Agenda packet — Cypress City Council, January 23, 2023 (part 1 of 2)

AMENDED AGENDA

REGULAR MEETING

CYPRESS CITY COUNCIL
January 23, 2023
5:00 P.M. - Closed Session
6:00 P.M. - Open Session
www.cypressca.org Council Chambers
5275 Orange Avenue
Cypress, California

AGENDA AMENDMENT
Added Closed Session Item: Conference with Real Property Negotiator, pursuant to Government Code Section 54956.8, regarding property at 5121 Myra Avenue, Cypress (APN 241-044-01); Agency Negotiator: Peter Grant, City Manager; Negotiating Parties:

Robert S. Ferrier; Under Negotiations: Price and terms of potential acquisition.

NOTICE
Effective January 2023, the general open session of all regular City Council meetings will begin at 6:00 p.m.

PUBLIC PARTICIPATION
Members of the public can participate in this meeting as follows:

1. Attend In-Person. First-come, first-served seating is available in the Council Chambers. Face coverings are recommended and all in-person attendees must be free of any symptoms associated with COVID-19.

2. Attend Virtually via Webinar. This option provides the ability to provide live public comments during Oral Communications or Public Hearings and view slideshow presentations. Please register at https://attendee.gotowebinar.com/register/6682541831096695382 to receive an email containing a link to join the webinar. Advance registration is recommended.

3. Watch the Meeting. The City Council meeting can be viewed live on Spectrum Cable Channel 36 or on the City's website at www.cypressca.org/watchlive.

4. Listen to the Meeting. The public may participate via the listen-only teleconference mode by calling (213) 929-4212 and entering Access Code 393-665-422 when prompted. No registration or audio pin is necessary.

5. Submit Public Comments Prior to the Meeting. The public may submit comments via email to [email protected]. Comments submitted by 3:00 p.m. on January 23, 2023 will be added to the City Council agenda as a Consent Calendar item.

CALL TO ORDER
5:00 P.M.

Executive Board Room

ROLL CALL
Cypress City Council, also acting as the Ex-Officio Governing Board of Directors of the Cypress Recreation and Park District
Mayor Anne Hertz-Mallari
Mayor Pro Tem Scott Minikus
Council Member David Burke
Council Member Frances Marquez
Council Member Bonnie Peat
ORAL COMMUNICATIONS (Three minutes per speaker, unless extended by the City Council) The public may address the City Council on matters appearing on the Closed Session agenda. Although Council Members may provide brief responses, the City Council may not discuss or take action on items that are not on its agenda.

If you would like to address the City Council in person, please complete a Speaker's Card. If you would like to address the City Council via the meeting webinar, please click the 'hand raise' button, unmute your microphone and wait for the Mayor or City Clerk to call on you. = Hand Raise = Unmute
Speakers providing comments in person will be called first. Speakers shall limit their comments to no more than three minutes.

Alternatively, comments may be submitted to [email protected] prior to 3:00 p.m. on January 23, 2023. All comments submitted via email prior to the deadline will be added to the agenda as a Consent Calendar item.

CLOSED SESSION
CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
Pursuant to Government Code Section 54956.9(d)(1)
Youngsma, et al. v. Cypress School District, et al.

Case No. 30-2021-01220176-CU-EI-CXC
Orange County Superior Court
CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
Pursuant to Government Code Section 54956.9(d)(1)
Southwest Voter Registration Education Project v. City of Cypress Case No. 30-2022-01270865-CU-CR-CJC
Orange County Superior Court
CONFERENCE WITH REAL PROPERTY NEGOTIATOR
Pursuant to Government Code Section 54956.8
Property:  5121 Myra Avenue, Cypress (APN 241-044-01)
Agency Negotiator:  Peter Grant, City Manager
Negotiating Parties:  Robert S. Ferrier
Under Negotiation:  Price and terms of potential acquisition January 23, 2023 | Page 2

RECONVENE
6:00 P.M.

Council Chambers

PLEDGE OF ALLEGIANCE
INVOCATION The Church of Jesus Christ of Latter-Day Saints The City Council does not endorse the content of the invocation and does not endorse the invocational speaker’s particular faith, belief and/or religious denomination. The City Council has an established neutral policy for selecting and scheduling invocational speakers. The City Council’s policy on invocations is available from the City Clerk.

REPORT OF WORKSHOP AGENDA / CLOSED SESSION
City Manager/City Attorney

PRESENTATIONS
Orange County Transportation Authority Measure M2 Streets and Roads Milestone Update Introduction of New City Employees
ORAL COMMUNICATIONS (Limited to 30 minutes – three minutes per speaker, unless extended by the City Council)
The public may address the City Council on any matters prior to any action taken on the agenda. Although Council Members may provide brief responses, the City Council may not discuss or take action on items that are not on its agenda.

January 23, 2023 | Page 3
comments to no more than three minutes.

PUBLIC HEARINGS
Public comments – five minutes per speaker, unless extended by the City Council.

If you would like to provide comments on a Public Hearing item in person, please complete a Speaker's Card available at the podium. If you would like to provide comments on a Public Hearing item via the meeting webinar, please click the 'hand raise' button, unmute your microphone and wait for the Mayor or City Clerk to call on you. = Hand Raise = Unmute
Speakers providing comments in person will be called first. Members of the public providing comments via webinar are encouraged to also submit a written copy of their comments to [email protected] prior to 3:00 p.m. on January 23, 2023. This will ensure your comments are included in the record should you experience any technical difficulties during the public hearing.

Council Members should disclose communications with anyone relevant to a Public Hearing item.

1. Approve Conditional Use Permit No. 2023-01 to Permit the Sale of Beer and Wine for an Existing Restaurant at 4720 Lincoln Avenue
Prepared by: Alicia Velasco, Planning Director
Recommendation: Adopt a Resolution approving Conditional Use Permit No. 2023-01, with conditions, and confirm the project is exempt from the California Environmental Quality Act requirements.

CONSENT CALENDAR
All matters listed on the Consent Calendar are to be approved with one motion unless a Council Member requests separate action on a specific item.

2. Receive and File Public Comments Submitted for the January 23, 2023 City Council Meeting
Prepared by: Alisha Farnell, City Clerk
Recommendation: Receive and file submitted public comments.

3. Introduce and/or Adopt All Ordinances and Resolutions Presented for Consideration by Title Only and to Waive Further Reading

January 23, 2023 | Page 4

4. Approve Minutes - Meeting of January 9, 2023
Prepared by: Alisha Farnell, City Clerk
Recommendation: Approve as submitted.

5. Adopt the 2023 Federal and State Legislative Platform Prepared by: Peter Grant, City Manager
Recommendation: Adopt the 2023 Federal and State Legislative Platform.

6. Approve a Task Order for Landscape Inspection Services Prepared by: Doug Dancs, Director of Public Works
Recommendation:

1. Approve a task order with Richard Fischer Associates for an amount not to exceed $63,000 to perform landscape inspection services; and

2. Approve a $63,000 budget transfer from personnel costs to contract landscape services in the General Fund ($56,700) and City Central Services Fund ($6,300).

7. Approve Purchase of Police Mobile Data Computers
Prepared by: Matt Burton, Director of Finance and Administrative Services Recommendation: Approve the purchase and installation of Police Department mobile data computers and associated hardware and software from Dell Marketing LP U.S., under the National Association of State Purchasing Officers Valuepoint Master Price Agreement for $159,906.90.

8. Award Contract for Traffic Camera Upgrades, Project 339 Prepared by: Doug Dancs, Director of Public Works
Recommendation: Award a contract for traffic camera upgrades to Macadee Electrical Construction for $76,022, and authorize a contingency of $7,600.

9. Receive an Update on the Strategic Plan Six-Month Objectives Prepared by: Peter Grant, City Manager
Recommendation: Receive an update on the Strategic Plan six-month objectives.

10. Receive and File the Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022
Prepared by: Matt Burton, Director of Finance and Administrative Services Recommendation: Receive and file the Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022.

January 23, 2023 | Page 5

11. Receive and File the Report on the City's Appropriations Limit for the Fiscal Year Ended June 30, 2022
Prepared by: Matt Burton, Director of Finance and Administrative Services Recommendation: Receive and file the attached Independent Accountants’ Report on Agreed-Upon Procedures Applied to the City's Appropriations Limit Worksheet for the Fiscal Year ended June 30, 2022.

12. Receive and File the Independent Accountants’ Report on the Cypress Recreation and Park District’s Appropriations Limit for the Fiscal Year Ended June 30, 2022
Prepared by: Matt Burton, Director of Finance and Administrative Services Recommendation: Receive and file the attached Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Appropriations Limit Worksheet for the Fiscal Year ended June 30, 2022.

13. Receive and File the Cypress Recreation and Park District’s Financial Statements and Auditors' Report for the Fiscal Year Ended June 30, 2022 Prepared by: Matt Burton, Director of Finance and Administrative Services Recommendation: Receive and file the District's Basic Financial Statements and Independent Auditors' Report for the Fiscal Year Ended June 30, 2022.

14. Receive and File the Audit Letter to the City Council for the Fiscal Year Ended June 30, 2022
Prepared by: Matt Burton, Director of Finance and Administrative Services Recommendation: Receive and file the audit letter from Lance, Soll and Lunghard LLP to the City Council for the Fiscal Year ended June 30, 2022.

15. Receive and File the Audit Letter to the District Board for the Fiscal Year Ended June 30, 2022
Prepared by: Matt Burton, Director of Finance and Administrative Services Recommendation: Receive and file the Audit Letter from Lance, Soll and Lunghard LLP to the Cypress Recreation and Park District Board of Directors for the Fiscal Year ended June 30, 2022.

16. Receive and File the Investment Report for the Month Ended December 31, 2022 Prepared by: Matt Burton, Director of Finance and Administrative Services Recommendation: Receive and file the attached investment reports.

January 23, 2023 | Page 6

17. Approve Register of Warrants, Transfers, and Wires Issued for the Period of December 24, 2022 through January 6, 2023
Prepared by: Matt Burton, Director of Finance and Administrative Services Recommendation: Approve the attached payment register summarized below for the period of December 24, 2022 through January 6, 2023:

Electronic Funds Transfers 12468 through 12517
Warrants 61452 through 61508
Payroll Transfers W1492

NEW BUSINESS
None.

ORAL COMMUNICATIONS (Five minutes per speaker, unless extended by the City Council) The public may address the City Council on any item within the subject matter jurisdiction of the City Council. Although Council Members may provide brief responses, the City Council may not discuss or take action on items that are not on its agenda.

COUNCIL MEMBER REPORTS AND REMARKS

CITY MANAGER REMARKS

ADJOURNMENT - IN MEMORY OF FORMER CYPRESS MAYOR OTTO LACAYO AND

RIVERSIDE COUNTY SHERIFF DEPUTY DARNELL CALHOUN
The next meeting will be an adjourned Regular Meeting, to be held on Monday, February 13, 2023, beginning at 5:30 p.m. in the Executive Board Room.

January 23, 2023 | Page 7
I hereby certify, under penalty of perjury under the laws of the State of California, that the foregoing Agenda was posted on the City Hall bulletin board not less than 72 hours prior to the meeting. Dated this 18th day of January, 2023.

________________________________
Alisha Farnell, City Clerk
In compliance with the Americans With Disabilities Act, if you need special assistance to participate in this meeting, you should contact the City Clerk at (714) 229-6685 at least 72 hours prior to the meeting to enable the City to make reasonable arrangements to assure accessibility to this meeting.

January 23, 2023 | Page 8
CITY OF CYPRESS
CITY COUNCIL REPORT
City Council Regular 1.

FROM: Alicia Velasco, Planning Director
DATE: 01/23/2023
SUBJECT: Approve Conditional Use Permit No. 2023-01 to Permit the Sale of Beer and Wine for an Existing Restaurant at 4720 Lincoln Avenue

RECOMMENDATION
Adopt a Resolution approving Conditional Use Permit No. 2023-01, with conditions, and confirm the project is exempt from the California Environmental Quality Act requirements.

DISCUSSION
Project Description
The applicant is requesting a Conditional Use Permit (CUP) for the sale of beer and wine at an existing restaurant (Hiyori Sushi) at 4720 Lincoln Avenue. This location has operated as a sushi restaurant for many years (most recently Aki Sushi), with Hiyori Sushi opening in September of 2022. The restaurant is open for lunch and dinner (10 AM to 12 AM), seven days a week.

Subject Property and Surrounding Uses
The restaurant is 1,320 square feet and seats approximately 40 patrons. It is located at the southeast corner of Lincoln Avenue and Sumner Place in an existing shopping center that includes a grocery store, restaurants, retail, and service businesses. The property is zoned PC – Planned Community (Lincoln Avenue Specific Plan) and the General Plan designation is Specific Plan Area. The shopping center is surrounded by:

Direction Land Use Zoning
North Condominiums PC - Planned Community
South Condominiums RM-20 Residential Multiple-Family
East Condominiums PC - Planned Community
West Commercial Center PC - Planned Community
A vicinity map is attached.

Analysis
Alcohol Beverage Sales
Restaurants are permitted in the Lincoln Avenue Specific Plan. The sale of alcoholic beverages requires a CUP. The restaurant’s CUP application is consistent with the alcoholic beverage sales guidelines in Section 3.17.030.B of the Zoning Ordinance. Two other restaurants in the shopping center serve alcohol (Coaches Corner Pizza and Howard’s Coffee Shop).

Conditional Use Permit
The commercial center complies with all development standards, including parking. With the recommended conditions, the restaurant will not have an adverse effect on adjacent properties or other businesses in the center, and the sale of beer and wine at Hiyori Sushi will not change the character of the commercial center. The Police department reviewed the application and recommends approval subject to the conditions of approval.

Required Findings
The project is consistent with the findings required by Zoning Code Section 4.19.070E (Conditional Use Permit) and Section 3.17.030.B (Alcoholic Beverage Sales):

The proposed location of the conditional use is consistent with the requirements of the General Plan and the zoning district in which the site is located:

1. The site is zoned PC – Planned Community (Lincoln Avenue Specific Plan), which is consistent with the Specific Plan Area land use designation in the General Plan. The PC Zone’s intent is to permit a compatible mix of land uses, planned commercial developments, business parks, and a variety of housing styles and densities. The PC Zone permits uses listed in the associated Specific Plan.The Lincoln Avenue Specific Plan permits restaurants with alcohol sales, subject to a Conditional Use Permit and the existing restaurant building site meets all development standards. The restaurant is in a commercial shopping center with surrounding retail and service type businesses. The restaurant, with beer and wine sales, will complement the surrounding uses.

The location of the conditional use and the conditions under which it would be operated or maintained will not be detrimental to the public health, safety or welfare, or be materially injurious to properties or improvements in the vicinity:

2. A restaurant is a permitted use at this location. The addition of on-site beer and wine sales will not be detrimental to the public health, safety or welfare, or injurious to properties in the vicinity. No new construction is included with this project and the project site meets all development standards. With the recommended project conditions, including restricted hours of operation, the beer and wine sales will comply with Municipal Code and Alcohol Beverage Control regulations. The Police department reviewed the restaurant’s application and found no indication that the addition of beer and wine sales would cause an undue burden on police resources.

The proposed conditional use will comply with each of the applicable provisions of the Zoning Ordinance:

3. The use as proposed and conditioned is consistent with the criteria for approving conditional use permits for alcoholic beverage sales, as set forth in Section 3.17.030.B of the Zoning Ordinance.

Recommendation
The CUP meets the requirements and intent of the Municipal Code and standards for the sale of alcohol. The restaurant and surrounding shopping center meets all development standards and the addition of beer and wine sales will provide a full-service dining option. It is recommended the City Council approve the Conditional Use Permit resolution and confirm the project is exempt from California Environmental Quality Act requirements.

Public Hearing
Notices of the public hearing were posted and mailed to the owners of all properties located within 500 feet of the site. To date, no communication regarding this item has been received.

Alternative Action
In the event the City Council determines there are concerns which should be addressed prior to taking any action on this item, the City Council should continue this application and instruct staff to work with the applicant to resolve the issues. A second alternative is to make the required finding for denial and deny the project.

BUDGET IMPACT
None.

LEGAL REVIEW
None required.

APPROVED BY: Peter Grant, City Manager
Attachments
Resolution
Project Conditions
Vicinity Map
Project Plans
Notice of Exemption
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CYPRESS APPROVING CONDITIONAL USE PERMIT NO. 2023-01, A REQUEST TO

ALLOW ON-SALE BEER AND WINE AT AN EXISTING RESTAURANT
LOCATED AT 4720 LINCOLN AVENUE, WITHIN THE PC – PLANNED

COMMUNITY ZONE AND FINDING THE REQUEST EXEMPT FROM

CALIFORNIA ENVIROMENTAL ACT REQUIREMENTS
WHEREAS, the City Council of the City of Cypress has considered an application for a conditional use permit in accordance with the provisions of Section 4.19.070 of the Zoning Ordinance of the City of Cypress to allow on-site sale of beer and wine at a restaurant located at 4720 Lincoln Avenue, within the PC Planned Community Zone.

WHEREAS, the subject site is designated Specific Plan Area in the City’s General Plan, and is zoned PC – Planned Community Zone (Lincoln Avenue Specific Plan), which allows restaurants with alcohol sales subject to a conditional use permit. Additionally, Section 3.17.030 of the Cypress Zoning Ordinance requires a conditional use permit and has special use provisions for restaurants with alcohol sales.

WHEREAS, the City Council, after proper notice thereof, on January 23, 2023, held a duly noticed public hearing on the application and took public testimony.

WHEREAS, the proposed project is categorically exempt pursuant to California Environmental Quality Act (CEQA) Guidelines, Section 15301 – Existing Facilities. Section 15301 involves the permitting, licensing or leasing of existing private or public buildings, which involves negligible changes in use of the building. The proposed project consists of a request to permit a restaurant, with an on-sale beer and wine license, within an existing 1,320 square-foot commercial building. Besides tenant improvements for the restaurant, including the alcoholic beverage storage area, there is no new building construction related with the project.

WHEREAS, it has been determined by the California Department of Alcoholic Beverage Control (ABC) that there is not an “undue concentration” in relation to the number of alcohol licenses that currently exist within the subject census tract of the City (Census Tract: 1101.11).

WHEREAS, the City Council finds that the applicant agrees with the necessity of and accepts all elements, requirements, and conditions of this Resolution as being a reasonable manner of preserving, protecting, providing for, and fostering the health, safety, and welfare of the citizenry in general and the persons who work, visit or live in this development in particular.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CYPRESS, CALIFORNIA, DOES HEREBY RESOLVE, based upon substantial evidence taken from the administrative record and at the public hearing, AS FOLLOWS:

SECTION 1. Findings. Pursuant to the Section 4.19.070E of the Cypress Zoning Ordinance, the City Council finds, after due study and deliberation that the following circumstances exist:

1. The proposed location of the conditional use is consistent with the requirements of the general plan and the zoning district in which the site is located:

The site is zoned PC – Planned Community (Lincoln Avenue Specific Plan), which is consistent with the Specific Plan Area land use designation in the General Plan.

The PC Zone’s intent is to permit a compatible mix of land uses, planned commercial developments, business parks, and a variety of housing styles and densities. The PC Zone permits uses listed in the associated Specific Plan. The Lincoln Avenue Specific Plan permits restaurants with alcohol sales, subject to a Conditional Use Permit and the existing restaurant building site meets all development standards. The restaurant is in a commercial shopping center with surrounding retail and service type businesses. The restaurant, with beer and wine sales, will complement the surrounding uses.

2. The location of the conditional use and the conditions under which it would be operated or maintained will not be detrimental to the public health, safety or welfare, or be materially injurious to properties or improvements in the vicinity:

A restaurant is a permitted use at this location. The addition of on-site beer and wine sales will not be detrimental to the public health, safety or welfare, or injurious to properties in the vicinity. No new construction is included with this project and the project site meets all development standards. With the recommended project conditions, including restricted hours of operation, the beer and wine sales will comply with Municipal Code and Alcohol Beverage Control regulations. The Police department reviewed the restaurant’s application and found no indication that the addition of beer and wine sales would cause an undue burden on police resources.

3. The proposed conditional use will comply with each of the applicable provisions of the Zoning Ordinance:

The use as proposed and conditioned is consistent with the criteria for approving conditional use permits for alcoholic beverage sales, as set forth in Section

3.17.030.B of the Zoning Ordinance.

SECTION 2. CEQA. The City Council finds that the proposed project is categorically exempt pursuant to California Environmental Quality Act (CEQA) Guidelines, Section 15301 – Existing Facilities. Section 15301 involves the permitting, licensing or leasing of existing private or public buildings, which involves negligible changes in use of the building.

The proposed project consists of a request to permit a restaurant, with an on-sale beer and wine license, within an existing 1,320 square-foot commercial building. Besides tenant improvements for the restaurant, including the alcoholic beverage storage area, there is no new building construction related with the project. Therefore, the City Council has determined that there is no substantial evidence that the project may have a significant effect on the environment.

NOW, THEREFORE, BE IT FURTHER RESOLVED that the City Council of the City of Cypress does hereby approve Conditional Use Permit No. 2023-01, subject to the conditions attached hereto as Exhibit "A".

Any challenge to this Resolution, and the findings set forth therein, must be filed within the 90-day statute of limitations set forth in Code of Civil Procedure 1094.6.

PASSED AND ADOPTED by the City Council of the City of Cypress at a regular meeting held on the 23rd day of January, 2023.

MAYOR OF THE CITY OF CYPRESS
ATTEST:

CITY CLERK OF THE CITY OF CYPRESS

STATE OF CALIFORNIA )

COUNTY OF ORANGE ) SS
I, ALISHA FARNELL, City Clerk of the City of Cypress, DO HEREBY CERTIFY that the foregoing Resolution was duly adopted at a regular meeting of the said City Council held on the 23rd day of January, 2023, by the following roll call vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

CITY CLERK OF THE CITY OF CYPRESS
 Community Development Department  Planning Division 

EXHIBIT A
CONDITIONAL USE PERMIT NO. 2023-01
(On-sale Beer and Wine at Restaurant)
4720 Lincoln Avenue

CONDITIONS OF APPROVAL

1. General Conditions

1.1.Prior to the issuance of building permits or commencement of the use, the project applicant shall sign and return a City-provided affidavit accepting these conditions of approval. (Planning)

1.2. The applicant shall defend, indemnify, and hold harmless, the City and any agency thereof, or any of its agents, officers, and employees from any and all claims, actions, or proceedings against the City or any agency thereof, or any of its agents, officers or employees, to attack, set aside, void or annul, an approval of the City, or any agency thereof, advisory agency, appeal board, or legislative body, including actions approved by the voters of the City, concerning the project, which action is brought within the time period provided in Government Code Section 66499.37 and Public Resources Code, Division 13, CH. 4 (§ 21000 et seq. - including but not by way of limitation § 21152 and 21167). City shall promptly notify the applicant of any claim, action, or proceeding brought within this time period. (City Attorney)

1.3. The applicant shall comply with all provisions of the Code of the City of Cypress. (Planning)

2. Planning

2.1. The alcoholic beverage sales associated with the restaurant shall be limited to on-sale beer and wine (Type 41 ABC License). The beer and wine consumption activities shall be confined within the restaurant lease area and shall comply with the restrictions of the ABC License. Any expansion or modification of the approved use beyond what is approved as part of this Conditional Use Permit will require an amendment to the conditional use permit. (Planning)

2.2. This conditional use permit may be modified or revoked by the City Council should the Council determine that the proposed use or conditions under which it is being operated or maintained is detrimental to the public health, safety, or welfare, or materially injurious to properties or improvements in the vicinity. (Planning)

3. Signage

3.1. The property owner/tenant shall not erect or display on the subject property any signs which have not been approved in writing by the Community Development Department. (Planning) Exhibit A
Conditional Use Permit No. 2023-01 Page 2
Conditions of Approval
 Community Development Department  Planning Division 

4. Operational

4.1.All product and material storage shall occur within the building. Exterior storage is specifically prohibited. (Planning)

4.2. If complaints are received regarding business hours of operation, noise, property/building maintenance, or vehicles not adhering to the approved parking, traffic and circulation plans, and relevant mitigation measures, the City, in its discretion, may have the City Council review the conditional use permit to, without limitation, revise the business hours, add conditions, or revoke the permit. When a complaint is received, the restaurant owner will engage with the City, to determine if the complaint is verified. Three unique verified complaints within 30 days or 10 unique verified complaints in a 12-month period shall indicate the use is creating an adverse impact upon neighboring properties. (Planning)

5. Property Maintenance

5.1. Commercial - The property owner shall maintain the site, the publically accessible interior, and publically viewable exterior of the building(s) clear of all graffiti, including but not limited to bathrooms and dining areas if applicable. All graffiti shall be removed within 24 to 48 hours once notified in writing by the City. (Planning)

6. Fees

6.1. Within 48 hours of the approval of this project, the applicant/developer shall deliver to the Community Development Department a check payable to the County Clerk-Recorder in the amount of $50.00 County administrative fee, to enable the City to file the Notice of Exemption pursuant to the California Environmental Quality Act (CEQA) Guidelines. (Planning)

7. Building and Safety

7.1. Applicant/developer shall obtain the required permits and comply with applicable provisions of the 2022 California Residential, Building, Plumbing, Electrical, and Mechanical Codes, the 2022 California Green Building Standards Code, Title 24, and the City of Cypress Codes. (Building & Safety)

8. Security

8.1. All exterior commercial doors, during the hours of darkness, shall be illuminated with a minimum of one foot-candle of light. All exterior bulbs shall be protected by weather and vandalism resistant cover(s). (Police Department)
Exhibit A
Conditional Use Permit No. 2023-01 Page 3
Conditions of Approval
 Community Development Department  Planning Division 

9. Alcohol – On-Sale

9.1. The applicant shall satisfy all necessary requirements of the State Department of Alcoholic Beverage Control prior to this conditional use permit becoming effective. (Planning)

9.2. The hours of operation shall be from 10:00 a.m. to 12:00 a.m., seven days a week. (Planning)

9.3. Signs shall be posted at the restaurant exit prohibiting open alcoholic beverages from leaving the confines of the restaurant. (Police Department)

9.4. At any time when the licensee(s) are absent from the premises they shall designate a responsible party on the premises who can assist or facilitate any peace officer inquiries. (Police Department)

9.5. The occupancy of the premises shall be prominently posted and monitored at all times. (Police Department)

9.6. There shall be no live entertainment permitted on the premises unless a special event permit is received pursuant to Cypress Municipal Code, Chapter 9.

9.7. All employees of the business who sell or serve alcoholic beverage products shall be required to complete a training program in alcoholic beverage compliance, crime prevention techniques and the handling of violence. For new employees, such training program must be completed within 30 days of the date of hire. The employees must provide the City of Cypress Police Department, Criminal Investigations Bureau a copy of the completed Alcohol Management Program (AMP) certificate. (Police Department)

9.8. The business shall install a surveillance camera system, colored monitor, and silent alarm. (Police Department)
Effective: 1/23/2023

VICINITY MAP

PROJECT SITE
4620 Lincoln Avenue
Conditional Use Permit No. 2023-01
Forest
Lawn
Mortuary
Sumner Place
Sushi Restaurant
Lincoln Avenue
SITE

FLOOR PLAN
1,320 SQUARE FEET
39 Interior seats
PL-5 Rev. 2011

NOTICE OF EXEMPTION
FROM: City of Cypress
5275 Orange Avenue
Cypress, CA 90630
TO: X County Clerk-Recorder
Public Services Division
P.O. Box 238
Santa Ana, CA 92702
Project Title
Conditional Use Permit No. 2023-01
Project Location - Specific
4720 Lincoln Avenue
Project Location - City
Cypress
Project Location -
County
Orange
Description of Nature, Purpose, and Beneficiaries of Project A request to allow on-sale beer and wine at a new restaurant, owned and operated by Young Ju Lee.

Name of Public Agency Approving Project
City of Cypress
Name of Person or Agency Carrying Out Project (Applicant’s Name and Address) Ms. Young Ju Lee, 6651 Western Avenue, #2, Buena Park, CA 90621 Exempt Status: (Check One)
Ministerial (Sec. 21080(b)(1);15268);
Declared Emergency (Sec. 21080(b)(3);15269(a));
Emergency Project (Sec. 21080(b)(4); 15269(b)(c));
X Categorical Exemption, Class 1.a (Sec. 15301(a))
Reasons why project is exempt:

The project consists of ABC licensing and minor interior alteration for an existing business within an existing commercial center.

Lead Agency Contact Person
Ms. Kori Sanders, Associate Planner
Area Code
(714)
Telephone Number
229-6724
If filed by applicant:

1. Attach certified document of exemption finding.

2. Has a notice of exemption been filed by the public agency approving the project? Yes X No ________
_________________________________
Signature Date
Alicia Velasco
Planning Director

Signed by Lead Agency
CITY OF CYPRESS
CITY COUNCIL REPORT
City Council Regular 2.

FROM: Alisha Farnell, City Clerk
DATE: 01/23/2023
SUBJECT: Receive and File Public Comments Submitted for the January 23, 2023 City Council Meeting

RECOMMENDATION
Receive and file submitted public comments.

BUDGET IMPACT
None.

LEGAL REVIEW
None required.

APPROVED BY: Peter Grant, City Manager
CITY OF CYPRESS
CITY COUNCIL REPORT
City Council Regular 4.

FROM: Alisha Farnell, City Clerk
DATE: 01/23/2023
SUBJECT: Approve Minutes - Meeting of January 9, 2023

RECOMMENDATION
Approve as submitted.

BUDGET IMPACT
None.

LEGAL REVIEW
None required.

APPROVED BY: Peter Grant, City Manager
Attachments
January 9, 2023 Minutes

REGULAR MEETING

CYPRESS CITY COUNCIL
JANUARY 9, 2023
5:15 P.M.

A regular meeting of the Cypress City Council was called to order at 5:15 p.m. by Mayor Hertz-Mallari in the Council Chambers, 5275 Orange Avenue, Cypress, California.

STAFF PRESENT
City Manager Peter Grant
City Attorney Fred Galante
Director of Finance and Administrative Services Matt Burton Director of Public Works Doug Dancs
Director of Recreation and Community Services Jeff Draper Chief of Police Mark Lauderback
Planning Director Alicia Velasco
City Clerk Alisha Farnell
Lieutenant Scott Ausmus
Assistant Director of Finance and Administrative Services Donna Mullally Assistant City Engineer Daniel Co
Information Systems Manager Adrian Smith
Acting Maintenance Superintendent Jose Guerra
Network Administrator Rheza Sanusi
Senior Management Analyst Kirsten Graham

ORAL COMMUNICATIONS
None.

CLOSED SESSION

THREAT TO PUBLIC SERVICES OR FACILITIES
Pursuant to Government Code Section 54957
Consultation with: Cypress Police Department, Chief of Police Mayor Hertz-Mallari recessed the meeting at 5:17 p.m.

RECONVENE
Mayor Hertz-Mallari called to order the 6:00 p.m. session of the City Council meeting at 6:03 p.m.

ROLL CALL
Mayor Anne Hertz-Mallari
Mayor Pro Tem Scott Minikus
Council Member David Burke
Council Member Frances Marquez
Council Member Bonnie Peat

STAFF PRESENT
City Manager Peter Grant
City Attorney Fred Galante
Director of Finance and Administrative Services Matt Burton Director of Public Works Doug Dancs
Director of Recreation and Community Services Jeff Draper Planning Director Alicia Velasco
Chief of Police Mark Lauderback
City Clerk Alisha Farnell
PLEDGE OF ALLEGIANCE Chief of Police Mark Lauderback led the Pledge of Allegiance.

INVOCATION Pastor Mike McKay, Cypress Neighborhood Church, led the Invocation.

REPORT OF WORKSHOP AGENDA / CLOSED SESSION
The City Attorney reported that the City Council met in Closed Session and held a discussion on the item listed on the Closed Session agenda, Threat to Public Services or Facilities in consultation with the Cypress Police Department, Chief of Police. He stated the City Council received a briefing and no further reportable action was taken.

PRESENTATIONS
Director of Public Works introduced Assistant City Engineer Daniel Co.

Director of Finance and Administration introduced Network Administrator Rheza Sanusi.

ORAL COMMUNICATIONS (Limited to 30 minutes – three minutes per speaker, unless extended by the City Council)
Katie Shapiro, Cypress, spoke regarding snowy owl in Cypress, Agenda Item No. 8 and franchise fees.

Beth Culver, Cypress, spoke regarding Constitutional rights and documents received under a CPRA request.

Marilyn Reames, Cypress, spoke regarding tenor of new City Council and personal goals for the new year.

CONSENT CALENDAR
All matters listed on the Consent Calendar are to be approved with one motion unless a Council Member requests separate action on a specific item.

Mayor Pro Tem Minikus stated that Agenda Item No. 8, the Warrant Register, includes electronic fund transfer No. 12022 for $286.18 and electronic fund transfer No. 12175 for $286.18 as reimbursement for medical coverage he is entitled to receive as a CalPERS annuitant. He indicated that in voting for any motion to approve the Warrant Register, he would not be voting on electronic fund transfers No. 12022 and No. 12175 for the reason disclosed.

Council Member Burke asked questions regarding Agenda Item No. 5.

A motion was made by Mayor Pro Tem Minikus, seconded by Council Member Burke, to approve Consent Calendar items No. 1 through 8.

The motion was unanimously carried by the following roll call vote:

AYES: 5 COUNCIL MEMBERS: Burke, Marquez, Peat, Minikus and Hertz-Mallari NOES: 0 COUNCIL MEMBERS: None
ABSENT: 0 COUNCIL MEMBERS: None
Item No. 1: Receive and File Public Comments Submitted for the January 9, 2023 City Council Meeting
Recommendation: Receive and file submitted public comments.

Item No. 2: Introduce and/or Adopt All Ordinances and Resolutions Presented for Consideration by Title Only and to Waive Further Reading Item No. 3: Approve Minutes – Meeting of November 14, 2022 and December 12, 2022
Recommendation: Approve as submitted.

Item No. 4: Approve a Resolution of the Successor Agency to the Cypress Redevelopment Agency Notifying the Oversight Board Regarding the Disposition of Successor Agency Assets, Requesting the Oversight Board Adopt a Final Resolution to Dissolve the Successor Agency, and Directing the Successor Agency be Dissolved Upon the Oversight Board’s Adopting of the Final Resolution Recommendation: Approve a Resolution which notifies the County Oversight Board regarding the disposition of Successor Agency assets, request the Oversight Board adopt a final Resolution to dissolve the Successor Agency, and directs the Successor Agency be dissolved upon the Oversight Board’s adopting of the final Resolution.

Item No. 5: Approve a Task Order for the Myra Avenue Pump Station No. 1 and Veterans Park Pump Station Evaluation
Recommendation: Approve a task order to AKM Consulting Engineers to evaluate the Myra Pump Station No. 1 and Veterans Park Pump Station for $84,022 and authorize a contingency of $8,400.

Item No. 6: Receive the Conceptual Design for Cerritos Avenue Frontage Landscape Improvements, Project 320
Recommendation: Receive the conceptual design for Cerritos Avenue Frontage Landscape Improvements, Project 320.

Item No. 7: Receive and File the Investment Reports for the Months Ended October 31, 2022 and November 30, 2022
Recommendation: Receive and file the attached investment reports.

Item No. 8: Approve Register of Warrants, Transfers, and Wires Issued for the Period of October 29, 2022 through December 23, 2022
Recommendation: Approve the attached payment register summarized below for the period of October 29, 2022 through December 23, 2022
• Electronic Funds Transfers 12008 through 12467
• Warrants 60997 through 61451
• Payroll Transfers W1487 through W1491

NEW BUSINESS
Item No. 9: Approve City Council Appointments to Organizations and Committees Mayor Hertz-Mallari made the following appointments:

COMPENSATED:

Orange County Fire Authority Anne Hertz – Representative (No Alternate)
Orange County Mosquito & Vector Control Bonnie Peat – Representative District (Term ending Jan. 2024) (No Alternate)
Orange County Sanitation District Scott Minikus – Representative Bonnie Peat – Alternate
NON-COMPENSATED:

Bridges at Kramer Place Community David Burke - Representative Advisory Board (No Alternate)
City/Anaheim Union High School Anne Hertz-Mallari
District Ad Hoc Subcommittee Scott Minikus
City/Cypress College Ad Hoc Committee Anne Hertz-Mallari Bonnie Peat
City/Cypress School District Ad Hoc David Burke
Subcommittee Anne Hertz-Mallari
Economic Development Ad Hoc Anne Hertz-Mallari
Subcommittee Bonnie Peat
Joint Forces Training Base Cities Group Scott Minikus – Representative Frances Marquez – Alternate
League of California Cities Anne Hertz-Mallari – Representative General Assembly Scott Minikus – Alternate
League of California Cities Anne Hertz-Mallari – Representative Orange County District Scott Minikus – Alternate
Orange County City Selection Committee Anne Hertz-Mallari – Representative Scott Minikus – Alternate
Orange County Council of Governments Anne Hertz-Mallari - Representative General Assembly Scott Minikus – Alternate
Orange County Library Advisory Board David Burke - Representative (2-year Term ending Jan. 2025) Bonnie Peat – Alternate
Santa Ana River Flood Protection Frances Marquez – Representative Agency Bonnie Peat – Alternate
Southern California Association of Scott Minikus - Representative Governments – General Assembly David Burke – Alternate
Veterans Recognition Ad Hoc Subcommittee Frances Marquez Scott Minikus
West Cities Police Communications Center Scott Minikus – Representative Anne Hertz-Mallari – Alternate
City Council discussion ensued.

It was moved by Mayor Pro Tem Minikus, and seconded by Council Member Peat, to confirm the Mayor’s appointments to organizations and committees.

The motion was carried by the following roll call vote:

AYES: 5 COUNCIL MEMBERS: Burke, Marquez, Peat, Minikus and Hertz-Mallari NOES: 0 COUNCIL MEMBERS: None
ABSENT: 0 COUNCIL MEMBERS: None
ORAL COMMUNICATIONS (Five minutes per speaker, unless extended by the City Council)
Bob Youngsma, Cypress, spoke regarding new City Council.

COUNCIL MEMBER REPORTS AND REMARKS
Council Member Marquez:

Congratulated Cypress High School Coach Feldman for being recognized as Orange County Football Coach of the Year. Congratulated new School Resource Officer Diana Martinez. Attended P.A.C.E. graduations for Vessels, Cerritos and Holder Elementary Schools. Attended the Holiday Sing and Tree Lighting event. Attended the Police Volunteer luncheon. Attended Sergeant Donald Sowma memorial. Attended the Southern California Association of Governments Economic Summit event.

Council Member Peat:

Attended retirement party for Recreation Supervisor Shelly Meyers. Attended swearingin ceremonies for Assemblywoman Sharon Quirk-Silva and State Senator Janet Nguyen.

Council Member Burke:

Reminded residents that Council Meetings start at 6:00 p.m. Thanked Department heads for meeting with him and answering his questions. Announced his city email and encouraged residents to contact him with any questions or concerns.

Mayor Pro Tem Minikus:

Attended the Cypress College Americana Awards kick-off event. Attended the Police Volunteer luncheon. Attended the Buena Park Mayor’s Prayer Breakfast. Attended the Orange County Mosquito and Vector Control District Board meeting. Attended State Senator Janet Nguyen’s swearing-in ceremony. Attended Sergeant Donald Sowma memorial. Attended the Holiday Sing and Tree Lighting event. Attended the P.A.C.E. graduation at Landell Elementary. Met with Pastor Mike McKay from Cypress Neighborhood Church. Attended the Westmont Holiday Mixer. Attended Joe Schmoe’s Christmas Toy Drive. Attended the swearing-in ceremony for newly-elected City of La Palma Council Members. Announced Modern Cellar is celebrating their one-year anniversary. Attended the Police Academy graduation. Met with Cypress High School student regarding homeless population.

Mayor Hertz-Mallari
Stated her focus this month has been on engagement with colleges, the community and surrounding cities. Will host Town Hall meetings. Will be meeting with the Mayor’s from the cities of La Palma, Seal Beach, Los Alamitos, Buena Park and Anaheim. Stated it is National Law Enforcement Appreciation Day.

CITY MANAGER REMARKS
Spoke regarding upcoming rain storms and the City’s efforts to keep the public safe.

Announced Congresswoman Michelle Steele will open a district office in Cypress.

The City Attorney provided an update in state law regarding Conflict of Interest rules.

ADJOURNMENT – IN MEMORY OF RIVERSIDE COUNTY SHERIFF DEPUTY ISAIAH

CORDERO
Mayor Hertz-Mallari adjourned the meeting at 7:13 p.m. to an adjourned Regular Meeting, to be held on Monday, January 23, 2033, beginning at 5:30 p.m. in the Executive Board Room.
_______________________________

MAYOR OF THE CITY OF CYPRESS
ATTEST:
___________________________________

CITY CLERK OF THE CITY OF CYPRESS
CITY OF CYPRESS
CITY COUNCIL REPORT
City Council Regular 5.

FROM: Peter Grant, City Manager
DATE: 01/23/2023
SUBJECT: Adopt the 2023 Federal and State Legislative Platform

RECOMMENDATION
Adopt the 2023 Federal and State Legislative Platform.

DISCUSSION
The Legislative Platform is a tool to protect and promote the City's interests on priority issues, legislative, and regulatory matters that may impact Cypress. Maintaining a legislative platform allows for timely response to legislative and regulatory issues important to the City.

It is a useful tool to monitor pending legislation and determine if action is warranted. Action may include letters from the Mayor consistent with the adopted platform, as well as conversations with legislators and their staff. Before taking any action or recommending a letter for the Mayor's signature, legislative proposals are evaluated with department input, legislative advocate analysis, legal input, and City Manager guidance. New or complex policy proposals may lead to additional City Council direction as appropriate.

The Legislative Platform provides broad guidance when evaluating legislation that may impact local control, fiscal stability, and the City's opportunity to compete for grants and funding. Additionally, the Platform establishes City legislative priorities to provide the foundation for advocacy efforts at the federal, state, and local levels. The legislative priorities articulate City Council policy direction and are presented in alignment with the League of California Cities.

BUDGET IMPACT
None.

LEGAL REVIEW
None required.

APPROVED BY: Peter Grant, City Manager
Attachments
2023 Legislative Platform

CITY OF CYPRESS
2023 STATE AND FEDERAL LEGISLATIVE PLATFORM
The Legislative Platform is a tool to protect and promote the City’s interests on priority issues, legislative and regulatory matters that may impact Cypress. The Legislative Platform defines the City Council’s policy guidelines and legislative priorities to provide the foundation for advocacy efforts at the federal, state, and local levels. Maintaining a legislative platform allows for timely response to legislative and regulatory issues important to the City, including letters from the Mayor or City Manager to the Legislature and/or Congress consistent with the Platform. The Legislative Platform also summarizes the City Council’s positions on priority issues without precluding the consideration of additional legislative and budget issues that arise during the year.

POLICY GUIDELINES
I. PRESERVE LOCAL CONTROL
Preserve and protect the City’s charter powers, duties and the ability to enact legislation and policy direction concerning local affairs, and oppose legislation that preempts local authority. Local agencies should preserve and enhance authority and accountability for revenues raised and services provided.

II. PROMOTE FISCAL STABILITY
Support measures that promote fiscal stability, predictability, and financial independence. Support measures that preserve the City’s revenue base and local control over local government budgeting, recognizing that economic cost is a factor in considering the merits and/or impacts of proposed legislation or regulation. Oppose measures that make cities more dependent on the County, State or Federal governments for financial stability, such as mandated costs with no guarantee of local reimbursement or offsetting benefits. Oppose measures that shift local funds to the County, State or Federal governments, without offsetting benefits.

III. SUPPORT FUNDING OPPORTUNITIES
Support opportunities that allow the City to compete for its fair share of regional, state and federal funding, and that maintain funding streams. Opportunities may include competitive grant and funding programs. Opportunities could also include dedicated funding streams at the regional, state and federal levels that allow the City to maximize local revenues, offset and leverage capital expenditures, and maintain City standards and goals.

CITY OF CYPRESS
2023 STATE AND FEDERAL LEGISLATIVE PLATFORM
2 LEGISLATIVE PRIORITIES
Community Services
• Support funding, measures, and legislation that provide for constructing, rehabilitating and maintaining public facilities, parks and open space. • Oppose state legislation that might limit local government’s ability to collect or allocate park in-lieu fees.
• Support legislation and grants that facilitate the provision of recreational activities for all segments of the population.

Environmental Quality
• Oppose legislation that imposes undue hardship on local agencies to implement environmental regulations.
• Support measures that expand markets for recyclable materials and maintain local authority and flexibility to regulate solid waste and recyclables. • Oppose waste and resource recovery measures imposing State-mandated costs when there is no guarantee of local cost recovery or offsetting benefit. • Support legislation that establishes funding opportunities that provide for compliance with environmental regulations.

Governance, Transparency and Labor Relations
• Monitor mandates in connection with proposed administrative or legislative action that would modify the governing responsibilities and authority of city councils. • Support legislation that modernizes requirements for publication of legal notices to allow for electronic posting.
• Support measures to achieve and maintain fair and proportionate representation on county-wide and regional boards.
• Oppose measures that reduce local control or create additional financial burden related to employee relations and collective bargaining issues that can be negotiated at the bargaining table.

CITY OF CYPRESS
2023 STATE AND FEDERAL LEGISLATIVE PLATFORM
3 • Support reform measures that provide sustainable and secure public pensions and other post-retirement benefits to ensure responsive and affordable public services.

Housing, Community and Economic Development
• Support legislation that strengthens local control and decision making on land use and zoning matters.
• Oppose legislation that erodes the ability of cities to condition and deny projects that inadequately mitigate impacts to the community.
• Support reforms and improvements to housing element law to provide clear processes and flexibility to allow regional cooperation and establish realistic housing goals and performance standards.
• Support economic development initiatives that preserve and enhance a positive business climate and maintains and grows the business tax base. • Support legislation that provides tangible and productive tools and investment to support job creation, job retention and local business. • Support legislation that provides funding, resources, and flexibility to provide affordable, transitional, supported, and emergency housing to prevent homelessness and assist individuals experiencing homelessness.

Public Safety
• Support legislative efforts to improve local law enforcement, fire suppression and prevention, hazardous materials mitigation, rescue, emergency medical services and disaster preparedness.
• Support legislation and seek funding to assist local law enforcement to reduce crimes related to illicit drugs, burglary, assault, and domestic violence. • Support measures that protect children and youth from tobacco, alcohol and drug use and related products, and that support related prevention and intervention programs. • Support legislation to deter drivers from operating motor vehicles while under the influence of alcohol and drugs.
• Support measures that provide frontline funding for law enforcement services associated with the “early release” of prisoners resulting from State-mandated criminal justice realignment provisions.

CITY OF CYPRESS
2023 STATE AND FEDERAL LEGISLATIVE PLATFORM
4 • Support increased funding for disaster preparedness, prevention, recovery and responses for all hazard threats.
• Support legislation that strengthens cities’ authority to regulate business that serve as fronts for illegal conduct such as human trafficking, prostitution, etc.

Revenue and Taxation
• Oppose legislation that would increase the City’s dependence on the State for financial stability and policy direction.
• Support the preservation and enhancement of the City’s ability to generate and retain sales and use tax revenue, and local point-of-sale revenue allocations. • Oppose legislation to alter the manner by which transient occupancy taxes are calculated and collected.

Transportation, Communications and Public Works
• Support and pursue funding that specifically benefits Cypress’ transportation and public works projects.
• Support protection of dedicated transportation-related tax revenues and enhance the ability of local agencies to finance local transportation programs and facilities. • Support efforts to maintain cities ability to retain existing fees on telecommunications services for public, educational and governmental channels. • Oppose efforts to restrict cities’ authority to zone and plan for the deployment of telecommunications infrastructure.
• Support cities’ ability to maintain and manage the public right-of-way and receive compensation for its use.

CITY OF CYPRESS
CITY COUNCIL REPORT
City Council Regular 6.

FROM: Douglas Dancs, Director of Public Works
DATE: 01/23/2023
SUBJECT: Approve a Task Order for Landscape Inspection Services

RECOMMENDATION

1. Approve a task order with Richard Fischer Associates for an amount not to exceed $63,000 to perform landscape inspection services; and

2. Approve a $63,000 budget transfer from personnel costs to contract landscape services in the General Fund ($56,700) and City Central Services Fund ($6,300).

DISCUSSION
In April 2022, the City Council approved a five-year on-call landscape inspection services agreement with Richard Fischer Associates (RFA) through an open and competitive selection process. The city assigns work to on-call contractors through task orders, which establish the scope, cost and timeframe for each assignment. Task orders above $25,000 require City Council approval.

The on-call contract with RFA provides professional services to assist with the management of landscape maintenance contracts in the event of staffing vacancies. The $100,800 task order issued in April 2022 provided landscape inspection services for medians, parkways and park facilities through December 31, 2022. Due to ongoing staffing vacancies within the Maintenance division and the specialized nature of the inspection services, additional on-call landscape maintenance management services are necessary. The recommended task order would authorize additional landscape inspection assistance from RFA through June 30, 2023.

BUDGET IMPACT
Due to ongoing staffing vacancies in Public Works Maintenance, salary savings are available in the General fund and City Central Services fund to pay for the task order through the end of FY 2022-23. The recommended appropriation transfer will not impact budgeted fund balance projections at June 30, 2023.

LEGAL REVIEW
None required.

APPROVED BY: Peter Grant, City Manager
Attachments
Task Order
Task Order
On Call Contract Date 4/11/2022
Contract Approved by
Council Yes
Consultant Richard Fisher Associates
Project
Landscape Inspection Services
Amount $63,000 maximum
Service
Landscape inspection services for ongoing maintenance of landscape and trees in the City’s medians, parkways and park facilities.

Hourly Rates
Principal Landscape Architect – Rate $145 / hour per contract.

Arborist – Rate $140 / hour per contract.

Landscape Inspector – Rate $135 / hour per contract.

Schedule
Up to 20 hours per week. Work amount may vary dependent on needs or assigned by the Director. The task order may be discontinued at any time upon written notice of the Director.

Reviewed:

Director of Public Works
Approved by City Council on:

Notes

1. All Task Orders must be performed within the budgetary limits established by the Task Order.

2. Provide sufficient back up for hours charged, as required by the Director.

3. Any work by the Principal Landscape Architect requires prior written approval of the Director.

4. Reimbursable for reprographics, postage, shipping and messenger service.

Mileage travel costs are not reimbursable, as they are included in hourly rates.

5. Inspections shall apply standards set forth in applicable maintenance contracts (Right-of-Way, Park and Facilities, and Lexington Park Landscape Maintenance Services; and Citywide Tree Maintenance)
CITY OF CYPRESS
CITY COUNCIL REPORT
City Council Regular 7.

FROM: Matt Burton, Director of Finance and Administrative Services DATE: 01/23/2023
SUBJECT: Approve Purchase of Police Mobile Data Computers

RECOMMENDATION
Approve the purchase and installation of Police Department mobile data computers and associated hardware and software from Dell Marketing LP U.S., under the National Association of State Purchasing Officers Valuepoint Master Price Agreement for $159,906.90.

DISCUSSION
The replacement mobile data computers (MDCs) are included in the Five-Year Technology Master Plan and FY 2022-23 Budget. MDCs are an integral part of Police department operations and wirelessly connect vehicles to the city's computer network. MDCs allow Officers to access computer-aided dispatch and records databases, transmit criminal information to the mobile units, run license plates and check identification, and provide a graphic display of the location of vehicles. The current MDCs were purchased in November 2016 from Dell, and show significant wear as they have operated 24 hours a day for the last six years. The units are no longer under warranty and are considered to be end-of-life by the manufacturer.

Information Technology and the Police department researched MDC replacement options, and after testing several options, recommend the Dell rugged laptop. The new MDCs offer improved performance while maintaining similar functionality to the current MDCs, which will allow replacement with little to no training. Technical support, repair, and administration are also unchanged from the current MDC.

Dell offers competitively pricing to California state and local governments under the NASPO ValuePoint Master Price Agreement for Computer Equipment, Peripherals, and Related Services. Using this agreement provides the city discounted equipment and installation pricing while meeting the requirements Municipal Code Section 21A-10(e).

BUDGET IMPACT
Sufficient amounts are budgeted in the Capital Replacement Fund for the purchase and Sufficient amounts are budgeted in the Capital Replacement Fund for the purchase and installation of the 44 mobile data computers and associated hardware and software.

LEGAL REVIEW
None required.

APPROVED BY: Peter Grant, City Manager
Attachments
Dell-Installation-SoW
Dell Quote - MDCs for Assignment
Dell Quote - MDCs for Vehicles and Hardware
NASPO - Master Agreement
NASPO - California Addendum
Cost Summary - MDC Replacement
City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 1 of 26 Statement of Work for
Rugged Mobility Managed Deployment
City Of Cypress Police Department (“Customer”)
5275 Orange Ave.

Cypress, CA 90630
SFDC # 21662904
Dell Marketing L.P. (“DT Services”)
City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 2 of 26 Table of Contents
1 INTRODUCTION............................................................................................. 3 2 TERM.............................................................................................................. 3 3 SUMMARY OF SERVICE............................................................................... 3 4 ENGAGEMENT DETAILS .............................................................................. 4

4.1 Scope of Services ..................................................................................................... 4

4.2 Project Timeline ........................................................................................................ 8

4.3 Services Out of Scope .............................................................................................. 9

4.4 Assumptions ............................................................................................................. 9

4.5 Customer Responsibilities ...................................................................................... 11

4.6 Service Hours ......................................................................................................... 12 5 COMPLETION AND ACCEPTANCE............................................................ 12 6 PRICING....................................................................................................... 13

6.1 Estimate Revisions ................................................................................................. 13

6.2 Expenses ................................................................................................................ 14

6.3 Additional Pricing Terms......................................................................................... 14 7 CHANGE MANAGEMENT PROCESS ......................................................... 15 8 OTHER PROVISIONS .................................................................................. 16 9 SIGNATURES............................................................................................... 18 Appendix A: Supported Sites.............................................................................. 19 Appendix B: Definitions....................................................................................... 20 Appendix C: Major Metropolitan Areas............................................................... 22 Appendix D: Hardware BOM and Vehicle List.................................................... 24 City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 3 of 26 1 INTRODUCTION
This SOW and the Services described in this SOW are governed by and subject to the terms and conditions set forth in: Customer’s separately signed master services agreement with DT Services to the extent such agreement authorizes Customer to order the Services; or, in the absence of such an agreement, the applicable terms and conditions at the following website: www.dell.com/cts, available in hardcopy upon request and incorporated by reference in its entirety into this SOW, and the parties acknowledge having read and agree to be bound by such online terms (“Agreement”).

Capitalized terms used herein but not otherwise defined will have the meanings ascribed to such terms in the Agreement. To the extent that this SOW conflicts with the Agreement, the terms and conditions of this SOW shall control. Prevailing terms will be construed as narrowly as possible to resolve the conflict while preserving as much of the non-conflicting terms as possible, including preserving non-conflicting provisions within the same paragraph, section, or sub-section.

The following appendices are attached hereto and incorporated by reference:
● Appendix A – Supported Sites
● Appendix B – Definitions
● Appendix C – Major Metropolitan Areas
● Appendix D – Hardware Quotes and Services Quotes
2 TERM
The term of this SOW will begin on the date of the last signature to the SOW (“Effective Date”) and, unless terminated in accordance with this SOW or the Agreement, expires on the date that DT Services completes the provision of Services in accordance with this SOW.
3 SUMMARY OF SERVICE
This section provides an overview of the Services.
● Project is expected to occur at approximately one (1) location in the Continental US. ● The duration of the project is expected to be up to one week for installations. ● Services are estimated to affect 20 units.
● Security clearance required is None.
● The start date of the deployment shall be contingent upon completion of the Scheduling Assumptions.
● DT Services will deliver Services for Customer’s sites identified in Appendix A (each, a “Customer Site”).

City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 4 of 26 General Overview:

Rugged Laptops –Installation of new equipment, to include the following: Same equipment for all 20 vehicles
● Dell Rugged Latitude 5430.
● Dock Swaps - Gamber-Johnson Docking Station with Lind 90W Power Supply (Tri RF) - docking station – VGA.
● Panorama Sharkee - Antenna - shark fin - navigation, cellular, Wi-Fi - 1 dBi - omni-directional - panel mountable.
● MMS VEHICLE POWER DISTRIBUTION UNIT W/SHUTDOWN (Charge Guard). ● GAMBER-JOHNSON RUGGED USB HUB WITH BARE.
● All legacy equipment will be place at a customer specified location (Legacy Docks). ● Run New Power to the Battery.
● On - site Trash.
4 ENGAGEMENT DETAILS
In connection with this SOW, DT Services will perform the Services as specifically described herein.

4.1 Scope of Services
DT Services will perform the following Services under this SOW:

4.1.1 Pre-Deployment Activities
DT Services and Customer will complete the activities listed below before managed deployment services begin. These activities will validate the assumptions, requirements, procedures, and responsibilities set forth in this SOW. In the event any assumption, requirement, procedure, or responsibility is found to be incorrect, the pricing and/or scope of Services will be modified using the Change Management Process to reflect the actual operating environment.
1) Site Survey and End-User Profiles. Customer will complete a site survey for each Customer Site.

The site survey is used to collect information needed for the deployment. Customer will complete end-user profile surveys, if applicable.
2) Schedules. DT Services and Customer will mutually agree in writing to a deployment schedule by Customer Site and Schedule Group (collectively, the “Deployment Schedule”). Customer will promptly notify DT Services of any conflicts in order to lock the schedule prior to the scheduled installation date. Any modifications or cancellations occurring prior to the scheduled installation date may be subject to additional fees.

The installation schedule will attempt to provide a continuous flow of Customer vehicles through each established installation bay, so that the DT Services installation technicians will not experience “down time”. Customer will not be responsible for any down time incurred by DT Services staff due to lack of work and vehicle flow. Once the deployment schedule is agreed upon the Customer is responsible for communicating the schedule to its personnel and is responsible for setting appointments with each individual to bring his/her vehicle in to the installation bay according to the established schedule.

Customer will require each individual to bring his/her vehicle to the install location at the prescribed date and time. The installation schedule will be matched to the vehicles ID, vehicle configuration and any other necessary information.

City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 5 of 26 3) Deployment Facilities. Indoor installation facilities will be used where necessary or accessible due to bad weather conditions.

Customer will provide a single point of contact to DT Services and will assist in coordinating and implementing the deployment as necessary. Customer agrees to provide a single site per location for installation services and vehicles will be provided in a continuous flow to the DT Services installation technicians. Customer installation locations will contain at least one (1) bay where the installs will occur.
4) Materials. DT Services will provide a detailed listing of mounting equipment required for each vehicle make and model scheduled to receive an installation.

Dell will drop ship the Dell Laptops directly to the Customer location. Vehicle Details:
● See Appendix A
DT Services will provide its technicians all the necessary tools required to install the project components. Customer will provide the following at each scheduled installation site:
● Each site must have one (1) full available bay to complete the work. It must have electricity and adequate lighting.

At the completion of the project, DT Services will supply a report with completed installation information. DT Services is responsible for providing the DT Services Project Manager with documentation of the installation and Customer acceptance. Reports must be in a consistent, repeatable format that is mutually agreed-upon between the DT Services Project Manager and the Customer.

4.1.2 Rugged Mobility Installation Services
DT Services will be conducting the following deployment activities.

4.1.2.1 Vehicle Inspection
Service Description
All vehicles are subjected to a pre- and post- inspection. For tracking the inspections DT Services utilizes a “VCD” (Vehicle Completion Document). Both of these inspections are logged on the VCD.

Pre- and post-installation Vehicle Inspection:

This inspection includes checking the following for damage and functionality:
● Dents and dings.
● Cracked windshields.
● Parking lights.
● Brake lights.
● Head lights.
● Dome lights.
● Existing equipment such as two-way radios and other current equipment.

4.1.2.2 Installation of New Equipment
Service Description
● Work with Customer to develop installation specifications of new mounting solution to be installed into vehicles.

Rugged Laptops –Installation of new equipment, to include the following: Same equipment for all 20 vehicles.
● QTY 20 - Dell Rugged Latitude 5430.

City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 6 of 26 ● Dock Swaps - Gamber-Johnson Docking Station with Lind 90W Power Supply (Tri RF) - docking station – VGA.
● Panorama Sharkee - Antenna - shark fin - navigation, cellular, Wi-Fi - 1 dBi - omni-directional - panel mountable.
● MMS VEHICLE POWER DISTRIBUTION UNIT W/SHUTDOWN (Charge Guard). ● GAMBER-JOHNSON RUGGED USB HUB WITH BARE.
● All legacy equipment will be place at a customer specified location (Legacy Docks). ● Place Customer-provided test laptop into docking station. ● Power on laptop and confirm operation per supplied procedure. ● Complete installation data sheet to confirm installation meets specifications. ● Remove installation trash from vehicle and place in designated Customer-provided disposal container at installation site.
● Supply all proper installation tools and installation parts, e.g., tie straps, tape, connectors, wire loom, etc., used for installation.
● SOW is based on 20 vehicles.
● All other activities will be out of scope and not part of this SOW.

Installation Process
Below is the process for scheduling, installing and coordinating the DT Services-delivered Rugged Mobility installations:
● One week out: Call from project team to schedule installation location. ― Confirm site data.
― Confirm vehicle quantity.
― Confirm site access (e.g., PINs, codes, keys etc.).
― Confirm date and time.
― Confirm contact info.
― Confirm on-site location area for old mounting hardware, docking stations and wire harnesses.

Note: DT Services recommends that Customer resolve any site issues, such as vehicle(s) in shop, product not on site, etc., at this time.
● One day out: Call from installation team to site contact. ― Confirm site contact.
― Confirm address.
― Confirm vehicle quantity.
― Confirm site access.
― Confirm start time.
● Day of Installation:
● Arrive on site, typically one (1) hour before vehicles are available, to facilitate setup. ● Meet Customer site contact, discuss plan for De-installations and installations. ● De-installation of existing equipment and install new hardware listed in this SOW. ● Follow DT Services testing procedures.
● Batch vehicle installation data for Customer sign-off (hard copy tear-off form/electronic data capture) on VCD.

Service Specific Assumptions
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© Copyright 2022 Dell Technologies All rights reserved Page 7 of 26 ● Dell will use one of the Customer’s Rugged Laptop units as a test unit to be used to validate all new installations.
● SOW pricing is based on 4-5 vehicles per technician per day for up to 1 week providing installation services.
● SOW installation pricing is based on a total QTY of 20 installations at one (1) location in Cypress CA.

4.1.3 Project Management
DT Services will assign a Single Point of Contact (“SPOC”) to manage the delivery of this engagement.

DT Services Project Management Responsibilities.

DT Services and/or its Project Manager will perform the following activities:
● Serve as SPOC for all service delivery issues.
● Manage DT Services tasks and resources associated with the Services and coordinate activities with Customer.
● Conduct meetings to communicate roles, responsibilities, review assumptions, and schedule activities.
● Use standard industry recognized project management tools and methodologies. ● Employ a reporting mechanism to identify project tasks, next steps, and issues. ● Implement changes associated with the Services in compliance with the Change Management Process described in this SOW.
● Daily project reporting: Provide an end-of-day call/report that provides a summary of the installation activity for that day.
● Daily Recap Report: At the end of each installation day, DT Services Field Managers will complete the Daily Recap Report. This report includes the following:
― Number of units installed.
― Number of units completed.
― Number of units missed.
― Missed Reasons listing (reason why each vehicle was missed, e.g., vehicle not at location, no keys, etc.).
― Notes and Comments.
● Weekly Recap Report: Total weekly installations are compiled into a weekly report in MS Excel format. DT Services utilizes the Weekly Recap Report to document how many vehicles were completed for that week.

Below is a sample reporting template used for the Weekly Recap Report compiled by DT Services to provide status on installs:

Week of xx/xx/2021
Site
#
Dell Technician Installation
Location
Monday Tuesday Wednesday Thursday Friday Saturday Sunday Weekly Total xx/xx/2021 xx/xx/2021 xx/xx/2021 xx/xx/2021 xx/xx/2021 xx/xx/2021 xx/xx/2021 1 Joe Tech 123 Main St. 10 10 11 10 12 0 0 53
2 Bob Tech 456 Main St. 11 10 10 11 12 0 0 54
Weekly Total 107
● Vehicle Completion Document (“VCD”): DT Services utilizes the VCD for tracking individual vehicle installations. The VCD includes the following information:
― Customer location data – street address, city, state, and zip.

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© Copyright 2022 Dell Technologies All rights reserved Page 8 of 26 ― Vehicle data – make, make, model, year, VIN# and fleet #. ― Product installed – make, model, serial # or other #’s. ― Technician signature and date.
― Customer signature and date.
― Warranty repair, service or other information performed on the vehicle.

A hard copy of each VCD is then passed onto Customer for invoicing and Customer billing purposes. The VCD is also used as a vehicle tracking document for future reference. DT Services archives every VCD from every installation.
● Problem Resolution and Reporting: Any DT Services technician that experiences any type of issue (e.g., unit not working, no keys for a vehicle, etc.) will report those issues to a DT Services Field Manager. The Field Manager will then escalate these issues to the DT Services Project Manager.

Any on-site issue, such as accidental vehicle damage, unit damage, etc., is recorded. DT Services utilizes a document called a “Project Incident Report.” This document contains the following information:
― Date.
― Location data – street address, city, state, and zip. ― Contact person notified – company name and time contacted. ― Incident description.
― Incident resolution.
― Additional comments.
― Representative sign-off – signature required.

Customer Project Management Responsibilities.

Customer and/or its Project Manager will perform the following activities:
● Provide reasonable assistance, cooperation, timely decisions, and support in connection with the provision of the Services by DT Services.
● Coordinate the scheduling of all Customer-designated resources required for the Services. ● Obtain all consents, approvals, and licenses required by Customer’s suppliers, licensors. and lessors necessary to support or permit the provision of Services under this SOW. ● Assign a site coordinator for each Customer site where Services will be provided. The Customer Site Coordinator will be responsible for ensuring that minimal Customer personnel is present at the installation site, to ensure uninterrupted production.
● Provide authorization for DT Services to proceed by presenting the cleaned vehicle, along with a Work Order Request Form, to the DT Services Lead Technician. The form will provide basic information and acts as the method for the Customer to sign off once the vehicle is completed. The form will be provided by the DT Services Project Manager before installations begin.

4.2 Project Timeline
DT Services anticipates the Services will span an estimated period of up to 1 week (business days). The actual schedule will be developed and agreed upon following project initialization. The actual schedule may change as the project progresses. Any changes will be managed in accordance with the Change Management Process described below.

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© Copyright 2022 Dell Technologies All rights reserved Page 9 of 26

4.3 Services Out of Scope
For the avoidance of doubt, the parties acknowledge that the following activities are not included in the scope of this SOW.
1) Any services, tasks or activities other than those specifically noted in this SOW. 2) The development of any intellectual property created solely and specifically for the Customer under this SOW.
3) Any Dell training or certification services not specifically described in this SOW. 4) Except as set forth herein, DT Services is not responsible (including financial responsibility) for any Customer and/or third party personnel, hardware, software, equipment or other assets currently utilized in the Customer’s operating environment.
5) Procurement, shipping, or warehousing of hardware, software, or other equipment required for the Services unless otherwise stated in the SOW.
6) Providing end user orientation, training, or support. 7) Transporting equipment between buildings or between Customer sites, or moving equipment between floors without the use of elevators.
8) Packing, shipping, or disposing of legacy equipment unless otherwise stated in the SOW. 9) Removing viruses (DT Services will promptly notify Customer Site Coordinator upon discovery of virus).
10) Disaster recovery, including but not limited to: re-imaging, reloading software applications or recovering backup data.
11) Warranty services or remedial hardware maintenance or software maintenance, including, but not limited to, repairs to existing wiring, antenna or antenna cable replacement, and printer repairs. 12) Warranty services for third-party products which are not provided by Dell. 13) De-installation and reinstallations of complete systems from one vehicle to another. 14) Installation of the required image/software for the Dell Rugged laptop unless otherwise stated in the SOW.

The terms of this SOW do not confer on the Customer any warranties which are in addition to the warranties provided under the terms of the Agreement. The Customer may be able to purchase out of scope services at an additional charge and, upon request by Customer, DT Services will provide a proposal for such out of scope services, pursuant to the Change Management Process described below.

4.4 Assumptions
DT Services has made the following specific assumptions while specifying the Services detailed in this SOW:

4.4.1 Scheduling Assumptions
1) Schedules will maximize the quantity of Services at each Customer Site which are in reasonable proximity within the same building and minimize the number of return visits to each Customer Site. 2) Changes to the mutually agreed schedule for performance of Services or modifications to the Services will only be in accordance with the Change Management Process. 3) Schedule Groups will be formed to allow a consistent daily volume of Services at a Customer Site. 4) Services will be scheduled to take place over consecutive days at a Customer Site to ensure maximum efficiency of resources.
5) Customer will meet the following scheduling milestones:

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© Copyright 2022 Dell Technologies All rights reserved Page 10 of 26 Scheduling Milestones Business
Days Execution
Installation Instructions finalized 15 Prior to the date of the first scheduled deployment
Site Surveys complete 15 Prior to scheduled deployment
Site ready to receive Services 10 Prior to scheduled deployment Schedule Groups finalized; Schedule locked 15 Prior to scheduled deployment Provide a detailed list of vehicles to receive Services, including the number of vehicles, VIN numbers, makes
and models
5 Prior to scheduled deployment

4.4.2 IT Environment & Technical Assumptions
1) Standard Ethernet 100MB T base switched subnets, and 5-10 MB/sec throughput at the desktop is available for login, data transfer, application loads, and imaging. 2) Customer provides a single point of contact for resolution of any technical issues which may arise with regard to the network, devices, and any software application. 3) Network infrastructure is stable and consistent across all Customer Sites. 4) DT Services is not responsible for application malfunctions or conflicts between Customer applications.
5) Customer ensures all software applications are certified, operational, and compatible with the new Client System configuration and operating systems.

4.4.3 General Assumptions
1) DT Services will dispose of deployment related trash to onsite Customer-provided disposal area within same building at Customer Site, unless stated otherwise in this SOW. 2) Customer does not require resources to have any United States Federal DoD Security Clearances (Secret, Top Secret, Top Secret / SCI, Top Secret / SCI with Polygraph, etc.). 3) Equipment weighing more than fifty (50) pounds requires an additional resource to assist with handling the system, which may require additional charges. 4) Customer is advised and agrees that modifications Customer makes, or changes DT Services, its subcontractors or any third-party makes on Customer’s behalf, to an Energy Star compliant product may affect whether the product continues to qualify as Energy Star compliant. 5) The following assumptions are critical to the delivery of the services described in this SOW:

Description Facts or Assumptions
All tools (e.g., carts, etc.) necessary
to perform and complete installation
services on the vehicle types as
required
Details of materials required are to be provided by DT Services. (Note: The DT Services Project Manager will work with Customer to ensure all materials are on-site before installations begin.)
PO to be provided by Customer.

Shipment of mounting materials to be performed by DT Services.

Receipt of mounting materials to be performed by Customer.

Availability at the installation site to be provided by DT Services.

Equipment receiving location Equipment will be drop shipped to Customer site Equipment receiving To be performed by Customer
Deployment To be performed by DT Services
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© Copyright 2022 Dell Technologies All rights reserved Page 11 of 26 Description Facts or Assumptions
Installation of new equipment
Software Image loading To be performed by Dell CFI using a customer provided and approved Image

4.5 Customer Responsibilities
Customer will provide reasonable and timely cooperation to DT Services in its performance of the Services.

If the Customer fails to fulfill one or more of the following responsibilities, DT Services will be relieved of any schedule, milestone, or financial commitments associated with the Services. Customer agrees to the following responsibilities:
1) Promptly notifying DT Services in writing of: a) any changes Customer makes to its information technology environment that may impact DT Services’ delivery of the Services; or b) business, organizational, security and technical issues that may have an impact on the performance and delivery of the Services. The Change Management Process will control any changes to the SOW following the notice.
2) Provide DT Services with any required consents necessary to perform the Services. 3) Maintain a current version of an anti-virus application continuously running on any system to which DT Services is given access and will scan all Deliverables and the media on which they are delivered. Customer will take reasonable back-up measures and, in particular, will provide for a daily back-up process and back-up the relevant data, software and programs before DT Services performs any work on Customer’s production systems.
4) Developing or providing documentation, materials and assistance to DT Services. 5) Unless this SOW specifically requires DT Services to provide a software license, Customer is responsible for any and all software licensing requirements. Unless otherwise directed by Customer in writing during the installation process, DT Services will “accept” on Customer’s behalf any and all electronic agreements provided with the installed hardware and/or software, including without limitation licenses, terms of sale, and other terms and conditions. Customer agrees that its purchase, license, and/or use of any hardware or software installed by DT Services under this SOW shall be subject to and governed by such electronic agreements to the same degree as if Customer had itself accepted the electronic agreements.
6) Ensuring the DT Services personnel have: reasonable and timely access to the project site, software, hardware, and internet access; a safe working environment; an adequate office space; parking; and remote access as required. Facilities and power must meet DT Services’ requirements for the products and Services purchased.
7) Prior to the start of this SOW, indicating to DT Services in writing a person to be the single point of contact to ensure that all tasks can be completed within the specified time period (the “Customer Contact”). All Services communications will be addressed to the Customer Contact. 8) Customer Contact will have the authority to act for Customer in all aspects of the Services including bringing issues to the attention of the appropriate persons within Customer’s organization and resolving conflicting requirements. Customer Contact will ensure attendance by key Customer personnel at Customer meetings and Deliverable presentations. Customer Contact will ensure that any communication between Customer and DT Services are made through the SPOC. Customer Contact will obtain and provide project requirements, information, data, decisions and approvals within one working day of the request, unless both parties agree to a different response time. 9) Providing technical points-of-contact, who have a working knowledge of the information technology components to be considered during the Services and have the authority to make business decisions (“Technical Contacts”). DT Services may request that meetings be scheduled with Technical Contacts.
10) Making appropriate service outage windows available for DT Services as needed.

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© Copyright 2022 Dell Technologies All rights reserved Page 12 of 26 11) The physical and network security of Customer environment. 12) Providing all documentation on DT Services standard templates unless both parties agree otherwise.
13) Ensure Customer’s Site Coordinator is on-site and available at the deployment site. 14) Prepare Customer Sites and end-user locations to receive Services (e.g., installing cables, network jacks, and power outlets and ensuring connectivity).
15) Procure all hardware components and software licenses in advance of deployment activities to meet the Deployment Schedule.
16) Ensure all systems and related equipment are easily accessible by DT Services without the need to move furniture, and provide keys to any cable locks as needed to remove or secure systems during de-installation and/or installation and disable any BIOS passwords currently configured on Legacy Systems prior to a service call for installation.
17) Receive hardware at Customer’s receiving dock or provide access, as applicable. 18) Provide carts for transporting hardware within deployment site. 19) Advise DT Services prior to locking schedule of any unique site entry requirements. 20) Provide DT Services with local administration rights necessary to perform the Services and ensure the domain login is enabled.
21) Provide all logon IDs, passwords, domain specifications, and personal settings necessary to perform the Services for each end-user prior to scheduled deployment. 22) Perform quality assurance after login is complete, including access to Active Directory profile to allow end users to access specific software applications and load personalities. 23) Provide adequate storage area for de-installed legacy equipment and a common area for debris at each Customer Site (to be located within the building where the deployment occurs). 24) Provide post-installation support and troubleshooting assistance as needed to address software application performance, software application and operating system conflicts, software application version issues or co-existence issues.
25) At the conclusion of the Services, change all system and network access credentials to prevent further DT Services access to systems and networks.
26) Installing the appropriate software package on the new Dell Rugged Laptop. 27) Ensuring that all mounting hardware, received through shipments to Customer site, is available at the installation facility when DT Services technicians arrive to begin work. 28) Providing access to a continuous flow of vehicles in order for DT Services technicians to avoid downtime.

4.6 Service Hours
DT Services will perform the Services during normal business hours typically 08:00 AM to 5:00 PM, Monday through Friday, Customer local time and will include travel time to and from the Customer location and excludes local holidays, unless other arrangements have been made in writing between DT Services and Customer.
5 COMPLETION AND ACCEPTANCE
Acceptance of the Services and any materials provided hereunder will occur upon the completion of the applicable portion of the Services.

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© Copyright 2022 Dell Technologies All rights reserved Page 13 of 26 6 PRICING
This section describes the methodology for calculating the charges for the Services provided under this SOW. Customer hereby agrees to pay such charges in accordance with the invoicing and payment terms of the Agreement and as further supplemented within this SOW. Except as otherwise mutually agreed to by Customer and DT Services, the total amount to be noted on the purchase order provided to DT Services for this SOW is: USD $12,560.00. If this SOW includes estimates, invoices will be based on actual usage or expenses incurred. Charges shall be as follows:

The per-unit price for the Services to be performed by DT Services and applicable cancellation and rescheduling fees for the Services are listed below (see "Pricing Structure" in definitions provided in Appendix B).

DT Services will invoice Customer monthly in advance based on the actual number of assets (“Units”) as recorded in the system of record, multiplied by the per Unit cost set forth in the table below.

Service Activity QTY Per Vehicle
Price Per Unit
Rugged Laptops –Installation of new equipment, to include the following:

Same equipment for all 20 vehicles
● Dell Rugged Latitude 5430
● Dock Swaps - Gamber-Johnson Docking Station with Lind 90W Power Supply (Tri RF) - docking station – VGA
● Panorama Sharkee - Antenna - shark fin - navigation, cellular, Wi-Fi - 1 dBi - omni-directional - panel mountable
● MMS VEHICLE POWER DISTRIBUTION UNIT W/SHUTDOWN
(Charge Guard)
● All legacy equipment will be place at a customer specified location (Legacy Docks)
● GAMBER-JOHNSON RUGGED USB HUB WITH BARE
● Run New Power to the Battery
● On - site Trash
20 $628.00
Extended Vehicle Total for QTY 20 Vehicles *$12,560
Cancellation Fee $12,560
Rescheduling Fee $12,560
*Note: Customer will ensure that vehicles are made seamlessly available on consecutive days.

Note: The Cancellation/Reschedule fee for this SOW See definitions in Appendix B.

6.1 Estimate Revisions
Should DT Services’ price estimate change because of a deviation in any assumption, engagement dependency, scope specification, or other provision of this SOW for which a change order as described in the Change Management Process section of this SOW does not already apply, DT Services will notify Customer and discuss any next steps. This may necessitate invoking the Change Management Process.

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© Copyright 2022 Dell Technologies All rights reserved Page 14 of 26

6.2 Expenses
Expenses are included in the charges under this SOW. Unless the scope or the list of supported sites change, pursuant to the Change Management Process, DT Services will not charge any additional expenses in connection with delivering the Services without the express written consent of Customer.

Additional expenses could include Service-related expenses such as actual, reasonable, and necessary travel and living expenses.

6.3 Additional Pricing Terms
1) The terms of this SOW shall be valid for ninety (90) calendar days following submission of the final version of this SOW to Customer. In the event this SOW is executed by Customer and returned to DT Services after such ninety (90) day period, DT Services may: (i) accept the SOW on the stated terms; or (ii) reject the SOW and provide Customer with a revised SOW setting forth any necessary updates to the terms of the previous SOW.
2) The price for the Services is based on Customer’s environment as disclosed to DT Services and on the basis that the information supplied is accurate and complete. If the assumptions and parameters used to develop the SOW are found to be incorrect or have changed, the Customer will notify DT Services in writing within five (5) business days. The parties agree to pursue resolution through the Change Management Process. If the parties fail to reach an agreement with respect to such incorrect assumptions or parameters, DT Services may terminate this SOW with notice to Customer.
3) Any timescales or plans presented in this document assume that Customer provides any required information and fulfils its other obligations as described in this SOW in a timely manner. If Customer fails to meet its obligations as set forth in this SOW, DT Services may adjust the timeline or costs with notice to Customer to address such delays or failure to meet obligations. 4) If any of the volumetric assumptions used in this SOW, including, time on task, locations, service consumption, and/or configuration factors, relied upon by DT Services vary by +/- five (5%) percent, DT Services has the right to adjust the pricing to reflect such changes.

Additionally, Customer is responsible for communicating the installation schedule and requiring end users to bring the vehicles to the designated location on the day of the scheduled installation per vehicle. If there is a deviation greater than - ten (10%) percent in the number of vehicles that keep the established appointment, Customer will subject to additional installation charges. 5) All prices are in US Dollars (USD) and are exclusive of all applicable taxes. 6) Both parties will mutually agree upon a service commencement date. If Customer requires changes to the service commencement date with less than ten (10) business days’ notice to DT Services, additional charges may apply.
7) In the event the Term of this SOW extends beyond one (1) year, DT Services reserves the right to revisit the pricing on each anniversary of the Effective Date. Any changes to the pricing will be managed in accordance with the Change Management Process. 8) Schedule delays outside of DT Service’s control, shall be billed at the current time and material rates plus travel and living expenses as described above. Any additional costs incurred by Customer as a result of delays shall be the sole responsibility of the Customer. 9) Price excludes travel incurred due to schedules that cause excessive travel between Customer sites.
10) Price includes travel expenses within fifty (50) miles of a major metropolitan area as defined by DT Services.
11) Per the Time and Material Pricing Table in Appendix B, rates will be invoiced to and will be paid by Customer, for the following:

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© Copyright 2022 Dell Technologies All rights reserved Page 15 of 26 a) Customer delays exceeding fifteen (15) minutes beyond the scheduled time for the Services to be performed; such charges will be invoiced in thirty (30) minute increments. b) Services requested when the technician is not currently onsite are charged based on a 2- hour minimum per incident.
c) Out-of-scope services (see Section 3.3 Out of Scope Services herein). d) Services performed outside the defined Service Hours. e) Services designated as Time & Materials.
12) Cancellation or Rescheduling of any scheduled deployment after the schedule has been locked may be subject to additional fees plus any actual and reasonable travel expenses incurred. See Definitions “Cancellation” and “Reschedule” for fee schedule. 13) Prices exclude costs for procurement of any hardware or software. 14) Payment for any hardware ordered from Dell is due in accordance with Dell’s standard terms for such purposes (unless the parties have entered into a separate agreement regarding acquisition of the hardware, in which case payment for the hardware would be due in accordance with such separate agreement) and shall in no case be contingent upon performance or delivery of the Services and/or installation described in this SOW.
15) For clarity, any hardware failures that are discovered in connection with Dell’s delivery of the Services will be resolved via the Customer’s existing warranty for such failed hardware. In the event warranties for failed hardware are expired or otherwise not effective, DT Services will provide reasonable support to Customer to facilitate resolution of the failed hardware so that Services hereunder may be completed. In no event will DT Services assume financial responsibility for Customer’s failed hardware where such failure is not the direct result of DT Services’ actions as indicated by root cause analysis.
7 CHANGE MANAGEMENT PROCESS
To ensure the success of this engagement, it is critical that Customer and DT Services have a clear understanding of engagement expectations. The parties will utilize the approach outlined below (the “Change Management Process”) for managing changes to the SOW. Customer or DT Services may propose changes to the Services under this SOW, including Deliverables, scope or any other aspect of the engagement. The Change Management Process for this engagement consists of the following:
● Change Initiation – All proposed changes will be forwarded to, or originated by, the SPOC and documented. A copy of the proposed change request will be forwarded to the Customer Contact.

Change requests will be documented using the Change Request. ● Change Validation – DT Services will examine the proposed change and may discuss the change request with the Customer Contact to clarify the details of the request. ● Change Analysis and Impact Analysis – DT Services will analyze the change request and make modifications to the Change Request Form as necessary.
● Change Implementation – If the change request is approved, the change will be noted as “Approved” and will be incorporated into the SOW and managed for progress. If the change is not approved, the change will be noted as “Rejected” and DT Services will continue to perform without regard to the proposed change to the extent practically possible.

The receiving party will review the proposed Change Request Form and will: (i) approve it, (ii) agree to further investigation, or (iii) reject it. Neither Customer nor DT Services will unreasonably withhold or delay its agreement to any proposed change. Investigation must be performed within five (5) business days. Changes agreed upon pursuant to the Change Management Process will not be effective until mutually executed by a duly authorized representative of both parties. In addition, DT Services shall be City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 16 of 26 relieved of any performance, schedule, milestone, or financial commitments associated with Services affected by Customer’s non-compliance with Customer responsibilities or other obligations under this SOW or in the event of any deviation from any assumption, constraint, dependency or engagement scope specification contained in this SOW until an appropriate written change order or other amendment to this SOW addressing the foregoing is approved and signed by the Customer and DT Services. 8 OTHER PROVISIONS
The Services, including any Deliverables, are subject to the following:
1) DT Services may use affiliates and subcontractors to perform the Services. 2) Customer acknowledges that DT Services will request Customer’s participation in a Customer feedback survey. Additionally, DT Services may approach Customer to serve as reference regarding DT Services’ performance of the Services. If Customer agrees to be a reference, Customer and DT Services will agree in writing to the terms of such reference. A reference program has been developed to facilitate confidential conversations between DT Services’ customers and potential customers.
a) Customers are invited to join the program at the conclusion of their project for a period of one year.
b) DT Services will only share Customer contact information to a potential customer who is interested in contacting Customer for a discussion on Customer’s previous experiences. c) We limit usage of Customer reference to no more than once per month. d) We will not publish Customer name, organization, or any Customer identifiable details based on participation in this program.
3) DT Services shall not be responsible for any delay or failure to provide the Services to the extent caused by: (a) failures by Customer to perform its responsibilities under this SOW; (b) materially inaccurate assumptions; (c) a defect, deficiency or failure with respect to Customer’s network, systems, software, data or other equipment; or (d) modifications to Customer’s network, systems, or other equipment made by a party other than DT Services or its representatives. In the event that either party becomes aware of the occurrence of one or more of the foregoing events, they shall notify the other party accordingly. Notwithstanding such occurrence, DT Services may, following discussion with Customer regarding the impact of such incident, continue to provide the Services and shall use commercially reasonable efforts to perform the Services under this SOW. Customer will reimburse DT Services for its reasonable additional costs of providing the Services and out of pocket expenses for such efforts to the extent attributable to the items defined above. 4) Customer, not DT Services, is responsible for the performance of Customer’s employees and agents, including any contribution, alteration, or other modification they make to the Services, including Deliverables, and for the accuracy and completeness of all data, information, and materials provided to DT Services. DT Services is not providing any warranty regarding, and is not liable for, Customer hardware, software, documentation, tools, equipment, or other products, assets, materials, or services. DT Services’ performance is dependent upon timely decisions and approvals of Customer in connection with the Services, and DT Services is entitled to rely on all decisions and approvals of Customer.
5) The Services and resulting Deliverables may include advice and recommendations, but Customer agrees that all decisions in connection with the implementation of such advice and recommendations will be the responsibility of, and made by, Customer. DT Services is not providing legal or regulatory advice.
6) Unless this SOW specifically requires otherwise, DT Services is not providing any third party hardware, software, documentation, tools, equipment, or other products, materials or services, including, without limitation, Dell Technologies Select Products and Brokerage Products City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 17 of 26 (collectively, “Third Party Products”) to Customer. Customer is solely responsible for the negotiation of an applicable agreement with the applicable third party from whom Customer wishes to license or acquire Third Party Products, the terms of which, including without limitation, the license, warranty, indemnity, maintenance, and support terms, shall govern such license or acquisition. DT Services is not providing any warranty regarding, and is not liable for, any Third Party Products. Third Party Products are not supported or maintained by DT Services and Customer must contact the applicable third party manufacturer or supplier directly for support and maintenance services. Any configuration or modification made by DT Services to any Third Party Products provided by Customer or work product incorporating such items will be subject to the ownership and other rights agreed to by Customer with the applicable third party. 7) DT Services will not be responsible for non-performance due to software failure or software errors including any software failures or functionality limitations of Third Party Products. 8) DT Services may rely upon any standard operating procedures or practices of Customer and any direction, regulatory guidance, or other guidance provided by Customer. 9) Customer is responsible for the identification and interpretation of, and ensuring compliance with, any laws, statutes, rules, regulations, and standards applicable to it or its affiliates’ business or operations.
10) No Dell Technologies product is or can be licensed or purchased under this document. Any purchase or licensing of Dell Technologies products is governed by the terms of a separate license or purchase agreement between the parties. DT Services’ fees set forth herein do not include the cost of the purchase or licensing of any Dell Technologies product. 11) The parties agree that scope of this SOW may be reassessed, if deemed necessary by either party, on each anniversary of the effective date of this agreement. 12) The functional overview, if applicable, demonstrates basic functionality to familiarize Customer with the implemented in-scope products, demonstrating the product operations as installed in Customer’s environment. Knowledge transfer, if applicable, demonstrates best practices to address Customer’s skills and resource gaps to ensure successful implementation of Customer's new technologies. Functional overviews and knowledge transfers are not a substitute for formal Dell Technologies product Customer education.
13) A non-deployable system is a Dell-branded system that has failed or is non-functioning at time of install (“NDS”). In the event any Dell-branded equipment covered by this SOW is deemed to be a NDS at the time of installation, DT Services will notify Customer that the equipment is NDS, and if the equipment is under warranty, then Customer is responsible for requesting warranty service per the terms of the warranty associated with the NDS equipment identified. 14) Installation Warranty. DT Services Rugged Mobility installations will be warrantied for quality and workmanship for ninety (90) calendar days from date of installation. (Note: Hardware warranty is covered with the hardware purchase, and the Rugged Mobility installation is a separate agreement).

Service call(s) to repair such faulty workmanship Rugged Mobility installations will be executed within ten (10) business days from issuance. If the issue is affecting vehicle operation or driver safety the service call will be executed within two (2) business days. a) Warranty is limited to labor required to replace defective connectors and to repair installation workmanship defects in installed wiring, mounts, etc. Warranty does not cover damage due to tampering, deliberate cutting or disconnection of cables or connectors, or damage caused by vehicle accidents. (Note: This agreement is for the Rugged Mobility installation warranty.

In the event that the issue is not covered by the Rugged Mobility installation warranty, DT Services and Customer will address via the Change Management process defined herein. b) Rugged Mobility installation warranty excludes replacement of defective hardware, including, but not limited to, docking station, associated cables, or other peripherals. c) Non-warranty services are addressed as Out of Scope and are subject to Time and Material fees and will be addressed via the Change Management process defined herein.

City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 18 of 26 9 SIGNATURES
Please review this SOW for accuracy. If the terms are acceptable, please sign and return to DT Services via email at [email protected]. This SOW may be executed in any number of counterpart copies, each of which will be deemed an original, but which taken together will constitute a single instrument. The parties agree to cooperate in good faith to provide each other with a fully executed original of this SOW within five (5) calendar days of any counterpart execution. This SOW together with the Agreement (i) is the complete and exclusive agreement between DT Services and Customer with regard to its subject matter, and supersedes all prior oral or written proposals, agreements, representations and other communications between the parties with respect to the Services described in this SOW; and (ii) will apply in lieu of any different, conflicting or additional terms and conditions which may appear on any order or other document submitted by either party.

IN WITNESS WHEREOF, the parties hereto have caused this SOW to be executed by their duly authorized representatives as of the Effective Date.

Cypress, California
Signature: ...........................................................

Printed Name:.....................................................

Title: ....................................................................

Date: ...................................................................

Dell Marketing L.P.

Signature: ...........................................................

Printed Name:.....................................................

Title:....................................................................

Date: ...................................................................

Please note that for administrative purposes only, Services may not be scheduled or commenced until DT Services receives and accepts a valid purchase order (“PO”) from Customer that references this SOW.

Upon receipt of this fully executed SOW and Customer’s PO, the SPOC will contact Customer to begin scheduling Services.

City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 19 of 26 Appendix A: Supported Sites
The Services will be provided for the following supported sites during the term of this SOW. Additional supported sites may be included as mutually agreed between the parties using the Change Management Process.

Supported Site Address City State Zip Qty
City of Cypress 5275 Orange Ave Cypress CA 90630 20
City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 20 of 26 Appendix B: Definitions
Average Installation Time
The Average Installation Time is calculated based on the aggregate quantity of new Client Systems installed per Customer per quarter. Installation times, including quantities of peripherals, will be evaluated on a monthly basis by the Dell PMO.

Cancellation
Site Cancellation: A site cancellation occurs when Customer cancels the Services for the site after the schedule has been locked and Customer either does not set a new date or the new date is scheduled beyond thirty (30) days of the original locked deployment schedule (see “Reschedule”).

Site Cancellation Fee Scenarios:

See Section 6.0 herein for Cancellation Fee.

User Cancellation: A user cancellation occurs when Customer cancels the Services for the user after the schedule has been locked and Customer either does not set a new date or the new date is scheduled beyond thirty (30) days of the original locked deployment schedule.

User Cancellation Fee Scenario:

See Section 6.0 herein for Cancellation Fee.

Change Order
A written and signed request by either party requesting change to the set of services or deadlines provided under this SOW. All Change Orders must be executed by both parties in accordance with the Change Management Process described in this SOW.

Clearances
Secret: Dell will provide on-site technical resources with a Secret clearance as defined in the Government-provided "DD Form 254".

Top Secret: Dell will provide on-site technical resources with a Top Secret clearance as defined in the Government-provided "DD Form 254".

Top Secret-SCI (Sensitive Compartmented Information): Dell will provide on-site technical resources with a Top Secret-SCI clearance as defined in the Governmentprovided "DD Form 254".

NOTE: This level of warranty support is based on the systems being located in areas accessible by non-cleared Dell service personnel. In the event that the systems are relocated and reside in a secure area when onsite service is required, Dell will work with Customer to develop a suitable plan for support.

Upon award of a Secret, Top Secret, or Top Secret-SCI contract, Dell's FSO (Facility Security Officer) must receive the Government-issued "CONTRACT SECURITY CLASSIFICATION SPECIFICATION" or most commonly called "DD Form 254" before service can begin. Dell's FSO will manage the "DD Form 254" for validation and processing.

Client Systems Dell Rugged Latitude 5430
Legacy System
The computer system installed at Customer's site which is to be upgraded or deinstalled, removed and replaced with a Dell computer system during a site installation event. Server or workstation class computer systems and external peripherals are not Legacy Systems.

Pricing Structure
Blended Pricing is based on the estimated units to be deployed per site per visit provided by Customer prior to the deployment. Variances in the estimated units to be deployed in excess of (+/-) five (5) percent of the actual units deployed per site per visit will be subject to Tiered Pricing.

City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 21 of 26 Tiered Pricing is based on actual units deployed per site per visit.

Reschedule
Site Reschedule: A site reschedule occurs when Customer reschedules the Services to be performed within thirty (30) days of the original locked deployment schedule (see “Cancellation”).

Site Reschedule Fee Scenarios:

See Section 6.0 herein for Reschedule Fee.

User Reschedule: A user reschedule occurs when Customer reschedules the Services to be performed within thirty (30) days of the original locked deployment schedule.

User Reschedule Fee Scenarios:

See Section 6.0 herein for Reschedule Fee.

Schedule Group A group of deployment events that are scheduled to occur on a specific date at a specific time at a specific location.

Services The complete set of services to be performed by Dell described in this Statement of Work “SOW.”
Time & Materials Pricing Table
Time & Materials Concept Disposition Cost
Time & Materials Rates - (During Service Hours - Per Hour) N/A $289.04 Time & Materials Rates - (Outside Service Hours - Per Hour) N/A $374.12 Project Management Office (Extension Fee for Services Beyond Term - Per Week) N/A $4,400.00 City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 22 of 26 Appendix C: Major Metropolitan Areas
The Services will be provided for the following supported sites during the term of this SOW. Additional supported sites may be included as mutually agreed using the Change Management process as defined in Section 7.

City State City State City State
Anchorage AK Honolulu HI Toledo OH
Birmingham AL Cedar Rapids IA Youngstown OH
Fayetteville AR Des Moines IA Oklahoma City OK
Little Rock AR Boise ID Tulsa OK
Chandler AZ Chicago IL Portland OR
Gilbert AZ Fort Wayne IN Bethlehem PA
Phoenix AZ Indianapolis IN Harrisburg PA
Scottsdale AZ Kansas City KS Lancaster PA
Tucson AZ Wichita KS Philadelphia PA
Anaheim CA Lexington KY Pittsburgh PA
Bakersfield CA Louisville KY Scranton PA
Chula Vista CA Baton Rouge LA Providence RI
Fontana CA New Orleans LA Columbia SC
Fremont CA Boston MA Greenville SC
Fresno CA Worcester MA Chattanooga TN
Irvine CA Baltimore MD Knoxville TN
Long Beach CA Portland ME Memphis TN
Los Angeles CA Detroit MI Nashville TN
Modesto CA Grand Rapids MI Amarillo TX
Oakland CA Minneapolis MN Arlington TX
Ontario CA St. Paul MN Austin TX
Oxnard CA Kansas City MO Corpus Christi TX
Riverside CA St. Louis MO Dallas TX
Sacramento CA Jackson MS El Paso TX
San Bernardino CA Charlotte NC Fort Worth TX
San Diego CA Durham NC Garland TX
San Francisco CA Fayetteville NC Grand Prairie TX
San Jose CA Greensboro NC Houston TX
Santa Ana CA Raleigh NC Irving TX
Stockton CA Winston-Salem NC Laredo TX
Aurora CO Lincoln NE Lubbock TX
Colorado Springs CO Omaha NE Mckinney TX
Denver CO Jersey City NJ Plano TX
Bridgeport CT Newark NJ San Antonio TX
Hartford CT Albuquerque NM Ogden UT
New Haven CT Henderson NV Provo UT
Washington DC Las Vegas NV Salt Lake City UT
Cape Coral FL Reno NV Arlington VA
Daytona Beach FL Albany NY Chesapeake VA
Fort Lauderdale FL Buffalo NY Norfolk VA
City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 23 of 26 Jacksonville FL Manhattan NY Richmond VA
Miami FL New York NY Virginia Beach VA
Orlando FL Rochester NY Seattle WA
Port St. Lucie FL Syracuse NY Spokane WA
Sarasota FL Yonkers NY Tacoma WA
St. Petersburg FL Cincinnati OH Vancouver WA
Tampa FL Cleveland OH Madison WI
Atlanta GA Columbus OH Milwaukee WI
Augusta GA Dayton OH
City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 24 of 26 Appendix D: Hardware BOM and Vehicle List
Note: The following hardware is required for the completion of the installation services detailed in this SOW and must be purchased by the Customer and be at Customer’s location prior to the arrival of the onsite installation technician(s). Hardware is not included in the scope/pricing of this SOW.

Laptop BOM
City Of Cypress Police Department 23 November 202
2 SFDC #:21662904
Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 25 of 26 City Of Cypress Police Department 23 November 2022 SFDC #:21662904 Dell Technologies Confidential
© Copyright 2022 Dell Technologies All rights reserved Page 26 of 26 Vehicle List
Cypress PD Fleet (September 2022) - MDC Replacement Units Unit # Vehicle Description Assignment License Plate Year Package 664 Ford Interceptor Utility BW K-9 Unit 1430581 2017 Police 665 Ford Interceptor Utility BW K-9 Unit 1503983 2016 Police 639 Ford Crown Victoria BW K-9 Unit (Backup) 1390875 2011 Police 612 Ford Interceptor Utility (Slick Top) Patrol 1565096 2019 Police 604 Ford Interceptor Utility BW Patrol 1501702 2016 Police 605 Ford Interceptor Utility BW Patrol 1501735 2016 Police 606 Ford Interceptor Utility BW Patrol 1488093 2016 Police 608 Ford Interceptor Utility BW Patrol 1430583 2017 Police 609 Ford Interceptor Utility BW Patrol 1430582 2017 Police 610 Ford Interceptor Utility BW Patrol 1518549 2017 Police 615 Ford Interceptor Utility BW Patrol 1534813 2017 Police 616 Ford Interceptor Utility BW Patrol 2022 Police
618 Ford Interceptor Utility BW Patrol 1534814 2017 Police 625 Ford Interceptor Utility BW Patrol 1433137 2019 Police 619 Ford Interceptor Utility BW Patrol (PSO) 1627813 2022 Police 672 White Chevy Colorado 2.5 Traffic 1501786 2016 Civilian 673 White Chevy Colorado 2.5 Traffic 1541637 2016 Civilian 674 White Chevy Colorado 2.5 Trafic 1637365 2022 Civilian 640 Ford Interceptor Utility BW Watch Commander 1503984 2016 Police 626 Ford Interceptor Utility BW Watch Commander (Backup) 1433138 2019 Police A quote for your consideration
Based on your business needs, we put the following quote together to help with your purchase decision. Below is a detailed summary of the quote we’ve created to help you with your purchase decision.

To proceed with this quote, you may respond to this email, order online through your Premier page, or, if you do not have Premier, use this Quote to Order.

Quote No. 3000134855705.8
Total $57,614.13
Customer # 3425143
Quoted On Nov. 08, 2022
Expires by Dec. 08, 2022
Contract Name
Dell NASPO Computer
Equipment PA - California
Contract Code C000000181156
Customer Agreement # MNWNC-108/7157034003
Deal ID 21662904
Sales Rep Stuart Porter
Phone (800) 456-3355, 6179258
Email [email protected]
Billing To HARRY DAMALLAS

CITY OF CYPRESS POLICE DEPT
PO BOX 609
CYPRESS, CA 90630-0609
Message from your Sales Rep
Please contact your Dell sales representative if you have any questions or when you are ready to place an order. Thank you for shopping with Dell! Regards, Stuart Porter
Product Unit Price Quantity Subtotal
Dell Latitude 5430 Rugged $2,529.24 17 $42,997.08
Dell Thunderbolt 4 Dock- WD22TB4 $234.38 11 $2,578.18
Mobile Precision 3470 $1,207.23 7 $8,450.61
Subtotal:

Shipping:

Environmental Fee:

Non-Taxable Amount:

Taxable Amount:

Estimated Tax:

Total:
$54,025.87
$0.00
$96.00
$9,060.19
$45,061.68
$3,492.26
$57,614.13

Page 1 ends

Quantity Subtotal
Dell Latitude 5430 Rugged
Estimated delivery if purchased today:

Nov. 29, 2022
Contract # C000000181156
Customer Agreement # MNWNC-108/7157034003
$2,529.24 17 $42,997.08
Description SKU Unit Price Quantity Subtotal
Dell Latitude 5430 Rugged 210-BCFW - 17 -
Intel Core Processor i5-1145G7, (QC, 2.6 to 4.0 GHz, 28W, vPro) 379-BERS - 17 - Windows 11 Pro, English, French, Spanish 619-AQLP - 17 - No Microsoft Office License Included 658-BCSB - 17 - Intel® Core™ vPro i5-1145G7 with Iris Xe Graphics 338-CCRI - 17 - Intel vPro Technology Advanced Management Features 631-ADEE - 17 - 16GB, 2x8GB, 3200 MHz DDR4 Non-ECC 370-AGTH - 17 -
512GB M.2 PCIe NVMe Class 40 Solid State Drive 400-BMRY - 17 - 14" Touch 1100 nits WVA FHD (1920 x 1080) 100% sRGB Anti- Glare, Outdoor Viewable 391-BGGI - 17 -
English US RGB Backlit Sealed Internal keyboard 583-BILF - 17 - Intel AX210 WLAN Driver 555-BHCC - 17 -
Intel AX210 Wireless Card with Bluetooth 555-BHCH - 17 - 4G DW5821E w/o eSIM WWAN Card Snapdragon X20 LTE for AT&T (With NMEA GPS Port Support) 556-BCYN
- 17 -
Hot surface warning label 389-ECGC - 17 - Primary 3 Cell 53.5 Whr ExpressCharge Capable Battery 451-BCWC - 17 - 90W 461G Type-C EPEAT Adapter 492-BDEL - 17 -
Full Security - Fingerprint Reader, Contacted Smartcard Reader, Contactless Smartcard Reader 346-BHQJ
- 17 -
Power Cord 1M US 450-AAEJ - 17 - Setup and Features Guide 340-CXCE - 17 - Hot surface warning label 389-ECGC - 17 - Additional 3 Cell 53.5 Whr ExpressCharge Capable Battery 451-BCWD - 17 - ENERGY STAR Qualified 387-BBPC - 17 - Custom Configuration 817-BBBB - 17 - Dell Applications for Windows 11 658-BFIP - 17 - Mix Ship, Notebook, 5430 Rugged 340-CYJC - 17 - 11th Gen Intel Core i5 vPro label 340-CTSV - 17 - Microphone + IR FHD camera; Touch; WLAN/WWAN antennae; Pogo vehicle docking and RF passthrough
319-BBHT
- 17 -
EPEAT 2018 Registered (Silver) 379-BDTO - 17 - Dedicated u-blox NEO GPS Card 540-BDCC - 17 - Additional USB-A rear port 590-TFHR - 17 - Additional TBT/Type-C port 325-BEJZ - 17 - Rigid handle 750-ADPK - 17 - ProSupport Plus: Next Business Day Onsite, 2 Years Extended 808-6796 - 17 - ProSupport Plus: Next Business Day Onsite, 3 Years 808-6797 - 17 -

Page 2 ends

Dell Limited Hardware Warranty Initial Year 808-6805 - 17 - ProSupport Plus: Accidental Damage Service, 5 Years 808-6826 - 17 - ProSupport Plus: Keep Your Hard Drive, 5 Years 808-6827 - 17 - ProSupport Plus: 7X24 Technical Support, 5 Years 808-6845 - 17 - Dell Limited Hardware Warranty Extended Year(s) 975-3461 - 17 - Thank you for choosing Dell ProSupport Plus. For tech support, visit www.dell.com/contactdell or call 1-866-516-3115
997-8367
- 17 -
Extended Battery Service for Years 2 and 3 of System Life 988-5542 - 17 - Configuration Services - Custom, Image Load 366-0330 - 17 - Quantity Subtotal Dell Thunderbolt 4 Dock- WD22TB4
Estimated delivery if purchased today:

Nov. 17, 2022
Contract # C000000181156
Customer Agreement # MNWNC-108/7157034003
$234.38 11 $2,578.18
Description SKU Unit Price Quantity Subtotal
BASE,DS,WD22TB4 US 180W 210-BDQH - 11 - Advanced Exchange Service, 3 Years 872-8550 - 11 - Dell Limited Hardware Warranty 872-8557 - 11 - Quantity Subtotal Mobile Precision 3470
Estimated delivery if purchased today:

Dec. 12, 2022
Contract # C000000181156
Customer Agreement # MNWNC-108/7157034003
$1,207.23 7 $8,450.61
Description SKU Unit Price Quantity Subtotal
Mobile Precision Workstation 3470 CTO 210-BEYL - 7 -
Intel Core i5-1250P vPro (12 MB Cache, 4+8 Core, 16 Threads, up to

4.40 GHz, 28 W) 379-BEXJ
- 7 - Windows 11 Pro, English, French, Spanish 619-AQLP - 7 - No Microsoft Office License Included 658-BCSB - 7 - Intel i5-1250P 28W Processor with vPro and Intel Integrated Graphics 329-BHGT - 7 - Intel Integrated Graphics 490-BHUX - 7 -
14" FHD LCD with 250 nits, non-touch, HD RGB Camera and Microphone, and WLAN
391-BGXR
- 7 -
HD Camera, Temporal Noise Reduction, Camera Shutter, Mic 319-BBJE - 7 - 16 GB, 2 x 8 GB, DDR5, 4800Mhz, Non-ECC SODIMM 370-AGZH - 7 - M.2 2230 256GB Gen 3 PCIe NVMe, Class 35 Solid State Drive 400-BOCN - 7 - Single Pointing Backlit US English Keyboard 583-BHCH - 7 - Single Pointing, Finger Print Reader only 346-BIHU - 7 - Intel AX211, 2x2 MIMO, 2400 Mbps, 2.4/5/6 GHz, Wi-Fi 6/6E (WiFi 802.11ax), Bluetooth 5.2
555-BHLT
- 7 -
4 Cell, 64WHr, standard battery 451-BCYI - 7 -
90W Type C Power Adapter 492-BDGG - 7 -
Intel vPro Enterprise Technology Enabled 631-ADEX - 7 - ENERGY STAR Qualified 387-BBLW - 7 - EPEAT 2018 Registered (Gold) 379-BDZB - 7 -

Page 3 ends

Custom Configuration 817-BBBB - 7 - Power Cord 1M US 470-AFGV - 7 - Intel Gen 12 CPU label for Core i5 vPro enable 340-CYNW - 7 - Wireless Intel AX211 WLAN Driver 555-BHIQ - 7 - Quick Setup Guide for Mobile Precision 3470 340-DBZH - 7 -
Bottom cover 354-BBFL - 7 - Mix Packaging for 90W Adapter and Integrated Graphics 340-DCDC - 7 - Dell Additional Software 658-BFOD - 7 - ProSupport Plus: Accidental Damage Service, 5 Years 997-1068 - 7 - ProSupport Plus: Keep Your Hard Drive, 5 Years 997-1089 - 7 - Dell Limited Hardware Warranty Plus Service 997-1129 - 7 - ProSupport Plus: 7x24 Technical Support, 5 Years 997-1139 - 7 - ProSupport Plus: Next Business Day Onsite, 5 Years 997-6068 - 7 - Thank you for choosing Dell ProSupport Plus. For tech support, visit www.dell.com/contactdell or call 1-866-516-3115
997-8367
- 7 -
Extended Battery Service for Years 2 and 3 of System Life 819-9622 - 7 - Ready Image for Client PC 365-8303 - 7 - CFI,INFO,LANG,ENGLISH,US,Factory Install 382-1755 - 7 - CFI,INFO,WIN11,UPDT,21H2.Factory Install 382-3038 - 7 - CFI,INFO,WIN11,21H2.FACT 382-4202 - 7 - CFI,INFO,WIN 11 PRO,OEM,FACT 382-4389 - 7 - Subtotal:

Shipping:

Environmental Fee:

Estimated Tax:

Total:
$54,025.87
$0.00
$96.00
$3,492.26
$57,614.13

Page 4 ends

Important Notes
Terms of Sale
This Quote will, if Customer issues a purchase order for the quoted items that is accepted by Supplier, constitute a contract between the entity issuing this Quote (“Supplier”) and the entity to whom this Quote was issued (“Customer”). Unless otherwise stated herein, pricing is valid for thirty days from the date of this Quote. All product, pricing and other information is based on the latest information available and is subject to change. Supplier reserves the right to cancel this Quote and Customer purchase orders arising from pricing errors. Taxes and/or freight charges listed on this Quote are only estimates. The final amounts shall be stated on the relevant invoice. Additional freight charges will be applied if Customer requests expedited shipping. Please indicate any tax exemption status on your purchase order and send your tax exemption certificate to [email protected] or [email protected], as applicable. Governing Terms: This Quote is subject to: (a) a separate written agreement between Customer or Customer’s affiliate and Supplier or a Supplier´s affiliate to the extent that it expressly applies to the products and/or services in this Quote or, to the extent there is no such agreement, to the applicable set of Dell’s Terms of Sale (available at www.dell.com/terms or www.dell.com/oemterms), or for cloud/as-a- Service offerings, the applicable cloud terms of service (identified on the Offer Specific Terms referenced below); and (b) the terms referenced herein (collectively, the “Governing Terms”). Different Governing Terms may apply to different products and services on this Quote. The Governing Terms apply to the exclusion of all terms and conditions incorporated in or referred to in any documentation submitted by Customer to Supplier.

Supplier Software Licenses and Services Descriptions: Customer’s use of any Supplier software is subject to the license terms accompanying the software, or in the absence of accompanying terms, the applicable terms posted on www.Dell.com/eula. Descriptions and terms for Supplier-branded standard services are stated at www.dell.com/servicecontracts/global or for certain infrastructure products at www.dellemc.com/en-us/customer-services/product-warranty-and-service-descriptions.htm. Offer-Specific, Third Party and Program Specific Terms: Customer’s use of third-party software is subject to the license terms that accompany the software. Certain Supplier-branded and third-party products and services listed on this Quote are subject to additional, specific terms stated on www.dell.com/offeringspecificterms (“Offer Specific Terms”).

In case of Resale only: Should Customer procure any products or services for resale, whether on standalone basis or as part of a solution, Customer shall include the applicable software license terms, services terms, and/or offer-specific terms in a written agreement with the end- user and provide written evidence of doing so upon receipt of request from Supplier.

In case of Financing only: If Customer intends to enter into a financing arrangement (“Financing Agreement”) for the products and/or services on this Quote with Dell Financial Services LLC or other funding source pre-approved by Supplier (“FS”), Customer may issue its purchase order to Supplier or to FS. If issued to FS, Supplier will fulfill and invoice FS upon confirmation that: (a) FS intends to enter into a Financing Agreement with Customer for this order; and (b) FS agrees to procure these items from Supplier. Notwithstanding the Financing Agreement, Customer’s use (and Customer’s resale of and the end-user’s use) of these items in the order is subject to the applicable governing agreement between Customer and Supplier, except that title shall transfer from Supplier to FS instead of to Customer. If FS notifies Supplier after shipment that Customer is no longer pursuing a Financing Agreement for these items, or if Customer fails to enter into such Financing Agreement within 120 days after shipment by Supplier, Customer shall promptly pay the Supplier invoice amounts directly to Supplier.

Customer represents that this transaction does not involve: (a) use of U.S. Government funds; (b) use by or resale to the U.S. Government; or (c) maintenance and support of the product(s) listed in this document within classified spaces. Customer further represents that this transaction does not require Supplier’s compliance with any statute, regulation or information technology standard applicable to a U.S. Government procurement.

For certain products shipped to end users in California, a State Environmental Fee will be applied to Customer’s invoice. Supplier encourages customers to dispose of electronic equipment properly.

Electronically linked terms and descriptions are available in hard copy upon request. ^DELL BUSINESS CREDIT (DBC): Offered to business customers by WebBank, who determines qualifications for and terms of credit. Taxes, shipping and other charges are extra and vary. The Total Minimum Payment Due is the greater of either $20 or 3% of the New Balance shown on the statement rounded up to the next dollar, plus all past due amounts. Dell and the Dell logo are trademarks of Dell Inc.

Page 5 ends

A quote for your consideration
Based on your business needs, we put the following quote together to help with your purchase decision. Below is a detailed summary of the quote we’ve created to help you with your purchase decision.

To proceed with this quote, you may respond to this email, order online through your Premier page, or, if you do not have Premier, use this Quote to Order.

Quote No. 3000137542807.2
Total $102,292.77
Customer # 3425143
Quoted On Nov. 22, 2022
Expires by Dec. 22, 2022
Contract Name
Dell NASPO Computer
Equipment PA - California
Contract Code C000000181156
Customer Agreement # MNWNC-108/7157034003
Deal ID 21662904
Sales Rep Stuart Porter
Phone (800) 456-3355, 6179258
Email [email protected]
Billing To HARRY DAMALLAS

HARRY DAMALAS

CITY OF CYPRESS POLICE DEPT
P O BOX 609
CYPRESS, CA 90630-0609
(714) 229-6719
Shipping Method
Standard Delivery
Product Unit Price Quantity Subtotal
Dell Latitude 5430 Rugged $2,529.24 20 $50,584.80
Gamber-Johnson Docking Station with Lind 90W Power
Supply (Tri RF) - docking station - VGA
$803.52 24 $19,284.48
Panorama Sharkee - Antenna - shark fin - navigation, cellular, Wi-Fi - 1 dBi - omni-directional - panel mountable$171.02 24 $4,104.48 MOBILE MOUNTS Vehicle Power Distribution Unit - Power
distribution unit
$159.37 24 $3,824.88

Page 1 ends

Gamber-Johnson Rugged USB Hub - Docking station - USB- C - HDMI - GigE $248.53 24 $5,964.72
Shipping Group 2 of 2
Shipping To

HARRY DAMALAS

CITY OF CYPRESS POLICE DEPT
P O BOX 609
CYPRESS, CA 90630-0609
(714) 229-6719
Shipping Method
Standard Delivery Free Cost
Dell Services $62.80 200 $12,560.00
Subtotal:

Shipping:

Environmental Fee:

Non-Taxable Amount:

Taxable Amount:

Estimated Tax:

Total:
$96,323.36
$0.00
$80.00
$20,411.00
$75,992.36
$5,889.41
$102,292.77

Page 2 ends

Shipping Group 1 of 2, Details
Shipping To

HARRY DAMALAS

CITY OF CYPRESS POLICE DEPT
P O BOX 609
CYPRESS, CA 90630-0609
(714) 229-6719
Shipping Method
Standard Delivery
Quantity Subtotal
Dell Latitude 5430 Rugged
Estimated delivery if purchased today:

Dec. 19, 2022
Contract # C000000181156
Customer Agreement # MNWNC-108/7157034003
$2,529.24 20 $50,584.80
Description SKU Unit Price Quantity Subtotal
Dell Latitude 5430 Rugged 210-BCFW - 20 -
Intel Core Processor i5-1145G7, (QC, 2.6 to 4.0 GHz, 28W, vPro) 379-BERS - 20 - Windows 11 Pro, English, French, Spanish 619-AQLP - 20 - No Microsoft Office License Included 658-BCSB - 20 - Intel® Core™ vPro i5-1145G7 with Iris Xe Graphics 338-CCRI - 20 - Intel vPro Technology Advanced Management Features 631-ADEE - 20 - 16GB, 2x8GB, 3200 MHz DDR4 Non-ECC 370-AGTH - 20 -
512GB M.2 PCIe NVMe Class 40 Solid State Drive 400-BMRY - 20 - 14" Touch 1100 nits WVA FHD (1920 x 1080) 100% sRGB Anti- Glare, Outdoor Viewable 391-BGGI - 20 -
English US RGB Backlit Sealed Internal keyboard 583-BILF - 20 - Intel AX210 WLAN Driver 555-BHCC - 20 -
Intel AX210 Wireless Card with Bluetooth 555-BHCH - 20 - 4G DW5821E w/o eSIM WWAN Card Snapdragon X20 LTE for AT&T (With NMEA GPS Port Support) 556-BCYN
- 20 -
Hot surface warning label 389-ECGC - 20 - Primary 3 Cell 53.5 Whr ExpressCharge Capable Battery 451-BCWC - 20 - 90W 461G Type-C EPEAT Adapter 492-BDEL - 20 -
Full Security - Fingerprint Reader, Contacted Smartcard Reader, Contactless Smartcard Reader 346-BHQJ
- 20 -
Power Cord 1M US 450-AAEJ - 20 - Setup and Features Guide 340-CXCE - 20 - Hot surface warning label 389-ECGC - 20 - Additional 3 Cell 53.5 Whr ExpressCharge Capable Battery 451-BCWD - 20 - ENERGY STAR Qualified 387-BBPC - 20 - Custom Configuration 817-BBBB - 20 - Dell Applications for Windows 11 658-BFIP - 20 - Mix Ship, Notebook, 5430 Rugged 340-CYJC - 20 - 11th Gen Intel Core i5 vPro label 340-CTSV - 20 - Microphone + IR FHD camera; Touch; WLAN/WWAN antennae; Pogo vehicle docking and RF passthrough
319-BBHT
- 20 -

Page 3 ends

EPEAT 2018 Registered (Silver) 379-BDTO - 20 - Dedicated u-blox NEO GPS Card 540-BDCC - 20 - Additional USB-A rear port 590-TFHR - 20 - Additional TBT/Type-C port 325-BEJZ - 20 - Rigid handle 750-ADPK - 20 - ProSupport Plus: Next Business Day Onsite, 2 Years Extended 808-6796 - 20 - ProSupport Plus: Next Business Day Onsite, 3 Years 808-6797 - 20 - Dell Limited Hardware Warranty Initial Year 808-6805 - 20 - ProSupport Plus: Accidental Damage Service, 5 Years 808-6826 - 20 - ProSupport Plus: Keep Your Hard Drive, 5 Years 808-6827 - 20 - ProSupport Plus: 7X24 Technical Support, 5 Years 808-6845 - 20 - Dell Limited Hardware Warranty Extended Year(s) 975-3461 - 20 - Thank you for choosing Dell ProSupport Plus. For tech support, visit www.dell.com/contactdell or call 1-866-516-3115
997-8367
- 20 -
Extended Battery Service for Years 2 and 3 of System Life 988-5542 - 20 - Ready Image for Client PC 365-8303 - 20 - CFI,INFO,LANG,ENGLISH,US,Factory Install 382-1755 - 20 - CFI,INFO,WIN11,UPDT,21H2.Factory Install 382-3038 - 20 - CFI,INFO,WIN11,21H2.FACT 382-4202 - 20 - CFI,INFO,WIN 11 PRO,OEM,FACT 382-4389 - 20 - Quantity Subtotal Gamber-Johnson Docking Station with Lind 90W Power Supply (Tri RF) - docking station - VGA
Estimated delivery if purchased today:

Dec. 20, 2022
Contract # C000000181156
Customer Agreement # MNWNC-108/7157034003
$803.52 24 $19,284.48
Description SKU Unit Price Quantity Subtotal
Gamber-Johnson Docking Station with Lind 90W Power Supply (Tri RF) - docking station - VGA
A9777897
- 24 - Quantity Subtotal
Panorama Sharkee - Antenna - shark fin - navigation, cellular, Wi-Fi - 1 dBi - omni-directional - panel mountable
Estimated delivery if purchased today:

Dec. 12, 2022
Contract # C000000181156
Customer Agreement # MNWNC-108/7157034003
$171.02 24 $4,104.48
Description SKU Unit Price Quantity Subtotal
Panorama Sharkee - Antenna - shark fin - navigation, cellular, Wi-Fi - 1 dBi - omni-directional - panel mountable AA328892
- 24 - Quantity Subtotal
MOBILE MOUNTS Vehicle Power Distribution Unit - Power
distribution unit
Estimated delivery if purchased today:

Dec. 15, 2022
Contract # C000000181156
Customer Agreement # MNWNC-108/7157034003
$159.37 24 $3,824.88
Description SKU Unit Price Quantity Subtotal

Page 4 ends

MOBILE MOUNTS Vehicle Power Distribution Unit - Power
distribution unit AC291266
- 24 - Quantity Subtotal
Gamber-Johnson Rugged USB Hub - Docking station - USB-C - HDMI - GigE Estimated delivery if purchased today:

Jan. 10, 2023
Contract # C000000181156
Customer Agreement # MNWNC-108/7157034003
$248.53 24 $5,964.72
Description SKU Unit Price Quantity Subtotal
Gamber-Johnson Rugged USB Hub - Docking station - USB-C - HDMI - GigE AC350248
- 24 -
Subtotal:

Shipping:

Environmental Fee:

Estimated Tax:

Total:
$83,763.36
$0.00
$80.00
$5,889.41
$89,732.77
Shipping Group 2 of 2, Details
Shipping To

HARRY DAMALAS

CITY OF CYPRESS POLICE DEPT
P O BOX 609
CYPRESS, CA 90630-0609
(714) 229-6719
Shipping Method
Standard Delivery Free Cost
Quantity Subtotal
Dell Services
Estimated delivery if purchased today:

Nov. 24, 2022
Contract # C000000181156
Customer Agreement # MNWNC-108/7157034003
$62.80 200 $12,560.00
Description SKU Unit Price Quantity Subtotal
Dell Services 850-0094 - 200 -
Subtotal:

Shipping:

Environmental Fee:

Estimated Tax:

Total:
$12,560.00
$0.00
$0.00
$0.00
$12,560.00

Page 5 ends

For certain products shipped to end users in California, a State Environmental Fee will be applied to Customer’s invoice. Supplier encourages customers to dispose of electronic equipment properly.

Page 6 ends

Persons with a hearing or speech disability may contact us by dialing 711 or 1.800.627.3529 Amendment No. 3 to NASPO Master Agreement MNWNC-108
AMENDMENT NO. 3 TO NASPO MASTER AGREEMENT NO. MNWNC-108 THIS AMENDMENT is by and between the State of Minnesota, acting through its Commissioner of Administration (“State”), and Dell Marketing L.P., One Dell Way, Mailstop RR1-33 Legal, Round Rock, TX 78682 (“Contractor” or “Contract Vendor”).

WHEREAS, the State has a Contract with the Contractor identified as NASPO Master Agreement No. MNWNC-108, April 15, 2015, through July 31, 2021 (“Contract”), to provide Computer Equipment, Peripherals & Related Services; and WHEREAS, Minn. Stat. § 16C.03, subd. 5, affords the Commissioner of Administration, or delegate pursuant to Minn.

Stat. § 16C.03, subd. 16, the authority to amend contracts; and WHEREAS, the terms of the Contract allow the State to amend the Contract as specified herein, upon the mutual agreement of the Office of State Procurement and the Contractor in a fully executed amendment to the Contract.

NOW, THEREFORE, it is agreed by the parties to amend the Contract as follows:

1. That NASPO Master Agreement No. MNWNC-108 is extended through July 31, 2022, at the same prices, terms, and conditions.

This Amendment is effective beginning August 1, 2021, or upon the date that the final required signatures are obtained, whichever occurs later, and shall remain in effect through contract expiration, or until the Contract is canceled, whichever occurs first.

Except as herein amended, the provisions of the Contract between the parties hereto are expressly reaffirmed and remain in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed intending to be bound thereby.

1. Dell Marketing L.P.

The Contractor certifies that the appropriate person(s) have executed this Amendment on behalf of the Contractor as
required by applicable articles, bylaws, resolutions, or ordinances.

By:

Signature
Printed Name
Title:

Date:

By:

Signature
Printed Name
Title:

Date:

2. Office of State Procurement
In accordance with Minn. Stat. § 16C.03, subd. 3.

By:

Title: Acquisition Management Specialist
Date:

3. Commissioner of Administration
Or delegated representative.

By:

Date:

DocuSign Envelope ID: EAC889CC-0F07-480E-AB62-8DFA4A153228 Contract Administrator
5/10/2021
Alyssa Sayles
5/14/2021
5/14/2021

~IIIIBIIta STATE OF MINNESOTA
Materials Management Division
112 Administration Building
50 Sherburne Avenue
St. Paul, MN 55155 DEPARTMENT OF ADMINISTRATION , Voice: 651.296.2600 Fax: 651.297.3996

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD
WITH
DELL MARKETING, L.P.

FOR
COMPUTER EQUIPMENT: (Desktops, Laptops, Tablets, Servers and Storage including Related Peripherals & Services)
To: Dell Marketing L. P. __ ,..; CONTRACT NO:

One Dell Way 1 S',.-
Mailstop 87'07' ~ltl-33 ~~- :>-ju,(~
Round Rock, TX 78682 /.J?;;? .4'/l/t..CONTRACT PERIOD:

Contract Vendor Administrator: Diane
Wigington
Email: Diane [email protected]
Phone: (512) 728-4805

THROUGH
EXTENSION OPTION:

MNWNC-108
April 1, 2015, or upon final
executed signatures,
whichever is later
March 31, 2017
UP TO 36 MONTHS
You are hereby notified that your response to our solicitation, which opened January 31, 2014, is accepted. The following documents, in order of precedence, are incorporated herein by reference and constitute the entire Contract between you and the Slate: 1. A Participating Entity's Participating Addendum ("PA") A Participating Entity's Participating Addendum shall not diminish, change, or impact the rights of the Lead State with regard to the Lead State's contractual relationship with the Contract Vendor under the Terms of Minnesota WSCA-NASPO Master Agreement.; 2. Minnesota WSCA-NASPO Master Agreement (includes negotiated Terms and Conditions); 3. The Solicitation; and 4. the Contract Vendor's response to the Solicitation. These documents shall be read to be consistent and complementary. Any conflict among these documents shall be resolved by giving priority to these documents in the order listed above.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed intending to be bound thereby.

1. DELL MARKETING L. P. 2. MINNESOTA MATERIALS MANAGEMENT DIVISION By:

Title:

St~hanie G. Miller ~ '{'J Pnffiea ame r
Contract Manager /Sen iD( M.lln£l8ef
Date: I (p fd?Y"uary 'l Dl5
By: 1gna ure 3. MINNESOTA COMMISSIONER OF ADMINISTRATION Or delegated representative.

By:

Original signed Title:

Date:

MAR 0 3 2015
By lucas J. Jan nett
CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L P.

DEPARTMENT OF ADMINI:STRATION

COMPUTER EQUIPMENT
2014-2019
f

WSCA- NASPO' COOPERATIVE PURCHASING

ORGANIZATION

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD

TABLE OF CONTENTS
TABLE OF CONTENTS ...................................................................................................................................................... 2 SUMMARY .......................................................................................................................................................................... 3 EXHIBIT A- TERMS & CONDITIONS ................................................................................................................................ 5 EXHIBIT B - PRICING ....................................................................................................................................................... 24 EXHIBIT B - PRICING SCHEDULE .................................................................................................................................. 26 EXHIBIT C- PRODUCT AND SERVICE SCHEDULE (PSS) ........................................................................................... 27 EXHIBIT D- WEBSITE. ..................................................................................................................................................... 28 EXHIBIT E- ACTION REQUEST UPDATE FORM (ARF) ................................................................................................ 29 EXHIBIT F- REPORTING ................................................................................................................................................. 31 EXHIBIT G -DEFINITIONS ............................................................................................................................................... 32 2 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

Ad1111n
~ lflinnssota

DEPARTMENT OF ADMINISTRATION

COMPUTER EQUIPMENT
2014-2019

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD

SUMMARY

1. BACKGROUND. The State of Minnesota, Department of Administration, Materials Management Division publicly posted a Request for Proposal on behalf of the State of Minnesota and WSCA-NASPO Cooperative Procurement Program ("WSCA-NASPO") resulting in a Master Agreement Award. After evaluation by a multi-state sourcing team the solicitation resulted in this Minnesota WSCA-NASPO Master Agreements with qualified manufacturers for:

Computer Equipment (Desktops, Laptops, Tablets, Servers, and Storage including related Peripherals & Services.

The original solicitation contains the requirements and definitions establishing the following Product Bands allowed on the Master Agreement. The configuration limits and restrictions for this Master Agreement are provided below.

Participating Entities may revise these in their Participating Addendum. Bands awarded are identified below:

Band 1: Desktop
Band 2: Laptop
Band 3: Tablet
Band 4: Server
Band 5: Storage
The original solicitation included Band 6: Ruggedized. This band has been removed and ruggedized equipment will be allowed in Bands 1-5. The original solicitation and responses may be found on the WSCA-NASPO Website.

2. EFFECTIVE DATE: The Master Agreement contract term will begin on April 1, 2015, or upon final executed signatures, whichever is later, through March 31, 2017 with the option to extend up to 36 months, upon agreement by both parties. Contract Sales may not begin until the Website, Product and Service Schedule and third party products have been approved by the Master Agreement Administrator.

3. PARTICIPATION. All authorized governmental entities in any State are welcome to use the resulting Master Agreements through WSCA-NASPO with the approval of the State Chief Procurement Official. Contract Vendors are able to sign Participating Addendums (PA) at the option of Participating States. Participating States reserve the right to add State specific terms and conditions and modify the scope of the contract in their Participating Addendum as allowed by the Master Agreement.

4. CONFIGURATION DOLLAR LIMITS. The following configuration limits apply to the Master Agreement. Participating States may define their configuration limits in their participating addendum. The Participating State's Chief Procurement Official may increase or decrease the configuration limits, as defined in their Participating Addendum.

The Participating State will determine with the Contract Vendor how to approve these modifications to the State's Product and Service Schedule.

The dollar limits identified below are based on a SINGLE computer configuration. This is NOT a restriction on the purchase of multiple configurations (e.g. an entity could purchase 10 laptops@ $10,000 for a total purchase price of $100,000).

ITEM CONFIGURATION*
Server $500,000
Storage $500,000
Desktops $ 1 0, 000
Laptops $ 10,000
Tablets $ 5,000
Peripherals $ 5,000
Services Addressed by each State in participating addendum *Configuration is defined as the combination of hardware and software components that make up the total functioning system. Software purchases are considered a part of the configuration limit of the equipment. 3 CONTRACT NO. MNWNC·108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

5. RESTRICTIONS. The following restrictions apply to the Master Agreement. A Participating State may set further restrictions of products in their Participating Addendum. The Participating State will determine with the Contract Vendor how to approve these modifications to the State's Product and Service Schedule. a. Software

1. Software is restricted to operating systems and commercial off-the-shelf (COTS) software and is subject to equipment configuration limits.

2. Software is an option which must be related to the procurement of equipment.

3. Software must be pre-loaded or provided as an electronic link with the initial purchase of equipment.

4. Software such as middleware which is not always installed on the equipment, but is related to storage and server equipment (Band 4&5) purchased, is allowed and may be procured after the initial purchase of equipment.
b. Services

1. Services must be related to the procurement of equipment.

2. Service limits will be addressed by each State.

3. Wireless phone and internet service is not allowed.

4. Cloud Services including acquisitions structured as managed on-site services are not allowed.

5. Managed Print Services are not allowed.
c. Third Party Products.

1. Contract Vendors can only offer Third Party Products in the bands they have been awarded.

2. Contract Vendor cannot offer products manufactured by another Contract Vendor holding a Minnesota WSCA-NASPO Master Agreement unless approved by the Lead State. d. Additional Product/Services

1. Hardware and software required to solely support wide area network (WAN) operation and management are not allowed.

2. Lease/Rentals of equipment may be allowed and will be addressed by each State.

3. Cellular Phone Equipment is not allowed.

4. EPEAT Bronze requirement may be waived, on a State case by case basis, if approved by the State's Chief Procurement Officer.

6. PARTNER UTILIZATION: Each state represented by WSCA-NASPO that chooses to participate in this Master Agreement independently has the option of utilizing partners. Only partners approved by the Participating·state may be deployed. The participating State will define the process to add and remove partners in their participating addendum.
4 CONTRACT NO. MNWNC·108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

DEPARTMENT OF ADMINISTRATION

COMPUTER EQUIPMENT
2014-2019

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD

EXHIBIT A - TERMS & CONDITIONS

MASTER AGREEMENT TERMS AND CONDITIONS
A. GENERAL TERMS, CONDITIONS & INSTRUCTIONS

1. ACCEPTANCE OF TERMS AND CONDITIONS. The contents of the RFP and the response of the successful responder will become Master Agreement contractual obligations, along with the final Master Agreement, if acquisition action ensues. A statement of acceptance of the proposed Contract Terms and Conditions, unless taken exception to, as specified in the RFP must be included in the response. Any suggestions for alternate language shall be presented.

The Lead State is under no obligation to accept wording changes submitted by the responder. The Lead State is solely responsible for rendering decisions in matters of interpretation on all terms and conditions. Any response which fails to comply with this requirement may be disqualified as nonresponsive.

All general proposal terms, specifications and WSCA-NASPO Terms & Conditions form a part of this RFP and will apply to any Master Agreements entered into as a result thereof.

2. CONFLICT OF TERMS/ORDER OF PRECEDENCE:
a. A Participating Entity's Participating Addendum ("PA"); b. Minnesota WSCA-NASPO Master Agreement (includes negotiated Terms & Conditions) c. The Solicitation including all Addendums; and
d. Contract Vendor's response to the Solicitation
These documents shall be read to be consistent and complementary. Any conflict among these documents shall be resolved by giving prioritY to these documents in the order listed above. Contract Vendor terms and conditions that apply to this Master Agreement are only those that are expressly accepted by the Lead State and must be in writing and attached to the Master Agreement as an Exhibit or Attachment. No other terms and conditions shall apply, including terms and conditions listed in the Contract Vendor's response to the Solicitation, or terms listed or referenced on the Contract Vendor's website, in the Contract Vendor quotation/sales order or in similar documents subsequently provided by the Contract Vendor. The solicitation language prevails unless a mutually agreed exception has been negotiated.

3. ADDENDA TO THE RFP. Any addendum issued will become a part of the RFP. The Lead State may modify or clarify the RFP by issuing one or more addenda to all parties who have received the RFP. Each responder must follow the directions on the addendum. Addenda will be numbered consecutively in the order they are issued.

4. AWARD. The award of this solicitation will be based upon the total accumulated points as established in the RFP, for separate items, by grouping items, or by total lot, and where at its sole discretion the Lead State believes it will receive the best value. The Lead State reserves the right to award this solicitation to a single responder, or to multiple responders, whichever is in the best interest of the Lead State. It is the State's intent to award to multiple responders.

The Lead State reserves the right to accept all or part of an offer, to reject all offers, to cancel the solicitation, or toreissue the solicitation, whichever is in the best interest of the Lead State.

The Sourcing Team will make a recommendation on the award of this RFP. The commissioner of Administration or designee may accept or reject the recommendation of the Sourcing Team. The final award decision will be made by the Commissioner of Administration and the WSCA-NASPO Management Board.

5. CLARIFICATION. If a responder discovers any significant ambiguity, error, conflict, discrepancy, omission, or other deficiency in the RFP, the responder shall immediately notify the Acquisition Management Specialist in writing, as 5 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. specified in the introduction, of such error and request modification or clarification of the document. This notification is due no later than seven calendar days prior to the proposal due date and time.

Responders are cautioned that any activity or communication with a State employee or officer, or a member of the Evaluation Team, regarding this Solicitation's contents or process, is strictly prohibited and may, as a result, have its response rejected. Any communication regarding this Solicitation, its content or process, must be directed to the Acquisition Management Specialist listed in the Solicitation documents.

6. COMPLETION OF RESPONSES. A response may be rejected if it is conditional or incomplete. Responses that contain conflicting, false, or misleading statements or that provide references that contradict or do not support an attribute or condition stated by the responder, may be rejected.

7. MASTER AGREEMENT ADMINISTRATOR. The Master Agreement Administrator designated by WSCA-NASPO and the State of Minnesota, Department of Administration is: Susan Kahle. Direct all correspondence and inquiries, legal questions, general issues, or technical issues regarding this RFP to:

Susan Kahle
Acquisition Management Specialist
Department of Administration
Materials Management Division
50 Sherburne Avenue
112 Administration Building
St. Paul, MN 55155
Fax: 651.297.3996
E-mail: [email protected]

8. DISPOSITION OF DATA SUBMITTED BY CONTRACT VENDOR. All materials submitted in response to this RFP will become property of the Lead State and will become public record after the evaluation process is completed. The evaluation process is complete when negotiations with the selected vendors are final.

By executing this Contract, the Contract Vendor certifies and agrees that all information provided in the Contract and in response to the solicitation will be made public in accordance with the solicitation and that no information has been designated Trade Secret pursuant to the Minnesota Government Data Practices Act. .If the Contract Vendor submits information after execution of this Contract that it believes to be trade secret materials, as defined by the Minnesota Government Data Practices Act, Minn. Stat. § 13.37, the Contract Vendor must:
a. clearly mark all trade secret materials at the time the information is submitted; b. include a statement with regard to the information justifying the trade secret designation for each item; and, c. defend any action seeking release of the materials it believes to be trade secret, and indemnify and hold harmless the Lead State, its agents and employees, from any judgments awarded against the Lead State in favor of the party requesting the materials, and any and all costs connected with that defense. This indemnification survives the Lead State's award of a Master Agreement. In submitting a response to the RFP, the responder agrees that this indemnification survives as long as the trade secret materials are in possession of the Lead State. The Lead State will not consider the prices submitted by the responder to be trade secret materials.

9. DISPUTE RESOLUTION PROCEDURES. Any issue a responder has with the RFP document, which includes, but is not limited to, the terms, conditions, and specifications, must be submitted in writing to and received by the Master Agreement Administrator prior to the opening due date and time. Any issue a responder has with the Master Agreement award must be submitted in writing to the Master Agreement Administrator within five working days from the time the notice of the intent to award is issued. This notice may be made by any of the following methods:
notification by letter, fax or email, or posted on the Materials Management website, www.inmd.admin.state.mn.us. The Lead State will respond to any protest received that follows the above procedure. For those protests that meet the above submission requirements, the appeal process is, in sequence: The responsible Master Agreement Administrator, the Materials Management Division (MMD) Assistant Director, and the MMD Director.

10. ELECTRONIC FILES TO DOWNLOAD, COMPLETE, AND RETURN. Responders must download a Word/Excel document.

11. ENTIRE AGREEMENT. A written Master Agreement (including the contents of this RFP and selected portions of Contract Vendor's response incorporated therein by reference) and any written addenda thereto constitute the entire agreement of the parties to the Master Agreement.
6 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L P.

12. IRREVOCABLE OFFER. In accordance with this Request for Proposal, and subject to all conditions thereof, the undersigned agrees that its response to this RFP, or any part thereof, is an irrevocable offer for 180 days following the submission deadline date unless stated otherwise in the RFP. It is understood and agreed that the response, or any part thereof, when accepted by the appropriate department and State officials in writing, may become part of a legal and binding Master Agreement between the undersigned vendor and the State of Minnesota.

13. MATERIAL DEVIATION. A responder shall be presumed to be in agreement with these terms and conditions unless it takes specific exception to one or more of the conditions. Submission by the responder of its proposed language shall not be viewed as an exception unless the responder specifically states in the response that its proposed changes are intended to supersede the terms and conditions.

RESPONDERS ARE CAUTIONED THAT BY TAKING ANY EXCEPTION THEY MAY BE MATERIALLY DEVIATING FROM THE REQUEST FOR PROPOSAL. IF A RESPONDER MATERIALLY DEVIATES FROM THE

GENERAL TERMS, CONDITIONS AND INSTRUCTIONS OR THE WSCA-NASPO TERMS AND CONDITIONS AND/OR SPECIFICATIONS, ITS RESPONSE MAY BE REJECTED.

A material deviation is an exception to the Request for Proposal general or WSCA-NASPO terms and conditions and/or specifications that:
a. gives the responder taking the exception a competitive advantage over other vendors; or, b. gives the Lead State something significantly different from that which the Lead State requested.

14. NONRESPONSIVE RESPONSES. Responses that do not comply with the provisions in the RFP may be considered nonresponsive and may be rejected.

15. NOTICES. If one party is required to give notice to the other under the Master Agreement, such notice shall be in writing and shall be effective upon receipt. Delivery may be by certified United States mail or by hand, in which case a signed receipt shall be obtained. A facsimile transmission shall constitute sufficient notice, provided the receipt of the transmission is confirmed by the receiving party. Either party must notify the other of a change in address for notification purposes. All notices to the Lead State shall be addressed as follows:

STATE OF MINNESOTA:

MN WSCA-NASPO COMPUTER EQUIPMENT CONTRACT ADMINISTRATOR 112 Administration Bldg.
50 Sherburne Avenue
St. Paul, MN 55155
651-296-2600
7 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L P.

MASTER AGREEMENT TERMS AND CONDITIONS
B. WSCA-NASPO TERMS AND CONDITIONS

1. ADMINISTRATIVE FEES. The Contract Vendor shall pay a WSCA-NASPO Administrative Fee of one-tenth of one percent (0.1% or 0.001) in accordance with the Terms and Conditions of the Master Agreement no later than 60 days following the end of each calendar quarter. The WSCA-NASPO Administrative Fee shall be submitted quarterly and is based on sales of products and services (less any charges for taxes or shipping). The WSCA-NASPO Administrative Fee is not negotiable. This fee is to be included as part of the pricing submitted with proposal.

Additionally, some states may require an additional fee be paid directly to the state on purchases made by Purchasing Entities within that state. For all such requests, the fee level, payment method and schedule for such reports and payments will be incorporated into the Participating Addendum that is made a part of the Master Agreement. The Contract Vendor may adjust the Master Agreement pricing accordingly for purchases made by Purchasing Entities within the jurisdiction of the state. All such agreements may not affect the WSCA-NASPO Administrative Fee or the prices paid by the Purchasing Entities outside the jurisdiction of the state requesting the additional fee.

2. AGREEMENT ORDER OF PRECEDENCE. The Master Agreement shall consist of the following documents:
a. A Participating Entity's Participating Addendum ("PA"); b. Minnesota WSCA-NASPO Master Agreement (includes negotiated Terms and Conditions) c. The Solicitation including all addendums; and
d. Contract Vendor's response to the Solicitation
These documents shall be read to be consistent and complementary. Any conflict among these documents shall be resolved by giving priority to these documents in the order listed above. Contract Vendor terms and conditions that apply to this Master Agreement are only those that are expressly accepted by the Lead State and must be in writing and attached to this Master Agreement as an Exhibit or Attachment. No other terms and conditions shall apply, including terms and conditions listed in the Contract Vendor's response to the Solicitation, or terms listed or referenced on the Contract Vendor's website, in the Contract Vendor quotation/sales order or in similar documents subsequently provided by the Contract Vendor. The solicitation language prevails unless a mutually agreed exception has been negotiated.

3. AMENDMENTS. The terms of this Master Agreement shall not be waived, altered, modified, supplemented or amended in any manner whatsoever without prior written approval of the WSCA-NASPO Master Agreement Administrator. ·

4. ASSIGNMENT OF ANTITRUST RIGHTS. Contract Vendor irrevocably assigns to a Participating Entity any claim for relief or cause of action which the Contract Vendor now has or which may accrue to the Contract Vendor in the future by reason of any violation of state or federal antitrust laws (15 U.S.C. § 1-15 or a Participating Entity's state antitrust provisions), as now in effect and as may be amended from time to time, in connection with any goods or services provided to the Contract Vendor for the purpose of carrying out the Contract Vendor's obligations under this Master Agreement or Participating Addendum, including, at a Participating Entity's option, the right to control any such litigation on such claim for relief or cause of action.

5. ASSIGNMENT/SUBCONTRACT. Contract Vendor shall not assign, sell, transfer, subcontract or sublet rights, or delegate responsibilities under this Master Agreement, in whole or in part, without the prior written approval of the WSCA-NASPO Master Agreement Administrator.

6. CANCELLATION. Unless otherwise stated in the terms and conditions, any Master Agreement may be canceled by either party upon 60 days' notice, in writing, prior to the effective date of the cancellation. Further, any Participating Entity may cancel its participation upon 30 days written notice, unless otherwise limited or stated in the special terms and conditions of this solicitation or in the applicable Participating Addendum. Cancellation may be in whole or in part. Any cancellation under this provision shall not affect the rights and obligations attending orders outstanding at the time of cancellation, including any right of a Participating Entity to indemnification by the Contract Vendor, rights of payment for goods/services delivered and accepted, and rights attending any warranty or default in performance in association with any order. Cancellation of the Master Agreement due to Contract Vendor default may be immediate if defaults cannot be reasonably cured as allowed per Default and Remedies term.

7. CONFIDENTIALITY. NON-DISCLOSURE AND INJUNCTIVE RELIEF. NEGOTIATED.

7.1 Confidentiality. The parties acknowledges that they and their employees or agents may, in the course of providing the Product and Services under this Master Agreement, be exposed to or acquire information that is confidential . Any and all information of any form that is marked as confidential or would by its nature be deemed 8 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. confidential obtained in the performance of this Master Agreement, including, but not necessarily limited to (a) any Participating Entity records, (b) personnel records, (c) information concerning individuals, (d) software, (e) product plans, (f) marketing and sales information, (g) customer lists, and (h) "know-how," or trade secrets, is confidential information ("Confidential Information"). Any reports or other documents or items (including software) that result from the use of the Confidential Information shall be treated in the same manner as the Confidential Information.

Confidential Information does not include information that (a) is or becomes (other than by disclosure by disclosing party) publicly known; (b) is rightfully furnished by the disclosing party to others without restrictions similar to those imposed by this Master Agreement; (c) is rightfully in .recipient party's possession without the obligation of nondisclosure prior to the time of its disclosure under this Master Agreement; (d) is obtained from a source other than disclosing party without the obligation of confidentiality, (e) is disclosed with the written consent of disclosing party or; (f) is independently developed by employees, agents or subcontractor of the parties who can be shown to have had no access to the Confidential Information

7.2 Non-Disclosure. The parties shall hold Confidential Information in confidence, using at least the industry standard of confidentiality, and not to copy, reproduce, sell, assign, license, market, transfer or otherwise dispose of, give, or disclose Confidential Information to third parties or use Confidential Information for any purposes whatsoever other than the performance of this Master Agreement, and to advise each of its employees and agents of their obligations to keep Confidential Information confidential. The parties shall use commercially reasonable efforts in identifying and preventing any unauthorized use or disclosure of any Confidential Information. Without limiting the generality of the foregoing, parties shall advise each other immediately if they learn or have reason to believe that any person who has had access to Confidential Information has violated or intends to violate the terms of this Master Agreement and shall at their expense cooperate in seeking injunctive or other equitable relief against any such person. Except as directed in writing , the parties will not at any time during or after the term of this Master Agreement disclose, directly or indirectly, any Confidential Information to any person, except in accordance with this Master Agreement, and that upon termination of this Master Agreement the parties shall turn over all documents, papers, and other matter in the recipient party's possession that embody Confidential Information. Notwithstanding the foregoing, the recipient party may keep one copy of such Confidential Information necessary for quality assurance, audits and evidence of the performance of this Master Agreement.

7.3 Injunctive Relief. The parties acknowledge that breach of this Section, including disclosure of any Confidential Information, may cause irreparable injury that is inadequately compensable in damages. Accordingly, the injured party may seek and obtain injunctive relief against the breach or threatened breach of the foregoing undertakings, in addition to any other legal remedies that may be available. The parties acknowledge and agree that the covenants contained herein are necessary for the protection of the legitimate business interests and are reasonable in scope and content.

7.4 Participating Entitv is agreeing to the above language to the extent is not in conflict with Participating Entities public disclosure laws.

8. DEBARMENT. The Contract Vendor certifies that neither it nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntary excluded from participation in this transaction (Master Agreement) by any governmental department or agency. If the Contract Vendor cannot certify this statement, attach a written explanation for review by WSCA-NASPO.

In any order against this Master Agreement for a requirement established by a Purchasing Entity that discloses the use of federal funding, to the extent another form of certification is not required by a Participating Addendum or the order of the Purchasing Entity, the Contractor's quote represents a recertification consistent with the terms of paragraph 8, Section 20, Minnesota Terms and Conditions

9. DEFAULTS & REMEDIES.
a. The occurrence of any of the following events shall be an event of default under this Master Agreement:
i. Nonperformance of contractual requirements; or
ii. A material breach of any term or condition of this Master Agreement; or iii. Any representation or warranty by Contract Vendor in response to the solicitation or in this Master Agreement proves to be untrue or materially misleading; or
iv. Institution of proceedings under any bankruptcy, insolvency, reorganization or similar law, by or against Contract Vendor, or the appointment of a receiver or similar officer for Contract Vendor or any of its property, which is not vacated or fully stayed within thirty (30) calendar days after the institution or occurrence thereof; or
v. Any default specified in another section of this Master Agreement. b. Upon the occurrence of an event of default, Lead State shall issue a written notice of default, identifying the nature of the default, and providing a period of 30 calendar days in which Contract Vendor shall have an opportunity to cure the default. The Lead State shall not be required to provide advance written notice or a cure period and may immediately terminate this Master Agreement in whole or in part if the Lead State, in its sole 9 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. discretion, determines that it is reasonably necessary to preserve public safety or prevent immediate public crisis.

Time allowed for cure shall not diminish or eliminate Contract Vendor's liability for damages, including liquidated damages to the extent provided for under this Master Agreement. c. If Contract Vendor is afforded an opportunity to cure and fails to cure the default within the period specified in the written notice of default, Contract Vendor shall be in breach of its obligations under this Master Agreement and Lead State shall have the right to exercise any or all of the following remedies:
i. Exercise any remedy provided by law; and
ii Terminate this Master Agreement and any related Master Agreements or portions thereof; and iii Impose liquidated damages as provided in this Master Agreement; and iv. Suspend Contract Vendor from receiving future bid solicitations; and v. Suspend Contract Vendor's performance; and
vi. Withhold payment until the default is remedied.
d. In the event of a default under a Participating Addendum, a Participating Entity shall provide a written notice of default as described in this section and have all of the rights and remedies under this paragraph regarding its participation in the Master Agreement, in addition to those set forth in its Participating Addendum. Unless otherwise specified in a Purchase Order, a Purchasing Entity shall provide written notice of default as described in this section and have all of the rights and remedies under this paragraph and any applicable Participating Addendum with respect to an Order placed by the Purchasing Entity. Nothing in these Master Agreement Terms and Conditions shall be construed to limit the rights and remedies available to a Purchasing Entity under the applicable commercial code.

10. DELIVERY. Unless otherwise indicated in th<;> Master Agreement, the prices are the delivered price to any Purchasing Entity. All deliveries shall be F.O.B. destination with all transportation and handling charges paid by the Contract Vendor. Additional delivery charges will not be allowed for back orders.

11. FORCE MAJEURE. Neither party to this Master Agreement shall be held responsible for delay or default caused by fire, riot, acts of God and/or war which is beyond that party's reasonable control. The WSCA-NASPO Master Agreement Administrator may terminate this Master Agreement after determining such delay or default will reasonably prevent successful performance of the Master Agreement.

12. GOVERNING LAW. This procurement and the resulting agreement shall be governed by and construed in accordance with the laws of the Lead State sponsoring and administering the procurement. The construction and effect of any Participating Addendum or order against the Master Agreements shall be governed by and construed in accordance with the laws of the Participating Entity's State. Venue for any claim, dispute or action concerning an order placed against the Master Agreements or the effect of a Participating Addendum shall be in the Purchasing Entity's State.

13. INDEMNIFICATION. DELETED SEE SECTION 2C17.

14. INDEMNIFICATION -INTELLECTUAL PROPERTY. DELETED SEE SECTION 2C17.

15. INDEPENDENT CONTRACT VENDOR. The Contract Vendor shall be an independent Contract Vendor, and as such shall have no authorization, express or implied to bind WSCA-NASPO or the respective states to any agreements, settlements, liability or understanding whatsoever, and agrees not to perform any acts as agent for WSCA-NASPO or the states, except as expressly set forth herein.

16.1NDIVIDUAL CUSTOMER. Except to the extent modified by a Participating Addendum, each Participating Entity shall follow the terms and conditions of the Master Agreement and applicable Participating Addendum and will have the same rights and responsibilities for their purchases as the Lead State has in the Master Agreement, including but not limited to, any indemnity or to recover any costs allowed in the Master Agreement and applicable Participating Addendum for their purchases. Each Purchasing Entity will be responsible for its own charges, fees, and liabilities.

The Contract Vendor will apply the charges and invoice each Purchasing Entity individually.

11. INSURANCE. Except to the extent modjfied by a Participating Addendum, Contract Vendor shall, during the term of this Master Agreement, maintain in full force and effect, the insurance described in this section. Contract Vendor shall acquire such insurance from an insurance carrier or carriers licensed to conduct business in the Participating Entity's state and having a rating of A-, Class VII or better, in the most recently published edition of Best's Reports. Failure to buy and maintain the required insurance may result in this Master Agreement's termination or at a Participating Entity's option, result in termination of its Participating Addendum. 10 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

Coverage shall be written on an occurrence basis. The minimum acceptable limits shall be as indicated below, with no deductible for each of the following categories:
a. Commercial General Liability covering the risks of bodily injury (including death), property damage and personal injury, including coverage for contractual liability, with a limit of not less than $1 million per occurrence/$2 million general aggregate;
b. Contract Vendor must comply with any applicable State Workers Compensation or Employers Liability Insurance requirements.

Contract Vendor shall pay premiums on all insurance policies. Such policies shall also reference this Master Agreement and shall have a condition that they not be revoked by the insurer until thirty (30) calendar days after notice of intended revocation thereof shall have been given to Participating Entity by the Contract Vendor.

Prior to commencement of the work, Contract Vendor shall provide to the Participating Entity a written endorsement to the Contract Vendor's general liability insurance policy that (i) names the Participating Entity as an additional insured, (ii) provides that no material alteration, cancellation, non-renewal, or expiration of the coverage contained in such policy shall have effect unless the named Participating Entity has been given at least thirty (30) days prior written notice, and (iii) provides that the Contract Vendor's liability insurance policy shall be primary, with any liability insurance of the Participating Entity as secondary and noncontributory.

Contract Vendor shall furnish to Participating Entity copies of certificates of all required insurance within thirty (30) calendar days of the Participating Addendum's effective date and prior to performing any work. Copies of renewal certificates of all required insurance shall be furnished within thirty (30) days after renewal date. These certificates of insurance must expressly indicate compliance with each and every insurance requirement specified in this section.

Failure to provide evidence of coverage may, at the Lead State Master Agreement Administrator's sole option, result in this Master Agreement's termination.

Coverage and limits shall not limit Contract Vendor's liability and obligations under this Master Agreement.

18. LAWS AND REGULATIONS. Any and all supplies, services and equipment offered and furnished shall comply fully with all applicable Federal and State laws and regulations.

19. LICENSE OF PRE-EXISTING INTELLECTUAL PROPERTY. DELETED- SEE SECTION 2830 FOR REVISED TERM ADDRESSING TITLE OF PRODUCT.

20. NO WAIVER OF SOVEREIGN IMMUNITY. The Lead State, Participating Entity or Purchasing Entity to the extent it applies does not waive its sovereign immunity by entering into this Contract and fully retains all immunities and defenses provided by law with regard to any action based on this Contract.

If a claim must be brought in a federal forum, then it must be brought and adjudicated solely and exclusively within the United States District Court of the Participating Entity's State.

21. ORDER NUMBERS. Contract order and purchase order numbers shall be clearly shown on all acknowledgments, shipping labels (if possible), packing slips, invoices, and on all correspondence.

22. PARTICIPANTS. WSCA-NASPO Cooperative Purchasing Organization LLC is not a party to the Master Agreement.

It is a nonprofit cooperative purchasing organization assisting states in administering the WSCA/NASPO cooperative purchasing program for state government departments, institutions, agencies and political subdivisions (e.g., colleges, school districts, counties, cities, etc.,) for all 50 states and the District of Columbia. Obligations under this Master Agreement are limited to those Participating States who have signed a Participating Addendum where contemplated by the solicitation. Financial obligations of Participating States are limited to the orders placed by the departments or other state agencies and institutions having available funds. Participating States incur no financial obligations on behalf of political subdivisions. Unless otherwise specified in the solicitation, the resulting award will be permissive.

23. PARTICIPATION OF ENTITIES. Use of specific WSCA-NASPO cooperative Master Agreements by state agencies, political subdivisions and other entities (including cooperatives) authorized by individual state's statutes to use state contracts are subject to the approval of the respective State Chief Procurement Official. Issues of interpretation and eligibility for participation are solely within the authority of the respective State Chief Procurement Official.

24. PAYMENT. Payment for completion of an order under this Master Agreement is normally made within 30 days following the date the entire order is delivered or the date a correct invoice is received, whichever is later. After 45 days the Contract Vendor may assess overdue account charges up to a maximum rate of one percent per month 11 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. on the outstanding balance. Payments will be remitted by mail. Payments may be made via a State or political subdivision "Purchasing Card" with no additional charge.

25. PUBLIC INFORMATION. The Master Agreement and all related documents are subject to disclosure pursuant to the Participating Entity's public information laws.

26. RECORDS ADMINISTRATION AND AUDIT. The disclosure of records in Participating States relating to Participating addenda and orders placed against the Master Agreement shall be governed by the laws of the Participating State and entity who placed the order.

The Contractor shall maintain books, records, documents, and other evidence pertaining to this Master Agreement and orders placed by Purchasing Entities under it to the extent and in such detail as shall adequately reflect performance and administration of payments and fees. Contractor shall permit the Lead State, a Participating Entity, a Purchasing Entity, the federal government (including its grant awarding entities and the U.S. Comptroller General), and any other duly authorized agent of a governmental agency, to audit, inspect, examine, copy and/or transcribe Contractor's books, documents, papers and records directly pertinent to this Master Agreement or orders placed by a Purchasing Entity under it for the purpose of making audits, 'examinations, excerpts, and transcriptions. This right shall survive for a period of five (5) years following termination of this Agreement or final payment for any order placed by a Purchasing Entity against this Agreement, whichever is later, to assure compliance with the terms hereof or to evaluate performance hereunder.

Without limiting any other remedy available to any governmental entity, the Contractor shall reimburse the applicable Lead State, Participating Entity, or Purchasing Entity for an overpayments inconsistent with the terms of the Master Agreement or orders or underpayment of fees found as a result of the examination of the Contractor's records.

The rights and obligations herein right exist in addition to any quality assurance obligation in the Master Agreement requiring the Contractor to self-audit contract obligations and that permits the Lead State Master Agreement Administrator to review compliance with those obligations.

Records will be retained longer if required by Participating Entity's law.

27. REPORTS- SUMMARY AND DETAILED USAGE. In addition to other reports that may be required by this solicitation, the Contract Vendor shall provide the following WSCA-NASPO reports. a. Summary Sales Data. The Contractor shall submit quarterly sales reports directly to WSCA-NASPO using the WSCA-NASPO Quarterly Sales/Administrative Fee Reporting Tool found at http://www.naspo.org/WNCPO/Calculator.aspx. Any/all sales made under the contract shall be reported as cumulative totals by state. Even if Contractor experiences zero sales during a calendar quarter, a report is still required. Reports shall be due no later than the last day of the month following the end of the calendar quarter (as specified in the reporting tool).
b. Detailed Sales Data. Contract Vendor shall also report detailed sales data by: state; entity/customer type, e.g., local government, higher education, K12, non-profit; Purchasing Entity name; Purchasing Entity bill-to and ship-to locations; Purchasing Entity and Contract Vendor Purchase Order identifier/number(s); Purchase Order Type (e.g., sales order, credit, return, upgrade, determined by industry practices); Purchase Order date; Ship Date; and line item description, including product number if used. The report shall be submitted in any form required by the solicitation. Reports are due on a quarterly basis and must be received by the Lead State no later than the last day of the month following the end of the reporting period. Reports shall be delivered to the Lead State and to the WSCA-NASPO Cooperative Development Team electronically through email; CO-Rom, jump drive or other electronic matter as determined by the Lead State.

Detailed sales data reports shall include sales information for all sales under Participating Addenda executed under this Master Agreement. The format for the detailed sales data report is in Section 6, Attachment H. c. Reportable sales for the summary sales data report and detailed sales data report includes sales to employees for personal use where authorized by the Participating Addendum. Specific data in relation to sales to employees for personal use to be defined in the final contract award to ensure only public information is reported. d. Timely submission of these reports is a material requirement of the Master Agreement. The recipient of the reports shall have exclusive ownership of the media containing the reports. The Lead State and WSCA-NASPO 12 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. shall have a perpetual, irrevocable, non-exclusive, royalty free, transferable right to display, modify, copy, and otherwise use reports, data and information provided under this section.

28. ACCEPTANCE AND ACCEPTANCE TESTING.

A. Acceptance. Purchasing Entity (the entity authorized under the terms of any Participating Addendum to place orders under this Master Agreement) shall determine whether all Products and Services delivered meet the Contractor's published specifications (a.k.a. "Specifications"). No payment shall be made for any Products or Services until the Purchasing Entity has accepted the Products or Services. The Purchasing Entity will make every effort to notify the Contractor within thirty (30) calendar days following delivery of non-acceptance of a Product or completion of Service. In the event that the Contractor has not been notified within 30 calendar days from delivery of Product or completion of Service, the Product and Services will be deemed accepted on the 31 ' 1 day after delivery of
Product or completion of Services. This clause shall not be applicable, if acceptance testing and corresponding terms have been mutually agreed to by both parties in writing.

B. Acceptance Testing. The Purchasing Entity (the entity authorized under the terms of any Participating Addendum to place orders under this Master Agreement) and the Contract Vendor shall determine if Acceptance Testing is applicable and/or required for the purchase. The terms in regards to acceptance testing will be negotiated, in writing, as mutually agreed. If Acceptance Testing is NOT applicable, the terms regarding Acceptance in the Contract shall prevail.

29. SYSTEM FAILURE OR DAMAGE. In the event of system failure or damage caused by the Contract Vendor or its Product, the Contract Vendor agrees to use its commercially reasonable efforts to restore or assist in restoring the system to operational capacity. The Contract Vendor shall be responsible under this provision to the extent a 'system' is defined at the time of the Order; otherwise the rights of the Purchasing Entity shall be governed by the Warranty.

30. TITLE OF PRODUCT. NEGOTIATED.

OWNERSHIP
a. Ownership of Documents/Copyright. Any reports, studies, photographs, negatives, databases, computer programs, or other documents, whether in tangible or electronic forms, prepared by the Contract Vendor in the performance of its obligations under the Master Agreement and paid for by the Purchasing Entity shall be the exclusive property of the Purchasing Entity and all such material shall be remitted to the Purchasing Entity by the Contract Vendor upon completion, termination or cancellation of the Master Agreement. The Contract Vendor shall not use, willingly allow or cause to allow such material to be used for any purpose other than performance of the Contract Vendor's obligations under this Master Agreement without the prior written consent of the Purchasing Entity.
b. Rights, Title and Interest. All rights, title, and interest in all of the intellectual property rights, including copyrights, patents, trade secrets, trade marks, and service marks in the said documents that the Contract Vendor conceives or originates, either individually or jointly with others, which arises out of the performance of the Master Agreement, will be the property of the Purchasing Entity and are, by the Master Agreement, assigned to the Purchasing Entity along with ownership of any and all copyrights in the copyrightable material. The Contract Vendor also agrees, upon the request of the Purchasing Entity, to execute all papers and perform all other acts necessary to assist the Purchasing Entity to obtain and register copyrights on such materials. Where applicable, works of authorship created by the Contract Vendor for the Purchasing Entity in performance of the Master Agreement shall be considered "works for hire" as defined in the U.S. Copyright Act. c. Notwithstanding the above, the Purchasing Entity will not own any of the Contract Vendor's pre-existing intellectual property that was created prior to the Master Agreement and which the Purchasing Entity did not pay the Contract Vendor to create. Subject to payment in full for the products, equipment or services, the Contract Vendor grants the Purchasing Entity a perpetual, irrevocable, non-exclusive, royalty free license for Contract Vendor's pre-existing intellectual property that is contained in the products, materials, equipment or services that are purchased through this Master Agreement. Contract Vendor will retain all right, title and interest in and to all Intellectual Property Rights in or related to the services, or tangible components thereof, including but not limited to (a) all know-how, intellectual property, methodologies, processes, technologies, algorithms, software or development tools used in performing the services, and (b) such ideas, concepts, know-how, processes and reusable reports, designs, charts, plans, specifications, documentation, forms, templates or output which are developed, created or otherwise used by or on behalf of Contract Vendor in the course of performing the services 13 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. or creating the deliverables, other than portions that specifically incorporate proprietary or Confidential Information or data of Ordering Entity (collectively, the "ResiduaiiP"), even if embedded in the deliverable.

31. WAIVER OF BREACH. Failure of Lead State Master Agreement Administrator, Participating Entity, or Purchasing Entity to declare a default or enforce any rights and remedies shall not operate as a waiver under this Master Agreement or Participating Addendum. Any waiver by the Lead State or Participating Entity must be in writing.

Waiver by the Lead State Master Agreement Administrator, Participating Entity, or Purchasing Entity of any default, right or remedy under this Master Agreement or Participating Addendum, or breach of any terms or requirements shall not be construed or operate as a waiver of any subsequent default or breach of such term or requirement, or of any other term or requirement under this Master Agreement, a Participating Addendum, or order.

32. WARRANTY. The warranty provided must be the manufacturers written warranty tied to the product at the time of purchase and must include the following:: (a) the Product performs according to the specifications (b) the Product is suitable for the ordinary purposes for which such Product is used, (c) the Product is designed and manufactured in a commercially reasonable manner, and (d) the Product is free of defects.

For third party products sold by the Contract Vendor, the Contract Vendor will assign the manufacturer or publisher's warranty and maintenance. The Contract Vendor will provide warranty and maintenance call numqers and assist the customer in engaging the manufacturer on warranty and maintenance issues.

Upon breach of the warranty, the Contract Vendor will repair or replace (at no charge to the Purch11sing Entity) the Product whose nonconformance is discovered and made known to the Contract Vendor. If the repaired and/or replaced Product proves to be inadequate, or fails of its essential purpose, the Contract Vendor will refund the full amount of any payments that have been made. The rights and remedies of the parties under this warranty are in addition to any other rights and remedies of the parties provided by law or so ordered by the court,

33. LIMITATION OF LIABILITY. NEGOTIATED.

A. CONTRACT VENDOR WILL NOT BE LIABLE FOR ANY INCIDENTAL, INDIRECT, PUNITIV~:. SPECIAL OR

CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE PRODUCTS, SOFTWARE OR SERVICES PROVIDED HEREUNDER. EXCEPT FOR YOUR BREACH OF PAYMENT 0)3LIGATIONS OR CONFIDENTIALITY REQUIREMENTS, NEITHER PARTY SHALL HAVE LIABILITY FORTH~ FOLLOWING:
(1) LOSS OF REVENUE, INCOME, PROFIT OR SAVINGS; (2) LOST OR CORRUPTED DATA OR SOFTWARE, LOSS OF USE OF A SYSTEM OR NETWORK OR THE RECOVERY OF SUCH; (3) LOSS Of BUSINESS OPPORTUNITY; (4) BUSINESS INTERRUPTION OR DOWNTIME; OR (5) DELIVERABLES, DELL PRODUCTS OR THIRD-PARTY PRODUCTS NOT BEING AVAILABLE FOR USE.

B. CONTRACT VENDOR'S TOTAL LIABILITY FOR ANY AND ALL CLAIMS ARISING OUT OF OR IN

CONNECTION WITH THIS AGREEMENT AND ALL PARTICIPATING ADDENDA SOURCEO FROM THIS

MASTER AGREEMENT (INCLUDING ANY PRODUCTS, SOFTWARE, OR SERVICES PROVIDED HEREUNDER) SHALL NOT EXCEED THE AGGREGATE AMOUNT OF TEN MILLION DOLL.ARS ($10,000,000).

C. THESE LIMITATIONS, EXCLUSIONS AND DISCLAIMERS SHALL APPLY TO ALL CLAIMS fOR DAMAGES, WHETHER BASED IN CONTRACT, WARRANTY, STRICT LIABILITY, NEGLIGENCE, TORT OR OTHERWISE.

THE PARTIES AGREE THAT THESE LIMITATION OF LIABILITY ARE AGREED ALLOCATIPNS OF RISK

CONSTITUTING IN PART THE CONSIDERATION FOR CONTRACT VENDOR'S SALE OF PRODUCTS, SOFTWARE OR SERVICES TO ORDERING ENTITY, AND SUCH LIMITATIONS WILL APP(.. Y

NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY AND EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LIABILITIES.

34. SERVICE AGREEMENTS. NEGOTIATED. Contract Vendor may provide Services, Software or Deliverables to you in accordance with one or more "Service Agreements." "Service Agreements" are service contract~. including "Service Descriptions" available at www.dell.com/servicecontracts/us, "Statements of Work," and any other· such mutually agreed upon documents. Each Service Agreement will be interpreted as a single agreement, independent of any other Service Agreement, so that all of the provisions are given as full effect as possible.

Any and all licensing, maintenance, or order specific agreements referenced within the terms and conditions of this Master agreement are agreed to only to the extent that the terms do not conflict with the terms of !he Participating Addendum or the Master Agreement, and to the extent the terms are not in conflict with the Participating Entities' applicable laws. In the event of conflict the terms and conditions, the Participating Addendum, ancl then the Master Agreement shall take precedence, as detailed in the Order of Precedence defined herein. Notwithstanding the 14 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. foregoing, licensing, maintenance agreements, or order specific agreements may be further negotiated by the Contract Vendor and the potential Purchasing Entity, provided the contractual documents are duly executed in writing.

35. SOFTWARE LICENSE. NEGOTIATED. Software (defined as any software, library, utility, tool, or other computer or program code, in object (binary) or source-code form as well as the related documentation provided by Contract Vendor to Purchasing Entity) is subject to the separate license agreements accompanying the Software, along with any product guides,' operating manuals, or other documentation included with the software media packaging or presented to Purchasing Entity during the installation or use of the Software. Purchasing Entity agrees that it will be bound by such license agreement.

Any and all licensing, maintenance, or order specific agreements referenced within the terms and conditions of this Master agreement are agreed to only to the extent that the terms do not conflict with the terms of the Participating Addendum or the Master Agreement, and to the extent the terms are not in conflict with the Participating Entities' applicable laws. In the event of conflict the terms and conditions, the Participating Addendum, and then the Master Agreement shall take precedence, as detailed in the Order of Precedence defined herein. Notwithstanding the foregoing, licensing, maintenance agreements, or order specific agreements may be further negotiated by the Contract Vendor and the potential Purchasing Entity, provided the contractual documents are duly executed in writing.

36. EXPORT COMPLIANCE. NEGOTIATED. Contract Vendor, Lead State and Purchasing Entities acknowledge that products (including software) sold or licensed under this Master Agreement are subject to the export control laws and regulations of the United States and other countries from which they were supplied and in which they are used and Purchasing Entity agrees to abide by those laws and regulations. Purchasing Entity warrants that any software provided by it and used as a part of the services supplied by Contract Vendor under this Master Agreement contains no encryption or to the extent that it contains encryption such software is approved for export under the relevant laws or regulations.

37. RETURNS AND EXCHANGES. NEGOTIATED. Contract Vendor's return policy can be found at www.dell.com/returnspolicy and applies to any returns and exchanges. Before returning or exchanging a Product, Purchasing Entity must contact Contract Vendor directly to obtain an authorization number to include with the return.

Purchasing Entity must return Products to Contract Vendor in their original or equivalent packaging, and Purchasing Entity is responsible for risk of loss, as well as shipping and handling fees. Additional fees, including up to a 15% restocking fee, may apply. Restocking fees must be approved by the customer. If Purchasing Entity fails to follow the return or exchange instructions provided by Contract Vendor, Contract Vendor will not be responsible for any loss, damage, or modification of a Product, or processing of a Product for disposal or resale. Credit for partial returns may be less than invoice or individual component prices due to bundled or promotional pricing associated with the original purchase. This restocking fee shall not apply in the case of Contract Vendor error. 15 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

MASTER AGREEMENT TERMS AND CONDITIONS
C. MINNESOTA TERMS AND CONDITIONS

1. ACCEPTANCE OF PROPOSAL CONTENT. The contents of this RFP and selected portions of response of the successful Proposer will become contractual obligations, along with the final Master Agreement, if acquisition action ensues. The Lead State is solely responsible for rendering the decision in matters of interpretation of all terms and conditions.

2. ACCESSIBILITY STANDARDS. The State of Minnesota has developed IT Accessibility Standards effective September 1, 2010, which entails, in part, the Web Content Accessibility Guidelines (WCAG) 2.0 (Level AA) and Section 508 Subparts A-D which can be viewed at http://www.mmd.admin.state.mn.us/pdf/accessibility standard.pdf Responders must complete the WCAG VPAT form included in the FORMS section of the RFP. The completed VPAT form will be scored based on its compliance with the Accessibility Standards. The requested WCAG VPAT applies to the responder's website to be offered under the Contract. For products offered, VPATS are only to be provided upon request by the participating entity.

Upon request by the participating entity, the responder must make best efforts to provide Voluntary Product Accessibility Templates (VPATS) for all products offered in its response. Click here for link to VPATS for both Section 508 VPAT and WCAG 2.0 VPAT http://mn.gov/oet/policies-and-standards/accessibility/#.

3. ADMINISTRATIVE PERSONNEL CHANGES. The Contract Vendor must notify the Contract Administrator of changes in the Contract Vendor's key administrative personnel, in advance and in writing. Any employee of the Contract Vendor who, in the opinion of the State of Minnesota, is unacceptable, shall be removed from the project upon written notice to the Contract Vendor. In the event that an employee is removed pursuant to a written request from the Acquisition Management Specialist, the Contract Vendor shall have 10 working days in which to fill the vacancy with an acceptable employee.

4. AMENDMENT(S). Master Agreement amendments shall be negotiated by the Lead State with the Contract Vendor whenever necessary to address changes in the terms and conditions, costs, timetable, or increased or decreased scope of work. An approved Master Agreement amendment means one approved by the authorized signatories of the Contract Vendor and the Lead State as required by law.

5. AMERICANS WITH DISABILITIES ACT (ADA). DELETED.

6. AWARD OF RELATED CONTRACTS. In the event the Lead State undertakes or awards supplemental Contracts for work related to the Master Agreement or any portion thereof, the Contract Vendor shall cooperate fully with all other Contract Vendors and the State in all such cases. All Master Agreements between subcontractors and the Contract Vendor shall include a provision requiring compliance with this section.

7. AWARD OF SUCCESSOR CONTRACTS. In the event the State undertakes or awards a successor for work related to the Contract or any portion thereof, the current Contract Vendor shall cooperate fully during the transition with all other Contract Vendors and the State in all such cases. All Master Agreements between subcontractors and the Contract Vendor shall include a provision requiring compliance with this section.

8. CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY AND VOLUNTARY EXCLUSION a. Certification regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion- Lower Tier Covered Transactions.

Instructions for certification:

1. By signing and submitting this proposal, the prospective lower tier participant [responder] is providing the certification set out below.

2. The certification in this clause is a material representation of fact upon which reliance was placed when this transaction was entered into. If it is later determined that the prospective lower tier participant knowingly rendered an erroneous certification, in addition to other remedies available to the federal government, the department or agency with which this transaction originated may pursue available remedies, including suspension and/or debarment.

3. The prospective lower tier participant shall provide immediate written notice to the person to whom this proposal [response] is submitted if at any time the prospective lower tier participant learns that its certification 16 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. was erroneous when submitted or had become erroneous by reason of changed circumstances.

4. The terms covered transaction, debarred, suspended, ineligible lower tier covered transaction, participant, person, primary covered transaction, principal, proposal, and voluntarily excluded, as used in this clause, have the meaning set out in the Definitions and Coverages section of rules implementing Executive Order 12549. You may contact the person to which this proposal is submitted for assistance in obtaining a copy of those regulations.

5. The prospective lower tier participant agrees by submitting this response that, should the proposed covered transaction be entered into, it shall not knowingly enter into any lower tier covered transaction [subcontract equal to or exceeding $25,000] with a person who is proposed for debarment under 48 CFR part 9, subpart 9.4, debarred, suspended, declared ineligible, or voluntarily excluded from participation in this covered transaction, unless authorized by the department or agency with which this transaction originated.

6. The prospective lower tier participant further agrees by submitting this proposal that it will include this clause titled, "Certification Regarding Debarment, Suspension, Ineligibility, and Voluntary Exclusion- Lower Tier Covered Transaction," without modification, in all lower tier covered transactions and in all solicitations for lower tier covered transactions.

7. A participant in a covered transaction may rely upon a certification of a prospective participant in a lower tier covered transaction that it is not proposed for debarment under 48 CFRpart 9, subpart 9.4, debarred, suspended, ineligible, or voluntarily excluded from covered transactions, unless it knows that the certification is erroneous. A participant may decide the method and frequency by which it determines the eligibility of its principals. Each participant may, but is not required to, check the list of parties excluded from federal procurement and nonprocurement programs.

8. Nothing contained in the foregoing shall be construed to require establishment of a system of records in order to render in good faith the certification required by this clause. The knowledge and information of a participant is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings.

9. Except for transactions authorized under paragraph 5 of these instructions, if a participant in a covered transaction knowingly enters into a lower tier covered transaction with a person who is proposed for debarment under 48 CFR part 9, subpart 9.4, suspended, debarred, ineligible, or voluntarily excluded from participation in this transaction, in addition to other remedies available to the Federal government, the department or agency with which this transaction originated may pursue available remedies, including suspension and/or debarment.
b. Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion -Lower Tier Covered Transactions.

1. The prospective lower tier participant certifies, by submission of this proposal, that neither it nor its principals is presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation in this transaction by any Federal department or agency.

2. Where the prospective lower tier participant is unable to certify to any of the statements in this certification, such prospective participant shall attach an explanation to this proposal.

9. CHANGE REQUESTS. The Lead State reserves the right to request, during the term of the Master Agreement, changes to the products offered. Products introduced during the term of the Master Agreement shall go through a formal review process. A formal process of changing the Master Agreement shall be developed during the negotiation of the Master Agreement. The Contract Vendor shall evaluate and recommend products for which agencies have an _expressed need. The Lead State shall require the Contract Vendor to provide a summary of its research of those products being recommended for inclusion in the Master Agreement as well as defining how adding the product will enhance the Master Agreement. The Lead State may request that products, other than those recommended, are added to the Master Agreement.

In the event that the Lead State desires to add new products and services that are not included in the original Master Agreement, the Lead State requires that independent manufacturers and resellers cooperate with the already established Contract Vendor in order to meet the Lead State's requirements. Evidence of the need to add products or services should be demonstrated to the Lead State. The Master Agreement shall be modified via supplement or 17 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. amendment. The Lead State will negotiate the inclusion of the products and services with the Contract Vendor. No products or services will be added to the Master Agreement without the Lead State's prior approval.

10. CONFLICT MINERALS. Contract Vendor must provide information to the public on its website regarding the use of conflict minerals, as required by Section 13(p) of the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder. See: http://www.sec.gov/rules/final/2012/34-67716.pdf.

11. COPYRIGHTED MATERIAL WAIVER. The Lead State reserves the right to use, reproduce and publish proposals in any manner necessary for State agencies and local units of government to access the responses and/or to respond to request for information pursuant to Minnesota Government Data Practices Act, , including but not limited to emailing, photocopying, State lntranet/lnternet postings, broadcast faxing, and direct mailing. In the event that the response contains copyrighted or trademarked materials, it is the responder's responsibility to obtain permission for the Lead State to reproduce and publish the information, regardless of whether the responder is the manufacturer or reseller of the products listed in the materials. By signing its response, the responder certifies that it has obtained all necessary approvals for the reproduction and/or distribution of the contents of its response and agrees to indemnify, protect, save and hold the Lead State, its representatives and employees harmless from any and all claims arising from the violation of this section and agrees to pay all legal fees incurred by the Lead State in the defense of any such action.

12. EFFECTIVE DATE. Pursuant to Minnesota law, the Master Agreement arising from this RFP shall be effective upon the date of final execution by the Lead State, unless a later date is specified in the Master Agreement.

13. FOREIGN OUTSOURCING OF WORK. Upon request, the Contract Vendor is required to provide information regarding the location of where services, data storage and/or location of data processing under the Master Agreement will be performed.

14. GOVERNMENT DATA PRACTICES. The Contract Vendor and the Lead State must comply with the Minnesota Government Data Practices Act, Minn. Stat. Ch. 13, (and where applicable, if the Lead State contracting party is part of the judicial branch, with the Rules of Public Access to Records of the Judicial Branch promulgated by the Minnesota Supreme Court as the same may be amended from time to time) as it applies to all data provided by the Lead State to the Contract Vendor and all data provided to the Lead State by the Contract Vendor. In addition, the Minnesota GovE>rnment Data Practices Act applies to all data created, collected, received, stored, used, maintained, or disseminated by the Contract Vendor in accordance with the Master Agreement that is private, nonpublic, protected nonpublic, or confidential as defined by the Minnesota Government Data Practices Act, Ch. 13 (and where applicable, that is not accessible to the public under the Rules of Public Access to Records of the Judicial Branch).

In the event the Contract Vendor receives a request to release the data referred to in this article, the Contract Vendor must immediately notify the Lead State. The Lead State will give the Contract Vendor instructions concerning the release of the data to the requesting party before the data is released. The civil remedies of Minn. Stat. § 13.08, apply to the release of the data by either the Contract Vendor or the Lead State.

The Contract Vendor agrees to indemnify, save, and hold the State of Minnesota, its agent and employees, harmless from all claims arising out of, resulting from, or in any manner attributable to any violation of any provision of the Minnesota Government Data Practices Act (and where applicable, the Rules of Public Access to Records of the Judicial Branch), including legal fees and disbursements paid or incurred to enforce this provision of the Master Agreement. In the event that the Contract Vendor subcontracts any or all of the work to be performed under the Master Agreement, the Contract Vendor shall retain responsibility under the terms of this article for such work.

15. HAZARDOUS SUBSTANCES. To the extent that the goods to be supplied by the Contract Vendor contain or may create hazardous substances, harmful physical agents or infectious agents as set forth in applicable State and federal laws and regulations, the Contract Vendor must provide Material Safety Data Sheets regarding those substances. A copy must be included with each delivery.

16. HUMAN RIGHTS/AFFIRMATIVE ACTION. The Lead State requires affirmative action compliance by its Contract Vendors in accordance with Minn. Stat. § 363A.36 and Minn. R. 5000.3400 to 5000.3600. a. Covered contracts and Contract Vendors. One-time acquisitions, or a contract for a predetermined amount of goods and/or services, where the amount of your response is in excess of $100,000 requires completion of the Affirmative Action Certification page. If the solicitation is for a contract for an indeterminate amount of goods and/or services, and the State estimated total value of the contract exceeds $100,000 whether it will be a multiple award contract or not, you must complete the Affirmative Action Certification page. If the contract dollar amount or the State estimated total contract amount exceeds $100,000 and the Contract Vendor employed more than 18 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. 40 full-time employees on a single working day during the previous 12 months in Minnesota or in the state where it has its principal place of business, the Contract Vendor must comply with the requirements of Minn. Stat. § 363A.36, subd. 1 and Minn. R. 5000.3400 to 5000.3600. A Contract Vendor covered by Minn. Stat. § 363A.36, subd. 1 and Minn. R. 5000.3400 to 5000.3600 that had more than 40 full-time employees within Minnesota on a single working day during the previous 12 months must have a certificate of compliance issued by the commissioner of the Department of Human Rights (certificate of compliance). A Contract Vendor covered by Minn. Stat. § 363A.36, subd. 1 that did not have more than 40 full-time employees on a single working day during the previous 12 months within Minnesota but that did have more than 40 full-time employees in the state where it has its principal place of business and that does not have a certificate of compliance must certify that it is in compliance with federal affirmative action requirements. b. Minn. Stat. § 363A.36, subd. 1 requires the Contract Vendor to have an affirmative action plan for the employment of minority persons, women, and qualified disabled individuals approved by the commissioner of the Department of Human Rights (commissioner) as indicated by a certificate of compliance. Minn. Stat. § 363A.36 addresses suspension or revocation of a certificate of compliance and contract consequences in that event. A contract awarded without a certificate of compliance may be voided. c. Minn. R. 5000.3400-5000.3600 implement Minn. Stat. § 363A.36. These rules include, but are not limited to, criteria for contents, approval, and implementation of affirmative action plans; procedures for issuing certificates of compliance and criteria for determining a Contract Vendor's compliance status; procedures for addressing deficiencies, sanctions, and notice and hearing; annual compliance reports; procedures for compliance review; and contract consequences for noncompliance. The specific criteria for approval or rejection of an affirmative action plan are contained in various provisions of Minn. R. 5000.3400-5000.3600 including, but not limited to, parts 5000.3420-5000.3500 and parts 5000.3552-5000.3559. d. Disabled Workers. Minn. R. 5000.3550 provides the Contract Vendor must comply with the following affirmative action requirements for disabled workers.

AFFIRMATIVE ACTION FOR DISABLED WORKERS
(a) The Contract Vendor must not discriminate against any employee or applicant for employment because of physical or mental disability in regard to any position for which the employee or applicant for employment is qualified. The Contract Vendor agrees to take affirmative action to employ, advance in employment, and otherwise treat qualified disabled persons without discrimination based upon their physical or mental disability in all employment practices such as the following: employment, upgrading, demotion or transfer, recruitment, advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training, including apprenticeship.
(b) The Contract Vendor agrees to comply with the rules and relevant orders of the Minnesota Department of Human Rights issued pursuant to the Minnesota Human Rights Act. (c) In the event of the Contract Vendor's noncompliance with the requirements of this clause, actions for noncompliance may be taken in accordance with Minn. Stat. § 363A.36 and the rules and relevant orders of the Minnesota Department of Human Rights issued pursuant to the Minnesota Human Rights Act. (d) The Contract Vendor agrees to post in conspicuous places, available to employees and applicants for employment, notices in a form to be prescribed by the commissioner of the Minnesota Department of Human Rights. Such notices must state the Contract Vendor's obligation under the law to take affirmative action to employ and advance in employment qualified disabled employees and applicants for employment, and the rights of applicants and employees.
(e) The Contract Vendor must notify each labor union or representative of workers with which it has a collective bargaining agreement or other contract understanding, that the Contract Vendor is bound by the terms of Minn. Stat. § 363A.36 of the Minnesota Human Rights Act and is committed to take affirmative action to employ and advance in employment physically and mentally disabled persons. e. Consequences. The consequences of a Contract Vendor's failure to implement its affirmative action plan or make a good faith effort to do so include, but are not limited to, suspension or revocation of a certificate of compliance by the commissioner, refusal by the commissioner to approve subsequent plans, and termination of all or part of the Contract by the commissioner or the State.
19 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. f. Certification. The Contract Vendor hereby certifies that it is in compliance with the requirements of Minn. Stat. § 363A.36, subd. 1 and Minn. R. 5000.3400-5000.3600 and is aware of the consequences for noncompliance. It is agreed between the parties that Minn. Stat. 363.36 and Minn. R. 5000.3400 to 5000.3600 are incorporated into any contract between these parties based upon this specification or any modification of it. A copy of Minn. Stat. § 363A.36 and Minn. R. 5000.3400 to 5000.3600 are available upon request from the contracting agency.

17. INDEMNIFICATION. NEGOTIATED. The Contract Vendor shall indemnify, protect, save and hold harmless the Lead State and the Participating Entity, its representatives and employees, from any and all third party claims or causes of action for personal bodily injury, including death, and damage to tangible personal property, including all legal fees incurred by the Lead State and the Participating Entity arising from the negligence in the performance of the Master Agreement by the Contract Vendor or its agents, employees, or subcontractors. This clause shall not be construed to bar any legal remedies the Contract Vendor may have with the Lead State's and Participating Entity's failure to fulfill its obligations pursuant to the Master Agreement.

If the Participating Entity's laws require approval of a third party to defend Participating Entity, Participating Entity will seek such approval and if approval is not received, Contract Vendor is not required to defend that Participating Entity.

18. INTELLECTUAL PROPERTY INDEMNIFICATION. NEGOTIATED In the event of any such claim by any third party against the Participating Entity that Products, Software, Services or Deliverables (excluding Third-Party Products and open source software) prepared or produced by Dell and delivered pursuant to this Agreement infringe or misappropriate that third party's U.S. patent, copyright, trade secret, or other intellectual property rights ("Indemnified Claims"), the Participating Entity shall promptly notify the Contract Vendor. The Contract Vendor, at its own expense, shall indemnify; defend to the extent permitted by the Participating Entity's laws, and hold harmless the Participating Entity against any loss, cost, expense, or liability (including legal fees) arising out of such a claim, whether or not such claim is successful against the Participating Entity.

If Contract Vendor receives prompt notice such a claim that in the ContractVendor's opinion is likely to result in an adverse ruling, the Contract Vendor shall at its option (1) obtain a right for the Participating Entity to continue using such Products, Deliverables or Software or allow Contract Vendor to continue performing the Services; (2) modify such Products, Software, Services or Deliverables to make them non-infringing; (3) replace such Products, Software, Services or Deliverables with a non-infringing equivalent; or (4) refund any pre-paid fees for the allegedly infringing Services that have not been performed or provide a reasonable depreciated or pro rata refund for the allegedly infringing Product, Deliverables or Software.

Notwithstanding the foregoing, Contract Vendor shall have no obligation under this Section for any claim resulting or arising from (1) modifications of the Products, Software, Services Deliverables that were not performed by or on behalf of Contract Vendor; (2) the combination, operation, or use of the Products, Software, Services or Deliverables in connection with a third-party product, software or service (the combination of which causes the claimed infringement); or (3) Contract Vendor's compliance with Participating Entity's written specifications or directions, including the incorporation of any software or other materials or processes provided by or requested by Participating Entity. Contract Vendor's duty to indemnify and defend under this Section is contingent upon: (x) Contract Vendor receiving prompt written notice of the third-party claim or action for which Contract Vendor must indemnify Participating Entity, (y) Contract Vendor having the right to solely control the defense and resolution of such claim or action, and (z) Participating Entity's cooperation with Contract Vendor in defending and resolving such claim or action.

This Section states Participating Entity's exclusive remedies for any third-party intellectual property claim or action, and nothing in this Agreement or elsewhere will obligate Contract Vendor to provide any greater indemnity to Participating Entity.

19. JURISDICTION AND VENUE. This RFP and any ensuing Master Agreement, its amendments and supplements thereto, shall be governed by the laws of the State of Minnesota, USA. Venue for all legal proceedings arising out of the Master Agreement, or breach thereof, shall be in the State or federal court with competent jurisdiction in Ramsey County, Minnesota. By submitting a response to this Request for Proposal, a Responder voluntarily agrees to be subject to the jurisdiction of Minnesota for all proceedings arising out of this RFP, any ensuing Master Agreement, or any breach thereof.

20. LAWS AND REGULATIONS. Any and all services, articles or equipment offered and furnished must comply fully with all local, State and federal laws and regulations, including Minn. Stat. § 181.59 prohibiting discrimination and business registration requirements of the Office of the Minnesota Secretary of State.

21. NONVISUAL ACCESS STANDARDS. Pursuant to Minn. Stat.§ 16C.145, the Contract Vendor shall comply with the following nonvisual technology access standards :
20 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. a. That the effective interactive control and use of the technology, including the operating system applications programs, prompts, and format of the data presented, are readily achievable by nonvisual means; b. That the nonvisual access technology must be compatible with information technology used by other individuals with whom the blind or visually impaired individual must interact; c. That nonvisual access technology must be integrated into networks used to share communications among employees, program participants, and the public; and
d. That the nonvisual access technology must have the capability of providing equivalent access by nonvisual means to telecommunications or other interconnected network services used by persons who are not blind or visually impaired.

These standards do not require the installation of software or peripheral devices used for nonvisual access when the information technology is being used by individuals who are not blind or visually impaired.

22. NOTICE TO RESPONDERS. Pursuant to Minn. Stat. § 270C.65, subd. 3, Contract Vendors are required to provide their Federal Employer Identification Number or Social Security Number. This information may be used in the enforcement of federal and State tax laws. Supplying these numbers could result in action to require a Contract Vendor to file tax returns and pay delinquent tax liabilities. These numbers will be available to federal and State tax authorities and State personnel involved in the payment of State obligations.

23. ORGANIZATIONAL CONFLICTS OF INTEREST. The responder warrants that, to the best of its knowledge and belief, and except as otherwise disclosed, there are no relevant facts or circumstances which could give rise to organizational conflicts of interest. An organizational conflict of interest exists when, because of existing or planned activities or because of relationships with other persons:
• a Contract Vendor is unable or potentially unable to render impartial assistance or advice to the State; • the Contract Vendor's objectivity in performing the work is or might be otherwise impaired; or • the Contract Vendor has an unfair competitive advantage.

The Contract Vendor agrees that if an organizational conflict of interest is discovered after award, an immediate and full disclosure in writing shall be made to the Assistant Director of the Department of Administration's Materials Management Division that shall include a description of the action the Contract Vendor has taken or proposes to take to avoid or mitigate such conflicts. If an organizational conflict of interest is determined to exist, the State may, at its discretion, cancel the Master Agreement. In the event the Contract Vendor was aware of an organizational conflict of interest prior to the award of the Master Agreement and did not disclose the conflict to the Master Agreement Administrator, the State may terminate the Master Agreement for default. The provisions of this clause shall be included in all subcontracts for work to be performed, and the terms "Contract,""Contract Vendor," "Master Agreement", "Master Agreement Administrator'' and "Contract Administrator" modified appropriately to preserve the State's rights.

24. PAYMENT CARD INDUSTRY DATA SECURITY STANDARD AND CARDHOLDER INFORMATION SECURITY.

Contract Vendor assures all of its Network Components, Applications, Servers, and Subcontractors (if any) comply with the Payment Card Industry Data Security Standard ("PCIDSS"). "Network Components" shall include, but are not limited to, Contract Vendor's firewalls, switches, routers, wireless access points, network appliances, and other security appliances; "Applications" shall include, but are not limited to, all purchased and custom external (web) applications. "Servers" shall include, but are not limited to, all of Contract Vendor's web, database, authentication, DNS, mail, proxy, and NTP servers. "Cardholder Data" shall mean any personally identifiable data associated with a cardholder, including, by way of example and without limitation, a cardholder's account number, expiration date, name, address, social security number, or telephone number.

Subcontractors (if any) must be responsible for the security of all Cardholder Data in its possession; and will only use Cardholder Data for assisting cardholders in completing a transaction, providing fraud control services, or for other uses specifically required by law. Contract Vendor must have a business continuity program which confonms to PCIDSS to protect Cardholder Data in the event of a major disruption in its operations or in the event of any other disaster or system failure which may occur to operations; will continue to safeguard Cardholder Data in the event this Agreement terminates or expires; and ensure that a representative or agent of the payment card industry and a representative or agent of the State shall be provided with full cooperation and access to conduct a thorough security 21 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. review of Contract Vendor's operations, systems, records, procedures, rules, and practices in the event of a security intrusion in order to validate compliance with PCIDSS.

25. PERFORMANCE WHILE DISPUTE IS PENDING. Notwithstanding the existence of a dispute, the parties shall continue without delay to carry out all of their responsibilities under the Master Agreement that are not affected by the dispute. If a party fails to continue without delay to perform its responsibilities under the Master Agreement, in the accomplishment of all undisputed work, any additional cost incurred by the other parties as a result of such failure to proceed shall be borne by the responsible party.

26. PREFERENCE.

Targeted/Economically Disadvantaged.ln accordance with Minn. Stat. § 16C.16, subds. 6 and 7, eligible certified targeted group (TG) businesses and certified economically disadvantaged (ED) businesses will receive a 6 percent preference on the basis of award for this RFP. The preference is applied only to the first $500,000 of the response to the RFP. Eligible TG businesses must be currently certified by the Materials Management Division prior to the bid opening date and time.

To verify TG/ED certification, refer to the Materials Management Division's web site at www.mmd.admin.state.mn.usunder "Vendor Information, Directory of Certified TG/ED Vendors." To verify TG eligibility for preference, refer to the Materials Management Division's web site under "Vendor Information, Targeted Groups Eligible for Preference in State Purchasing" or call the Division's Helpline at 651.296.2600.

Reciprocal Preference. In accordance with Minn. Stat. §16C.06, subd 7, the acquisition of goods or services shall be allowed a preference over a non-resident vendor from a state that gives or requires a preference to vendors from that state, the preference shall be equal to the preference given or required by the state of the non-resident vendor. If you wish to be considered a Minnesota Resident vendor you must claim that by filling out the Resident Vendor Form included in this sol(citation and include it in your response.

Veteran. In accordance with Minn. Stat.§ 16C.16, subd. 6a, (a) Except when mandated by the federal government as a condition of receiving federal funds, the commissioner shall award up to a six percent preference in the amount bid on state procurement to certified small businesses that are majority-owned and operated by:
(1) recently separated veterans who have served in active military service, at any time on or after September 11, 2001, and who have been discharged under honorable conditions from active service, as indicated by the person's United States Department of Defense form DD-214 or by the commissioner of veterans affairs; (2) veterans with service-connected disabilities, as determined at any time by the United States Department of Veterans Affairs; or
(3) any other veteran-owned small businesses certified under section 16C.19, paragraph (d).

In accordance with Minn. Stat.§ 16C.19 (d), a veteran-owned small business, the principal place of business of which is in Minnesota, is certified if it has been verified by the United States Department of Veterans Affairs as being either a veteran-owned small business or a service disabled veteran-owned small business, in accordance with Public Law 109-461 and Code of Federal Regulations, title 38, part 74.

To receive a preference the veteran-owned small business must meet the statutory requirements above by the solicitation opening date and time. The preference is applied only to the first $500,000 of the response.

If responder is claiming the veteran-owned preference, attach documentation, sign and return form with response to the solicitation. Only eligible veteran-owned small businesses that meet the statutory requirements and provide adequate documentation will be given the preference.

27. PUBLIC INFORMATION. Once the information contained in the responses is deemed public information, interested parties may request to obtain the public information. You may call 651.201.2413 between the hours of 8:00 a.m. to 4:30 p.m. to arrange this.

28. PUBLICITY. Any publicity given to the program, publications or services provided resulting from a State contract for goods or services, including but not limited to notices, informational pamphlets, press releases, research, reports, signs and similar public notices prepared by or for the Contract Vendor, or its employees individually or jointly with others, or any subcontractors, shall identify the State as the sponsoring agency and shall not be released, unless such release is a specific part of an approved work plan included in the Master Agreement prior to its approval by the State's Authorized Representative and the State's Assistant Director or designee of Materials Management Division.

The Contract Vendor shall make no representations of the State's opinion or position as to the quality or effectiveness of the products and/or services that are the subject of the Master Agreement without the prior written consent of the 22 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

State's Assistant Director or designee of Materials Management Division. Representations include any publicity, including but not limited to advertisements, notices, press releases, reports, signs, and similar public notices.

29. PURCHASE ORDERS. NEGOTIATED. The State requires that there will be no minimum order requirements or charges to process an individual purchase order. The Master Agreement number and the PO number must appear on all documents (e.g., invoices, packing slips, etc.). The Ordering Entity's purchase order constitutes a binding contract.

Unless otherwise expressly agreed between a Purchasing Entity and the Contract Vendor, any preprinted terms on the Purchasing Entity's purchase order shall be given no force or effect and no terms of a purchase order that conflict with this Master Agreement or the Participating Addendum shall be binding on Contract Vendor.

30. RIGHTS RESERVED. Notwithstanding anything to the contrary, the State reserves the right to:
a. reject any and all responses received;
b. select, for Master Agreements or for negotiations, a response other than that with the lowest cost; c. waive or modify any informalities, irregularities, or inconsistencies in the responses received; d. negotiate any aspect of the proposal with any responder and negotiate with more than one responder; e. request a BEST and FINAL OFFER, if the State deems it necessary and desirable; and f. terminate negotiations and select the next response providing the best value for the State, prepare and release a new RFP, or take such other action as the State deems appropriate if negotiations fail to result in a successful Master Agreement.

31. RISK OF LOSS OR DAMAGE. The State is relieved of all risks of loss or damage to the goods and/or equipment during periods of transportation, and installation by the Contract Vendor and in the possession of the Contract Vendor or their authorized agent.

32. SEVERABILITY. If any provision of the Master Agreement, including items incorporated by reference, is found to be illegal, unenforceable, or void, then both the State and the Contract Vendor shall be relieved of all obligations arising under such provisions. If the remainder of the Master Agreement is capable of performance it shall not be affected by such declaration or finding and shall be fully performed.

33. STATE AUDITS (Minn. Stat.§ 16C.05, subd. 5). The books, records, documents, and accounting procedures and practices of the Contract Vendor or other party, that are relevant to the Master Agreement or transaction are subject to examination by the contracting agency and either the Legislative Auditor or the State Auditor as appropriate for a minimum of six years after the end of the Master Agreement or transaction. The State reserves the right to authorize delegate(s) to audit this Master Agreement and transactions.

34. SURVIVABILITY. The following rights and duties of the State and responder will survive the expiration or cancellation of the resulting Master Agreements. These rights and duties include, but are not limited to paragraphs:

Indemnification, Hold Harmless and Limitation of Liability, State Audits, Government Data Practices, Governing Law, Jurisdiction and Venue, Publicity, Intellectual Property Indemnification, and Admin Fees.

35. TRADE SECRET/CONFIDENTIAL INFORMATION. Any information submitted as Trade Secret must be identified and submitted per the Trade Secret Form and must meet Minnesota Trade Secret as defined in Minn. Stat.§ 13.37 23 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

DEPARTMENT OF ADMINI-STRATION

COMPUTER EQUIPMENT
2014-2019

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD
EXHIBIT 8 - PRICING

1. BAND(S) AWARDED: Band 1: Desktop Band 2: Laptop Band 3: Tablet Band 4: Server Band 5: Storage.

2. PRICE STRUCTURE. The contract employs a MINIMUM discount-off baseline price list structure with category exceptions for each band. The category discounts may be higher or lower than the than the band discount. The minimum discount and categorized exceptions will be applied to all "quantity one" procurements. An end user will be able to verify pricing using the named base line price list and the minimum discounts with the categorized exceptions provided in the Master Agreement.

3. PRICE GUARANTEE. These discounts must remain firm, or the discount may be increased, during the term of the Master Agreement.

4. BASELINE PRICE LIST. The Base Line Price is designated in the Pricing Discount Schedule. The Base Line Price List must be accessible and verifiable by potential end users preferably on the Contract Vendor Website. All historic versions of the Baseline Price List must be made available upon request pursuant to the audit provisions.

5. PRODUCT AND SERVICE SCHEDULE (PSS). The Product and Service Schedule (PSS) identifies a complete listing of all products and services included in the awarded Master Agreement. The PSS serves as the Contract Catalog.

The PSS will be submitted to the Lead State following contract award and must be approved by the Lead State prior to the start of any sales. The PSS must be available on the Contract Vendor website for end users to verify pricing based on the minimum discounts with category exceptions provided off a designated base line price list.

The Contract Vendor will work with each State to develop a satisfactory PSS reflecting the individual States restrictions.

6. CHANGES TO THE PSS. Contract Vendor will request changes to the PSS utilizing an Action Request Form (ARF) Submittals will be reviewed by the Lead State quarterly. Obsolete and discontinued products will be removed.

7. BULKNOLUME PRICING. Further bulk/quantity savings may be obtained when additional quantities are requested.

Additional savings are expected when competing awarded vendors for volume pricing.

8. PROMOTIONAL OFFERS. Contract Vendors may provide promotions for deeply discounted products based on their inventory and sales. The Contract Vendors will be responsible to market these offers.

9. PREMIUM SAVINGS PACKAGE PROGRAM. Contract Vendors participating in the Premium Savings Package (PSP) Program will commit to the standard configurations. The standards currently are refreshed every six months (May and November). Refresh schedule is subject to change. See current configurations:
http:/lwww.wnpsp.com/index.html. States and other Participating Entities can choose to purchase these packages without any signing additional documents.

10. TRADE-IN. Trade-In Programs are the option of the Participating Entity. The Participating Addendum by each State may address the allowance of Trade-Ins.

11. SERVICES. Services are at the option of the Participating Entity. The Participating Addendum by each State may address service agreement terms and related travel.
24 CONTRACT NO. MNWNC·10B MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

12. LEASING. The Discount schedule will indicate if the Contract Vendor provides leasing. Participating Entities may enter in to lease agreements if they have the legal authority to enter into these types of agreements. The Participating Addendum by each State will identify if and how leasing agreement terms will be conducted.

13. FREIGHT. All prices shall be FOB Destination, prepaid and allowed (with freight included in the price), to the address, receiving dock or warehouse as specified on the ordering agency's purchase order, In those situations in which the "deliver-to" address has no receiving dock or agents, the Contract Vendor must be able to deliver to the person specified on the PO without additional cost. If there is a special case where inside delivery fee must be charged, the Contract Vendor will notify the customer in advance in order for the customer to determine if the additional cost will affect the decision to utilize the Contract Vendor.

14. DELIVERY. Delivery of ordered product should be completed within thirty (30) calendar days after receipt of an order, unless otherwise agreed to by the ordering agency.
25 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. c.

Adntbt
~.lflinnsstJta DEPARTMENT OF ADMINIStRATiON

COMPUTER EQUIPMENT
2014-2019

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD

EXHIBIT B - PRICING SCHEDULE
may .purchase warranty
purchases of Category 0 Services, Dell will offer a 13.5% discount. 26 CONTRACT NO. MNWNC·10B MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

DEPARTMENT OF ADMINISTRATION

COMPUTER EQUIPMENT
2014-2019

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD

EXHIBIT C - PRODUCT AND SERVICE SCHEDULE (PSS)

1. MAINTAINING THE PSS. The Product and Service Schedule (PSS) identifies a complete listing of all products and services included in the awarded Master Agreement. The PSS serves as the WSCA-NASPO Contract Catalog. The PSS will be submitted to the Lead State following contract award and must be approved by the Lead State prior to the start of any sales. The PSS must be available on the Contract Vendor website for end users to verify pricing based on the minimum discounts with category exceptions provided off a designated base line price list. The Contract Vendor will work with each State to develop a satisfactory PSS reflecting the individual States restrictions.

The Contract Vendor will work to develop a PSS satisfactory to the Lead State prior to the start of sales and containing the following information:
a. Band number
b. Part# - SKU #
c. Manufacturer
d. Description
e. Minimum Discount
f. Category Code (This code will be refined during the approval process) g. Other fields approved by the Lead State

2. CHANGES TO THE PSS: Contract Vendor will request changes to the PSS utilizing an Action Request Form (ARF) Submittals will be reviewed by the Lead State quarterly. Obsolete and discontinued products will be removed.

3. FORMAT: The format for the final product and service schedule will be approved within 30 days of contract award.

Suggested format is provided below:

MANUFACTURER NAME
BASELINE PRICE LIST: ------------ DATE: ___________ _
LINK:------------------
BAND Part#- SKU# MANUFACTURER DESCRIPTION MINIMUM CATEGORY

DISCOUNT CODE
1 XYZ ABC DESKTOP 60% 1M
2 550 zzzzzzz LAPTOP CART 10% 2TM
3 123A ABC SUPER TABLET 25% 3A

4. THIRD PARTY PRODUCTS: A list of third party products is to be submitted to the Lead State. Approval must be received from the Lead State prior to adding third party products to the Product and Service Schedule. Master Agreement restrictions of third party products include:
a. Contract Vendors can only offer Third Party Products in the bands they have been awarded. b. ContractVendor cannot offer products manufactured by another Contract Vendor holding a Minnesota WSCA-NASPO Master Agreement unless approved by the Lead State. c. The Contract Vendor will assign the manufacturer or publisher's warranty and maintenance. The Contract Vendor will provide warranty and maintenance call numbers and assist the customer in engaging the manufacturer on warranty and maintenance issues.
d. Any additions to the Third Party Product list must be submitted utilizing the Action Request Form. e. The approved Third Party Product list will be clearly posted on the Vendor provided website and updated as products are approved.
27 CONTRACT NO. MNWNC·108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

Adhl1:h 'Minnesota

DEPARTMENT OF ADMINISTRATION

COMPUTER EQUIPMENT
2014-2019

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD

EXHIBIT D -WEBSITE

1. IMPLEMENTATION. Within 30 calendar days of Master Agreement award, the Contract Vendor must provide a sample URL of the Master Agreement webpage to the Lead State for review and approval. The Lead State will review and determine acceptability of the website format and data. If the information is determined to be unacceptable or incorrect, the Contract Vendor will have 15 calendar days to provide revisions to the Lead State. Once the website is approved, the Contract Vendor may not make material changes to the website without notifying the Lead State and receiving written approval of the changes utilizing the Action Request Form. The Contract Vendor must continue to monitor and update the website throughout the life of the contract. Periodic audits may be conducted to ensure websites are updated and Contract Vendors will be expected to correct deficiencies.

2. WEBSITE CONTENT. The website must be separate from the Contract Vendor's commercially available (i.e., public) on-line catalog and ordering systems. Contract Vendor agrees to pursue design of a website to include the items listed below. The Lead State will review and determine acceptability of the website format and data as stated in Item 1 above.
a. Baseline Price List and historic versions
b. Approved Product and Service Schedule (PSS)
c. Product specifications, pricing, and configuration aids for the major product categories proposed that can be used to obtain an on-line quote
d. Third Party Product list will be clearly posted on the Vendor provided website and updated as products are approved
e. Link to the WSCA-NASPO EmarketCenter
f. Online ordering capability with the ability to remember multiple ship to locations if applicable to product g. Contact information for order placement, service concerns (warranty and maintenance), problem reporting, and billing concerns
h. Sales representatives for participating entities
i. Purchase order tracking
j. Available Twenty-four (24) hours per day, seven (7) days per week availability, except for regularly scheduled maintenance
k. Additional Terms may not be posted on the Website without written approval of the Lead State I. Link to the WSCA-NASPO EmarketCenter if a State is participating • m. Information on accessibility and accessible products n. If participating in Premium Savings Package Program, lead with these products and display prominently on the website
o. Links to environmental certification, including but not limited to take-back/recycling programs, p. Information regarding the use of Conflict minerals, as required by Section 13(p) of the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder. See: http://www.sec.gov/rules/final/2012/34-67716.pdf q. Service options, service agreements for negotiations when allowed by a participating addendum r. EPEAT, Energy Star, etc.
s. Link to Signed Participating Addendums
t. Link to Signed Master Agreement
u. Link to solicitation and Response

3. TERMINATION Upon termination or expiration of the Master Agreement awarded from this RFP all websites, on-line offering systems and Electronic Catalog functions supported and/or available as part of the Master Agreement will cease and be removed from public viewing access without redirecting to another website. 28 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

Ad1111n 'lllinnssota

DEPARTMENT OF ADMINISTRATION

COMPUTER EQUIPMENT
2014-2019

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD

EXHIBIT E- ACTION REQUEST UPDATE FORM (ARF)
The Action Request Form (ARF) provided in this document must be utilized by the Contract Vendor to provide quarterly updates of PSS and to make requests. The Action Request Forms may be reviewed quarterly by the Lead State.

DATE:

ATTN: WSCA-NASPO Master Agreement Administrator
RE: Master Agreement # ____ with ____________________ (Contract Vendor) Dear WSCA-NASPO Master Agreement Administrator:
---;:---;-;---..,.----;--:-,...-;--------- (Contract Vendor) is providing the following update and/or requesting the action noted below.

Action Requested:

Action Log: ______ Verify Log is attached
SELECT ACTION BELOW AND PROVIDE REQUIRED INFORMATION:
_Update of Product & Service Schedule Provide summary of additions, deletions and pricing changes.

NOTE: THIS WILL BE A NOTIFICATION OF CHANGES TO THE PSS, APPROVAL WILL NOT BE NEEDED _Quarterly Self Audit Check this box to verify the Quarterly Self Audit has been completed _Third Party Product Addition Provide warranty Guarantee _Marketing Approval Attach Materials for review
_Material Website Change Describe and provide link for review _Miscellaneous Inquiry Provide detail (e.g. key contact change, etc.) The Contract Vendor certifies Products and Services provided meet the terms and conditions of the Master Agreement and understands they may be audited for compliance. Additional information may be requested upon submission. The Lead State may remove previously approved items throughout the life of the Master Agreement if in the best interest at its sole discretion.

Contract Vendor: Name of Requester:

Title of Requester: --------------
29 CONTRACT NO. MNWNC·108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

Admtn --Minnesota

DEPARTMENT OF ADMINISTRATION

COMPUTER EQUIPMENT
2014-2019

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD

EXHIBIT E -ACTION REQUEST FORM (ARF)

ACTION REQUEST FORM
LOG
Submit updated Action Log with each .update. Log must provide history of previous update.

CONTRACT VENDOR:. _________ _
Contact Name and Email (for questions):. ____________ _ DATE: ______ _
DATE ACTION REQUESTED: DATE

SUBMITTED APPROVED
'
30 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

DEPARTMENT OF ADMINISTRATION

COMPUTER EQUIPMENT
2014-2019

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD

EXHIBIT F - REPORTING

1. OWNERSHIP: Recipient of the reports shall have exclusive ownership of the media containing the reports. The Lead State and WSCA-NASPO shall have a perpetual, irrevocable, non-exclusive, royalty free, transferable right to display, modify, copy, and otherwise use reports, data and information provided.

2. DUE DATE: Reports shall be due no later than the last day of the month following the end of the calendar quarter . ... . ····· .. · FRO.M',o''•.;.' ]"0 . .·. DUE .. :•
Q1 Januarv 1 March 31 April30
Q2 April1 June 30 Julv 31
Q3 July 1 September 30 October 31
04 October 1 December 31 January 31

3. REQUIRED REPORTS:

Report Name Submitted to Purpose & Submittal
1 WSCA-NASPO Administrative Fee WSCA- Identify total sales and administrative fee due to WSCANASPO NASPO 1) Go to: htt(l://www.nas!lo.org/WNCPO/Calculator.as!lx 2) Complete all contract report infonmation fields
3) Enter total sales per State or Select "no sales for quarter" checkbox
4) Click on Submit button
2 WSCA-NASPO Detailed Sales WSCA- Detailed sales data by line item. Currently via an Excel Report NASPO template. Future MAY involve a portal. No modifications may be made by the Contract Vendor to the template. This report may also fulfill the reporting requirements of self audits, premium savings sales, and Bring Your Own Device Employee Sales.
3 Participating States Participating Contract Vendor may utilize the detailed sales report to report State to individual States unless otherwise directed by the State.

States may require additional reporting.
4 Participating Addendum Status WSCA- Provides status of Participating Addendums. Excel Template NASPO to be provided by WSCA-NASPO.
5 Premium Saving Package (PSP) PSP Lead Additional reporting may be requested. 6 Quarterly Updates of PSS and Self Lead State Utilize the Action Request Form (ARF) Audit
31 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

Admin / lflinnsstJta

DEPARTMENT OF ADMINISTRATION

COMPUTER EQUIPMENT
2014-2019

MINNESOTA WSCA-NASPO MASTER AGREEMENT AWARD

EXHIBIT G - DEFINITIONS
Acceptance. See Master Agreement Terms regarding Acceptance and Acceptance Testing.

Accessory. Accessories do not extend the functionality of the computer, but enhances the user experience i.e., mouse pad, monitor stand. For the purposes of this proposal, accessories are considered peripherals.

Bands: For the purpose of this solicitation, there are six product bands which may be awarded. Each product band includes related peripherals and services. Responders must only respond to Bands in which they manufacture the defined product. Responder may receive an award in one or more bands for which they manufacture a product based on the evaluation.

BAND 1: DESKTOP. A desktop computer is a personal computer intended for regular use at a single location. A desktop computer typically comes in several units connected together during installation: 1) the processor, 2) display monitor and 3) input devices usually a keyboard and a mouse. All operating systems for tablets are allowed. Zero Clients, Thin clients, all in ones and workstations will also be included under desktops. Ruggedized equipment may also be included in the Product and Service schedule for this band.

BAND 2: LAPTOP. A laptop computer is a personal computer for mobile use. A laptop includes a display, keyboard, point device such as a touch pad and speakers into a single unit. A laptop can be used away from an outlet using a rechargeable battery. All operating systems for tablets are allowed. Laptops will include notebooks, ultrabook, mobile thin clients, chromebooks and netbooks. Computers with mobile operating systems will also be included under laptops.

Tablets that have the option to be utilized with a keyboard can be sold in this band. Ruggedized equipment may also be included in the Product and Service Schedule for this band.

BAND 3: TABLET. A tablet is a mobile computer that provides a touchscreen which acts as the primary means of control. All operating systems for tablets are allowed. Ruggedized equipment may also be included as a category in the Product and Service Schedule for this band.

BAND 4: SERVER. A server is a physical computer dedicated to run one or more services or applications (as a host) to serve the needs of the users of other computers on a network. This band also includes server appliances. Server appliances have their hardware and software preconfigured by the manufacturer. It also includes embedded networking components such as those found in blade chassis systems. Ruggedized equipment may also be included in the Product and Service Schedule for this band.

BAND 5: STORAGE. Storage is hardware with the ability to store large amounts of data. This band includes SAN switching necessary for the proper functioning of the storage environment. Ruggedized equipment may also be included in the Product and Service Schedule for this band.

ElAND 6: RUGGEiDI:<:I!D DI!IJICEiS R~ggeEiizeEI releFS te devises s~esilisally ElesigReEite e~erate reliaBly iR harsh ~sage eR>JirGRmeRts aREI seRditieRs, sYsh as streRg viBratieRs, el!treme tem~eratYres aREI wet er EIYsty seREiitieRs. RYggedized Devises may alse Be ellered YA€ier BaREis 1 e elthe Master AgreemeRI. BAND 6 REMOVED. RUGGEDIZED EQUIPMENT MAY BE SOLD IN BANDS 1-5, PROVIDED IT MEETS BAND REQUIREMENTS.

Cloud Services. Delivery of computing as a service rather than a product, whereby shared resources, software and information are provided to computers and other devices as a utility over a network, such as the Internet. (Cloud Services including acquisitions structured as managed on-site services are not allowed.) Contract Vendor or Contractor. The manufacturer responsible for delivering products or performing services under the terms and conditions set forth in the Master Agreement. The Contract Vendor must ensure partners utilized in the performance of this contract adhere to all the terms and conditions. For the purposes of this RFP, the term Partner will be utilized in naming the relationship a manufacturer has with another company to market and sell the contract. Participating States will have final determination/approval if a Partner may be approved for that state in the role identified by the Contract Vendor.

Components. Parts that make up a computer configuration.

Configuration. The combination of hardware and software components that make up the total functioning system.

Desktop. This is Band 1 of this solicitation. A desktop computer is a personal computer intended for regular use at a single location. A desktop computer typically comes in several units connected together during installation: 1) the processor, 32 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. 2) display monitor and 3) input devices usually a keyboard and a mouse. Desktop virtualization endpoints such as zero and thin clients will also be included under the Desktop Band.

Energy Star®. A voluntary energy efficiency program sponsored by the U.S. Environmental Protection Agency. The Energy Star program makes identification of energy efficient computers easy by labeling products that deliver the same or better performance as comparable models while using less energy and saving money. Energy Star qualified computers and monitors automatically power down to 15 watts or less when not in use and may actually last longer than conventional products because they spend a large portion of time in a low-power sleep mode. For additional information on the Energy Star program, including product specifications and a list of qualifying products, visit the Energy Star website at http://www:energystar.gov.

EPEAT. A system for identifying more environmentally preferable computer desktops, laptops, and monitors. It includes an ANSI standard- the IEEE 1680 EPEAT standard- and website www.epeat.net to identify products manufacturers have declared as meeting the standard. EPEAT provides a clear and consistent set of performance criteria for the design of products. It is not a third-party certification program. Instead, Manufacturers self-certify that their products are in conformance with the environmental performance standard for electronic products.

FOB Destination. Shipping charges are included in the price of the item and the shipped item becomes the legal property and responsibility of the receiver when it reaches its destination unless there is acceptance testing required.

FOB Inside Delivery. Special Shipping arrangements, such as inside delivery, may include additional fees payable by the Purchasing Entity. Any FOB inside delivery must be annotated on the Purchasing Entity ordering document.

General Consulting. Services related to advising agencies on how best to use information technology to meet business objectives. Examples of such services would include management and administration of IT systems. Each State will have varying laws, rules, policies and procedures surrounding general consulting which need adherence. Minnesota Statute section 16C.08 defines general consulting for the State of Minnesota. https://www.revisor.mn.gov/statutes/?id=16C.08 Laptop. This is Band 2 of this solicitation. A laptop computer is a personal computer for mobile use. A laptop includes a display, keyboard, point device such as a touchpad and speakers into a single unit. A laptop can be used away from an outlet using a rechargeable battery. Laptop Band may include notebooks, ultrabooks, and netbooks. Computers with mobile operating systems will also be included under the Laptop Band.

Lead State. The State conducting this cooperative solicitation and centrally administering any resulting Master Agreement with the permission of the Signatory States. Minnesota is the Lead State for this procurement and the laws of Minnesota Statute Chapter 16C apply to this procurement.

Manufacturer. A company that, as one of its primary business function, designs, assembles owns the trademark/patent and markets branded computer equipment.

Master Agreement. The underlying agreement executed by and between the Lead State and the Contract Vendor.

Middleware. Middleware is the software "glue" that helps programs and databases (which may be on different computers) work together. Its most basic function is to enable communication between different pieces of software.

Options. An item of equipment or a feature that may be chosen as an addition to or replacement for standard equipment and features.

Order. A purchase order, sales order, or other document used by a Purchasing Entity to order the Equipment.

Participating Addendum. A written statement of agreement signed by the Contract Vendor and a Participating State or other Participating Entity that clarifies the operation of this Master Agreement for the Participating Entity (e.g., ordering procedures specific to a Participating State) and may add other state-specific language or other requirements. A Participating Addendum evidences the Participant's willingness to purchase and the Contract Vendor's willingness to provide equipment under the terms and conditions of this Master Agreement with any and all exceptions noted and agreed upon.

Participating States. States that utilize the Master Agreement established by the RFP and enter into a Participating Addendum which further defines their participation.

Participating Entity. A Participating State, or other legal entity, properly authorized by a Participating State to enter into the Master Agreement through a Participating Addendum and that authorizes orders from the Master Agreement by Purchasing Entities. Under the WSCA-NASPO program, in some cases, local governments, political subdivisions or other entities in a State may be authorized by the chief procurement official to execute its own Participating Addendum where a Participating Addendum is not executed by the chief procurement official for that state that covers local governments, political subdivisions, or other government entities in the state.

Partner. A company, authorized by the Contract Vendor and approved by the Participating State, to provide marketing, support, or other authorized contract services on behalf of the Contract Vendor in accordance with the terms and conditions of the Contract Vendor's Master Agreement. In the RFP, Partner is the term that is used to call out the many different relationships a manufacturer may have with another company to market their product including, but not limited to agents, subcontractors, partners, fulfillment partners, channel partners, business partners, servicing subcontractor, etc.

Peripherals. A peripheral means any hardware product that can be attached to, added within or networked with personal computers, servers and storage. Peripherals extend the functionality of a computer without modifying the core components of the system. For the purposes of this proposal, peripherals are defined as including accessories.

Peripherals may be manufactured by a third party, however, Contract Vendor shall not offer any peripherals manufactured by another Contract Vendor holding a Master Agreement. The Contract Vendors shall provide the warranty service and 33 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P. maintenance for all peripherals on the Master Agreement. Examples of peripherals/accessories/options: Include but are not limited to: printers, monitors, multifunction printers, audiovisual equipment, instructional equipment, cabling, modems, networking to support server, storage and client applications such as routers, switches. Software is an option which must be related to the purchase of equipment and subject to configuration limits. Third party products are allowed to be offered as peripherals/accessories/options and may be offered in any related band.

Per Transaction Multiple Unit Discount. A contractual volume discount based on dollars in a single purchase order or combination of purchase orders submitted at one time by a Participating Entity or multiple entities conducting a cooperative purchase.

Premium Savings Packages. Deeply discounted standard configurations available to Purchasing Entities using the Master Agreement. This specification includes a commitment to maintain and upgrade (keep pace with the advance of technology) the standard configurations for a stated period of time or intervals. WSCA-NASPO reserves the right to expand and modify the PSP throughout the life of the contract. See http://www.wnpsp.com/index.html.

Purchasing Entity- means a state, city, county, district, other political subdivision of a State, and a nonprofit organization under the laws of some states if authorized by a Participating Addendum, that issues an order against the Master Agreement and becomes financially committed to the purchase.

Ruggedized. This was band 6 of this solicitation. Ruggedized refers to equipment specifically designed to operate reliably in harsh usage environments and conditions, such as strong vibrations, extreme temperatures and wet or dusty conditions.

Services. Broadly classed as installation/de-installation, maintenance, support, training, migration, and optimization of products offered or supplied under the Master Agreement. These types of services may include, but are not limited to:
warranty services, maintenance, installation, de-installation, factory integration (software or equipment components), asset management, recycling/disposal, training and certification, pre-implementation design, disaster recovery planning and support, service desk/helpdesk, and any other directly related technical support service required for the effective operation of a product offered or supplied. Contract Vendors may offer, but participating States and entities do not have to accept, limited professional services related ONLY to the equipment and configuration of the equipment purchased through the resulting contracts. EACH PARTICIPATING STATE DETERMINES RESTRICTIONS AND NEGOTIATES TERMS FOR SERVICES.

Server. This is Band 4 of this solicitation. A server is a physical computer dedicated to run one or more services or applications (as a host) to serve the needs of the users of other computers on a network. This band also includes server appliances. Server appliances have their hardware and software preconfigured by the manufacturer. It also includes embedded networking components such as those found in blade chassis systems. Ruggedized equipment may also be included in the Product and Service Schedule for this band.

Storage. This is Band 5 of this solicitation. Storage is hardware with the ability to store large amounts of data. This band includes SAN switching necessary for the proper functioning of the storage environment. Ruggedized equipment may also be included in the Product and Service Schedule for this band.

Storage Area Network. A storage area network (SAN) is a high-speed special-purpose network (or subnetwork) that interconnects different kinds of data storage devices with associated data servers on behalf of a larger network of users.

Storage as a Service (STaaS). An architecture model by which a provider allows a customer to rent or lease storage space on the provider's hardware infrastructure on a subscription basis. E.g., manage onsite or cloud services.

Software. For the purposes of this proposal, software is commercial operating off the shelf machine-readable object code instructions including microcode, firmware and operating system software that are preloaded on equipment. The term "Software" applies to all parts of software and documentation, including new releases, updates, and modifications of software.

Tablet. This is Band 3 of this solicitation. A tablet is a mobile computer that provides a touchscreen which acts as the primary means of control. Tablet band may include notebooks, ultrabooks, and netbooks that are touchscreen capable.

Takeback Program. The Contract Vendor's process for accepting the return of the equipment or other products at the end of life.

Third Party Products. Products sold by the Contract Vendor which are manufactured by another company.

Upgrade. Refers to replacement of existing software, hardware or hardware component with a newer version.

Warranty. The Manufacturers general warranty tied to the product at the time of purchase.

Wide Area Network or WAN. A data network that serves users across a broad geographic area and often uses transmission devices provided by common carriers.

WSCA-NASPO. The WSCA-NASPO cooperative purchasing program, facilitated by the WSCA-NASPO Cooperative Purchasing Organization LLC, a 501 (c)(3) limited liability company that is a subsidiary organization of the National Association of State Procurement Officials (NASPO). The WSCA-NASPO Cooperative Purchasing Organization facilitates administration of the cooperative group contracting consortium of state chief procurement officials for the benefit of state departments, institutions, agencies, and political subdivisions and other eligible entities (i.e., colleges, school districts, counties, cities, some nonprofit organizations, etc.) for all states and the District of Columbia. The WSCA-NASPO Cooperative Development Team is identified in the Master Agreement as the recipient of reports and rnay be performing contract administration functions as assigned by the Lead State Contract Administrator. 34 CONTRACT NO. MNWNC-108 MASTER AGREEMENT AWARD COMPUTER EQUIPMENT DELL MARKETING L. P.

Quote and Description Quote Number Amount
MDCs for Assignment
Includes laptops and accessories for division assignments within the Police Department, does not include equipment installed in vehicles 3000134855705.8 $ 57,614.13 MDCs for Vehicles and Associated Hardware
Laptops, vehicle hardware, and installation for patrol vehicles (see Scope of Work for installation details) 3000137542807.2 102,292.77 Total Recommended Purchase $ 159,906.90
MDC Replacement Purchase - Cost Summary
January 23, 2023
CITY OF CYPRESS
CITY COUNCIL REPORT
City Council Regular 8.

FROM: Douglas Dancs, Director of Public Works
DATE: 01/23/2023
SUBJECT: Award Contract for Traffic Camera Upgrades, Project 339

RECOMMENDATION
Award a contract for traffic camera upgrades to Macadee Electrical Construction for $76,022, and authorize a contingency of $7,600.

DISCUSSION
The city has 40 traffic monitoring cameras throughout Cypress that allow Public Works to monitor real-time traffic conditions, traffic signal operations, signal timing, and construction projects. Most of the cameras are more than 10 years old and beyond their useful life. The cameras do not record video, nor do they have license plate reading or vehicle identification capabilities.

This project is the fourth year of a five-year Capital Improvement Program project to replace traffic monitoring cameras, install cameras at new intersections, and upgrade equipment and infrastructure throughout the city. The FY 2022-23 year project will replace 11 cameras.

As required by State law/the Municipal Code, Public Works solicited bids from qualified contractors specializing in installing traffic monitoring cameras. Macadee Electrical Construction is the low bidder and has completed several projects of similar size and scope for Cypress and other agencies in Orange County. A summary of project award information is attached.

BUDGET IMPACT
The estimated project cost is $83,622 and sufficient amounts are budgeted in the Measure M2 Fund for the recommended capital improvements.

LEGAL REVIEW
None required.

APPROVED BY: Peter Grant, City Manager
Attachments
Award Information and Bid Proposals
Project Award Information Checklist
Description of Project:

Replace 11 traffic monitoring cameras at various locations.

Contract Working Days: 30 working days
Bidders Amount

1. Macadee Electrical Construction, Chino, CA $ 76,022

2. Yunex Traffic, Anaheim, CA $ 77,745

3. Crosstown Electrical & Data Inc., Irwindale, CA $ 79,875 Apparent Low Bidder: Macadee Electrical Construction - $76,022 Qualified to Perform Work: Yes. Staff confirmed bid was responsive.

Contractor’s License: Registration with DIR:

Valid at Time of Award: Yes Contractor: Yes
Valid at Time of Bid: Yes Sub-Contractor: N/A
Experience:

The apparent low bidder has performed this type of work for multiple government agencies in Southern California.

PROPOSAL BID SHEET
PROJECT 339

UPGRADE TRAFFIC CAMERA
Bid Due Date: Thursday, December 15, 2022
Company Name:

Address:

Telephone:

Email:

Contractor's License No. and Class:

Contractor's DIR Public Works Registration No:

Honorable Councilmembers:

The undersigned principal, after having carefully examined the plans, Specifications and General Provisions The undersigned principal, after having carefully examined the plans, Specifications and General Provisions for the City of Cypress Project 339, hereby proposes and agrees to furnish all labor, materials, equipment, plant, transportation, services, sales taxes and other costs necessary to complete the entire project in strict conformity with the specifications, general and special provisions, and all addenda therefore as prepared by the Engineering Division of the Department of Public Works Department of the City of Cypress and to complete all work within the contract time specified in this PROPOSAL, for the following bid:
g g p p y yp
complete all work within the contract time specified in this PROPOSAL, for the following bid:

BASE BID:

No. Quantity Unit Items of Work
(Please Print Unit Prices Written in Words)
Unit
Price Total

1. 11 EA
Furnish and install Axis Q6075-E PTZ Network Camera
$ $ Axis T91G61 Wall Mount, Axis T91B57 Pole Mount & Cat 5 Cable included
PER EA

2. 2 EA
Furnish Axis Q6075-E PTZ Network Camera (spare camera)
Axis T91G61 Wall Mount, Axis T91B57 Pole Mount included $ $ PER EA

3. 5 EA
Remove existing Pelco Camera and its cable from camera to cabinet.
$ $
PER EA
TOTAL AMOUNT OF BASE BID: $
TOTAL AMOUNT OF BID IN WORDS:

Dollars
(Please Print Total Amount of Bid in WORDS)

MACADEE ELECTRICAL CONSTRUCTION
4821 LANIER RD, CHINO, CA 91710
(909) 627-1336
[email protected]
583125, C10
PW-LR-1000395429
FIVE THOUSAND NINE HUNDRED FOURTEEN & 00/100
5,914.00 65,054.00
FOUR THOUSAND TWO HUNDRED THIRY-FOUR & 00/100
4,234.00 8,468.00
FIVE HUNDRED & 00/100
500.00 2,500.00
76,022.00
SEVENTY-SIX THOUSAND TWENTY-TWO 00/100
12/15/2022

PROPOSAL BID SHEET
PROJECT 339

UPGRADE TRAFFIC CAMERA
Bid Due Date: Thursday, December 15, 2022
Company Name:

Address:

Telephone:

Email:

Contractor's License No. and Class:

Contractor's DIR Public Works Registration No:

Honorable Councilmembers:

BASE BID:

No. Quantity Unit Items of Work
(Please Print Unit Prices Written in Words)
Unit
Price Total

1. 11 EA
Furnish and install Axis Q6075-E PTZ Network Camera
$ $ Axis T91G61 Wall Mount, Axis T91B57 Pole Mount & Cat 5 Cable included
PER EA

2. 2 EA
Furnish Axis Q6075-E PTZ Network Camera (spare camera)
Axis T91G61 Wall Mount, Axis T91B57 Pole Mount included $ $ PER EA

3. 5 EA
Remove existing Pelco Camera and its cable from camera to cabinet.
$ $
PER EA
TOTAL AMOUNT OF BASE BID: $
TOTAL AMOUNT OF BID IN WORDS:

Dollars
(Please Print Total Amount of Bid in WORDS)
Yunex LLC
1026 E. Lacy Ave Anaheim, CA 92805
(714) 284-0206
[email protected]
1080007 C10/A
PW-LR-1000815000
6,075.00
4,335.00
450.00
66,825.00
8,670.00
2,250.00
77,745.00
Seventy-seven thousand, seven hundred
forty-five dollars and zero cents

PROPOSAL BID SHEET
PROJECT 339

UPGRADE TRAFFIC CAMERA
Bid Due Date: Thursday, December 15, 2022
Company Name:

Address:

Telephone:

Email:

Contractor's License No. and Class:

Contractor's DIR Public Works Registration No:

Honorable Councilmembers:

The undersigned principal, after having carefully examined the plans, Specifications and General Provisions for the City of Cypress Project 339, hereby proposes and agrees to furnish all labor, materials, equipment, plant, transportation, services, sales taxes and other costs necessary to complete the entire project in strict conformity with the specifications, general and special provisions, and all addenda therefore as prepared by the Engineering Division of the Department of Public Works Department of the City of Cypress and to complete all work within the contract time specified in this PROPOSAL, for the following bid:

BASE BID:

No. Quantity Unit Items of Work
(Please Print Unit Prices Written in Words)
Unit
Price Total

1. 11 EA
Furnish and install Axis Q6075-E PTZ Network Camera
$ $ Axis T91G61 Wall Mount, Axis T91B57 Pole Mount & Cat 5 Cable included
PER EA

2. 2 EA
Furnish Axis Q6075-E PTZ Network Camera (spare camera)
Axis T91G61 Wall Mount, Axis T91B57 Pole Mount included $ $ PER EA

3. 5 EA
Remove existing Pelco Camera and its cable from camera to cabinet.
$ $
PER EA
TOTAL AMOUNT OF BASE BID: $
TOTAL AMOUNT OF BID IN WORDS:

Dollars
(Please Print Total Amount of Bid in WORDS)
CROSSTOWN ELECTRICAL & DATA, INC.
5454 DIAZ ST., IRWINDALE, CA 91706
626-813-6693
[email protected]
756309; A & C-10
1000000155
6,100.00 67,100.00
3,575.00 7,150.00
1,125.00 5,625.00
79,875.00

SEVENTY NINE THOUSAND, EIGHT HUNDRED
SEVENTY FIVE DOLLARS AND NO CENTS.

CITY OF CYPRESS
CITY COUNCIL REPORT
City Council Regular 9.

FROM: Peter Grant, City Manager
DATE: 01/23/2023
SUBJECT: Receive an Update on the Strategic Plan Six-Month Objectives

RECOMMENDATION
Receive an update on the Strategic Plan six-month objectives.

DISCUSSION
The Strategic Plan establishes major goals and objectives for the City. It provides the principle guidance for the preparation of the budget and a plan for implementation and accountability. The Strategic Plan is among the City Council's most effective tools to improve services and preserve Cypress' high quality of life.

The City Council updated the Strategic Plan in September 2022, including a review of the existing plan, development of new six-month objectives, and a discussion of the City's strengths and accomplishments during the past six months. The attached matrices report the progress on the six-month objectives as of January 23, 2023, several of which are impacted by staff transitions in Public Works' engineering team and the resources required by the City Council transition.

BUDGET IMPACT
None.

LEGAL REVIEW
None required.

APPROVED BY: Peter Grant, City Manager
Attachments
SP Objectives

C I T Y O F C Y P R E S S

SIX -MONTH STRATEGIC OBJECTIVES
S e p t e m b e r 2 1 , 2 0 2 2 – M a r c h 1 5 , 2 0 2 3 Updated: January 17, 2023 A
THREE-YEAR GOAL: MAINTAIN INFRASTRUCTURE AND FACILITIES

WHEN WHO WHAT STATUS COMMENTS
DONE
ON

TARGET REVISED

1. At the March 13,
2023 City Council
meeting
Public Works
Director, working with
the RCS Director
Report the results of public engagement for the
reimagining of Arnold Cypress Park.

2. At the Feb. 27, 2023
City Council workshop
Public Works
Director, working with
SCE
Present options for converting to LED streetlights. X

3. FUTURE Public Works
Director, working with
Golden State Water
Present recommendations to encourage/support
residential water conservation.

X On hold to a time
when users will be
more inclined to
conservation

4. At the Mar. 27, 2023
City Council meeting
Public Works Director Recommend a consultant to develop a plan to provide Arnold Cypress Park with reclaimed water.

5. At the Mar. 27, 2023
City Council meeting
Public Works Director Recommend a consultant to evaluate right-of-way irrigation systems and software to reduce water
consumption.

C I T Y O F C Y P R E S S

SIX -MONTH STRATEGIC OBJECTIVES
S e p t e m b e r 2 1 , 2 0 2 2 – M a r c h 1 5 , 2 0 2 3 Updated: January 17, 2023 B

MAINTAIN FINANCIAL STABILITY AND PROMOTE ECONOMIC ACTIVITY

WHEN WHO WHAT STATUS COMMENTS
DONE
ON

TARGET REVISED

1. At the Oct. 24, 2022
City Council meeting
Finance Director Recommend an update to the Fiscal Strategies establishing annual discretionary payments to CalPERS
to further mitigate the City’s unfunded pension liability.

2. At the March 13,
2023 City Council
workshop
Planning Director Provide a Housing Element implementation update. X

3. By March 1, 2023 Planning Director Present the City Manager with the Business Park Market Trends and Opportunities.

4. By March 15, 2023 Planning Director Release the Housing Element Implementation Draft Environmental Impact Report for public review and
comment.

5. At the March 13,
2023 City Council
meeting
Planning Dir, working
with the Economic
Development
Subcommittee
Recommend an implementation plan for economic
development-related projects in the Pandemic Recovery
Plan.

C I T Y O F C Y P R E S S

SIX -MONTH STRATEGIC OBJECTIVES
S e p t e m b e r 2 1 , 2 0 2 2 – M a r c h 1 5 , 2 0 2 3 Updated: January 17, 2023 C
THREE-YEAR GOAL: ENHANCE AND MAINTAIN PUBLIC SAFETY

WHEN WHO WHAT STATUS COMMENTS
DONE
ON

TARGET REVISED

1. By Feb. 15, 2023 Police Chief, working
with a consultant
Present the City Manager with the Police Department’s
Property and Evidence operations audit.

2. At the Feb. 13, 2023
City Council meeting
Police Chief Present an update on the HOPE Center and the Orange County Public Safety Collaborative.

3. On Feb. 16, 2023 Police Chief Conduct an orientation and training for city staff in the new Emergency Operations Center.

4. By March 15, 2023 Police Chief, working
with the Police
Management
Association and
Police Officers’
Association
Issue an RFQ for a consultant to review and enhance the Police Department’s personnel performance evaluation
system.

C I T Y O F C Y P R E S S

SIX -MONTH STRATEGIC OBJECTIVES
S e p t e m b e r 2 1 , 2 0 2 2 – M a r c h 1 5 , 2 0 2 3 Updated: January 17, 2023 D
THREE-YEAR GOAL: ENHANCE RECREATION FACILITIES AND PROGRAMS

WHEN WHO WHAT STATUS COMMENTS
DONE
ON

TARGET REVISED

1. At the Oct. 24, 2022
City Council meeting
Public Works Director,
working with the RCS
Director
Recommend plans and specifications for Senior Center
improvements.

2. FUTURE RCS Director Provide a review of Celebrate Cypress events, including the Women’s Conference Partnership and viability of the Cypress Run.

X Celebrate Cypressrelated Decision
Packages will be
recommended in the
Proposed FY 23-24
Budget

3. At the March 13,
2023 City Council
meeting
Public Works Director,
working with the RCS
Director
Recommend a design contract for security upgrades at
Oak Knoll Park.

4. By March 27, 2023 RCS Director, working
with the RCS
Commission
Present the City Manager options for relocating Cypress Girls Softball and pickle ball during Arnold Cypress Park construction.

C I T Y O F C Y P R E S S

SIX -MONTH STRATEGIC OBJECTIVES
S e p t e m b e r 2 1 , 2 0 2 2 – M a r c h 1 5 , 2 0 2 3 Updated: January 17, 2023 E
THREE-YEAR GOAL: MAINTAIN HIGH QUALITY AN HIGH VALUE SERVICES FOR THE COMMUNITY

WHEN WHO WHAT STATUS COMMENTS
DONE
ON

TARGET REVISED

1. At the Oct. 10, 2022
City Council meeting
Planning Director Provide an update on the Neighborhood Preservation Program.

2. By Jan. 1, 2023 City Manager, working
with the Mayor, Mayor
Pro Tem and City
Clerk
Select a consultant and organize a team-building event
for the City Council and department directors.

3. By Feb. 15, 2023 City Clerk, working
with the Finance
Director
Release an agenda management and video streaming
services RFQ.

4. At the March 13,
2023 City Council
meeting
Finance Director Recommend a contract for a Voice Over Internet Protocol (VOIP) telephone system.

5. Ongoing City Manager and City
Attorney, working with
the City Council
Assess and respond to the California Voting Rights Act
lawsuit and potentially consider changes to the City’s
system for electing Council Members.

CITY OF CYPRESS
CITY COUNCIL REPORT
City Council Regular 10.

FROM: Matt Burton, Director of Finance and Administrative Services DATE: 01/23/2023
SUBJECT: Receive and File the Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022

RECOMMENDATION
Receive and file the Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022.

SUMMARY
The Director of Finance is required to annually submit a complete financial statement and report to the City Council. Additionally, the State requires all California cities undergo an annual audit. Attached is the City's Annual Comprehensive Financial Report (ACFR) for the Fiscal Year ended June 30, 2022. The Basic Financial Statements contained in the ACFR have been audited by the firm of Lance, Soll and Lunghard, LLP. Based on the results of this audit, the City has received an unqualified, or “clean”, opinion.

DISCUSSION
The ACFR is comprised of three major sections: Introductory, Financial, and Statistical. Each of these sections contains required information in a prescribed format.

The Introductory Section contains a transmittal letter, a directory of City officials, and an organizational chart.

The Financial Section incorporates critical information on the financial condition of the City and includes all the information in the ACFR which is part of the scope of the audit, as well as required supplementary information and supplemental schedules. The Financial Section includes the basic financial statements, note disclosures and a management discussion and analysis (MD&A) narrative. The basic financial statements contain two types of statements: the government-wide financial statements and the fund financial statements. The government-wide financial statements present a broad overview of the City’s financial information on a full accrual basis, similar to the private sector, which provides a long-term perspective on the City's finances. The fund financial statements are presented on a modified accrual basis focusing on a short-term view of the City’s current and available financial resources. When both sets of financial statements are reviewed in conjunction with the other information presented of financial statements are reviewed in conjunction with the other information presented in the Financial Section (note disclosures and the MD&A), the reader of the ACFR should be able to gain a thorough and complete picture of the City’s financial condition.

The Statistical Section includes a variety of financial and demographic information related to financial trends, revenue and debt capacity, and operating and economic data. The contents of the statistical section are intended to provide the reader with additional analysis to help in the understanding of the overall financial health of the City.

The audit process also includes a report on internal control over financial reporting and on compliance and other matters, found at the end of the ACFR. No material weaknesses in internal controls were identified by the auditors.

The City has received national recognition for the past 36 years for its ACFR by receiving a "Certificate of Achievement of Excellence in Financial Reporting” from the Government Finance Officers Association of the United States and Canada (GFOA). The current year’s ACFR has been submitted to the GFOA for FY 2021-22 award consideration.

BUDGET IMPACT
City staff prepares the ACFR and sufficient appropriations are included in the budget to pay for the cost of the annual audit.

LEGAL REVIEW
None required.

APPROVED BY: Peter Grant, City Manager
Attachments
Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022 City of Cypress, California
Annual Comprehensive
Financial Report
For the Fiscal Year Ended June 30, 2022
For the Fiscal Year
Ended June 30, 2022
Annual Comprehensive
Financial Report
Prepared by the
Department of Finance &
Administrative Services

CITY OF CYPRESS
Annual Comprehensive Financial Report
Year ended June 30, 2022
Table of Contents

INTRODUCTORY SECTION
Letter of Transmittal 8
Directory of City Officials 14
Organizational Chart 15
GFOA Certificate of Achievement for Excellence in Financial Reporting 16

FINANCIAL SECTION
Independent Auditors’ Report 18
Management’s Discussion and Analysis 21
Basic Financial Statements
Government-wide Financial Statements:

Statement of Net Position 51
Statement of Activities and Changes in Net Position 52
Fund Financial Statements:

Balance Sheet – Governmental Funds 53
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 55
Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 56
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 58 Statement of Net Position – Proprietary Funds 59
Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 60
Statement of Cash Flows - Proprietary Funds 61
Statement of Fiduciary Net Position – Fiduciary Funds 62 Statement of Changes in Fiduciary Net Position – Fiduciary Funds 63 Notes to Basic Financial Statements 64
Required Supplementary Information
Budgets and Budgetary Accounting 114
Budgetary Comparison Schedule (Budgetary Basis), General Fund 115 Budgetary Comparison Schedule (Budgetary Basis), Pandemic Response Fund 116 Budgetary Comparison Schedule (Budgetary Basis), Recreation and Park District Special Revenue Fund 117
Budgetary Comparison Schedule (Budgetary Basis), Streets Special Revenue Fund 118 California Public Employees’ Retirement Systems (CalPERS) 119 Terminated Orange County Employees Retirement System Plan (OCERS) 127 Post-Employment Health Care Benefits 129
3 CITY OF CYPRESS
Annual Comprehensive Financial Report
Year ended June 30, 2022
Table of Contents, Continued

FINANCIAL SECTION (CONTINUED)
Supplemental Schedules
Combining and Individual Fund Financial Statements and Schedules:

Other Major Governmental Funds
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – City Capital Projects Fund 132
Nonmajor Governmental Funds
Combining Balance Sheet 134
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 136 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Local Drainage Special Revenue Fund 138 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Stanton Channel Maintenance District Special Revenue Fund 139
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Lighting District Special Revenue Fund 140 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Cable TV PEG Grant Special Revenue Fund 141 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – AB 2766 Special Revenue Fund 142
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Traffic Safety Special Revenue Fund 143 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Supplemental Law Enforcement Special Revenue Fund 144
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Narcotics Asset Seizure Special Revenue Fund 145 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Low and Moderate Housing Assets Special Revenue Fund 146
4 CITY OF CYPRESS
Annual Comprehensive Financial Report
Year ended June 30, 2022
Table of Contents, Continued

FINANCIAL SECTION (CONTINUED)
Combining and Individual Fund Financial Statements and Schedules (Continued):

Internal Service Funds
Combining Statement of Net Position 148
Combing Statement of Revenues, Expenses and Changes in
Net Position 150
Combining Statement of Cash Flows 152
Fiduciary Funds
Combining Statement of Fiducial Net Position – Custodial Funds 155 Combining Statement of Changes in Fiduciary Net Position – Custodial Funds 156

STATISTICAL SECTION
Statistical Section Index 158
Financial Trends
Schedule 1 - Net Position by Component 159
Schedule 2 - Changes in Net Position 161
Schedule 3 - Fund Balances – Governmental Funds 163
Schedule 4 - Changes in Fund Balances – Governmental Funds 165 Revenue Capacity
Schedule 5 - Assessed Value and Estimated Actual Value of Taxable Property 167 Schedule 6 - Direct and Overlapping Property Tax Rates 168 Schedule 7 - Principal Property Tax Payers 169
Schedule 8 - Property Tax Levies and Collections 170
Debt Capacity
Schedule 9 - Ratios of Outstanding Debt by Types 171
Schedule 10 - Direct and Overlapping Governmental Activities Debt 172 Schedule 11 - Legal Debt Margin Information 173
Demographic and Economic Information
Schedule 12 - Demographic and Economic Statistics 175
Schedule 13 - Principal Employers 176
Operating Information
Schedule 14 - Full-time Equivalent City Government Employees by Function/Program 177 Schedule 15 - Operating Indicators by Function/Program 178 Schedule 16 - Capital Assets Statistics by Function/Program 179 5 CITY OF CYPRESS
Annual Comprehensive Financial Report
Year ended June 30, 2022
Table of Contents, Continued
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER

MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING
STANDARDS 180
6 Introductory Section
7 December 21, 2022
To the City Manager, Honorable Mayor, Members of the City Council and Residents of the City of Cypress, California:

We are pleased to submit to you the Annual Comprehensive Financial Report (ACFR) of the City of Cypress for the fiscal year ended June 30, 2022. This report is published in accordance with local ordinance and state law requirements that financial statements be presented in conformity with accounting principles generally accepted in the United States of America and audited in accordance with auditing standards generally accepted in the United States of America by a firm of licensed certified public accountants.

This ACFR consists of management’s representations concerning the finances of the City of Cypress. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Cypress has established a comprehensive internal control framework designed both to protect the City’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Cypress’ financial statements. Because the cost of internal controls should not outweigh their benefits, the City of Cypress’ comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The report is presented in three sections: Introductory, Financial and Statistical.

While there have been no significant changes in the City’s fiscal policies that impact the current year financial statements, we urge readers of the report to pay particular attention to the overview and analysis presented in the Management’s Discussion and Analysis (MD&A) found in the financial section of the ACFR.

City policy requires its financial statements be audited by independent certified public accountants. The firm of Lance, Soll, and Lunghard, LLP has performed the audit for the fiscal year ended June 30, 2022. The goal of the independent audit was to provide reasonable assurance the financial statements of the City of Cypress are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded there was a reasonable basis for rendering an unmodified opinion that the City of Cypress’ financial statements for fiscal year ended June 30, 2022 are fairly presented in conformity with accounting principles generally accepted in the United States of America. The Independent Auditors' Report is presented as the first component of the financial section of this report. 8 As a recipient of federal, state and county financial assistance, the City of Cypress is responsible for having an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to such programs. This internal control structure is subject to periodic evaluation by management. In years when over $750,000 is expended on Federal financial assistance programs, the City is required to undergo an annual single audit in conformity with the provisions of the Federal Single Audit Act Amendments of 1996 and the Office of Management and Budget Circular A-133 regulating Single Audits, and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States.

For the year ended June 30, 2022, more than $750,000 was expended on Federal financial assistance programs and a single audit was required. Information related to this single audit will be available in the City of Cypress’ separately issued Single Audit Report.

CITY OF CYPRESS PROFILE
The City of Cypress, incorporated in July 1956, is located in the northwestern part of Orange County, California, where two of the nation’s largest metropolitan areas, Los Angeles and Orange counties, meet. Cypress is primarily a residential community occupying 6.7 square miles of land and serving a population of 49,810. In addition to its residential communities, Cypress has an 800-acre business park that includes a diverse array of well-known companies. People are drawn to Cypress for its quality housing, business park, educational facilities, citizen-oriented social and recreational activities, and progressive City government.

Some of the major attractions in Cypress include: Los Alamitos Race Course, Forest Lawn Memorial Park, and Cypress Community College.

The City of Cypress is a charter city and operates under the Council-Manager form of government. Policymaking and legislative authority are vested in the City Council, which consists of a Mayor, Mayor Pro Tem, and three Council Members. The City Council, among other things, is responsible for the City’s ordinances, operating resolutions, adoption of the annual budget, appointing commissions and committees, and hiring the City Manager, the City Clerk and the City Attorney. The City Manager is responsible for implementing the policies, ordinances and directives of the City Council, for overseeing the day-to-day operations of the City, and for appointing the Directors of the City’s departments. The City Council is elected on a nonpartisan basis. Council Members are elected to four-year staggered terms and may serve a maximum of two terms. The Mayor and Mayor Pro Tem are selected annually by the Council Members.

The City of Cypress provides a full range of services, including police protection; the construction and maintenance of streets, public facilities and other infrastructure; sanitary sewer; building safety regulations and inspections; and recreational activities and cultural events. The City is a member of the Orange County Fire Authority which provides fire protection and emergency medical aid services. Independent special districts provide educational and library services, while private entities offer utility services to Cypress residents.
9 The annual budget serves as the foundation for the City of Cypress’ financial planning and control. The City operates on a fiscal year basis, beginning July 1 and ending June 30. The budget is prepared under the supervision of the City Manager and submitted to the City Council for deliberation and adoption prior to the beginning of the fiscal year.

The City follows these procedures in establishing the budgetary data reflected in the financial statements: After January 1, department directors prepare estimates for required appropriations for the fiscal year commencing the following July 1. The proposed budget includes estimated expenditures and forecasted revenues for the fiscal year. The data is presented to the City Manager for review. The operating budget includes a summary of the proposed expenditures and financial resources, as well as data for the preceding fiscal period. Prior to July 1, the budget is legally enacted through passage of an adopting resolution. Upon adoption by the City Council, the City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual budget. The City Manager may make transfers of appropriations within a department if within the same fund. However, appropriation transfers between departments, funds or relating to personnel costs or capital purchases require approval by the City Council, as do any supplemental appropriations.

Budget to actual comparisons are provided in this report for each individual government fund for which an appropriated annual budget has been adopted. With the exception of the General fund, where budgetary control is maintained at the department level, budgetary control is maintained at the fund level. Additional budget information is presented in the Notes to the Basic Financial Statements and Required Supplementary Information Sections of the financial section of this report.

FACTORS AFFECTING FINANCIAL CONDITION
The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Cypress operates.

Local economy. Cypress is home to a wide range of businesses, particularly in the 800- acre Cypress Business Park, which has historically generated a significant percentage of City General fund revenues. Major industries with headquarters or divisions located within the City’s boundaries include electronic equipment, managed healthcare, horseracing and flooring distribution. A variety of professional businesses, aerospace, hotels, and other retail businesses are also based in Cypress.

Over the last decade, the local economy in Orange County had experienced strong economic growth and job creation. While the COVID-19 pandemic brought with it huge uncertainties that have now lingered for over two years, the local economy has proved resilient. The negative toll on Cypress’ revenue base has been far less than feared, but the long-term economic impacts of the pandemic, and associated recovery period, will likely continue in the Orange County region for the foreseeable future.

Since the end of the great recession, the City has focused on building up its reserves and limiting growth in operations in order to be in a position to effectively handle periods of 10 uncertainty. This strategy served Cypress well during the pandemic as the City has been able to keep a balanced budget while maintaining service levels. Property taxes remain a stable source of income, while sales tax revenues are more volatile and unpredictable.

Sales tax concerns have existed for well over a decade due to significant revenue declines (when compared to inflation), and were further exacerbated in 2020 which saw the departure of one of the City’s major generators and the start of the COVID-19 pandemic. While sales tax revenues over the past two years have not declined as much as feared, City leaders will continue to monitor revenue trends to best determine methods for strengthening the City’s economic base.

The losses incurred by the financial markets as part of the Great Recession continue to have a direct impact on the City, most significantly in the form of required annual pension costs associated with being a member of the California Public Employees’ Retirement System (CalPERS). The substantial decrease in the value of CalPERS assets during the financial crisis, and subsequent changes in actuarial assumptions and the discount rates since that time, have been passed on to members of CalPERS in the form of higher payments for the foreseeable future. Cypress, like most other California cities, has seen its annual required contributions nearly double over the last five-years. While healthy investment returns in FY 2020-21 favorably impacted the City’s unfunded accrued liability, CalPERS portfolio losses in the last 18 month have eroded those gains and the unfunded liability calculated in the next actuarial report will likely increase significantly.

It seems that just when you get a handle on one financial challenge, another new challenge comes onto the scene. In the past year, inflation has taken center stage as the latest threat to the City’s financial health as increases to the Consumer Price Index (CPI) have risen to levels not seen in over 40 years. The potential impacts to City expenditures cannot be overstated, as cost increase for all City services and projects are expected to far outpace revenue growth. While the move out of the pandemic phase of COVID-19 is a laudable event, it appears the certainty of uncertainty will accompany our return to normalcy.

Despite being subjected to all the aforementioned issues outside the control of the City’s decision makers, the City has effectively managed its budget and used the positive results of past economic growth to build up fund balances and net position. It has been the City’s practice to set-aside a portion of these fund balances and net position for potential future budget shortfalls and contingencies, and to offset significant long-term liabilities. Nearly $13.4 million has been accumulated in the General fund for contingencies and budget stabilization at June 30, 2022. In addition, a pension trust was established in 2017 in response to pension and budget stabilization concerns, and $20.2 million is invested in the trust at June 30, 2022. The pension trust provides a vehicle to restrict and invest monies for future pension obligations, while maintaining asset control at the local level.

The remaining fund balances and net position are available for use on non-operating expenditures and provide for the payment of any other long-term obligations. Assuming the City continues making sound budget decisions in the future, accumulated fund balance and net position amounts are at a level which should allow the City to withstand negative shortterm economic impacts without affecting the primary service levels currently provided to its residents and businesses. However, the City’s long-term ability to maintain the current high11 levels of service remain in a state of uncertainty due to economic instability and risk of recession, inflation, sales tax volatility and rising pension costs.

Another ongoing financial challenge remains funding the necessary maintenance and improvements required for the City’s facilities and infrastructure systems. The seven-year capital funding plan is updated annually based on the most recent condition assessments of the various infrastructure systems and facilities. While significant progress has been made in the last quarter century by way of improvements and setting aside reserves, there are still a significant number of improvements necessary to improve aging city and park facilities and storm drainage infrastructure. The funding plans for these assets, as well as the other infrastructure components (sidewalks, trees, streets, traffic signals), indicates a need for additional revenue sources to achieve the City’s goal of maintaining its infrastructure systems and facilities at high standards. One of the largest concerns continues to be the lack of a dedicated revenue source (outside the General fund) to pay for facilities and storm drainage improvements identified in the condition assessments. For the reasons discussed previously related to economic concerns, sales tax uncertainty, inflation and pension challenges, it continues to be necessary to identify viable future funding solutions (other than the General fund) in order to address the issues facing aging infrastructure systems and facilities.

Long-term financial planning. The City of Cypress seeks to assure a high quality of life for its residents and businesses. As such, strategic planning is utilized to establish major goals and objectives of the City which provide principal guidance for the budget established by the City Council. The three year goals established for 2019 through 2022 include the following (not in priority order):
 Maintain financial stability and promote economic activity.  Maintain high quality and high value services for the community.  Maintain infrastructure and facilities.
 Enhance and maintain public safety.
 Enhance recreation facilities and programs.

The City’s pursuit of these goals has resulted in establishing strategic objectives, which are incorporated into the annual budget. Most of these strategic objectives were completed during the past year and included developing plans for both American Rescue Plan Act (ARPA) monies and pandemic recovery, an update to the community survey to assess satisfaction with city services and public engagement, creation of a citizen’s academy to educate residents, establishing the new full-time classification of Business Development Manager, launching the residential organics recycling program, and celebrating the opening of Lexington Park and the reopening of the modernized Police Department.

The City of Cypress maintains a seven-year Capital Improvement Program to plan for capital and infrastructure needs, and evaluates its annual budget in coordination with longer-term revenue projections. It is the City’s policy to fund capital projects by accumulating and setting aside a portion of excess General fund revenues over General fund expenditures, for future infrastructure needs in the City’s Capital Projects fund. However, due to the factors discussed in detail earlier, the ability to continue setting aside General fund amounts for future capital needs will become increasingly difficult over the next several years. 12 In addition, a five-year forecast for the General fund is included in the budget. This forecast provides a longer term analysis, which when viewed in conjunction with the current year budget, creates parameters for charting a prudent and sustainable financial course. When compared to where we feared we might be at the outset of the pandemic, the forecast has improved greatly but future challenges (both those that we are aware of and those that are currently unknown) make it difficult to create a reliable five-year forecast.

AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Cypress for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2021. This is the 36th consecutive year that the City has received this prestigious award.

The Certificate of Achievement is a national award that recognizes conformance with the highest standards for preparation of state and local government financial reports.

In order to receive a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized ACFR. The report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to the Certificate of Achievement Program requirements, and we will be submitting it to GFOA to determine its eligibility for another certificate.

The preparation of this report could not have been accomplished without the dedicated service of the entire staff of the City’s Finance Division. The challenges and uncertainty associated with the last few years is unprecedented, and I want to extend my thanks to all the Finance staff that assisted and contributed to the preparation of this report. Appreciation must also be extended to the Cypress City Council for their ongoing commitment to plan ahead and put the City in a positon to be financially prepared for unforeseen challenges.

This strategic approach has greatly benefited Cypress residents and businesses during the pandemic and will continue to do so during the ongoing recovery period. I look forward to working with the City Manager and the newly-elected City Council on ensuring the City’s short-term and long-term fiscal health continues to be strong and it remains the highest priority so that Cypress will be able to flourish for generations to come.

Respectfully submitted,
Matt Burton
Director of Finance and Administrative Services
13 Directory of
City Officials
City of Cypress, California
For the FiscalYear Ended June 30, 2022
Legislative Body
Peter Grant
Matt Burton
Mark Lauderback
Doug Dancs
Alicia Velasco
Jeff Draper
Alisha Farnell
Staff Members
City Manager
Director of Finance & Admin. Services
Chief of Police
Director of Public Works
Director of Planning
Director of Rec. & Comm. Services
City Clerk
Paulo Morales
Anne Hertz-Mallari
Frances Marquez, PhD
Scott Minikus
Jon Peat
Mayor
Mayor Pro-Tem
Council Member
Council Member
Council Member
14 City of Cypress

ORGANIZATIONAL CHART
City Clerk
Community
Development Police
Public Works
Recreation & Parks
Finance &
Administrative Services
City Manager
PEOPLE
of

CYPRESS
Commissions CITY COUNCIL City Attorney
15 Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Cypress
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2021
Executive Director/CEO
16 Financial Section
17 Lance, Soll & Lunghard, LLP 203N. BreaBlvd.,Suite 203 Brea,CA92821 Phone: 714.672.0022 INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
City of Cypress, California
Report on the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Cypress, California, (the “City”) as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

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 City as of June 30, 2022, 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.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements 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; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 18 To the Honorable Mayor and Members of the City Council City of Cypress, California
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Other Reporting Responsibilities
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison schedules for General Fund and major special revenue funds, and the required pension and other post-employment benefits schedules, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial 19 To the Honorable Mayor and Members of the City Council City of Cypress, California
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.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the 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 supplementary information is fairly stated, in all material respects in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory section and statistical section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2022 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.

The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Brea, California
December 21, 2022
20 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
As management of the City of Cypress (City), we offer readers of the City’s financial statements this overview and analysis of the financial activities for the fiscal year ended June 30, 2022. 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 in the introductory section of this report, and with the City’s financial statements, which follow this discussion.

Financial Highlights
 The assets and deferred outflows of resources of the City exceed its liabilities and deferred inflows of resources at the close of the fiscal year ended June 30, 2022 by $334,485,147 (net position). Of this amount, $95,515,524 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors.
 The City’s total net position increased by $17,983,910 during the fiscal year.  As of June 30, 2022, the City’s governmental funds reported combined ending fund balances of $144,498,266, an increase of $11,138,302 in comparison with the prior year. A total of $1,043,486 is unassigned within the General fund and is available for spending at the government’s discretion, while a deficit fund balance of $163,885 is included in the nonmajor governmental funds (unassigned fund balance of the governmental funds).
 As of June 30, 2022, the total fund balance of the General fund was $31,417,525.

Of this total, $8.9 million has been committed by the City Council as part of a stabilization agreement to be used should General fund revenues decrease or expenditures increase unexpectedly due to unforeseen factors or emergencies. In addition to these commitments, a total of $21.2 million of the fund balance has been assigned – including for use on future capital improvements, investment in the City’s pension trust, potential budget shortfalls, pandemic recovery programs and storm drainage purposes. While these assigned amounts are not legally restricted, it continues to be the City Council’s practice to set-aside and annually transfer surplus amounts (if available) both to the City’s Capital Project Fund for future infrastructure improvement projects as outlined in the City’s Seven-Year Capital Improvement Plan and for investment to offset the City’s unfunded pension liabilities.

Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements (which includes the required supplementary information). This report also contains other supplementary information in addition to the basic financial statements themselves. 21 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the City’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between assets/deferred outflows and liabilities/deferred inflows 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 City of Cypress is improving or deteriorating.

The statement of activities presents how the government’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 only result in cash flows in future fiscal periods (e.g. unpaid accrued interest).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all, or a significant portion, of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, community development, public safety, public works and recreation. The business-type activities of the City are related to the sanitary sewer system.

The government-wide financial statements include not only the City itself (known as the primary government), but also two legally separate entities: the Cypress Recreation and Park District (District), and the Cypress Recreation and Community Services Foundation (Foundation). The City is financially accountable for both the District and the Foundation, and the financial information for these blended component units is reported within the financial information presented for the primary government itself.

The government-wide financial statements can be found in the financial section of this report immediately following Management’s Discussion and Analysis (MD&A).

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 City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City 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 22 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Because the focus of governmental funds is narrower than 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 governmentwide 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 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 City maintains various individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General fund, the Pandemic Response Special Revenue Fund, the Recreation and Park District Special Revenue fund, and the City Capital Projects fund, all of which are considered to be major funds. Also presented is the Streets Special Revenue fund which management has designated as a major fund. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the nonmajor governmental funds is provided in the form of combining statements elsewhere in this report.

The City adopts an annual appropriated budget for each of its major funds. The required supplementary information section of the basic financial statements includes budgetary comparison schedules for the General fund, the Pandemic Response Special Revenue Fund, the Recreation and Park District Special Revenue fund and the Streets Special Revenue fund to demonstrate budgetary compliance with the annual budget. A budgetary comparison schedule has been provided elsewhere in this report for the other major governmental fund, the City Capital Projects fund.

The basic governmental fund financial statements can be found in the financial section of this report immediately following the government-wide financial statements.

As part of this annual discussion and analysis, management will discuss financial highlights of the City’s General fund, all other major funds, and any funds experiencing a significant change in fund balances or any other noteworthy activity.

Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses an enterprise fund to account for its sanitary sewer system. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its central services, the District’s central 23 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
services, employee benefits, liability insurance and workers’ compensation insurance.

Because these services benefit governmental functions, they have been included in governmental activities within 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 business-type activities of the Sewer fund, which is considered a major fund of the City. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report.

The basic proprietary fund financial statements can be found immediately following the basic governmental fund financial statements.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the governmentwide financial statement because the resources of those funds are not available to support the City’s own programs. The City’s two types of fiduciary funds are custodial funds and a private-purpose trust fund. The custodial funds are used for assets held in a custodial capacity and cannot be used to support the City’s own programs, the West Cities Police Communications Joint Powers Authority and the Business and Professional Assessment District. The private-purpose trust fund is used to account for the activities of the Successor Agency to the Cypress Redevelopment Agency (Successor Agency) which was established upon the dissolution of the Cypress Redevelopment Agency (Agency). The basic fiduciary fund financial statements can be found immediately following the basic proprietary fund financial statements.

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 basic financial statements can be found in the financial section of this report immediately following the basic fiduciary fund financial statements.

Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. The required supplementary information section includes the City’s progress in funding its obligation to provide pension benefits and post-retirement health care benefits to its employees, and the previously discussed budgetary comparison schedules for the General fund, the Pandemic Response Special Revenue fund, the Recreation and Park District Special Revenue fund and the Streets Special Revenue fund. Required supplementary information can be found immediately following the notes to the basic financial statements.
24 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
The combining statements (referred to previously in connection with nonmajor governmental funds and the internal service funds) are presented immediately following the required supplementary information.

The blended component units (referred to earlier in connection with the government-wide financial statements), although legally separate, function at the discretion and direction of the City’s management. Their financial position and results of operations, therefore, have been included as an integral part of the primary government, and are presented in the fund financial statements.

Government-wide Financial Analysis
The government-wide financial statements provide long-term and short-term information about the City’s overall financial condition. This analysis addresses the financial statements of the City as a whole.

Net position of the City increased by nearly $18.0 million (5.7 percent) to $334.5 million at June 30, 2022, of which $191.7 million is invested in capital assets such as land, buildings and improvements, equipment, and infrastructure. Of the remaining total, $47.3 million is restricted as to use by specifically stipulated spending agreements originated by law, contract or other agreements with external parties. The remaining $95.5 million classified as unrestricted net position increased by $7.4 million (8.4 percent) from $88.1 million at June 30, 2021, and while subject to being designated for specific purposes as approved by the City Council and management, these amounts may be used to meet the Assets:

Current and other assets $ 205,414,223 $ 193,239,901 $ 6,700,860 $ 5,363,075 $ 212,115,083 $ 198,602,976 Capital assets 172,804,367 166,272,625 18,876,494 19,322,767 191,680,861 185,595,392 Total assets 378,218,590 359,512,526 25,577,354 24,685,842 403,795,944 384,198,368 Deferred Outflows of Resources:

Deferred outflows - pension & OPEB 14,230,921 15,161,001 - 14,230,921 - 15,161,001 Total deferred outflows 14,230,921 15,161,001 - 14,230,921 - 15,161,001 Liabilities:

Long-term liabilities outstanding 13,910,689 15,203,699 - 13,910,689 - 15,203,699 Net pension liability 32,737,065 53,272,251 - 32,737,065 - 53,272,251 Other liabilities 7,867,424 9,554,930 62,488 109,282 7,929,912 9,664,212 Total liabilities 54,515,178 78,030,880 62,488 109,282 54,577,666 78,140,162 Deferred Inflows of Resources:

Deferred inflows - pension & OPEB 28,964,052 4,717,970 - 28,964,052 - 4,717,970 Total deferred outflows 28,964,052 4,717,970 - 28,964,052 - 4,717,970 Net Position:

Invested in capital assets 172,804,367 166,272,625 18,876,494 19,322,767 191,680,861 185,595,392 Restricted 40,650,390 37,532,553 6,638,372 5,253,793 47,288,762 42,786,346 Unrestricted 95,515,524 88,119,499 - 95,515,524 - 88,119,499 Total net position $ 308,970,281 $ 291,924,677 $ 25,514,866 $ 24,576,560 $ 334,485,147 $ 316,501,237 2021
Business-type Activites
2022

CITY OF CYPRESS
Summary of Net Position
As of June 30, 2022 and 2021
2021
Total
2022 2021
Governmental Activites
2022
25 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
City’s ongoing obligations. The increase in unrestricted net position is due to many factors, including: tax revenues exceeding estimates, the receipt of one-time American Rescue Plan Act (ARPA) monies made available to local governments for pandemic response and recovery, and realizing budget savings associated with personnel vacancies throughout all departments of the City.

The City’s investment in capital assets (less any related outstanding debt used to acquire those assets) is the largest portion of the City’s net position and represents 57.3 percent of total net position, which is a modest decrease from the percentage of overall net position at the conclusion of the prior year. While the City uses these capital assets to provide services to citizens; these assets are not available for future spending.

The following revenue impacts contributed to the change in net position for governmental activities for the fiscal year ended June 30, 2022:
 The City’s program revenues totaled 46.5 percent of total revenues and nearly tripled from the prior year. Charges for services (which include items such as planning and building fees, city services, and recreation user fees) experienced large increases due to activity levels bouncing back to pre-pandemic levels (especially in development and recreation activities) and receiving nearly $6.2 million of park development fees. These park development fees were over $6.1 million more than the prior year and tend to fluctuate year to year based on development activity. In FY 2021-22, a few large developments in the area of the Los Alamitos Race Track paid significant fees which must be used to build new or Revenues
Program Revenues:

Charges for services $ 10,505,192 $ 3,719,781 $ 1,779,495 $ 1,861,974 $ 12,284,687 $ 5,581,755 Operating grants and contributions 16,061,186 3,862,387 35 37 16,061,221 3,862,424 Capital grants and contributions 1,638,108 1,869,583 - - 1,638,108 1,869,583 General Revenues:

Sales tax 13,292,177 11,249,720 - - 13,292,177 11,249,720 Property taxes 19,500,488 18,720,345 32,508 30,499 19,532,996 18,750,844 Other taxes 6,369,071 5,221,855 - - 6,369,071 5,221,855 Other (4,695,002) 2,282,935 28,657 27,924 (4,666,345) 2,310,859 Total Revenues 62,671,220 46,926,606 1,840,695 1,920,434 64,511,915 48,847,040 Expenses
General government 5,477,433 6,295,641 - - 5,477,433 6,295,641 Community development 2,333,245 2,100,332 - - 2,333,245 2,100,332 Public safety 19,494,326 19,428,392 - - 19,494,326 19,428,392 Public works 12,737,505 13,865,043 - - 12,737,505 13,865,043 Recreation 5,583,107 5,303,581 - - 5,583,107 5,303,581
Sewer - - 902,389 888,283 902,389 888,283
Total Expenses 45,625,616 46,992,989 902,389 888,283 46,528,005 47,881,272 Excess of revenues over expenses
before special item 17,045,604 (66,383) 938,306 1,032,151 17,983,910 965,768 Special Item
Gain on sale of land held for resale - 2,053,172 - - - 2,053,172 Total Special Item - 2,053,172 - - - 2,053,172
Increase (Decrease) in Net Position 17,045,604 1,986,789 938,306 1,032,151 17,983,910 3,018,940 Net Position
Beginning Net Position 291,924,677 289,937,888 24,576,560 23,544,409 316,501,237 313,482,297 Ending Net Position $ 308,970,281 $ 291,924,677 $ 25,514,866 $ 24,576,560 $ 334,485,147 $ 316,501,237

CITY OF CYPRESS
Changes in Net Position
For the fiscal year ended June 30, 2022 and 2021
Business-type Activites
2022 2021
Governmental Activites
2022 2021
Total
2022 2021
26 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
enhanced parks. Operating grants and contributions also far exceed prior year totals, in most part due to the one-time receipt of $11.7 million of American Rescue Plan Act (ARPA) monies provided by the Federal government which replace pandemic-related revenue losses. While grants and contributions tend to fluctuate year-to-year based on availability and project timing, the increases experienced in the past year due to ARPA receipts are unprecedented.
 The City’s general revenues represent 53.5 percent of total revenues. General revenues decreased by just over $3.0 million (8.0 percent) from the prior year.

Sales taxes, which represent 38.5 percent of total general revenues and experienced declines due to the pandemic and the loss of a major generator in October 2020, experienced healthy increases in FY 2021-22. The resiliency of the economy despite the threat of recession, rising gasoline prices and the highest inflation seen in over 40 years, as well as strong business to business sales all helped propel sales tax revenues up by over $2.0 million. Property tax revenues, the City’s largest revenue source, continued to grow due to the stable real estate market and its impact on assessed values. Growth in other taxes, including a strong post-pandemic rebound in transient occupancy taxes, resulted in a $1.1 million year over year increase. However, other general revenues totaled a negative $4.7 million for the year due to experiencing $6.0 million of fair market value adjustments in accordance with generally accepted accounting principles.

These adjustment includes $3.1 million in paper losses to the City’s investment portfolio that will never be realized since the City’s practice is to hold all investments to maturity, and a $2.9 million adjustment to the City’s pension trust which is not expected to be realized due to the long-term nature of pension trust investments.

All revenues from governmental activities are summarized in the following graph. 27 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
Revenues by Source – Governmental Activities
The following revenue items contributed to the change in net position for business-type activities for the fiscal year ended June 30, 2022:
 Program revenues for the sewer system are the major revenue source for the City’s lone business-type activity. Charges for sewer services comprised 97 percent of total revenues and decreased by 4.2 percent from the prior year. Since sewer fees are directly tied to water consumption, any significant annual change can likely be attributed to precipitation levels and drought restrictions experienced throughout the last year. The current sewer fee collections represent a dedicated revenue source which provides full-funding for ongoing maintenance and annual capital improvements to the City’s sewer system.
 General revenues for business-type activities are largely limited to investment earnings on cash balances and a small amount of property tax that is allocated to the City and is restricted to use for sewer purposes.

All revenues from business-type activities are summarized in the following graph. 28 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
Revenues by Source – Business-type Activities
Total expenses for governmental activities decreased by nearly $1.4 million for the fiscal year ended June 30, 2022, (2.9 percent), compared to the prior year.  General government expenses decreased due to higher activity levels in the prior fiscal year associated with pandemic response and recovery related programs to assist local business, non-profit organizations and a hot meal program for eligible residents. While recovery efforts are ongoing, FY 2021-22 pandemic expenditures to assist the community fell well below the levels established in the two previous years.
 Community Development expenses increased 11.1 percent due to contract costs associated with state-mandated housing element update and implementation which is required every eight years.
 Public safety (police) continues to account for the largest portion (42.7 percent) of total expenses related to governmental activities. Public safety expenses increased slightly from the prior year, and the increases are attributed to personnel cost increases related to the impacts of labor agreements with the Cypress Police Officers’ Association and the Cypress Police Management Association. The department continued to have several police officer vacancies throughout the year, which limited year over year increases.
 Public works expenses decreased over $1.1 million due primarily to incurring lower costs for recurring street maintenance projects. These project costs, which include roadway paving and curb and sidewalk maintenance, tend to vary year to year based the scale and timing of projects.
29 CITY OF CYPRESS
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 Recreation expenses increased 5.3 percent due to fully reinstituting many programs which had been halted or scaled back due to the pandemic. These lower levels of programming reduced part-time staffing costs and payments for contract class instructors.
 Total expenses for business-type activities increased $14,106 (1.6 percent).

Ongoing investments to improve the sewer system occur each year, and the modest increase in expenses is largely attributable to increased personnel and consulting costs associated with sewer operations.

Financial Analysis of the Governmental Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information may be useful in assessing the City’s financing requirements and operating needs.

As of the end of the current fiscal year, the City’s governmental funds reported total combined ending fund balances of $144,498,266, an increase of $11,138,302 over total fund balances at June 30, 2021. The increase can be attributed to the receipt of one-time federal ARPA monies and park development fees related to large development projects in the City.

Total fund balance is broken down into five categories – ranging from nonspendable to unassigned. Restricted fund balance amounts total $20.3 million and increased by $1.1 million from the prior year and equal 14.1 percent of total fund balance. The increase in restricted fund balance is due to the accumulation of additional fund balance in the streets fund which will be used for future capital improvements. The restricted amounts at June 30, 2022 can only be used for specific purposes, with the major restrictions being limited for recreation uses, street maintenance and improvements and street lighting. Committed fund balance amounts total $20.5 million (14.2 percent) and decreased by just over $0.6 million in the past year. The small decrease in committed fund balance is due to having a lower amount of City Council approved contracts outstanding at the end of the most recent fiscal year than the prior fiscal year. These unexpended contract amounts tend to vary from year to year depending on the status of major capital projects (such as improvements to the City’s streets and facilities) at the end of the fiscal year, and the current year decrease is largely attributed to declines in the outstanding contract balances associated with the police department remodel and Lexington Park. An additional $102.5 million of fund balance is categorized as assigned. These assignments of fund balance are made by City management for specific purposes – with the large majority of the assignments being for future capital improvements, pension trust investment, potential future budget shortfalls and future pandemic recovery programs. It continues to be the City’s strategy to set aside available resources in order to provide a funding mechanism 30 CITY OF CYPRESS
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JUNE 30, 2022
to pay for future improvements to the City’s infrastructure and public facilities, as well as accumulating monies to offset unfunded pension liabilities. The remaining amount of fund balance is categorized as unassigned and is available in the General fund for any purpose the City Council deems appropriate.

Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The City’s major proprietary fund is the Sewer enterprise fund. Net position of the Sewer fund at the end of the fiscal year ending June 30, 2022 totaled $25.5 million, which is just over $938,000 higher than the prior year. The increase in net position is largely attributed to allocating resources for the ongoing investment in the sanitary sewer system through capital improvement projects.

Major Fund Financial Highlights
General Fund
The General fund is the primary operating fund of the City. At June 30, 2022, the total fund balance of the General fund was $31,417,525 (compared to $25,192,662 at the beginning of the year). The fund balance of the General fund is composed of five different categories – nonspendable, restricted, committed, assigned and unassigned. The City continues to implement the practice of accumulating monies for future infrastructure improvements in the City Capital Projects fund through transfers out of the General fund, as well as setting aside monies to invest in the City’s pension trust. A total of $4.5 million was transferred out for future infrastructure and facility needs, and an additional $4.5 million for pension trust investment, during the fiscal year ended June 30, 2022. It is important to note the annual General Fund monies transferred to the City Capital Projects fund for the intended purpose of providing infrastructure and facility improvements are available for other uses at the City Council’s discretion should the need arise.

As a measure of the General fund’s liquidity, it may be useful to compare the total of assigned and unassigned fund balances to total fund expenditures since assigned and unassigned amounts are essentially available for any purpose. Total assigned and unassigned fund balance represents 72.1 percent (up from 54.5 percent the previous year) of the total expenditures in the General fund. As mentioned, the largest component of assigned fund balance is for future capital infrastructure investments. Despite the City Council’s and management’s policy to actively set-aside monies for future infrastructure needs, the annual General fund amounts expected to be available for transfer to the City’s Capital Project fund will likely be insufficient to pay for all future capital needs due to projected expenditure growth outpacing projected revenue growth.

For the fiscal year ended June 30, 2022, cash and investments in the General fund totaled $26,251,338, a decrease of $348,523 from the prior fiscal year. The net decrease to cash is due to the one-time American Rescue Plan Act monies transferred into the General Fund for eligible revenue replacement being offset by the transfer out of prior year 31 CITY OF CYPRESS
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JUNE 30, 2022
accumulations for capital projects and pension trust investments. These transfers for capital and pension investment had been deferred for a year due to budget uncertainties associated with the pandemic.

Total General fund revenues for the fiscal year ended June 30, 2022 increased by nearly $1.8 million from the prior year. Individual components of this change are highlighted as follows:
 Sales tax receipts, historically the largest revenue source of the General fund, increased by $1.7 million from the prior year. The ongoing rebound from the pandemic’s negative impact on sales tax revenue, combined with rising gasoline prices and inflationary pressures, contributed to the 14.8 percent year over year revenue increase.
 Annual property tax revenue continued to grow due to increases in the City’s secured property tax base resulting from the ongoing strength of the real estate market. The General fund also received over $5.3 million in property taxes in lieu of Motor Vehicle License Fees (MVLF), which represented an increase over the prior year.

Revenues
Taxes:

Sales $ 13,292,177 $ 11,579,445 $ 1,712,732
Property 11,852,927 11,398,114 454,813
Other 6,751,658 5,568,782 1,182,876
Total taxes 31,896,762 28,546,341 3,350,421
Licenses and permits 1,326,104 884,938 441,166
Fines and forfeitures 167,159 257,141 (89,982)
From use of property (2,894,980) (547,569) (2,347,411)
From other agencies 667,581 240,412 427,169
Charges for services 3,540,366 3,481,808 58,558
Other 363,434 419,100 (55,666)
Total Revenues 35,066,426 33,282,171 1,784,255
Expenditures
General government 4,833,262 5,291,414 (458,152)
Community development 2,099,379 1,852,108 247,271
Public safety 17,746,963 17,222,083 524,880
Public works 6,189,563 5,869,347 320,216
Total Expenditures 30,869,167 30,234,952 634,215
Net Transfers 2,027,604 (898,347) 2,925,951
Increase (decrease) in fund balance $ 6,224,863 $ 2,148,872 $ 4,075,991 Change

CITY OF CYPRESS
Summary of Changes in Fund Balances - General Fund
For the fiscal year ended June 30, 2022 and 2021
2022 2021
32 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
 Other taxes were up significantly due to several factors, with the impacts on postpandemic non-essential travel and transient occupancy tax receipts accounting for the majority of the increase.
 Licenses and permit revenues, as well as charges for services, increased due to higher building development activity when compared to the prior year. These revenues tend to vary year to year, and while development activity in the City remained strong throughout the pandemic, activity levels increased further in the past year.
 Revenue from use of property experienced another year over year decline, resulting in a second consecutive year of recognizing negative amounts for this revenue source due to investment earnings. While the market interest rate earned on the City’s cash and investment reserves rose throughout the year, the market value of the underlying assets was less than their purchase price. Accounting standards require all investments be recorded at their fair market value on June 30, 2022, which caused total annual revenues from the use of property to be negative. It should be noted that the City’s investment policy provides for all investments to be held to maturity, so the $3.1 million of losses required to be recorded at year end will never be realized.
 Revenue from other agencies increased due to receiving a one-time pandemicrelated $105,000 meal gap services grant from the County and the first year of a three year State tobacco grant to fund the City’s new school resource officer in the Police Department. This State grant will provide up to $710,000 of funding over three years for tobacco education and compliance purposes.

Changes in General fund expenditures, by function, occurred as follows during the year ended June 30, 2022:
 General government expenditures decreased by $458,152 (8.7 percent). The decrease is attributed to a higher volume of one-time pandemic response expenditures incurred in the previous fiscal year. In the fiscal year ended June 30, 2021, the City expended $950,000 of General fund monies for additional small business resiliency grants and business recovery programs, a hot community hot meal program and support for local non-profit partners. While meal assistance programs continued into FY 2021-22, total expenditures for pandemic response and recovery declined to $300,000.
 Community development expenditures increased due primarily to incurring higher contract costs to provide support for the preparation and implementation of the City’s Housing Element. The Housing Element is a State-mandated document that establishes housing programs and zoning amendments and is required to be updated every eight years. Implementing the components of the housing element will take several years and is expected to cost over $1 million.  Public safety (police) expenditures increased by $524,880 (3.0 percent) when compared to the prior fiscal year. Cost increases associated with implementing negotiated salary and benefit increases for sworn officers, and contract cost 33 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
increases brought on by inflationary impacts, accounted for the majority of the additional expenditures.
 Public works expenditures rose by $320,216 (5.5 percent) due to many factors, including having more engineering plan check contract costs due to high activity levels, as well as higher park maintenance costs. Specifically, the cost to irrigate the City’s parks continue to increase due to higher water prices and dry weather conditions. All costs associated with park maintenance is reimbursed to the City’s General fund by the Park District.

General fund net transfers in increased by over $2.9 million as compared to the prior fiscal year and are summarized as follows:
 The General fund transferred $1,550,000, as compared to $725,000 in the prior year, to the City’s Capital Projects fund for current year projects. Additionally, $4.5 million of accumulated fund balance, up from $1.3 million in the prior year, was transferred from the General fund to the City’s Capital Projects fund for future infrastructure projects.
 $4.5 million was transferred to the City’s Internal Service Employee Benefits fund during the past year, compared to $150,000 in the prior year. This annual transfer is used to fund the City’s pension trust which was established in 2017 to help offset the City’s growing pension liabilities.
 As discussed above, the increases to transfers from the General fund for future capital and pension trust investments were significantly higher than the prior year.

The increases were a result of overcoming two pandemic-related factors: $1.9 million of available fund balance amounts were allocated for pandemic response efforts and approximately $2.1 million was set-aside to offset projected budget deficits in the prior fiscal year. Fortunately, no additional pandemic response efforts were necessary in the past year and the projected budget deficits never materialized which resulted in additional General fund amounts being available to set-aside for future capital and pension trust investment.  $11.7 million of American Rescue Plan Act (ARPA) monies were transferred to the General fund during the fiscal year ended June 30, 2022. In accordance with eligibility guidelines, the City elected to use these one-time amounts to replace revenue losses brought on by the pandemic.

General Fund Budgetary Highlights
Differences between the original appropriations budget and the final amended budget totaled a net increase of $2,935,210. The annual carryover of appropriations to the new fiscal year for encumbrances and services not completed in the prior fiscal year accounted for $1,713,545 of the change. The majority of the carryover appropriations related to unexpended contingency amounts, unexpended grant awards and planning services for the State-mandated update to the City’s housing element. The remaining major changes in appropriations are summarized as follows:
34 CITY OF CYPRESS
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JUNE 30, 2022
 $37,500 increase in Legislative for consulting assistance to further community outreach and public engagement related to the California Voting Rights Act and the format Cypress uses to elect Council Members.
 $105,000 increase in Administration for a grant from the County of Orange for meal gap support initiatives in response to the COVID-19 pandemic.  $78,000 in the Police Department for a State Office of Traffic Safety grant for a selective traffic enforcement program which aims to reduce collisions involving alcohol, speed and red light violations.
 $666,610 of contract cost increases in Planning for the State-mandated update of the Housing Element and associated implementation, business park modernization and integration project, and a neighborhood preservation pilot program for code enforcement issues.
 $211,000 of contract costs increases in Building associated with providing inspection and plan check services. Inspection and plan check services tend to fluctuate year-to-year based on many factors, including the strength of the local economy and housing market. The additional inspection and plan check appropriations were fully offset by increases in revenues in the General fund.  $50,000 in Public Works for a solid waste low-income assistance program for eligible residents designed to help offset higher solid waste fees resulting from the implementation of a new State-mandated organics recycling program.

Total actual General fund revenues fell below the final amended revenue budget by $370,014. Tax revenue exceeded the amended budget by over $3.3 million due to several factors, with sales tax being the largest impact and exceeding initial estimates by $2.0 million. This sales tax overage was driven by the ongoing strength of the City’s largest sales tax generators, inflationary impacts including rising gas prices, and a postpandemic rebound in business to business sales. Other tax sources contributed to the overage and include property tax, transient occupancy tax and franchise taxes. Several revenue sources fell below budget, which more than offset the tax overages. The most significant revenue shortfall was from the use of property (which includes interest earnings on the City’s investments). Accounting requirements mandate all investments are adjusted to their fair market value at fiscal year end, which resulted in $3.1 million of markdowns in FY 2021-22. While the rate earned on cash balances increased from historic lows in the prior year, rising interest rates caused the market value of assets to fall below their purchase price. Since the City’s investment policy provides for all investments to be held to maturity, these additional losses will never be realized. So in many ways, the negative amount recorded as revenue from use of property is misleading and gives a false impression to the reader of the financial statement. Other revenue sources that fell short of the amended budget include revenue from other agencies which consists primarily of grant allocations which remained unexpended at the end of fiscal year.

Total operating expenditures were nearly $6.1 million below the final amended budget (before any carryover amounts to the fiscal year ended June 30, 2023) and these savings were attributed across all departments throughout the City. The reason for the large 35 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
budget variance is similar to prior fiscal years, in that the largest component is related to personnel savings and the periods with staffing vacancies during the course of the year.

The bulk of these staffing vacancies are associated with positions (such as police officers) in which active recruitments are ongoing and the periods of vacancy are temporary.

Further savings were realized due to one-time amounts budgeted for contingency purposes and COVID-19 recovery not being expended prior to June 30, 2022. These unexpended amounts have been carried over and are expected to be expended in the new fiscal year.

Other Major Funds and Other Funds
Management annually discusses financial highlights of the City’s major funds and any other funds experiencing significant changes in fund balance during the year. Also included in the annual discussion are any activities management considers relevant to the operations of the City.

Pandemic Response Special Revenue Fund
The Pandemic Response and Recovery Fund accounts for receipts and expenditures of money received from federal, state and county sources in response to the COVID-19 pandemic. Included in this fund are Coronavirus Aid, Relief, and Economic Security (CARES) act and American Rescue Plan Act (ARPA) monies used to respond to the pandemic in accordance with established guidelines.

Total revenues for the fiscal year ended June 30, 2022 increased over $11 million from the prior fiscal year due to the one-time allocation of Coronavirus State and Local Fiscal Recovery Funds through ARPA. In January 2022, the City Council approved a spending Revenues
From use of property $ $ 505 - $ (505) From other agencies 11,717,000 675,035 11,041,965 Other revenue - 611 (611)
Total Revenues 11,717,000 676,151 11,040,849
Expenditures
General Government - 194,355 (194,355)
Total Expenditures - 194,355 (194,355)
Net Transfers (11,717,000) (481,796) (11,235,204)
Increase (decrease) in fund balance $ $ - $ - -

CITY OF CYPRESS
Summary of Changes in Fund Balances
Pandemic Response Fund
For the fiscal year ended June 30, 2022 and 2021
2022 2021 Change
36 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
plan which uses the full allocation as revenue replacement to the maximum extent allowed by U.S. Treasury guidelines. Eligible revenue losses total $11,717,000 through June 30, 2021 and were transferred out during the fiscal year ended June 30, 2022.

Coronavirus State and Local Fiscal Recovery Funds of $6,277 remain unexpended at June 30, 2022 and are anticipated to be available for revenue replacement in future fiscal years.

Recreation and Park District Special Revenue Fund
The Recreation and Park District special revenue fund is the sole operating fund of the Cypress Recreation and Park District. At the end of the current fiscal year, total fund balance was $6,406,514 as compared to $6,342,546 at the beginning of the year. The fund balance represents 141.4 percent (compared with 151.7 percent from the previous year) of the fund’s total current Recreation operating expenditures and the large majority of the fund balance is categorized as restricted. The fund balance restrictions at June 30, 2022 are separated into amounts that are required to be used for improvements to open space, for use on youth league renovations and those amounts that may be used for general recreation activities. Since the bulk of the District’s operations are funded with annual property tax revenues, a portion of the restricted fund balance for general recreation usage is needed to meet cash flow shortages between property tax receipts.

The remaining restricted amounts (for both open space and recreation) are being accumulated for future non-recurring expenditures such as facility and infrastructure improvements. During the fiscal year ended June 30, 2018, the City Council approved the transfer of $2.2 million to the District for use on future capital facility improvements. To date, no improvements have been applied against the $2.2 million and it is categorized as committed fund balance of the District since these monies were transferred from the General Fund of the City and are not legally restricted.

For the fiscal year ended June 30, 2022, the cash and investments balance in the Recreation and Park District special revenue fund was $13,769,669, a decrease of $1,053,886 from the prior fiscal year. Total receivables at the end of the fiscal year were $127,734, a decrease from the prior year total of $147,048. The decrease in receivables is attributed to more registration fees outstanding in the prior year partially offset by larger interest receivable. The change to interest receivables is a direct result of higher market rates earned on cash balances at June 30, 2022 than the prior year. 37 CITY OF CYPRESS
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JUNE 30, 2022
Total Recreation and Park District Special Revenue fund revenues for the fiscal year ended June 30, 2022 more than doubled from the prior year. Individual components of this change are highlighted as follows:
 Property tax revenues, the District’s largest recurring revenue source, were 4.4 percent more than the prior year. The District continues to benefit from the positive impacts to property tax revenues resulting from rising assessed values.  Revenues from the use of property increased due to higher facility rentals resulting from the easing of COVID-19 pandemic restrictions which had severely limited facility rentals throughout the prior fiscal year.
 The huge increase to charges for services is two-fold. First, traditional recreation programming, which had been significantly curtailed while dealing with a variety of pandemic-related challenges and caused sharp declines in fee revenues, largely returned to normal during the fiscal year ended June 30, 2022. The second, more significant factor, relates to park development fee receipts. These receipts are difficult to predict due to uncertainties associated with development activity and economic conditions, and can fluctuate drastically from year to year. Three major developments, consisting of over 340 new units, generated fees totaling nearly $6.2 million in the fiscal year ended June 30, 2022 while prior year receipts were just under $100,000.

Notable changes in expenditures during the fiscal year ended June 30, 2022 follow:

Revenues
Taxes:

Property $ 6,222,354 $ 5,958,449 $ 263,905 From use of property 190,760 101,041 89,719 From other agencies 53,076 32,300 20,776
Charges for services 6,831,408 468,056 6,363,352
Other 27,104 4,938 22,166
Total Revenues 13,324,702 6,564,784 6,759,918
Expenditures
Recreation 4,532,507 4,181,884 350,623
Capital outlay 7,648,236 6,894,042 754,194
Total Expenditures 12,180,743 11,075,926 1,104,817
Excess of revenues over expenditures 1,143,959 (4,511,142) 5,655,101 Net transfers (1,079,991) (1,094,928) 14,937
Increase in fund balance $ 63,968 $ (5,606,070) $ 5,670,038

CITY OF CYPRESS
Change
Summary of Changes in Fund Balances
Recreation and Park District Special Revenue Fund
For the fiscal year ended June 30, 2022 and 2021
2022 2021
38 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
 Recreation expenditures increased just over $350,000 (8.4 percent) due to the rebound from pandemic-related declines in recreation activities which yielded lower costs for part-time personnel and contract class instructors. Also contributing to the increase are cost of living salary and benefit increases for all full-time employees.
 Capital expenditures rose by $754,194 due primarily to the completion of the multiyear construction of Lexington Park. This project created two large sports fields and other amenities with a total cost of approximately $13 million. In addition to the investment in Lexington Park, amounts were expended for the initial redesign of Arnold Cypress Park ADA and a variety of enhancements at six parks.

District net transfers decreased slightly and totaled a net outflow of nearly $1.1 million.

These transfers occur each year and are comprised of multiple components. First, the District annually transfers additional property tax amounts to the City that were previously apportioned to the Agency. The City Council established this repayment when the State disallowed loans from the City to the Agency which had been used to pay for several recreation capital projects (including the construction of the Senior Center and the remodel of the Community Center). The other recurring component relates to a $150,000 annual transfer to the employees’ benefits internal service fund to help offset any unfunded pension liability owed to the Orange County Employees Retirement System (OCERS). This liability represents monies owed on behalf of vested District employees who earned OCERS pension benefits prior to 2000 when all employees were transitioned to CalPERS.
39 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
Streets Special Revenue Fund
The Streets Special Revenue Fund accounts for receipts and expenditures of money apportioned under Streets and Highway Code (Highway Users’ Tax), the Road Repair and Accountability Act of 2017, Measure M2 sales tax revenues, and Traffic Mitigation Fees charged by the City. These funds are used to maintain and improve streets and traffic signals.

Total revenues for the fiscal year ended June 30, 2022 increased $811,760 from the prior fiscal year. The largest recurring income source in this fund is revenue from other agencies which includes State Gas Tax, Road Repair and Accountability Act of 2017 and County Measure M2 allocations. All these allocations experienced increases from the prior year, which were likely the result of the overall rebound from the pandemic and its positive impact on the activities that generate these revenues. In addition, traffic mitigation fees increased $363,729 year over year and these annual receipts tend to fluctuate based on development activity in the City.

Total expenditures and net transfers also tend to vary from year-to-year depending on resource availability and the specific timing and scope of recurring projects such as the arterial and residential street rehabilitation and concrete/sidewalk improvements.

Expenditures for street rehabilitation and concrete/sidewalk improvements decreased in the past year. Also, extensive median improvements in the prior year along Lincoln Avenue utilized $535,000 of restricted Gas Tax monies resulting in the year over year decrease to net transfers.

Revenues
From use of property $ 23,603 $ 32,765 $ (9,162) From other agencies 3,420,933 2,929,680 491,253 Charges for services 404,131 8,789 395,342
Other revenue - 65,673 (65,673)
Total Revenues 3,848,667 3,036,907 811,760
Expenditures
Public works 842,875 2,228,221 (1,385,346)
Capital outlay 713,140 111,922 601,218
Total Expenditures 1,556,015 2,340,143 (784,128)
Net Transfers (979,727) (1,906,455) 926,728
Increase (decrease) in fund balance $ 1,312,925 $ (1,209,691) $ 2,522,616

CITY OF CYPRESS
Summary of Changes in Fund Balances
Streets Special Revenue Fund
For the fiscal year ended June 30, 2022 and 2021
2022 2021 Change
40 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
City Capital Projects Fund
The City Capital Projects Fund provides a cost center for City projects funded (either partially or in full) with General fund monies. In accordance with City Council policy, an annual transfer is made from the General fund to the Capital Projects Fund to pay for a portion of the projects approved as part of the Seven-Year Capital Improvement Program.

Annual transfers are also made from the General fund to accumulate monies for future projects. The following table summarizes the activity during the past two years.

Total revenues for the fiscal year ended June 30, 2022 increased $154,450 from the prior fiscal year. The increase is a result of earning a higher interest rate on idle cash balances and receiving $225,000 of Community Development Block Grant monies for a portion of residential street resurfacing project costs. It is common for the City’s revenues from other agencies (grant monies) to fluctuate from year to year based on eligibility and availability.

Total expenditures tend to vary from year-to-year depending on the status of nonrecurring projects such as public facility renovations, median improvements and other major infrastructure improvements such as storm drainage construction. During each of the last two fiscal years, expenditures have been higher than typical years due to median improvements on Katella Avenue as well as incurring nearly $6.5 million on the multi-year Police Department building modernization project.

The annual amounts shown as net transfers are comprised of transfers in from various restricted funds of the City and two transfers from the General fund. Total net transfers Revenues
From use of property $ 373,338 $ 443,888 $ (70,550) From other agencies 225,000 - 225,000 Total Revenues 598,338 443,888 154,450
Expenditures
Public works 1,083,215 940,847 142,368
Capital outlay 3,958,855 4,642,503 (683,648)
Total Expenditures 5,042,070 5,583,350 (541,280)
Net Transfers 8,186,370 6,363,157 1,823,213
Special Item
Gain on sale of land held for resale 2,053,172 - (2,053,172) Increase (decrease) in fund balance $ 3,742,638 $ 3,276,867 $ 465,771 Change

CITY OF CYPRESS
Summary of Changes in Fund Balances
For the fiscal year ended June 30, 2022 and 2021
City Capital Projects Fund
2022 2021
41 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
from restricted funds decreased year over year, due to using over $2 million of one-time federal asset seizure monies to pay for a portion of the Police Department building modernization project in FY 2020-21. The two annual General fund transfers represent the annual funding requirement approved by the City Council to fund current year projects, while the other component allocates monies for future infrastructure improvements that will be appropriated in upcoming years. The amount available for future improvements is directly tied to available General fund surplus amounts from the prior fiscal year. Available surplus amounts from FY 2020-21, and transferred to the City Capital Projects fund in FY 2021-22, were $4.3 million higher than the prior year. This increase is partially attributed to pandemic impacts limiting the prior year transfer due to the City Council’s decision to utilize a large portion of FY 2019-20 General fund surpluses for community pandemic response programs.

Changes to fund balance were also impacted by the sale of land held for resale during the fiscal year ended June 30, 2021. The sale of the 13 acres of land held in the City Capital Projects fund resulted in a one-time, extraordinary gain of more than $2 million.

The proceeds of the sale of the land will be used for future infrastructure and facility improvements.

Sewer Enterprise Fund
The Sewer Enterprise fund accounts for the maintenance and improvements made to the City’s sewer system. The primary revenue source associated with this fund is fees collected from users of the sewer system. The Sewer fund is an enterprise fund in accordance with the requirements of GASB Statement No. 54 and all infrastructure assets associated with the sanitary sewer system are recorded as assets in the Sewer fund and the full-accrual method of accounting is used to account for sewer activities within the fund. The net position increased by nearly $940,000 during the year and the following is a comparison of the enterprise activity in the fund for the past two years:
42 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
Total Sewer fund operating revenues for the fiscal year ended June 30, 2022 are comprised primarily of sewer fee revenues, which decreased by $82,479 from the prior year. Sewer fees are charged to both residential and commercial accounts based on water consumption and can fluctuate year to year based on many factors, including precipitation levels and drought restrictions.

Maintenance expenditures tend to be consistent from year to year except in years in which the comprehensive update to the Sewer System Management Plan (SSMP) is required.

This update occurs every five years and was last performed in the fiscal year ended June 30, 2020 with a cost of nearly $100,000.

All non-operating revenues and expenses have remained consistent over the past two years. However, interest income can vary year to year due to changes in the City’s investment portfolio earnings rate of return and average cash balances held for sewer purposes.

Capital Asset and Debt Administration
Capital assets. The City’s investment in capital assets as of June 30, 2022 amounts to $191,680,861 (net of accumulated depreciation) and consists of $172,804,367 for governmental activities and $18,876,494 for business-type activities. The investment in capital assets for governmental activities includes land, buildings and improvements, vehicles and equipment, furniture and fixtures, roads, storm drains, sidewalks, street lights, and construction in progress. The investment in business-type activities is limited Operating Revenues
Charges for services $ 1,779,495 $ 1,861,974 $ (82,479) Other 2,442 2,779 (337) Total Operating Revenues 1,781,937 1,864,753 (82,816)
Operating Expenditures
Sewer Maintenance 308,534 298,261 10,273
Depreciation 593,855 590,022 3,833
Total Operating Expenditures 902,389 888,283 14,106
Non-Operating Revenues (Expenses)
Property Taxes 32,508 30,499 2,009
From other agencies 35 37 (2)
Interest income 26,215 25,145 1,070
Total Non-operating Revenues 58,758 55,681 3,077
Increase (Decrease) in net position $ 938,306 $ 1,032,151 $ (93,845)

CITY OF CYPRESS
Change
Summary of Changes in Net Position
Business-type Activities - Sewer Enterprise Fund
For the fiscal year ended June 30, 2022 and 2021
2022 2021
43 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
to the City’s sanitary sewer system. The City’s overall investment in capital assets increased during the past fiscal year by $12.9 million (3.8 percent) before depreciation.

The following table summarizes capital asset activity for the fiscal year ended June 30, 2022.

Major governmental activities capital asset transactions during the fiscal year ended June 30, 2022 included the following:
 The large increase to construction in progress is due to the ongoing construction associated with Lexington Park and the Police Department modernization and seismic retrofit project. These two large-scale, multi-year projects were completed soon after June 30, 2022 and were recorded as construction in progress at the end of the current fiscal year.
 Additions to buildings and improvements of $1.8 million include Americans with Disabilities Act (ADA) playground surfacing upgrades at several parks, and restroom improvements at the Senior Center, maintenance yard and Evergreen Park.
 The increase to machinery and equipment is attributed to the purchase of one tractor loader backhoe, a new wood chipper, and the replacement of information technology firewalls at all City locations.
 Infrastructure additions of $285,000 are comprised of capitalizing prior year construction in progress amounts as well as street name sign upgrades incurred in the fiscal year ended June 30, 2022.

Major business-type activities capital asset transactions during the most recent fiscal year included the following:

Governmental Activities:

Capital Assets, Not Depreciated:

Land $ 9,734,882 $ 9,734,882 $ - $ - $ 9,734,882 $ 9,734,882 Construction in Progress 23,701,600 13,185,847 253,324 105,742 23,954,924 13,291,589 Total, Not Depreciated 33,436,482 22,920,729 253,324 105,742 33,689,806 23,026,471 Capital Assets, Being Depreciated:

Buildings and Improvements 40,222,966 38,390,119 - - 40,222,966 38,390,119 Machinery and Equipment 11,352,637 11,209,381 - - 11,352,637 11,209,381 Infrastructure 233,968,226 233,683,122 34,445,054 34,445,054 268,413,280 268,128,176 Total, Being Depreciated 285,543,829 283,282,622 34,445,054 34,445,054 319,988,883 317,727,676 Less Accumulated Depreciation:

Buildings and Improvements (21,311,078) (20,093,724) - - (21,311,078) (20,093,724) Machinery and Equipment (8,341,912) (7,720,733) - - (8,341,912) (7,720,733) Infrastructure (116,522,954) (112,116,269) (15,821,884) (15,228,029) (132,344,838) (127,344,298) Total Accumulated Depreciation (146,175,944) (139,930,726) (15,821,884) (15,228,029) (161,997,828) (155,158,755) Total Depreciated, Net 139,367,885 143,351,896 18,623,170 19,217,025 157,991,055 162,568,921 Governmental Activities Capital
Assets, Net $ 172,804,367 $ 166,272,625 $ 18,876,494 $ 19,322,767 $ 191,680,861 $ 185,595,392 2022 2021
Total
2022 2021
Summary of Capital Assets
As of June 30, 2022 and 2021
2022 2021
Governmental Activities Business-type Activities
44 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
 Nearly $148,000 was invested in sewer capacity and condition improvement projects at various locations and recorded as construction in progress at June 30, 2022.

Additional information on the City’s capital assets can be found in the Capital Assets and Depreciation note (7) in the notes to the basic financial statements section of this report.

Long-Term debt. The City had total debt outstanding of $46,544,375 at June 30, 2022.

The following schedule summarizes the City’s long-term liabilities.

Long-term debt activity during the fiscal year ended June 30, 2022 included:
 The claims payable increase is a result of two offsetting factors. Outstanding general liability claims declined by $400,000 in the past year, while workers’ compensation claims rose by $590,000 due to several new workers’ compensation cases remaining open at June 30, 2022. This is the second straight year workers’ compensation claims have experienced large increases.
 Compensated absences increased by $109,946. Compensated absence liabilities tend to grow modestly in years where there are few retirements or resignations of long-term employees, such as in the past year.
 In conjunction with GASB 75, the City had an actuarial valuation performed to determine the liability for other postemployment benefit (OPEB) plans as of June 30, 2022. The results of the actuarial valuation resulted in a decrease to the City’s liability for retiree’s health benefits due to an increase in the required discount rate used to calculate future benefits. Any changes in liability from year to year are due to many factors, including adjustment of the discount rate, as well as the ongoing impact of the actuarial requirement of an “implied subsidy” which results when the premiums paid by both active employees and retirees are the same. In these situations, such as with the City, the underlying assumption is the value of benefits to retirees exceeds those provided to active employees.  The City’s pension liability associated with its defined benefit plans decreased by over $20.5 million during the fiscal year ended June 30, 2022. These decreases are directly attributable to the results of the annual actuarial valuations performed by the plan’s administrators, CalPERS and OCERS.
2022 2021 Change
Claims Payable $ 2,490,415 $ 2,301,334 $ 189,081
Compensated Absences 2,405,207 2,295,261 109,946
Retiree's Health Benefits 9,015,067 10,607,104 (1,592,037) Accrued Pension Liability 32,737,065 53,272,251 (20,535,186) Total $ 46,647,754 $ 68,475,950 $ (21,828,196)
Summary of Long-Term Debt
As of June 30, 2022 and 2021
45 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
The City has set aside nearly $3 million in the Employees Benefits Internal Service Fund to offset and pay a portion of both the OPEB and pension liabilities. However, these monies have not been placed in an irrevocable trust and therefore are not considered funded assets for actuarial purposes. In addition to these cash balances, $20.2 million is invested in the City’s pension trust as of June 30, 2022. These trust amounts are legally restricted and may only be used to pay pension obligations.

Additional information on the City’s long-term debt, pension plans and other postemployment retirement benefits can be found in the Long-Term Debt note (8), the Other Long-Term Liabilities note (9), the Public Employees’ Retirement System (CalPERS) note (10), the Terminated Orange County Employees Retirement System (OCERS) Defined Benefit Pension Plan note (12) and the Post-Employment Health Care Benefits note (13) in the notes to the basic financial statements section of this report.

Economic Factors and their impact on future City Budgets Cypress has achieved enviable fiscal health through strategic financial management and oversight. Its long history of fiscal discipline has enabled Cypress to weather economic downturns; maintain a commitment to first class infrastructure; and see Cypress repeatedly recognized as one of Southern California’s best cities for families and businesses.

The City’s long-term financial position remains remarkably strong and benefits from the $11.7 million Coronavirus State and Local Fiscal Recovery Funds windfall through the American Rescue Plan Act (ARPA). The FY 2022-23 Budget is effectively balanced, but dogged by a modest, stubborn structural deficit that limits the City’s options to absorb cost increases or enhance community service levels. The structural deficit is a function of the City ongoing commitment of a $1.5 million annual contribution toward capital and infrastructure projects using General Fund operating revenues. The deficit is expected to be resolved by drawing on reserves established to bridge small budget deficits, or more likely, be rectified through operational efficiencies and prior fiscal year end savings.

While the City has proficiently addressed small budget deficits for several years, Cypress must remain financially vigilant. In particular, City operations are heavily dependent on Sales Tax – a volatile revenue source that is not generated evenly throughout the business community. Rather, Cypress relies on a handful of businesses for the majority of its Sales Tax, which means a disruption to any of these major producers could jeopardize City operations.

The discipline and foresight to preserve the commitment of annual General fund operating revenue for capital and infrastructure investment; creation of reserves for budget 46 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
stabilization purposes; and the development of prudent Fiscal Strategies to ensure the City’s long-term health are hallmarks of Cypress’ financial management practices.

Our financial management practices are also a justifiable source of community pride and industry leadership. Cypress is the only city to be recognized twice by former State Senator (and Certified Public Accountant) John Moorlach for having the largest unrestricted net position per capita of Orange County’s 34 cities.

After two tumultuous Budgets, FY 2022-23 finds the City’s short-term financial condition largely untroubled by the pandemic, but facing a variety of challenges due to inflation skyrocketing to 40-year highs.

Runaway inflation will challenge the City across the board:
 The cost to provide municipal services will increase. Everything from supplies, to gasoline, to service contracts will cost more.
 The cost of capital projects will go up. Annual projects, like residential street resurfacing and rehabilitation, may see their scope of work reduced compared to prior years. Fortunately, Cypress’ strong financial management practices enable the City to avoid higher borrowing costs by continuing to fund CIP projects on a pay-as-you basis.
 There will be pressure to increase employee compensation as the City works to retain and attract employees in a tight labor market. While some City revenues will increase due to inflation, those increases cannot keep pace with historically large CPI increases, which also limit the City’s ability to preserve employee wages relative to the cost of living.
 Employer pension costs are likely to increase as CalPERS navigates soaring interest rates, volatile financial markets, and rising employee wages.

The potential for a recession in the next 12-18 months appears to have increased significantly since the start of 2022. California State University, Fullerton’s recent midyear economic forecast presented a decidedly grim outlook, “The confluence of an escalating war, rapid rate hikes, unprecedented labor shortages, persistent supply disruptions, higher energy costs, a multi-decade spike in inflation and continued flare-ups in a oncein-a-century pandemic are bound to dim even the most Pollyannaish outlook.” Many economists peg the risk of a recession by 2023 as high as the impacts of the cumulative Federal Reserve rate hikes used to attack inflation further weigh on mortgage payments and monthly payments.
47 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
While Cypress is exceedingly well prepared to weather a typical recession/business cycle, the risk of recession must be a consideration in the City’s planning and operational decisions for the foreseeable future.

Revenues. The City’s projected revenues for Fiscal Year 2022-23 are $44.8 million and do not include any tax rate increases from the previous year. The Fiscal Year 2022-23 revenues included in the budget are 7.5 percent higher than the Fiscal Year 2021-22 adopted revenue budget.

The City’s largest General fund revenue sources remain sales tax ($12.4 million) and property tax ($12.0 million including State backfills). Together, these two sources comprise over two-thirds of General Fund revenues. Budgeted sales tax revenues have increased by nearly $1.2 million (10.2 percent) from the FY 2021-22 Budget. The increase is attributed to the lingering impacts of the pandemic not being as severe as initially feared.

While not nearly as large as property taxes and sales tax, transient occupancy tax (TOT) is a major component of Other Taxes in the General Fund. The TOT declines due to COVID-19 were significant, but have rebounded well and TOT revenues are projected to increase by $750,000 (39%) when compared to the FY 2021-22 Budget.

Expenditures. Fiscal Year 2022-23 expenditures accomplish Strategic Plan goals and operating costs grow in response to a variety of factors largely outside the City’s control (higher pension contributions, state mandates, contract and personnel increases due to inflation, etc.) Major expenditure highlights in the Fiscal Year 2022-23 Budget are as follows:
 Maintaining current service levels.
 Funding required CalPERS pension cost increases.
 Incorporating negotiated employee salary and benefit increases.  Year one of the City’s updated Seven Year Capital Improvement Program which totals $10.2 million.
 Capital Outlay funding of slightly more than $1.1 million to acquire and/or replace computer software/hardware items, vehicles and various tools and equipment. Most capital outlay amounts are being funded with accumulated monies specifically setaside for these purchases.

Requests for Information
48 CITY OF CYPRESS
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022
This financial report is designed to provide a general overview of the financial position of the City for all interested parties. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Department, 5275 Orange Avenue, Cypress, CA 90630. 49 50
ASSETS
Cash and investments $ 172,147,287 $ 6,549,537 $ 178,696,824 Restricted cash and investments 20,198,541 20,198,541 - Receivables:

Taxes 3,798,725 122 3,798,847
Interest 268,734 9,969 278,703
Notes, net of allowance 152,801 - 152,801
Accounts 7,214,741 141,232 7,355,973
Prepaid items 103,250 - 103,250
Inventory 5,057 - 5,057
Net Pension Asset 103,379 - 103,379
Assets available for resale 1,421,708 1,421,708 -
Capital assets
Non-depreciable:

Land 9,734,882 9,734,882 -
Construction in progress 23,701,600 253,324 23,954,924
Depreciable, net of accumulated depreciation:

Building and improvements 18,911,888 18,911,888 -
Machinery and equipment 3,010,725 3,010,725 -
Infrastructure 117,445,272 18,623,170 136,068,442
TOTAL ASSETS 378,218,590 25,577,354 403,795,944

DEFERRED OUTFLOWS OF RESOURCES
Deferred amount from pension plans 12,006,762 12,006,762 - Deferred amount from OPEB 1,253,299 1,253,299 -
Deferred amount from OCERS 970,860 - 970,860
TOTAL DEFERRED OUTFLOWS OF RESOURCES 14,230,921 14,230,921 -

LIABILITIES
Accounts payable and other accrued liabilities 5,387,762 62,488 5,450,250 Deposits 1,332,884 1,332,884 -
Unclaimed property 64,417 - 64,417
Unearned revenue 853,950 - 853,950
Due to bondholders 153,575 - 153,575
Due to other governments 74,836 - 74,836
Long-term liabilities:

Due within one year
Claims payable 622,600 - 622,600
Compensated absences 601,300 - 601,300
Due in more than one year
Claims payable 1,867,815 1,867,815 -
Retirees' health payable 9,015,067 9,015,067 -
Compensated absences 1,803,907 1,803,907 -
Net pension liability 32,737,065 32,737,065 -
TOTAL LIABILITIES 54,515,178 62,488 54,577,666

DEFERRED INFLOWS OF RESOURCES
Deferred amount from pension plans 26,391,420 26,391,420 - Deferred amount from OPEB 2,061,388 2,061,388 -
Deferred amount from OCERS 511,244 - 511,244
TOTAL DEFERRED INFLOWS OF RESOURCES 28,964,052 28,964,052 -

NET POSITION
Invested in capital assets 172,804,367 18,876,494 191,680,861 Restricted:

Pension trust 20,198,541 20,198,541 -
Public safety 1,041,827 1,041,827 -
Public works 12,819,497 12,819,497 -
Recreation 4,206,514 4,206,514 -
Sanitary sewer 6,638,372 - 6,638,372
Other 2,410,929 2,410,929 -
Unrestricted 95,488,606 95,488,606 -
TOTAL NET POSITION $ 308,970,281 $ 25,514,866 $ 334,485,147

See Accompanying Notes to the Basic Financial Statements.

CITY OF CYPRESS

STATEMENT OF NET POSITION
June 30, 2022
Activities
Governmental Business-type
Activities Total
51 Capital
Charges for Grants and
Expenses Services Contributions
Governmental Activities:

General government $ 5,477,433 $ 420,799 $ 11,781,951 $ 75,610 $ 6,800,927 $ $ 6,800,927 - Community development 2,333,245 1,985,828 171,877 - (175,540) - (175,540) Public safety 19,494,326 277,816 1,374,444 (17,842,066) - (17,842,066) - Public works 12,737,505 873,072 2,578,243 1,562,498 (7,723,692) (7,723,692) - Recreation 5,583,107 6,947,677 154,671 - 1,519,241 - 1,519,241 Total Governmental Activities 45,625,616 10,505,192 16,061,186 1,638,108 (17,421,130) (17,421,130) - Business-type Activities:

Sewer 902,389 1,779,495 35 - - 877,141 877,141
Total $ 46,528,005 $ 12,284,687 $ 16,061,221 $ 1,638,108 $ (17,421,130) $ 877,141 $ (16,543,989) General Revenues:

Taxes:

Property tax, levied for general purpose 6,530,911 - 6,530,911 Property tax, levied for recreation purposes 6,222,354 - 6,222,354 Property tax, levied for lighting purposes 1,425,207 - 1,425,207 Property tax, levied for sewer purposes - 32,508 32,508 Property tax, backfill of vehicle license fees 5,322,016 - 5,322,016 Sales tax 13,292,177 13,292,177 -
Transient occupancy tax 2,602,233 - 2,602,233
Franchise tax 1,801,173 - 1,801,173
Other taxes 1,965,665 - 1,965,665
Total taxes 39,161,736 32,508 39,194,244
Investment earnings (loss) (4,733,571) 26,215 (4,707,356) Miscellaneous 38,569 2,442 41,011
Total General Revenues 34,466,734 61,165 34,527,899
Change in Net Position 17,045,604 938,306 17,983,910
Net Position at Beginning of Year 291,924,677 24,576,560 316,501,237 Net Position at End of Year $ 308,970,281 $ 25,514,866 $ 334,485,147 See Accompanying Notes to the Basic Financial Statements.

CITY OF CYPRESS

STATEMENT OF ACTIVITIES
For the fiscal year ended June 30, 2022
Net (Expense) Revenues and
Total
Business-type
Activities
Program Revenues
Governmental
Activities
Grants and
Contributions
Operating
Changes in Net Position
52 ASSETS
Cash and investments $ 26,251,338 $ $ 13,769,669 662
Receivables:

Taxes 3,231,708 - 79,568
Interest 82,870 - 27,839
Notes, net of allowance 79,973 - -
Accounts 616,310 5,855,362 20,327
Prepaids 26,738 - 26,759
Inventory - - 159
Due from other funds 5,932,954 - -
Advances to other funds 163,885 - -
Assets available for resale - - -

TOTAL ASSETS $ 36,385,776 $ 5,856,024 $ 13,924,321

LIABILITIES, DEFERRED INFLOWS OF RESOURCES,

AND FUND BALANCES

LIABILITIES:

Accounts payable and other accrued liabilities $ 2,618,291 $ $ 915,319 - Deposits 1,315,984 - 16,900
Unclaimed property 64,117 - 300
Unearned revenue 596,922 - 220,028
Due to other funds - 5,856,024 -
Advances from other funds - - 6,365,260
Due to bondholders 153,575 - -
Due to other governments 74,836 - -

TOTAL LIABILITIES 4,823,725 5,856,024 7,517,807

DEFERRED INFLOWS OF RESOURCES:

Unavailable revenue 144,526 - -

TOTAL DEFERRED INFLOWS OF RESOURCES 144,526 - -
FUND BALANCES:

Nonspendable 270,596 - -
Restricted 28,944 - 4,206,514
Committed 8,862,296 - -
Assigned 21,212,203 - 2,200,000
Unassigned 1,043,486 - -

TOTAL FUND BALANCES 31,417,525 - 6,406,514

TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES $ 36,385,776 $ 5,856,024 $ 13,924,321 See Accompanying Notes to the Basic Financial Statements.

CITY OF CYPRESS

BALANCE SHEET

GOVERNMENTAL FUNDS
June 30, 2022
General Park District
Pandemic
Response
Special Revenue
Major Funds
Recreation and
53 $ 5,865,200 $ 85,330,768 $ 8,599,195 $ 139,816,832
469,226 - 18,223 3,798,725
9,020 127,421 13,631 260,781
- - 72,828 152,801
- - 47,398 6,539,397
- - - 53,497
- - - 159
- - - 5,932,954
- 6,365,260 - 6,529,145
- - 1,421,708 1,421,708
$ 6,343,446 $ 91,823,449 $ 10,172,983 $ 164,505,999
$ 87,836 $ 1,058,302 $ 240,207 $ 4,919,955
- - - 1,332,884
- - - 64,417
- 37,000 - 853,950
54,979 - 21,951 5,932,954
- - 163,885 6,529,145
- - - 153,575
- - - 74,836
142,815 1,095,302 426,043 19,861,716
- - 1,491 146,017
- - 1,491 146,017
- - - 270,596
6,200,631 - 9,909,334 20,345,423
11,600,177 - 20,462,473 -
79,127,970 - 102,540,173 -
- - (163,885) 879,601
6,200,631 90,728,147 9,745,449 144,498,266
$ 6,343,446 $ 91,823,449 $ 10,172,983 $ 164,505,999
Major Funds (Continued)
City
Fund Total
Nonmajor
Governmental
Funds
Special Revenue
Streets
Capital Projects
54 Fund Balances of Governmental Funds $ 144,498,266
Amounts reported for governmental funds in the Balance Sheet differ from the amounts reported in the Statement of Net Position for governmental activities due to the following:

Capital assets of governmental activities are not financial resources and, therefore, are not reported in the governmental funds. Except for the internal service fund amount of $3,226,460 which is included in the amount reported below, the capital assets net of accumulated depreciation were equal to the following amount. 169,577,907
Unavailable revenue is comprised of long-term receivables, which are not current available resources, and grants, which are resources not received within the proper revenue recognition period, and are therefore offset by deferred inflow of resources amounts equal to the receivable in the governmental funds. 146,017
Internal service funds are used by management to charge the costs of certain activities (including central services, employee benefits, liability insurance, and workers compensation insurance) to individual funds. The assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the internal service funds are included in the Statement of Net Position for governmental activities. (5,251,909)
Net Position of Governmental Activities $ 308,970,281
See Accompanying Notes to the Basic Financial Statements.

CITY OF CYPRESS

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET POSITION
June 30, 2022
55 REVENUES: General
Taxes $ 31,896,762 $ $ 6,222,354 -
Licenses and permits 1,326,104 - -
Fines and forfeitures 167,159 - -
From use of property (2,894,980) - 190,760
From other agencies 667,581 11,717,000 53,076
Charges for services 3,540,366 - 6,831,408
Other revenue 363,434 - 27,104
TOTAL REVENUES 35,066,426 11,717,000 13,324,702

EXPENDITURES:

Current:

General government 4,833,262 - -
Community development 2,099,379 - -
Public safety 17,746,963 - -
Public works 6,189,563 - -
Recreation - - 4,532,507
Capital outlay - - 7,648,236
TOTAL EXPENDITURES 30,869,167 - 12,180,743

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 4,197,259 11,717,000 1,143,959
OTHER FINANCING SOURCES (USES):

Transfers in 12,602,563 - -
Transfers out (10,574,959) (11,717,000) (1,079,991)

TOTAL OTHER FINANCING
SOURCES (USES) 2,027,604 (11,717,000) (1,079,991)

NET CHANGE IN FUND BALANCES 6,224,863 - 63,968
FUND BALANCE - BEGINNING OF YEAR 25,192,662 - 6,342,546 FUND BALANCES - END OF YEAR $ 31,417,525 $ $ 6,406,514 - See Accompanying Notes to the Basic Financial Statements.

CITY OF CYPRESS

STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
For the fiscal year ended June 30, 2022
Major Funds
Recreation and
Park District
Pandemic
Response
Special Revenue
56 $ $ - $ 1,500,817 - $ 39,619,933
- - - 1,326,104
- - 83,255 250,414
23,603 373,338 50,835 (2,256,444)
3,420,933 225,000 228,945 16,312,535
404,131 - 303,442 11,079,347
- - 355,883 746,421
3,848,667 598,338 2,523,177 67,078,310
- - - 4,833,262
- - 60,300 2,159,679
- - 192,375 17,939,338
842,875 1,083,215 1,146,597 9,262,250
- - - 4,532,507
713,140 3,958,855 207,548 12,527,779
1,556,015 5,042,070 1,606,820 51,254,815
2,292,652 (4,443,732) 916,357 15,823,495
326,288 8,186,370 - 21,115,221
(1,306,015) - (1,122,449) (25,800,414)
(979,727) 8,186,370 (1,122,449) (4,685,193)
1,312,925 3,742,638 (206,092) 11,138,302
4,887,706 86,985,509 9,951,541 133,359,964
$ 6,200,631 $ 90,728,147 $ 9,745,449 $ 144,498,266
Major Funds (Continued)
Special
Total
Nonmajor
Governmental
Funds
Revenue
Streets
City
Capital Projects
Fund
57 Net Change in Fund Balances - Total Governmental Funds $ 11,138,302 Amounts reported for governmental activities in the Statement of Activities differ from the amounts reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances as follows:

Governmental funds report capital outlays as expenditures. However, 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 follow:

Cost of assets capitalized 12,527,779
Depreciation expense (less $759,982 recorded in the Internal Service Funds) (5,624,039) Certain revenues in the governmental funds are classified as deferred inflows of resources because they are not collected within the prescribed time period after yearend to provide for current operations. However, the revenues are included under the accrual basis used in the government-wide statements and are as follows:

Unavailable revenue (371,645)
Internal service funds are used by management to charge the costs of certain activities (including central services, employee benefits, liability insurance, and workers compensation insurance) to individual funds. The changes in net position of the internal service funds are reported with governmental activities. (624,793)
Change in Net Position of Governmental Activities $ 17,045,604 See Accompanying Notes to the Basic Financial Statements.

CITY OF CYPRESS

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO

THE STATEMENT OF ACTIVITIES
For the fiscal year ended June 30, 2022
58 ASSETS
CURRENT ASSETS:

Cash and cash equivalents $ 6,549,537 $ 32,330,455
Restricted cash and cash equivalents - 20,198,541
Receivables:

Taxes 122 -
Interest 9,969 7,953
Accounts 141,232 675,344
Prepaid items - 49,753
Inventory - 4,898
TOTAL CURRENT ASSETS 6,700,860 53,266,944
NON-CURRENT ASSETS:

Net pension asset - 103,379
Construction in progress 253,324 215,735
Equipment (Net) - 3,010,725
Infrastructure (Net) 18,623,170 -
TOTAL NON-CURRENT ASSETS 18,876,494 3,329,839
TOTAL ASSETS 25,577,354 56,596,783

DEFERRED OUTFLOWS OF RESOURCES
Deferred amount from pension plans - 12,006,762
Deferred amount from OPEB - 1,253,299
Deferred amount from OCERS - 970,860
TOTAL DEFERRED OUTFLOWS OF RESOURCES - 14,230,921

LIABILITIES
CURRENT LIABILITIES:

Accounts payable and other accrued liabilities 62,488 467,807 Claims payable - 622,600
Compensated absences, current portion - 601,300
TOTAL CURRENT LIABILITIES 62,488 1,691,707
LONG-TERM LIABILITIES:

Claims payable - 1,867,815
Retirees' health payable - 9,015,067
Compensated absences - 1,803,907
Net pension liability - 32,737,065
TOTAL LONG-TERM LIABILITIES - 45,423,854
TOTAL LIABILITIES 62,488 47,115,561

DEFERRED INFLOWS OF RESOURCES
Deferred amount from pension plans - 26,391,420
Deferred amount from OPEB - 2,061,388
Deferred amount from OCERS - 511,244
TOTAL DEFERRED INFLOWS OF RESOURCES - 28,964,052

NET POSITION
Invested in capital assets 18,876,494 3,226,460
Restricted:

Pension trust - 20,198,541
Sanitary sewer 6,638,372 -
Unrestricted - (28,676,910)
TOTAL NET POSITION $ 25,514,866 $ (5,251,909)
See Accompanying Notes to the Basic Financial Statements.

Sewer
Fund
Activities -
Business-type
Internal Service
Funds
Governmental
Activities -

CITY OF CYPRESS

STATEMENT OF NET POSITION
June 30, 2022

PROPRIETARY FUNDS
Enterprise
Funds
59 Governmental
Activities -
Internal Service
Funds
OPERATING REVENUES:

From other agencies $ $ 29,965 -
Charges for services 1,779,495 17,948,682
Other revenue 2,442 494,054
TOTAL OPERATING REVENUES 1,781,937 18,472,701

OPERATING EXPENSES:

Personnel services - 1,148,246
Contractual services - 12,991,345
Supplies and other services - 5,781,955
Claim payments and changes in estimates - 897,538
Sewer maintenance 308,534 -
Depreciation 593,855 759,982
TOTAL OPERATING EXPENSES 902,389 21,579,066
OPERATING INCOME 879,548 (3,106,365)

NON-OPERATING REVENUES (EXPENSES):

Taxes 32,508 -
From other agencies 35 -
Interest income (loss) 26,215 (2,197,632)
Gain (loss) on disposal of equipment - (5,989)
TOTAL NON-OPERATING REVENUES (EXPENSES) 58,758 (2,203,621)

INCOME BEFORE TRANSFERS 938,306 (5,309,986)

TRANSFERS:

Transfers in - 4,685,193
TOTAL TRANSFERS - 4,685,193
CHANGE IN NET POSITION 938,306 (624,793)
NET POSITION - BEGINNING OF YEAR 24,576,560 (4,627,116) NET POSITION - END OF YEAR $ 25,514,866 $ (5,251,909)
See Accompanying Notes to the Basic Financial Statements.

Enterprise
Funds
Sewer
Fund
Activities -
Business-type

CITY OF CYPRESS

STATEMENT OF REVENUES, EXPENSES AND

CHANGES IN NET POSITION

PROPRIETARY FUNDS
For the fiscal year ended June 30, 2022
60 CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from users $ 1,789,618 $ 18,071,216
Cash payments to suppliers for goods and services (247,225) (16,533,089) Cash payments to employees (108,102) (1,141,040)

NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,434,291 397,087
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

From taxes and other agencies 32,543 -
Transfers in - 4,685,193

NET CASH PROVIDED BY NONCAPITAL
FINANCING ACTIVITIES 32,543 4,685,193
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Proceeds from disposal of capital assets - 13,848
Acquisition of capital assets (147,582) (407,823)

NET CASH USED BY CAPITAL AND
RELATED FINANCING ACTIVITIES (147,582) (393,975)
CASH FLOWS FROM INVESTING ACTIVITIES:

Interest on investments 26,215 (2,197,632)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 26,215 (2,197,632) INCREASE (DECREASE) IN CASH AND INVESTMENTS 1,345,467 2,490,673 CASH AND INVESTMENTS - BEGINNING OF YEAR 5,204,070 50,038,323 CASH AND INVESTMENTS - END OF YEAR $ 6,549,537 $ 52,528,996

RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:

Operating income $ 879,548 $ (3,106,365)
Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation 593,855 759,982
Changes in assets and liabilities:

Accounts receivable decreased (increased) 7,682 (18,749) Prepaid items decreased (increased) - (19,244)
Inventory decreased (increased) - (3,201)
Deferred outflows decreased (increased) - 930,080
Accounts payable and other accrued liabilities increased (decreased) (46,794) (459,924) Insurance claims payable increased (decreased) - 189,081 Accrued retirees' health payable increased (decreased) - (1,592,037) Accrued leave payable increased (decreased) - 109,947
Accrued pension liability increased (decreased) (20,638,565) - Deferred inflows increased (decreased) - 24,246,082
TOTAL ADJUSTMENTS 554,743 3,503,452
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,434,291 $ 397,087 NON-CASH CAPITAL ACTIVITIES:

Gain/(loss) on disposition of capital assets $ - $ (5,989) See Accompanying Notes to the Basic Financial Statements.

Funds
Sewer
Fund
Activities -
Internal Service
Funds

CITY OF CYPRESS

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
For the fiscal year ended June 30, 2022
Governmental
Activities -
Business-type
Enterprise
61 ASSETS
Cash and cash equivalents $ 225,186 $ 3,616,142
Restricted cash and investments - 161,793
Interest receivable 345 5,766
Accounts receivable 46,670
Prepaid items - 20,866
Notes receivable 437,690 -

TOTAL ASSETS 663,221 3,851,237

LIABILITIES
Current liabilities
Accounts payable and other accrued liabilities - 177,737 Unearned revenue - 37,383
Bonds payable - 170,000
Accrued leave payable - 68,216
Noncurrent liabilities
Accrued leave payable - 204,646
Retirees' health payable - 611,017
Due to other governments - 1,114,616
TOTAL LIABILITIES - 2,383,615

NET POSITION
Restricted for:

Other governments 663,221 -
Assessment district improvements - 10,156
Member agencies - 1,457,466

TOTAL NET POSITION $ 663,221 $ 1,467,622
See Accompanying Notes to the Basic Financial Statements.

CITY OF CYPRESS

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS
June 30, 2022
City of Cypress
Redevelopment
Successor
Agency to the
Custodial
Funds
Purpose Trust
Fund
Agency Private
62 Successor
Agency to the
City of Cypress
Redevelopment
Agency Private
Purpose Trust Custodial
Fund Funds
ADDITIONS:

Member contributions $ - $ 2,885,055
Investment income 10,556 15,779
Other revenue - 149,266
TOTAL ADDITIONS 10,556 3,050,100
DEDUCTIONS:

Dispatch services 2,435,520 -
Debt service - 14,392
Other expenses - 5,580
TOTAL DEDUCTIONS 2,455,492 -
CHANGE IN NET POSITION 10,556 594,608
NET POSITION - BEGINNING OF YEAR, 652,665 873,014
NET POSITION - END OF YEAR $ 663,221 $ 1,467,622
See Accompanying Notes to the Basic Financial Statements.

CITY OF CYPRESS

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS
For the fiscal year ended June 30, 2022
63 CITY OF CYPRESS
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies
A. Reporting Entity
The City of Cypress (City) is a municipal corporation, incorporated in 1956, and governed by an elected five-member council which, along with the Cypress Recreation and Park District (District), and Cypress Recreation and Community Services Foundation (Foundation), comprise the reporting entity. As required by generally accepted accounting principles, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable.

The District, although a legally separate entity, is in substance part of the City’s operations and, accordingly, District data are combined with the data of the City within these financial statements.

The balances and transactions of the District and Foundation are blended within this report in all fund types except the General Fund. Separate financial statements are prepared for the District and are available from the City. A description of the District and Foundation and discussion of the criteria used for inclusion in the reporting entity follows.

Cypress Recreation and Park District
The Cypress Recreation and Park District was formed in 1949 to provide park and recreational facilities for the areas now known as the cities of Cypress and La Palma and adjacent unincorporated areas plus small portions of the adjacent cities of Los Alamitos, Buena Park and Anaheim. The District was under the control of the Orange County Board of Supervisors until 1971, when the City of La Palma and the other aforementioned cities withdrew from the District. On June 29, 1971, the District was established as a subsidiary district of the City, effective July 1, 1971. The members of the City Council act as the governing board of the District. The District is managed by employees of the City and overhead expenses are billed to the District each year. The fiscal year-end is June 30, the same as the City.

Cypress Recreation and Community Services Foundation
The Cypress Recreation and Community Services Foundation was created in 2019 to support and enhance safe, attractive, and high quality recreation facilities, programs, and services in the City of Cypress. The Foundation is organized and operates under section 501(c)(3) of the Internal Revenue Code as a charitable organization. The members of the City Council act as the Board of Directors for the Foundation. The Foundation is managed by employees of the City. The fiscal year-end is also June 30.

B. Accounting and Reporting Policies
The City has conformed to the pronouncements of the Governmental Accounting Standards Board (GASB), which are primary authoritative statements of accounting principles generally accepted in the United States of America applicable to state and local governments.

C. Basis of Accounting, Measurement Focus and Financial Statement Presentation Government–Wide Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non-fiduciary activities of the primary government and its component units. Generally, the effect of interfund activity has been removed from the governmentwide financial statements, except for interfund services provided and used. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. 64 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) C. Basis of Accounting, Measurement Focus, Financial Statement Presentation (Continued) The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are expenses that are clearly identifiable with a specific program, project, function or segment. Program revenues of the City include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment of the City.

Internally dedicated resources are reported as general revenues rather than as program revenues.

Likewise, general revenues include all taxes and other items that are properly not included among program revenues.

The government-wide financial statements are reported using the flow of economic resources measurement focus and the accrual basis of accounting. With the flow of economic resources measurement focus, all assets, deferred outflows of resources, liabilities, and deferred inflows of resources associated with the government are included on the statement of net position. Net position is segregated into three primary components: net investment in capital assets, restricted net position and unrestricted net position. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the providers have been met.

Governmental Fund Financial Statements
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. With the current financial resources measurement focus, only current assets and deferred outflows of resources, and current liabilities and deferred inflows of resources, are generally included on the balance sheet. Under the modified accrual basis of accounting, revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.

Expenditures generally are recorded when a liability is incurred, as under accrual accounting.

However, debt service expenditures, as well as expenditures related to other long-term liabilities, are recorded only when payment is due.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual, and are therefore recognized as revenues of the current fiscal period. Grant funds earned but not received are reported as a receivable and deferred inflow of resources, and grant funds received before the revenue recognition criteria have been met are reported as unearned revenue. Other revenue items are considered to be measurable and available only when cash is received by the City.

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. 65 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) C. Basis of Accounting, Measurement Focus, Financial Statement Presentation (Continued) The City reports the following major governmental funds:

The General Fund – The General Fund is the City’s primary operating fund and accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Pandemic Response Fund – This fund accounts for the Coronavirus Aid Relief, and Economic Security (CARES) Act and the American Rescue Plan Act revenues received from county, state and federal sources in response to the COVID-19 pandemic.

The Recreation and Park District Special Revenue Fund – This fund accounts for all resources, and operating and capital project activity of the Cypress Recreation and Park District. The primary resources of the District include a portion of the base property tax rate and user fee revenues.

The Streets Special Revenue Fund – This fund accounts for receipts and expenditures of money apportioned under the State of California Streets and Highway Code Sections 2103, 2105, 2106, 2107 and 2107.5 (Gas Tax) and Section 2032(h) (Road Maintenance and Rehabilitation Act); Measure “M2” money from Orange County; and Traffic Mitigation Fees charged by the City.

The City Capital Projects Fund – This fund accounts for construction of major transportation infrastructure and public facilities. The resources of the fund are limited to transfers from the City’s General fund and grant reimbursements for eligible projects.

The City reports the following major proprietary fund:

The Sewer Fund – This fund accounts for all of the operating and capital project activities associated with the City’s sanitary sewer system. The resources of the fund are primarily fees charged to the users of the system.

Additionally, the City reports the following fund types:

Governmental Funds
The Special Revenue Funds – These funds account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes.

Proprietary Funds
Internal Service Funds – Internal Service Funds are used to account for the financing of goods and services provided by one department of the City to other departments or agencies of the City on a pro-rata cost-sharing basis. The City currently uses internal service funds for the following activities:
central services (which includes print shop, information systems, phone and equipment maintenance, building and grounds maintenance for the City’s Civic Center and Corporate Yard, fleet maintenance for City vehicles and equipment, and for accumulating and expending monies for capital equipment acquisition and replacement), recreation central services (which includes the District’s maintenance of equipment and the accumulation and expending of monies for the acquisition and replacement of District capital equipment items), employees’ benefits, general liability insurance, and workers’ compensation.
66 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) C. Basis of Accounting, Measurement Focus, Financial Statement Presentation (Continued) Proprietary funds are accounted for using the economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. All proprietary funds are accounted for on a cost of services or economic resources measurement focus. This means that all assets, deferred outflows of resources, liabilities, and deferred inflows of resources (whether current or noncurrent) associated with their activity are included on the Statement of Net Position. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net position.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise fund are charges to customers for use of the sanitary sewer system, while the principal operating revenues of the internal service funds are charges to departments in the governmental funds of the City for services. Operating expenses for the enterprise fund and the internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

The City’s internal service funds are presented in the proprietary funds financial statements. Because the principal users of the internal services are the City’s governmental activities, the financial statements of the internal service funds are consolidated into the governmental activities column when presented in the government-wide financial statements. To the extent possible, the cost of these services is reported in the appropriate functional activity (general government, public safety, public works, etc.)
Fiduciary Funds
Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are reported in a separate Statement of Fiduciary Net Position. These funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s operations. Fiduciary funds are reported using the accrual basis of accounting.

Custodial Funds – Custodial funds are used to report fiduciary activities in which the City acts as an agent. These funds do not involve measurement of the results of City operations. The City’s custodial funds include the Cypress Business and Professional Center Assessment District and amounts held on behalf of the West Cities Communication Center Joint Powers Authority.

Private-Purpose Trust Funds – A Private-Purpose Trust fund is used to account for the activities of the Successor Agency to the Cypress Redevelopment Agency in which the City acts as an agent.

Net position is reported as net position held in trust. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred.

D. Cash and Investments
Investments are classified within the financial statements as “Cash and investments” and are stated at fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All investment income, including changes in the fair value of investments, is recognized as revenue in the operating statement.
67 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) D. Cash and Investments (Continued)
All cash and investments of proprietary funds are held in the City’s investment pool. Therefore, all cash and investments in the proprietary funds are considered cash and cash equivalents for purposes of the statement of cash flows as these cash pools have the general characteristics of a demand deposit account.

Restricted Cash and Investments
The City established a Post-Employment Benefits Trust (Trust) as a tax-exempt trust within the meaning of Section 115 of the Internal Revenue Service Code to accumulate resources for the CalPERS pension obligations. The trust may also be used to stabilize the amount of General Fund resources needed to meet future required contributions to CalPERS. The balances and activities of the Trust are irrevocably dedicated to funding future obligations to CalPERS. These amounts are reflected as restricted cash and investments in the Employees’ Benefit Internal Service Fund.

E. Inventories and Prepaid Amounts
Inventories are valued at average cost and consist primarily of fuel and postage. The City follows the consumption method for inventory control whereby inventory items are reported as expenditures when consumed rather than when purchased.

Certain payments to vendors reflect costs applicable to a future accounting period and are recorded as prepaid items in both government-wide and fund financial statements. Prepaid items are recorded as expenditures/expenses when consumed rather than when purchased.

F. Advances to Other Funds
Long-term interfund advances are reported as a receivable in the advancing fund, and a long-term liability is recorded in the fund receiving the advance.

G. Capital Assets
Capital assets, which include land, machinery and equipment (vehicles, computers, etc.), buildings and improvements, and infrastructure assets (street systems, storm drains, sewer systems, etc.), are reported in governmental activities column of the government-wide financial statements. Capital assets are defined by the City as all land and buildings, vehicles, computers and equipment with an initial individual cost of more than $1,000; and improvements and infrastructure assets with costs of more than $10,000, and a life in excess of one year. Purchased or constructed assets are recorded at historical cost or estimated historical cost. Donated or annexed capital assets are recorded at acquisition value at the date of donation or annexation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Depreciation is recorded in the government-wide financial statements on a straight-line basis over the estimated useful life of the assets as follows:

Building and Improvements 10 to 40 years
Machinery and Equipment 3 to 10 years
Infrastructure 20 to 65 years
68 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) H. Compensated Absences
Compensated leave for all permanent employees is paid by the Employees’ Benefit Internal Service Fund. The accrued leave payable represents the estimated liability for all accrued vacation, compensatory time, and 50% of the sick leave, as noted below, for all employees of the reporting entity. However, amounts greater than 50% of the sick leave have been accrued for certain Police Association members eligible for Service Retirement. The Employee Benefit Fund is funded by payroll charges to other funds based on benefits earned during that year. Compensated absences are primarily considered a long-term liability, as accruals earned in each fiscal year are generally sufficient to cover leave taken during the same fiscal year. An estimate has been made for the portion of the liability at fiscal year-end that will be due within one year for any employees terminating employment and receiving a payoff of their accrued leave balances.

Permanent employees may accumulate unlimited sick leave hours. Employees with 5 or more years of service terminated for any reason, and having 60 days or more of accumulated sick leave (equal to 480 hours), will be paid for 50% of their accumulated sick leave. Employees with 5 or more years of service terminated for any reason, and having between 240 hours and 480 hours, will be paid for 50% of their accumulated sick leave in excess of 240 hours. Employees having less than 240 hours will not be paid for their accumulated sick leave. The accumulation of vacation leave is generally limited to twice an employees’ annual accrual. Employees who terminate for any reason are paid 100% of their accumulated vacation pay.

I. Long-Term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities or proprietary fund type statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

J. Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB and OPEB expense have been determined by an independent actuary.

For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. The Employees’ Benefit Internal Service Fund, which is funded primarily through charges from the General Fund, is typically used to liquidate OPEB liabilities. 69 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) J. Other Postemployment Benefits (OPEB) (Continued)
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
Gains and losses related to changes in total OPEB liability are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense.

The recognition period may differ depending on the source of the gain or loss. The net difference between projected and actual earnings on OPEB plan investments are amortized over a closed 5- year period. The City, however, does not have an OPEB trust, so there are no deferred inflows or outflows related to this item. All other amounts are amortized over the expected average remaining service lifetime of plan participants.

K. Net Position and Fund Equity
In the government-wide financial statements and the proprietary fund financial statements, net position is classified in the following categories:

Net Investment in Capital Assets – This component of net position consists of capital assets, net of accumulated depreciation, and reduced by outstanding debt attributed to the acquisition, construction, or improvement of the assets.

Restricted Net Position – This component of net position is restricted by external creditors, grantors, contributors, or laws or regulations of other governments.

Unrestricted Net Position – This component of net position consists of all net position that does not meet the definition of “net investment in capital assets” or “restricted net position.” In the governmental fund financial statements, fund balances are classified in the following categories in accordance with GASB Statement No. 54:

Nonspendable – Nonspendable fund balances encompass Items that cannot be spent because they are not in spendable form, such as prepaid items, inventories, and long-term receivables, and items that are legally or contractually required to be maintained intact, such as principal of an endowment or revolving loan funds.

Restricted – Restricted fund balances encompass the portion of net fund resources subject to externally enforceable legal restrictions. This includes externally imposed restrictions by creditors, such as through debt covenants, grantors, contributors, laws or regulations of other governments, as well as restrictions imposed by law through constitutional provisions or enabling legislation. 70 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) K. Net Position and Fund Equity (Continued)
Committed – Committed fund balances encompass the portion of net fund resources, the use of which is constrained by limitations that the government imposes upon itself at its highest level of decision making, normally the governing body, and that remain binding unless removed in the same manner.

The City Council is considered the highest authority for the City and the adoption of a formal resolution or the formal award of a contract by the City Council is required to establish a fund balance commitment. Additionally, commitments (other than those associated with the award of a contract) can only be modified or rescinded by the adoption of a formal resolution of the City Council.

Assigned – Assigned fund balances encompass the portion of net fund resources reflecting the government’s intended use of resources. Assignment of resources can be done by the highest level of decision making or by an official designated for that purpose. The City Council has adopted a resolution that authorizes the Director of Finance to assign fund balances.

Unassigned – Unassigned fund balances encompass the residual balance for the City’s General Fund and includes all spendable amounts not contained in other classifications. In other funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned.

L. Spending Policy
In the government-wide financial statements, when expenses are incurred for purposes for which both restricted and unrestricted net position are available, the City’s policy is to apply restricted net position first.

In the governmental fund financial statements, when expenditures are incurred for purposes for which all categories of fund balances are available, the City’s general policy is to apply the expenditures against fund balance in the following order: restricted, committed, assigned, and unassigned.

M. Use of Estimates
The preparation of 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 and assumptions.
71 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) N. New Accounting Pronouncements
Current Year Standards:

The City adopted the following new accounting pronouncements:
 GASB Statement No. 87 – “Leases” becomes effective for fiscal years beginning after June 15, 2021.
 GASB Statement No. 89 – “Accounting for Interest Cost Incurred before the End of a Construction Period”, effective for periods beginning after December 15, 2020.  GASB Statement No. 91 – “Conduit Debt Obligations” becomes effective for fiscal years beginning after December 15, 2021.
 GASB Statement No. 92 – “Omnibus 2020” becomes effective for fiscal year ending June 30, 2022.

Pending Accounting Pronouncements:

GASB has issued the following statements which may impact the City’s financial reporting requirements in the future:
 GASB Statement No. 94 – ”Public-Private and Public-Public Partnerships and Availability Payment Arrangements” becomes effective for fiscal years beginning after June 15, 2022.  GASB Statement No. 96 – “Subscription-Based Information Technology Arrangements” becomes effective for fiscal years beginning after June 15, 2022.

O. Deferred Outflows/Inflows of Resources
In addition to assets, the Statement of Net Position and governmental funds’ Balance Sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represent a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expenditure) until that time. The deferred outflows of resources relate to pensions and other postemployment benefits.

There are various deferred outflow amounts related to CalPERS pensions. First is the amount of employer contributions made after the measurement date of the net pension liability, which will be recognized in the following fiscal year. The second item is a deferred outflow related to pensions for the net difference between projected and actual earnings on pension plan investments, which will be amortized over five years. Other items include the difference between expected and actual experience, changes in assumptions, and the adjustments due to differences in proportions. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions determined for the June 30, 2021 measurement date, which is 3.7 years for both Safety Plan and Miscellaneous Plan members. 72 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) O. Deferred Outflows/Inflows of Resources (Continued)
The deferred outflows related to the OCERS pension plan is the combined difference between expected and actual experience and assumption changes, which will be recognized over the average expected remaining service lives of all employees that are provided with pensions through OCERS, which for this measurement period is 5.45 years.

The deferred outflows related to other postemployment benefits is combined of the difference between expected and actual experience and assumption changes. These amounts are amortized over the average expected remaining active and inactive service lives as of the June 30, 2022 measurement date, which is 8.4 years.

In addition to liabilities, the Statement of Net Position and governmental funds’ Balance Sheet may report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.

The City reported three items in this category. The first item, which arises only under the modified accrual basis of accounting, is unavailable revenues, which is reported only in the governmental funds’ Balance Sheet. The governmental funds report unavailable revenues from one source, accounts receivable. Unavailable revenues are primarily capital project grants, or other revenues, which have been earned, but not received within 60 days after year-end. This amount is deferred and recognized as an inflow of resources in the period that the amounts become available.

The second item is a deferred inflow related to pensions. For CalPERS pensions, the deferred inflow is the result of differences in expected and actual actuarial experience, changes in actuarial assumptions, adjustments due to changes in proportions, and differences between employer’s contributions, the proportionate share of contributions, and differences between projected and actual earnings. The changes in projected and actual investment earnings are recognized over five years, beginning with the year in which they occur. The remaining items are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions. For CalPERS pensions, the remaining service life as determined for the June 30, 2021 measurement date is 3.7 years for both the Safety Plan and the Miscellaneous Plan.

The deferred inflow related to the OCERS pension plan is the net difference between projected and actual earnings on pension plan investments, which will be recognized over a period of five years, beginning with the year in which they occur.

The third item is a deferred inflow related to other postemployment benefits. The deferred inflow is the result of changes in actuarial assumptions. This amount is amortized over a closed period equal to the expected average remaining service lives of plan participants. 73 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(1) Summary of Significant Accounting Policies (Continued) P. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the City’s fiduciary net position in the California Public Employees’ Retirement System (CalPERS) and Orange County Employees Retirement System (OCERS) plans and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS and OCERS, respectively. 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. The Employees’ Benefit Internal Service Fund, which is funded primarily through charges from the General Fund and the Recreation and Park District General Fund, is typically used to liquidate CalPERS and OCERS pension liabilities, respectively.
(2) Property Taxes
Property taxes include assessments on both secured and unsecured property. Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on July 1 and are payable in two installments on December 10 and April 10. The County of Orange (County) bills and collects the property taxes and remits them to the City in installments during the year. City property tax revenues are recognized when levied to the extent that they result in current receivables, defined as being received within 60 days after year-end.

The County is permitted by State Law (Proposition 13) to levy taxes at 1% of full market value (at time of purchase) and can increase the property tax rate no more than 2% per year. The City receives a share of this basic levy proportionate to what it received in the 1976 to 1978 period adjusted by State mandated transfers to the various school districts in fiscal years ended June 30, 1993 and June 30, 1994.
(3) Cash and Investments
The City follows the practice of pooling cash and investments for all funds. Certain restricted funds that are held and invested by independent outside custodians through contractual bond indenture agreements are not pooled, and are reported as restricted cash and investments.

Investment income earned on pooled cash and investments is allocated quarterly to the various funds based on the average cash balance in each fund. Investment income from cash and investments with fiscal agents is credited directly to the fund earning the income. 74 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(3) Cash and Investments (Continued)
Authorized Investments
Under provision of the City’s annually adopted investment policy, and in accordance with Section 53601 of the California Government Code, the City may deposit and invest in the following:
 Securities of the U.S. Government
 Federal Agency Issues
 Certificates of Deposit (or Time Deposits) placed with commercial banks and/or savings and loan companies
 Bankers’ Acceptances
 Commercial Paper
 Negotiable Certificates of Deposit
 Medium-term Corporate Notes
 Local Agency Investment Fund (LAIF)
 Investment Trust of California (CalTRUST)
 Money Market Mutual Fund
 Passbook Savings Account Demand Deposits
A five-year maximum maturity for each investment is allowed unless an extension of maturity is expressly permitted by the City Council, with the exception of Certificates of Deposit, Bankers’ Acceptances, and Commercial Paper, which are one year, 180 days, and 270 days respectively.

The above policy does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s Investment Policy.

Deposits and Risks
At June 30, 2022, the carrying amount of the City’s demand deposits was $5,084,196. The bank balances of these funds totaled $5,166,525 and were either covered by federal depository insurance or were held in collateralized accounts. If there were amounts not covered by federal depository insurance, the California Government Code requires California banks and savings and loans associations to secure a City’s deposit by pledging government securities with a value of 110% of a City’s deposits, or by pledging first trust deed mortgage notes having a total value of 150% of the City’s total deposits.
75 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(3) Cash and Investments (Continued)
Deposits and Risks (Continued)
The following is a summary of pooled cash and investments, including restricted cash and investments, as of June 30, 2022:

Restricted cash and investments held by the fiscal agent which are reported in governmental activities include the pension trust fund, which includes restricted pension obligations. In the fiduciary agency fund, restricted cash and investments relate to monies held by fiscal agents for special assessment bonds.

Cash and investments, as of June 30, 2022, consist of the following deposits, and investments and maturities:

The City’s investment policy and the California Government Code generally limit the amount that can be invested in any one issuer, except for U.S. Treasury securities and U.S. government-sponsored enterprises. At June 30, 2022, investments in Federal Home Loan Bank securities totaling $15,254,505 represented 7.52% of the City’s investments (other than external investment pools). The Federal Home Loan Bank is a government-sponsored enterprise and there is no limit on the percentage of the portfolio that can be invested in this category.

Fiduciary
Funds
Governmental Business-type Statement of
Activities Activities Net Position Totals
Cash and investments $ 172,147,287 $ 6,549,537 $ 3,841,328 $ 182,538,152 Restricted cash and investments 20,198,541 161,793 - 20,360,334 Totals $ 192,345,828 $ 6,549,537 $ 4,003,121 $ 202,898,486 Government Wide Statement
of Net Position
12 Months 13 to 24 25 to 60
Amount or Less Months Months
Deposits:

Demand Deposits 5,084,196 $ 5,084,196
Restricted Deposits 1,668 1,668
Investments:

State of California Local Agency
Investment Fund 130,300,555 130,300,555
CalTrust Short Term Fund 1,991,678 1,991,678
CalTrust Medium Term Fund 21,236,258 21,236,258
Federal Farm Credit Bank 3,746,160 $ 3,746,160
Federal Home Loan Bank 15,254,505 12,434,295 2,820,210
United States Treasury 4,924,800 4,924,800
Restricted Cash and Investments:

Money Market Accounts 160,125 160,125
PARS Mutual Funds 20,198,541 20,198,541
Total Cash and Investments 202,898,486 $ $ 183,897,821 $ 12,434,295 $ 6,566,370 Remaining Maturity
76 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(3) Cash and Investments (Continued)
Deposits and Risks (Continued)
Interest Rate Risk. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City’s investment policy provides that final maturities of securities cannot exceed five years.

At June 30, 2022, the City’s pooled cash and investment portfolio had a maturity of less than one year with an average life of the portfolio of approximately 87 days.

Credit Risk. State law limits investments in commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations (NRSROs). It is the City’s practice to limit its investments in these investment types to the top rating issued by NRSROs, including raters Standard & Poor’s and Moody’s Investors Service. At June 30, 2022, the City’s money market mutual accounts were rated AAAm by Standard & Poor’s. The Federal Farm Credit Bank and Federal Home Loan Bank investments were rated AA+ rated by Standard & Poor’s and Aaa by Moody’s. The California Local Agency Investment Fund (LAIF) is not rated, but has a separate investment policy governed by Government Code Sections 16480-16481.2 that provides credit standards for its investments. There is no minimum legal rating.

Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party.

All securities owned by the City with the exception of LAIF and CalTRUST are deposited in trust for safekeeping with a custodial bank. Securities are not held in broker accounts. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: California Government Code requires a financial institution to secure deposits made by local governments by pledging securities in an undivided collateral pool held by a depository regulated under state law. The fair value of pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the governments. The investment in a Repurchase Agreement is uninsured with the collateral for the repurchase agreement held in the name of the bank but not the name of the City. For investments identified herein as held by a fiscal agent, the trustee selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the City.

External Investment Pool
The City is a voluntary participant in LAIF, which is an external investment pool regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California through which local governments may pool investments. The City and the District each may invest up to $75,000,000 in the fund. Investments in LAIF are considered highly liquid, as deposits can be converted to cash within 24 hours without loss of interest.

The City values its investments in LAIF at a fair value provided by LAIF. LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available, and on amortized cost or best estimate for those securities where market value is not readily available. At June 30, 2022 the factor used was 0.987125414. The City’s investment with LAIF includes a portion of pool funds invested in structured notes and asset-backed securities.

As of June 30, 2022, the City had total deposits of $132,000,000 invested in LAIF, with a fair value of $130,300,555. LAIF had invested 1.88% of its portfolio in structured notes and medium-term assetbacked securities. 77 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(3) Cash and Investments (Continued)
External Investment Pool (Continued)
The City also participates in the Investment Trust of California (CalTrust), a joint powers authority and public agency established by its members under the provisions of Section 6509.7 of the California Government Code. Members and participants are limited to California public agencies. CalTrust is governed by a Board of Trustees comprised of experienced local agency finance professionals, members of the governing body, or officers or personnel of public agency CalTrust members. The City reports its investment in CalTrust at the fair value amount provided by CalTrust, which is the same as the value of the pool shares. There is no legal minimum or maximum investment in CalTrust, however, the City has set a policy limit of $50,000,000.

Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established by Generally Accepted Accounting Principles. The hierarchy is based on the relative inputs used to measure the fair value of the investments. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described as follows:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets in active markets that the City has the ability to access.

Level 2: Inputs to the valuation methodology include:
 Quoted prices for similar assets in active markets;
 Quoted prices for identical or similar assets in inactive markets;  Inputs other than quoted prices that are observable for the asset;  Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the City’s own data.

The asset’s level within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The determination of what constitutes observable requires judgment by the City’s management. City management considers observable data to be that market data which is readily available, regularly distributed or updated, reliable, and verifiable, not proprietary, and provided by multiple independent sources that are actively involved in the relevant market.

The categorization of an investment within the hierarchy is based upon the relative observability of the inputs to its fair value measurement and does not necessarily correspond to City management’s perceived risk of that investment.
78 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(3) Cash and Investments (Continued)
Fair Value Measurements (Continued)
The methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

When available, quoted prices are used to determine fair value. When quoted prices in active markets are available, investments are classified within Level 1 of the fair value hierarchy. When quoted prices in active markets are not available, fair values are based on evaluated prices received by the City’s asset broker or custodian.

The following is a description of the recurring valuation methods and assumptions used by the City to estimate the fair value of its investments.

The City’s management has valued the Federal Farm Credit Bank and Federal Home Loan Bank in Level 2 based on quoted prices for similar assets. LAIF, Money Market and Mutual Funds are uncategorized.
(4) Notes Receivable
Changes in Notes Receivable
The following is a summary of note receivable transactions for governmental activities for the year ended June 30, 2022:

Home Loans
The dissolved Cypress Redevelopment Agency (Agency) administered two loan programs to assist qualified low and/or moderate income applicants. Upon dissolution of the Agency, the administration and the outstanding notes associated with these two loan programs were transferred to the City’s Low and Moderate Housing Assets Special Revenue Fund. The Home Equity Loan Program (HELP I) provided loans in the form of notes up to $25,000 for down payment assistance to eligible first time homebuyers. Payments on the notes were deferred for the first five (5) years with no interest during the deferral period. The loan becomes due and payable on a monthly basis in years 6 through 30 with a 5% interest rate assessed during the amortization period. Effective with the dissolution of the Agency on February 1, 2012, the HELP I program assets were transferred to the City’s Low and Moderate Housing Assets Fund and no new HELP I loans are expected to be issued.

Balance Balance Due Within Due in More
Description July 1, 2021 Additions Deletions June 30, 2022 One Year than One Year Home Loans $ 582,098 $ 67,727 $ (134,409) $ 515,416 $ 10,000 $ 505,416 Housing Covenants 10,193,888 238,342 10,432,230 - - 10,432,230 Other Notes 5,566 - (428) 5,138 428 4,710 Subtotal 10,781,552 306,069 (134,837) 10,952,784 10,428 10,942,356 Less: Allow ance (10,573,171) (306,069) 79,257 (10,799,983) - (10,799,983) Total $ 208,381 -$ (55,580) $ $ 152,801 $ 10,428 $ 142,373 Classification
79 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(4) Notes Receivable (Continued)
Home Loans (Continued)
The Home Enhancement Loan Program (HELP II) provides loans to assist single family homeowners with home improvement costs. Moderate income applicants are eligible for loans of up to $20,000 with a 5% interest rate and payment deferred for the full 15-year term of the loan. The loans become due and payable in full upon sale, transfer of title, cash out refinances, or the end of the loan term, whichever comes first. Lower income applicants can qualify for no interest, forgivable loans of up to $20,000. The principal amounts for the forgivable loans are reduced by ten percent (10%) annually and are completely forgiven after ten years. Some of the HELP II notes are eligible for federal grant reimbursement to the City upon issuance and are recorded in the General Fund. Effective with the dissolution of the Agency on February 1, 2012, the HELP II program assets previously funded by the Agency were transferred to the City’s Low and Moderate Housing Assets Special Revenue Fund. Any new loan issuances will be limited to those that are funded with federal grant reimbursements and recorded in the General Fund.

In the fund financial statements and government-wide statements for all loans, a note receivable is recorded when issued to the homeowner and is decreased upon repayment. The City holds notes due from homeowners totaling $217,525 (which is net of an allowance of $297,891 for forgivable loans) at June 30, 2022 in both the fund financial statements and the government-wide statements.

Housing Covenants
The City holds notes receivable totaling $10,432,230 (including accrued interest) related to affordability covenants entered into by the dissolved Agency associated with the following five projects described below. Upon dissolution of the Agency on February 1, 2012, the notes were transferred to the City and are recorded in the Low and Moderate Housing Assets Special Revenue Fund.

In 2004, the 13-unit Lincoln Glen townhome project was constructed in the Lincoln Avenue Redevelopment Project Area. To address the inclusionary affordability requirement triggered by the development, five (5) units were restricted for sale to affordable households. Silent second first-time homebuyer loans were provided to secure long term (45 year) affordability covenants on these units.

The loans provide for interest to accrue at a rate of 7% per year. Two (2) units received $57,700 loans and were reserved for low income households (80% or less of County median income), and three (3) units received $37,350 loans and were reserved for moderate income households (up to 120% of County median income). Four of the loans (and their associated affordability covenants) were recorded in late 2004 and the remaining loan closed in early 2005. These loans, totaling $227,450 plus accrued interest of $491,023 at June 30, 2022, will be forgiven at the end of the 45 year covenant term.

To address the inclusionary affordability requirement triggered by the construction of the 63-unit Lincoln Square town project in 2007, ten (10) units received $35,000 silent second loans which covenanted them as affordable to moderate income households for a period of 45 years. All the loans were recorded in 2007 and provide for interest to accrue at a rate of 7% per year. All of the loans, totaling $350,000 plus accrued interest of $577,756 at June 30, 2022, are forgivable at the end of the covenant term.
80 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(4) Notes Receivable (Continued)
Housing Covenants (Continued)
In 2004, the Agency entered into an affordable housing agreement to provide a $774,473 loan to Habitat for Humanity of Orange County to acquire a property and build seven (7) townhome units known as the Cypress Heather development. The units were sold to very low income families (with incomes not exceeding 50% of the County’s median). Each family assumed one-seventh of the Agency’s loan with Habitat and these loans were recorded in 2007 and secured 45 year affordability covenants on the units. The loans provide for interest to accrue at a rate of 7% and be added to the loan principal each year. The loans, totaling $774,473 plus accrued interest of $1,222,532 at June 30, 2022, are forgivable at the end of the 45 year term.

In 2009, the Agency entered into an agreement to purchase long-term affordability covenants at the Tara Village apartment complex. The agreement provided a $6,788,996 loan to the owner of the apartment complex in exchange for reserving 80 units for rental to lower income households for 55 years, with 40 units reserved for very low income families and 40 units reserved for low income families. The loan is forgivable at the end of the covenant term.

In the fund financial statements, a note receivable is recorded upon initial funding of the loan with a corresponding amount recorded as an allowance for uncollectable amount since these notes will likely be forgiven prior to payment being due. This results in no impact to the fund balance reported in the fund financial statements. Similarly, in the government-wide statements, a note receivable is recorded when issued to the homeowner and would be decreased upon a repayment. However since all the loans associated with covenants are forgivable and will likely never be repaid, an allowance for forgivable loans of $10,432,230 has fully offset the amount reported as notes receivable in the government-wide statements at June 30, 2022.

Other Notes
The City receives an annual refund from Golden State Water related to the extension of a main water line in 1994. This annual payment of $428 will end in 2034. (5) Interfund Transactions
Interfund Balances
The following summarizes the total due to and from other funds as of June 30, 2022:

The outstanding balances between funds result from interfund borrowings and to cover cash flow deficits resulting from annual operating transfers to other funds.

General
Fund Total
Pandemic Response Fund $ 5,856,024 $ 5,856,024
Streets Special Revenue Funds 54,979 54,979
Non-major Governmental Funds 21,951 21,951
Total $ 5,932,954 $ 5,932,954
Due To Due From
81 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(5) Interfund Transactions (Continued)
Interfund Advances
On February 26, 2018, the City approved an advance of $490,874 from the General Fund to the AB 2766 Trip Reduction Fund for the purchase of a compressed natural gas sewer cleaning truck. The advance occurred on May 3, 2019 after the sewer truck was received and payment was made. The advance is to be repaid, at zero percent interest, by annual payments from the Assembly Bill 2766 revenues which are to be used to reduce air pollution from motor vehicles. The use of this funding was approved by the South Coast Air Quality Management District. During fiscal year 2021-22, $62,419 was repaid, leaving a remaining balance of $163,885 at June 30, 2022. It is anticipated the advance will be fully repaid by fiscal year 2024-25.

On January 28, 2019, the City approved an advance of up to $900,000 from the City Capital Projects Fund to the Cypress Recreation and Park District Special Revenue Fund for the design of a 9-acre sports park. The District pays interest annually on June 30 at the California Local Agency Investment Fund (LAIF) rate, with repayment to occur on or before June 30, 2024 from park development fees.

The preliminary design was completed in fiscal year 2020-21 at a total cost of $426,409. On February 14, 2022, the advance was repaid in full from park development fees. Interest of $592, based on an average LAIF rate of 0.222%, was earned through the payoff date and paid at the same time.

On February 8, 2021, the City approved an advance of up to $12,800,000 from the City Capital Projects Fund to the Cypress Recreation and Park District Special Revenue Fund for the construction of the 9-acre sports park, subsequently named Lexington Park. The District will pay interest annually on June 30 at the California LAIF rate. The principal will be repaid from anticipated park development fees (if available) on or before June 30, 2025, and the five-year term can be extended by mutual agreement. During fiscal year 2021-22, additional advances for construction costs were $6,839,779, bringing total construction costs to $12,258,065. Repayments of $4,785,916 and $1,106,889 were made from park development fees during the year. Interest of $27,120 was earned and paid on the outstanding balance, based on an average LAIF rate of 0.522%. The remaining balance at June 30, 2022 is $6,365,260.

Nonmajor Special
Governmental Revenue
AB 2766 Trip Recreation and Park
Reduction Fund District Fund Total
General Fund $ 163,885 $ 163,885 - $
Capital Projects Fund - 6,365,260 6,365,260
Total $ 163,885 $ 6,365,260 $ 6,529,145
Advances to Advances from
82 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(5) Interfund Transactions (Continued)
Interfund Transfers
With City Council approval, resources may be transferred from one City fund to another. The purpose of transfers is to move funding from its original source to the fund in which the authorized expenditures occur. Transfers between funds during the fiscal year ended June 30, 2022 are as follows:

The transfer to the General Fund from the Streets Fund provided resources for street maintenance.

The transfer to the General Fund from the non-major Governmental Funds provided resources for Traffic Safety, administrative costs associated with the Stanton Channel Maintenance District and Lighting District funds, and American Rescue Plan Act reimbursements for COVID-19 revenue losses.

The transfers to the Capital Projects Fund – City from the General Fund were for capital projects approved by City Council as part of the first year of the Seven-Year Capital Improvement Program and for the set-aside of monies for future capital improvement projects.

The transfer to the Capital Projects Fund – City from the Recreation and Park District Fund are former Agency property tax increment amounts that are now allocated to the District due to the dissolution of the Agency. These amounts are being transferred to repay capital project expenditures benefitting the District.

The transfer to the Capital Projects Fund – City from the Streets Fund provided funding for eligible capital improvements for residential street resurfacing and median restoration.

The transfer to the Capital Projects Fund – City from the non-major Governmental Funds provided funding for the Police Modernization/Seismic Retrofit project and a Civic Center energy study.

Pandemic Recreation Non-major
General Response and Park Streets Governmental
Fund Fund District Fund Fund Funds Totals
General Fund $ 11,717,000 - $ $ 599,186 - $ $ 286,377 $ 12,602,563 Capital Projects
Fund - City 6,050,000 919,757 - 706,829 509,784 8,186,370 Special Revenue
Funds - Streets - - - 326,288 - 326,288
Internal Service Funds 4,524,959 160,234 - - 4,685,193 - Totals $ 10,574,959 $ 11,717,000 $ 1,079,991 $ 1,306,015 $ 1,122,449 $ 25,800,414 Transfers Out Transfers In
83 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(5) Interfund Transactions (Continued)
Interfund Transfers (Continued)
The transfer from the General Fund to the Internal Service Funds provided $4,500,000 to the Employees’ Benefit Fund for investment in the pension trust, and $24,959 for information technology and capital equipment.

The transfers to the Internal Service Funds from the Recreation and Park District fund provided $150,000 for future OCERS pension costs and resources for the initial purchase of capital outlay items in the City’s Central Services Funds.
(6) Assets Available for Resale
During the fiscal year ended June 30, 2004, the former Redevelopment Agency acquired a parcel of land with a cost of $1,421,708 located at 5732 Lincoln Avenue. At the time of purchase, it was the intent of the Agency to resell this parcel for the development of low and moderate income housing units. The parcel was transferred to the City upon dissolution of the Agency on February 1, 2012. As of June 30, 2022, the City maintains ownership of the parcel of land and $1,421,708 is classified as assets available for resale in the Low and Moderate Housing Assets Fund.

(7) Capital Assets and Depreciation
In accordance with GASB 34, the City has reported all capital assets including infrastructure in the Government-Wide Statement of Net Position. The City elected to use the basic approach (as defined by GASB 34) for all infrastructure reporting in which depreciation expense and accumulated depreciation has been recorded. At June 30 2022, the City’s capital assets consisted of the following:
84 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(7) Capital Assets and Depreciation (Continued)
The following is a summary of changes in the capital assets for governmental activities during the fiscal year:

Capital Assets, Not Depreciated:

Land $ 9,734,882 $ $ 9,734,882 -
Construction in Progress 23,701,600 253,324 23,954,924
Total, Not Depreciated 33,436,482 253,324 33,689,806
Capital Assets, Being Depreciated:

Buildings and Improvements 40,222,966 40,222,966 -
Machinery and Equipment 11,352,637 11,352,637 -
Infrastructure 233,968,226 34,445,054 268,413,280
Total, Being Depreciated 285,543,829 34,445,054 319,988,883 Less Accumulated Depreciation:

Buildings and Improvements (21,311,078) (21,311,078) -
Machinery and Equipment (8,341,912) - (8,341,912)
Infrastructure (116,522,954) (15,821,884) (132,344,838) Total Accumulated Depreciation (146,175,944) (15,821,884) (161,997,828) Total Depreciated, Net 139,367,885 18,623,170 157,991,055 Total Capital Assets, Net $ 172,804,367 $ 18,876,494 $ 191,680,861 Business-type
Activities Activities Total
Governmental
Balance Balance
June 30, 2021 Additions Deletions June 30, 2022
Capital Assets, Not Depreciated:

Land $ 9,734,882 $ $ - $ 9,734,882 -
Construction in Progress 13,185,847 12,093,044 (1,577,291) 23,701,600 Total, Not Depreciated 22,920,729 12,093,044 (1,577,291) 33,436,482 Capital Assets, Being Depreciated:

Buildings and Improvements 38,390,119 1,832,847 40,222,966 - Machinery and Equipment 11,209,381 301,897 (158,641) 11,352,637 Infrastructure 233,683,122 285,104 233,968,226 -
Total, Being Depreciated 283,282,622 2,419,848 (158,641) 285,543,829 Less Accumulated Depreciation:

Buildings and Improvements (20,093,724) (1,217,354) (21,311,078) - Machinery and Equipment (7,720,733) (759,983) 138,804 (8,341,912) Infrastructure (112,116,269) (4,406,685) (116,522,954) - Total Accumulated Depreciation (139,930,726) (6,384,022) 138,804 (146,175,944) Total Depreciated, Net 143,351,896 (3,964,174) (19,837) 139,367,885 Governmental Activities Capital
Assets, Net $ 166,272,625 $ 8,128,870 $ (1,597,128) $ 172,804,367 Governmental Activities
85 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(7) Capital Assets and Depreciation (Continued)
Depreciation expense was charged to functions/programs of governmental activities for the fiscal year ended June 30, 2022 as follows:

Construction Commitments
The City has active construction projects as of June 30, 2022. The projects include traffic signals, streets, and sewers. At fiscal year-end, the City’s encumbrances with contractors were as follows:

The following is a summary of changes in the capital assets for business-type activities during the fiscal year:

General Government $ 398,390
Recreation 686,339
Public Safety 113,267
Public Works 4,426,044
Internal Service Funds Depreciation (Charged to Programs Based on Usage) 759,982 Total Depreciation Expense - Governmental Activities $ 6,384,022 Remaining
Commitment
Streets Fund $ 74,663
Lighting Fund 11,050
Capital Projects Fund - City 180,304 Sewer Fund 74,454
Totals $ 340,471
Balance Balance
June 30, 2021 Additions Deletions June 30, 2022
Capital Assets, Not Depreciated:

Construction in Progress $ 105,742 $ 147,582 $ $ 253,324 - Total, Not Depreciated 105,742 147,582 - 253,324
Capital Assets, Being Depreciated:

Infrastructure 34,445,054 - 34,445,054 -
Total, Being Depreciated 34,445,054 - 34,445,054 - Less Accumulated Depreciation:

Infrastructure (15,228,029) (593,855) (15,821,884) -
Total Accumulated Depreciation (15,228,029) (593,855) (15,821,884) - Total Depreciated, Net 19,217,025 (593,855) 18,623,170 - Business-type Activities Capital Assets, Net $ 19,322,767 $ (446,273) $ $ 18,876,494 -
Business-type Activities
86 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(7) Capital Assets and Depreciation (Continued)
Depreciation expense for business-type activities for the fiscal year ended June 30, 2022 was charged as follows:
(8) Long-Term Debt
There is no City-obligated debt outstanding as of June 30, 2022, nor was there any activity related to City-obligated debt during fiscal year 2021-22.

Non-City Obligations - Cypress Business and Professional Center Limited Obligation Improvement Bonds
On February 18, 1998, $2,160,000 of Limited Obligation Improvement Bonds were issued to finance the acquisition of certain improvements within the Cypress Business and Professional Center Assessment District (Assessment District) of the City. Assessments to secure the bonds are to be levied only on parcels within the Assessment District for the cost of improvements with these assessments being payable over 25 years (term of debt issued). The bonds are limited obligations of the Assessment District payable solely from the special assessment or funds held pursuant to the trust indenture. Neither the faith and credit, nor the taxing power of the City, is pledged to the payment of the bonds. The City has no obligation beyond the cash balances in the Agency Fund for any delinquent Assessment District bond payments. The City acts solely as an agent for levying the assessments and paying the bondholders. At June 30, 2022, the District held in the Custodial Fund cash and investments totaling $180,125, including $160,125 held in bond reserves and $20,000 held for future improvements and other costs. The outstanding assessment bonds at June 30, 2022 totaled $170,000.
(9) Other Long-Term Liabilities
During the year ended June 30, 2022, in addition to the lease revenue bonds in Note 8, net pension liability in Notes 10 and 12, other postemployment benefits in Note 13, and claims payable in Note 15, the City had the following changes in Other Long-Term Liabilities:

All compensated absence amounts above relate to the internal service funds and are generally liquidated by the General Fund through charges from the internal service funds.

Sewer $ 593,855
Total Depreciation Expense - Business-type Activities $ 593,855 Balance Balance Due Within Due in More
Description July 1, 2021 Additions Deletions June 30, 2022 One Year than One Year Compensated Absences 2,295,261 $ $ 1,495,967 $ (1,386,021) $ 2,405,207 $ 601,300 $ 1,803,907 $ 2,295,261 $ 1,495,967 $ (1,386,021) $ 2,405,207 $ 601,300 $ 1,803,907 Classification
87 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(10) Public Employees’ Retirement System (CalPERS)
A. General Information about the Pension Plan
Plan Descriptions: All qualified permanent and probationary employees are eligible to participate in the City’s Safety (Police) or the Miscellaneous (all other employees) cost-sharing multiple-employer defined benefit pension plan, administered by the California Public Employees Retirement System (CalPERS). CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided: CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits.

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 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for the plan are applied as specified by the Public Employees’ Retirement Law. The plans’ provisions and benefits in effect at June 30, 2022, are summarized as follows:

Net Pension
Liability/(Asset)
Deferred
Outflows Deferred Inflows
CalPERS
Safety $ 19,580,447 $ 7,750,960 $ 13,527,591
Miscellaneous 13,156,618 4,255,802 12,863,829
32,737,065 12,006,762 26,391,420
OCERS *
(103,379) 970,860 511,244
Total Pension $ 32,633,686 $ 12,977,622 $ 26,902,664
* See Note 12 for information on the OCERS Pension Plan Pension Plan Summaries
88 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(10) Public Employees’ Retirement System (CalPERS) (Continued) A. General Information about the Pension Plan (Continued) Contributions: Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employees be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount necessary to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer rates may change if plan contracts are amended.

Payments made by the City to satisfy contribution requirements identified by the pension plan as member contributions are classified as plan member contributions.

Hire date
Prior to January 1,
2013
On or After
January 1, 2013
Benefit formula 2.0% at 55 2.0% at 62
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age 50-63 52-67
Monthly benefits, as a percentage of eligible compensation 1.426% - 2.418% 1.000% - 2.500% Required employee contribution rates 7.000% 7.250%
Required employer contribution rates:

Normal cost rate 11.180% 9.590%
Payment of unfunded liability $1,864,295 $7,153
Hire date
Prior to January 1,
2013
On or After
January 1, 2013
Benefit formula 3.0% at 50 2.7% at 57
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age 50 50-57
Monthly benefits, as a percentage of eligible compensation 3.00% 2.00% - 2.70% Required employee contribution rates 9.000% 13.750%
Required employer contribution rates:

Normal cost rate 25.590% 13.980%
Payment of unfunded liability $2,267,644 $5,010
Miscellaneous
Safety
89 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(10) Public Employees’ Retirement System (CalPERS) (Continued) B. Net Pension Liability
The City’s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each Plan is measured as of June 30, 2021, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Assumptions: The total pension liability in the June 30, 2020 actuarial valuation was determined using the following actuarial assumptions:
(1) The mortality table used was developed based on the CalPERS-specific data. The table includes 15 years of mortality improvements 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 CalPERS website.

Change of Assumptions: There were no changes in assumptions.

Discount Rate: The discount rate used to measure the total pension liability was 7.15 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions 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 projected benefit payments to determine the total pension liability.

Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Mortality Rate Table (1) Derived using CalPERS membership data for all funds Post Retirement Benefit Increase
Power Protection Allowance Floor on Purchasing Power
applies, 2.50% thereafter
Varies by entry age and service
The lesser of contract COLA or 2.50% until Purchasing
June 30, 2020
June 30, 2021
Entry-Age Normal Cost Method

7.15%

2.50%
90 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(10) Public Employees’ Retirement System (CalPERS) (Continued) B. Net Pension Liability (Continued)
Long-Term Expected Rate of Return: The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund (Public Employees’ Retirement Fund) cash flows. Taking into account historical returns of all the funds’ asset classes, 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 longterm 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 expected real rates of return by asset class are as follows:
(a) An expected inflation of 2.00 percent was used for this period. (b) An expected inflation of 2.92 percent was used for this period.

C. Changes in the Net Pension Liability
Proportionate Share of Net Pension Liability: As of June 30, 2021, the City reported net pension liabilities for its proportionate shares of the net pension liability of each Plan as follows:

Assumed Real Return Real Return
Asset Years Years
Asset Class Allocation 1-10 (a) 11+ (b)
Global equity 50.00% 4.80% 5.98%
Fixed Income 28.00% 1.00% 2.62%
Inflation assets 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%
Proportionate Share
of Net Pension Liability
Safety Plan $ 19,580,447
Miscellaneous Plan 13,156,618
Total Net Pension Liability $ 32,737,065
91 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(10) Public Employees’ Retirement System (CalPERS) (Continued) C. Changes in the Net Pension Liability (Continued)
The City’s net pension liability for both the Safety and Miscellaneous Plans is measured as the proportionate share of the net pension liability. The net pension liability is measured as of June 30, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the Plans relative to the projected contributions of all participating employers, as actuarially determined. The City’s proportionate share of the net pension liability for the Plans as of June 30, 2020 and 2021 was as follows:

Sensitivity of the Net Pension Liability to Changes in the Discount Rate: The following presents the net pension liability of each plan, as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

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

D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2022, the City recognized pension expense of $4,858,077 in the Miscellaneous Plan; $4,086,938 in the Safety Plan; and ($105,942) in the Terminated OCERS Plan (Note 12) for a total of $8,839,073. At June 30, 2022, the City reported deferred outflows and deferred inflows of resources related to CalPERS pensions as follows:

Miscellaneous Safety
Proportion - June 30, 2020 0.20786% 0.28006%
Proportion - June 30, 2021 0.24327% 0.36205%
Change - Increase (Decrease) 0.03541% 0.08199%
Miscellaneous Safety
Discount Rate Plan Plan Total
1 % Decrease 6.15% $25,281,430 $34,271,619 $59,553,049
Current Discount Rate 7.15% 13,156,618 19,580,447 32,737,065 1 % Increase 8.15% 3,133,209 7,513,465 10,646,674
Net Pension Liability
92 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(10) Public Employees’ Retirement System (CalPERS) (Continued) D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Deferred Deferred
Outflows Inflows
Miscellaneous Plan of Resources of Resources
City contributions subsequent to measurement date $ 2,447,524 $ - Differences between expected and actual experience 1,475,373 - Net difference between projected and actual earnings on pension plan investments - (11,485,031)
Adjustments due to differences in proportions 332,905 (75,969) Changes in proportion and differences between
contributions and proportionate share of - (1,302,829)
Total $ 4,255,802 $ (12,863,829)
Deferred Deferred
Outflows Inflows
Safety Plan of Resources of Resources
City contributions subsequent to measurement date $ 3,558,957 $ - Differences between expected and actual experience 3,345,303 - Net difference between projected and actual earnings on pension plan investments - (11,654,130)
Adjustments due to differences in proportions 846,700 - Changes in proportion and differences between contributions and proportionate share of - (1,873,461)
Total $ 7,750,960 $ (13,527,591)
Deferred Deferred
Outflows Inflows
Total PERS Pension Plans of Resources of Resources
City contributions subsequent to measurement date $ 6,006,481 $ - Differences between expected and actual experience 4,820,676 - Net difference between projected and actual earnings on pension plan investments - (23,139,161)
Adjustments due to differences in proportions 1,179,605 (75,969) Changes in proportion and differences between - contributions and proportionate share of - (3,176,290) Total $ 12,006,762 $ (26,391,420)
93 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(10) Public Employees’ Retirement System (CalPERS) (Continued) D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
The amount reported as deferred outflows of resources related to contributions subsequent to the measurement date of $2,447,524 for the Miscellaneous Plan and $3,558,957 for the Safety Plan, totaling $6,006,481, will be recognized as a reduction of the net pension liability in the year ending June 30, 2023. The amount reported as deferred inflows, net of the remaining deferred outflows, will be recognized as pension expense as follows:

E. Payable to the Pension Plan
At June 30, 2022, the City had no outstanding contributions to the pension plan required for the year ended June 30, 2022.
(11) Other Defined Contribution Pension Plans
Nationwide Retirement Solutions Deferred Compensation Plan Under the Omnibus Budget Reconciliation Act of 1990 (OBRA), the City is required to provide a retirement plan to all City employees, including part-time temporary and seasonal employees. OBRA law allows the City to provide any retirement plan in which benefits are comparable to those provided under Social Security and meet certain criteria or “safe harbor formulas” for defined benefit retirement systems. To comply with this Federal law, the City currently provides a 457 deferred compensation plan through Nationwide Retirement Solutions for part-time temporary and seasonal employees.

These employees pay a mandatory contribution of 7.5% of their compensation to the plan, which may be withdrawn upon employment separation.

For the year ended June 30, 2022, the City’s payroll covered by the plan was $714,950. Employee contributions to the plan totaled $53,622. The City does not contribute to the plan. (12) Terminated Orange County Employees Retirement System Defined Benefit Pension Plan A. General Information about the Pension Plan
Plan Description: The Cypress Recreation and Park District (District) participated in the Orange County Employees’ Retirement System (OCERS), a cost-sharing multiple-employer defined benefit pension plan, for employees’ service prior to October 12, 2000.

Measurement Periods
Ending June 30, Miscellaneous Plan Safety Plan Total
2022 $ (2,577,319) $(1,628,858) $ (4,206,177)
2023 (2,585,416) (1,968,109) (4,553,525)
2024 (2,718,946) (2,531,567) (5,250,513) 2025 (3,173,870) (3,207,054) (6,380,924) Thereafter - - -
$ (11,055,551) $(9,335,588) $(20,391,139)
Deferred Outflows/(Inflows) of Resources
94 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(12) Terminated Orange County Employees Retirement System Defined Benefit Pension Plan (Continued)
A. General Information about the Pension Plan (Continued) OCERS was established in 1945, under the provisions of the County Employees Retirement Law of 1937. OCERS is governed by a ten-member Board of Retirement comprised of nine voting members and one alternate member. Board membership consists of four members appointed by the County of Orange Board of Supervisors and five members elected by the members of the pension system – two by the general members, two by the safety members (one voting and one alternate), and one by the retired members. The County of Orange Treasurer-Tax Collector, who is elected by the voters registered in the County, serves as an ex-officio member. The OCERS Board of Retirement is responsible for establishing policies governing the administration of the retirement plan, making disability determinations, assuring benefit payments, establishing investment policies, and monitoring execution of its policies.

OCERS issues a publicly available financial report that includes financial statements and required supplementary information for the cost-sharing plans administered by OCERS. The report can be obtained online at www.ocers.org, or from its executive office at 2223 Wellington Avenue, Santa Ana, CA 92701.

Benefits Provided: OCERS provides retirement, disability, and death benefits to safety and general members. Safety membership includes those members serving in active law enforcement, fire suppression, and probation officers. General membership applies to all other occupations, including all eligible District employees. Plan retirement benefits are tiered based upon date of OCERS membership. Members employed prior to September 21, 1979 are designated as Tier I members and will have their highest one-year average salary used to determine their retirement allowance. Tier II members, hired on or after September 21, 1979 will have their highest three-year average salary used to determine their retirement allowance. Member rate groups are determined by the employer, bargaining unit, and benefit plan. The benefit plan represents the benefits formula and tier that will be used in calculating a retirement benefit.

Employees Covered: The plan was closed to new members as of October 12, 2000. After that date, all existing and new District employees were enrolled in the CalPERS Miscellaneous Plan. At December 31, 2021, the following employees were covered by the benefit terms of the OCERS Plan:

Contributions: The participating entities in OCERS share proportionately in all risks and costs, including benefit costs. The District’s discontinuance of the OCERS plan precludes the District from sharing the risks and costs of the plan in the same manner as actively participating entities, but the District remains liable for its share of pension liabilities. To ensure the District pays its fair share of the costs associated with its eligible employees, OCERS and the District entered into a Withdrawing Employer and Continuing Contribution Agreement (Agreement) on October 15, 2018.

Retired members or beneficiaries currently receiving benefits 22 Vested terminated members entitled to, but not yet receiving 4 Active members 0
Total 26
95 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(12) Terminated Orange County Employees Retirement System Defined Benefit Pension Plan (Continued)
A. General Information about the Pension Plan (Continued) Per the terms of the Agreement, the District paid OCERS $740,000 on October 16, 2018 to satisfy the estimated net pension liability as of December 31, 2016 and interest accrued on that liability through October 16, 2018. Beginning December 31, 2020 and at least every three years thereafter, OCERS will recalculate the then current unfunded actuarial accrued liability attributable to the District.

For purposes of the recalculation, the District’s employees are treated as a closed group and the District’s assets and liabilities will be segregated from the remaining assets of the retirement system.

Based on the recalculation, in the event there is any new pension liability, the District shall satisfy the obligation to OCERS within three years following the effective date of the recalculation, including accrued interest. If the recalculation determines there is a surplus attributable to the District, it shall remain with OCERS as a credit against future pension liabilities.

The recalculated unfunded actuarial liability attributable to the District as of December 31, 2020 is $536,775. The District has until December 31, 2023 to pay OCERS, but elected to make the payment, plus accrued interest of $58,825, on July 15, 2022.

B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources As of December 31, 2021, the District reported a net pension asset for the OCERS plan of $103,379.

The net pension liability was measured as of December 31, 2021, and 2020. The Plan’s Fiduciary Net Position (plan assets) was valued as of the measurement date while the Total Pension Liability (TPL) was determined based upon rolling forward the TPL from actuarial valuations as of December 31, 2020 and 2019, respectively.

The District’s net pension liability as of December 31, 2020 and 2021 was as follows:

OCERS
Net Pension Liability - December 31, 2020 185,117
Net Pension Liability (Asset) - December 31, 2021 (103,379) Change - Increase (Decrease) (288,496)
96 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(12) Terminated Orange County Employees Retirement System Defined Benefit Pension Plan (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources (Continued)
Actuarial Assumptions: The actuarial valuation was determined using the following actuarial assumptions:

Valuation Date December 31, 2020
Measurement Date December 31, 2021, rolled forward on an actuarial basis
Actuarial Experience Study Three-year period ended December 31, 2019 and dated August 6, 2020.

Actuarial Cost Method Entry age normal
Actuarial Assumptions:

Inflation 2.50%
Salary increases General: 4.0% to 11.0%, varies by
service, including inflation
Investment rate of return 7.00%, net of pension plan investment expense, including inflation.

Discount Rate 7.00%
Mortality Assumptions: The underlying mortality assumptions used in the actuarial valuation were based on the results of the actuarial experience study for the period January 1, 2017 through December 31, 2019 using the Public Retirement Plans Mortality tables (Pub-2010) published by the Society of Actuaries. Within the Pub-2010 family of mortality tables, OCERS has adopted both the General and Safety Amount-Weighted Above-Median Mortality Tables (adjusted for OCERS experience), projected generationally with the two-dimensional mortality improvement scale MP2019, and adjusted separately for healthy and disabled for both general and safety members.

Discount Rate: The discount rate used to determine the total pension liability was 7.00% as of December 31, 2021 and 2020. The projection of cash flows used to determine the discount rate assumed plan member contributions will be made at the current contribution rate and employer contributions will be made at rates equal to the actuarially determined contribution rates. For this purpose, only employer contributions intended to fund benefits for current plan members and their beneficiaries are included. Projected employer contributions that are intended to fund the service costs for future plan members and their beneficiaries, as well as projected contributions from future plan members, are not included. Based on those assumptions, the Plan’s Fiduciary Net Position was projected to be available to make all projected future benefit payments for current plan members.

Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability as of December 31, 2021.
97 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(12) Terminated Orange County Employees Retirement System Defined Benefit Pension Plan (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources (Continued)
Long-Term Expected Rate of Return: The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of inflation) are developed for each major asset class. These returns 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, adding expected inflation and subtracting expected investment expenses and a risk margin. The target allocation and projected arithmetic real rates of return for each major asset class, after deducting inflation but before deducting investment expenses are shown in the following table. This information was used in the derivation of the longterm expected investment rate of return assumption for the December 31, 2020 actuarial valuation.

This information will change every three years based on the actuarial experience study.

Asset Class Target
Allocation
Long-Term Expected
Real Rate of Return
Large Cap Equity 23.10% 5.43%
Small Cap Equity 1.90% 6.21%
International Developed Equity 13.00% 6.67%
Emerging Markets Equity 9.00% 8.58%
Core Bonds 9.00% 1.10%
High Yield Bonds 1.50% 2.91%
TIPS 2.00% 0.65%
Emerging Market Debt 2.00% 3.25%
Corporate Credit 1.00% 0.53%
Long Duration Fixed Income 2.50% 1.44%
Real Estate 3.01% 4.42%
Private Equity 13.00% 9.41%
Value Added Real Estate 3.01% 7.42%
Opportunistic Real Estate 0.98% 10.18%
Energy 2.00% 9.68%
Infrastructure (Core Private) 1.50% 5.08%
Infrastructure (Non-Core Private) 1.50% 8.92%
CTA – Trend Following 2.50% 2.38%
Global Macro 2.50% 2.13%
Private Credit 2.50% 5.47%
Alternative Risk Premia 2.50% 2.50%
Total 100.0%
98 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(12) Terminated Orange County Employees Retirement System Defined Benefit Pension Plan (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources (Continued)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate: The following presents the net pension liability of the OCERS plan, as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

Pension Plan Fiduciary Net Position: Detailed information about the pension plan’s fiduciary net position is available in the separately-issued OCERS financial reports.

C. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2022, the District recognized pension income of $105,942 in the OCERS Plan. At June 30, 2022, the District reported deferred outflows and deferred inflows of resources related to pensions as follows:

The amounts reported as deferred inflows, net of the remaining deferred outflows, will be recognized as pension expense as follows:

1% Decrease Current Rate 1% Increase

6.00% 7.00% 8.00%
$1,261,728 ($103,379) ($1,216,068)
Net Pension Liability
Discount Rate
Deferred Deferred
Outflows Inflows
OCERS Plan of Resources of Resources
Differences between expected and actual experience $ 947,260 $ - Net difference between projected and actual earnings on pension plan investments (501,465)
Changes of assumptions 23,600 (9,779)
Total $ 970,860 $ (511,244)
OCERS Plan
Measurement Periods Deferred Outflows/
Ending June 30, (Inflows) of Resources
2023 $ 681,559
2024 (116,015)
2025 (68,323)
2026 (45,355)
2027 7,750
Thereafter -
$ 459,616
99 CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(12) Terminated Orange County Employees Retirement System Defined Benefit Pension Plan (Continued)
D. Payable to the Pension Plan
At June 30, 2022, the City had no outstanding contributions to the pension plan required for the year ended June 30, 2022.
(13) Post-Employment Health Care Benefits
Plan Description
The City, through a single-employer defined benefit plan, provides post-employment health care benefits to eligible retirees through the CalPERS healthcare program entitled Public Employees’ Medical and Hospital Care Act (PEMHCA). All eligible employees become participants in PEMHCA in the month following their date of hire. Upon retirement, the City pays the PEMHCA minimum amount ($149 per month in 2022) for all eligible retirees who choose to continue with their coverage through PEMHCA. Retired PEMHCA members receiving benefits make contributions at premium rates identical to active City employees, less the PEMHCA minimum.

In addition to the PEMHCA minimum amount, certain members of all retiree groups with at least ten years of continuous service receive a Supplemental Health Care Benefit directly from the City. The benefits are based on negotiated memorandums of understanding with the various employee associations. The City provides a monthly contribution from $100 to $300 based on years of continuous service and employee classification, which can be used by the retiree to either continue their health care benefits as may be available under the City’s current health care contract through PEMHCA or to use the monthly contribution amount to purchase alternative health care benefits. The Supplemental Health Care Benefit terminates for retirees on the date the retiree reaches age 65 or becomes Medicare eligible whichever comes first. This plan is closed to new members. New employees are only eligible for the PEMHCA benefit and the Retiree Health Savings plan.

All other City employees that are either ineligible or have elected out of the above Supplemental Health Care Benefit are members of the City’s Retiree Health Savings defined-contribution plan in which the City contributes monthly amounts on behalf of the employee to an account in the employee’s name. These monthly contributions are $75 per month or $185 per month for full-time employees based on employee association.

Employees Covered
As of the June 30, 2022 actuarial valuation, the following current and former employees were covered by the benefit terms under the OPEB plans:

Defined
Contribution
Supplemental Retiree
PEMHCA Health Care Health
Minimum Benefit Savings
Active Employees 120 10 113
Eligible Retirees - Enrolled 71 31 n/a
Eligible Retirees - Not Enrolled 82 0 n/a
Defined Benefit Plans
100

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(13) Post-Employment Health Care Benefits (Continued)
Contributions
The minimum contribution for PEMHCA is established and amended by CalPERS. The City’s contribution towards the Supplemental Health Care Benefit and Retiree Health Savings OPEB plans are established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by agreements between the City and the bargaining units.

The City pays the monthly contribution for all employees and retirees on a pay-as-you-go basis. As of June 30, 2022, 71 retirees were receiving the PEMHCA benefit and the cost to the City for the year ended June 30, 2022 was $122,795. The City paid an additional $104,059 to 35 retirees during the year for the Supplemental Health Care Benefit. For the measurement date ended June 30, 2022, the City’s cash contributions were $226,854, which were recognized as a reduction to the OPEB liability.

While the City does not directly make contributions above the required pay-as-you-go amounts, the ability of the retiree to obtain health insurance at an active employee rate constitutes a significant economic benefit to the retiree, called an implicit subsidy. The implicit subsidy is considered to be an other post-employment benefit (OPEB) of the City. For the year ended June 30, 2022, the City’s contribution towards the implicit subsidy was $336,060.

The Retiree Health Savings Plan (RHS) is a defined contribution plan. Eligible employees receive either $85 or $175 per month, depending on bargaining unit, deposited in an individual Retiree Health Savings Account. During the fiscal year ended June 30, 2022, the City paid $124,655 into RHS accounts for eligible employees. The monthly payments are recognized as expenditures when the payments are made into the RHS. Because the RHS is a defined contribution plan there is no unfunded liability associated with it.

Total OPEB Liability
The City’s total OPEB liability of $9,015,067 was based on an actuarial valuation as of June 30, 2021, a measurement date of June 30, 2022 and a discount rate of 3.54%. The total OPEB liability was determined using the following assumptions:
101

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(13) Post-Employment Health Care Benefits (Continued)
Total OPEB Liability (Continued)
Notes:
(1) The discount rate was based on the Bond Buyer 20-year bond General Obligation Index. (2) Mortality rates were based on the 2017 CalPERS Mortality Tables for Safety and Miscellaneous Employees, as appropriate for the population.

Changes in the OPEB Liability
The changes in the Total OPEB liability for the Plan are as follows:
* The interest assumption changed from 2.16% to 3.54%.

Actuarial Cost Method Entry Age, Level Percent of Pay
Actuarial Assumptions
Discount Rate (1)
As of 6/30/22 3.54%, net of investment expenses
Inflation 2.50%
Salary increases 2.75%
Mortality rate (2)
Healthcare cost trend rates 4.00%
Medical CPI 4.00% (used to project CalPERS statutory minimum benefit) Retirees' share of cost Retirees pay the balance of the premium after statutory minimum benefit, Supplemental Health Care Benefits, if any, and PEMHCA administrative fees contributed by the City.

Balance at June 30, 2021 (measurement date 6/30/21) $10,607,104 Changes recognized for the measurement period:

Service cost 411,807
Interest 227,512
Difference between expected and actual experience 2,850 Changes of assumptions *
(1,671,292)
Benefit payments, including implicit subsidy (562,914)
Net changes (1,592,037)
Balance at June 30, 2021 $9,015,067
102

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(13) Post-Employment Health Care Benefits (Continued)
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability as of June 30, 2022 calculated using the discount rate of 3.54%, as well as what the total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (2.54%) or one percentage point higher (4.54%) than the current rate:

Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the total OPEB liability as of June 30, 2022, as well as what the total OPEB liability would be if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current health care cost trend rates:

OPEB Expense
The annual OPEB expense can be calculated as the change in the amounts reported on the Statement of Net Position that are not attributable to employer contributions. It is the change in total liability minus the changes in deferred outflows plus the changes in deferred inflows. For the fiscal year ended June 30, 2022, the City recognized OPEB expense of $675,883.

Deferred Outflows/Inflows of Resources Related to OPEB
As of the fiscal year ended June 30, 2022, the City reported deferred outflows and deferred inflows of resources related to OPEB from the following sources:
1% Decrease Current Rate 1% Increase

2.54% 3.54% 4.54%
Total OPEB Liability $10,206,118 $9,015,067 $8,191,630
1% Decrease Current Rates 1% Increase

3.00% 4.00% 5.00%
Total OPEB Liability $7,851,442 $9,015,067 $10,390,322
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual experience $ 352,857 $ 77,558 Changes of assumptions 900,442 1,983,830
Total $ 1,253,299 $ 2,061,388
103

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(13) Post-Employment Health Care Benefits (Continued)
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB Amounts reported as deferred outflows and deferred inflows of resources will be recognized in OPEB expense as follows:
(14) Public Agency Retirement Services (PARS) Post-Employment Benefits Trust The City established the PARS Post-Employment Benefits Trust (Trust) as a tax-exempt trust within the meaning of Section 115 of the Internal Revenue Service Code to accumulate resources to “stabilize” the amount of General Fund resources that it will need to meet future contribution requirements to the California Public Employees Retirement System (PERS). The balances and activities of the Trust are not part of the pension plan. Instead, the assets will benefit the employer through reduced future cash flow demands on the General Fund resources and continue to be assets of the City. At June 30, 2022, $20,198,541 in restricted cash and investment in the Employees’ Benefit Internal Service Fund is restricted for pension contribution stabilization. (15) Self Insurance
At June 30, 2022 the City was self-insured for workers’ compensation and general liability. The selfinsured portion for workers’ compensation and general liability is limited to the first $300,000 and $150,000 respectively, of liability per occurrence. Coverage in excess of these amounts is maintained in layers to a maximum of $43,000,000 for general liability and the statutory limit for workers compensation (of which $3,000,000 per occurrence is for each employee accident or disease) through the California Insurance Pool Authority (CIPA). CIPA is a consortium of 13 cities in Southern California, established to pool resources, share risks, purchase excess insurance and to share costs for professional risk management and claims administration. Member agencies make payments based on underwriting estimates. Each agency may be assessed the difference between funds available and the $33,000,000 annual aggregate in proportion to their annual premiums.

The Governing Board is comprised of one member from each City and is responsible for the selection of management, and for the budgeting and financial management of CIPA. No determination has been made as to each participant’s proportionate share of the fund equity as of June 30, 2022. Upon termination of CIPA, and after settlement of all claims, any excess or deficit will be divided among the cities in proportion to the amount of their contributions.

Fiscal Year Deferred Outflows/
Ending June 30, (Inflows) of Resources
2023 $ 36,564
2024 82,079
2025 14,007
2026 (218,269)
2027 (218,269)
Thereafter (504,201)
104

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(15) Self Insurance (Continued)
Liabilities associated with the self-insurance program area are accrued when incurred in the internal service funds (using the accrual basis of accounting). The amount accrued represents estimates of amounts to be paid for reported claims and incurred-but-not-yet-reported claims based upon past experience, modified for current trends and information. While the ultimate amount of losses incurred through June 30, 2022 is dependent on future developments, based upon information from the City Attorney, the City’s claims administrators and others involved with the administration of programs, City management believes the accrual is adequate to cover such losses. Settled claims have not exceeded commercial coverage during the last three years. There have been no significant reductions in insurance coverage from the prior year.

All City departments participate in the self-insurance program. Payments made to the Liability Insurance and Workers’ Compensation Internal Service Funds are based on estimates of amounts needed to pay prior and current year claims and to establish a reserve for catastrophic losses. At June 30, 2022, the Liability Insurance Fund and the Workers’ Compensation Fund had reserves for catastrophic losses of $2,970,718 and $94,880, respectively, which are reported as net position in these funds. The claims liabilities of $196,094 and $2,294,321 reported in the Liability Insurance and Workers’ Compensation Funds, respectively, at June 30, 2022, are based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that the liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.

Changes in the claims liability amounts during the fiscal years ended June 30, 2021 and June 30, 2022 are as follows:

Copies of CIPA’s annual financial statements may be obtained from its offices located at 366 San Miguel Drive, Suite 312, Newport Beach, CA 92660.

Liability Workers'
Total
Balance at July 1, 2020 $ 328,490 $ 1,010,433 $ 1,338,923 Current year claims 316,659 134,697 451,356
Changes in estimates 271,034 691,377 962,411
Claims payments (316,659) (134,697) (451,356)
Balance at June 30, 2021 $ 599,524 $ 1,701,810 $ 2,301,334 Balance at July 1, 2021 $ 599,524 $ 1,701,810 $ 2,301,334 Current year claims 19,545 180,954 200,499
Changes in estimates (403,430) 592,511 189,081
Claims payments (19,545) (180,954) (200,499)
Balance at June 30, 2022 $ 196,094 $ 2,294,321 $ 2,490,415 Insurance Compensation
105

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(16) Classification of Net Position
Net Position
The City’s Net Position at June 30, 2022 is summarized as follows:

Governmental Business-type
Activities Activities Totals
Capital Assets $ 318,980,311 $ 34,698,378 $ 353,678,689 Less: Accumulated Depreciation (146,175,944) (15,821,884) (161,997,828) Net Invested in Capital Assets 172,804,367 18,876,494 191,680,861 Restricted for:

Public Safety 1,041,827 1,041,827 - Public Works-Street Maintenance and Improvements 6,200,631 6,200,631 - Public Works-Street Lighting 5,401,064 5,401,064 - Public Works-Local Drainage Improvements 1,050,302 1,050,302 - Public Works-Other 167,500 - 167,500 Total - Public Works 12,819,497 12,819,497 - Sanitary Sewer System 6,638,372 - 6,638,372 Recreation 4,158,242 4,158,242 - Recreation-Open Space Improvements 1,697 - 1,697 Recreation-Facility and Service Enhancements 19,657 - 19,657 Total-Recreation 4,179,596 4,179,596 - Other-Pension Trust 20,198,541 20,198,541 - Other-Promotional Activities 28,944 - 28,944 Other-Low and Moderate Income Housing 1,546,397 1,546,397 - Other-Cable Television Equipment 703,735 - 703,735 Other-LEAP Grant 48,037 - 48,037
Other-Tobacco Grant 56,935 - 56,935
Other-Community Development Block Grant 1,800 - 1,800
Other-Office of Traffic Safety Grant 19,370 - 19,370
Other-Department of Justice Grant 5,711 - 5,711
Total-Other 2,410,929 - 2,410,929
Unrestricted 95,515,524 - 95,515,524
Total Net Position $ 308,970,281 $ 25,514,866 $ 334,485,147 Government Wide Statement
of Net Position
106

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(16) Classification of Net Position (Continued)
Net Invested in Capital Assets – This net position amount represents capital assets, net of accumulated depreciation and reduced by outstanding debt attributed to acquisition, construction, or improvement of the assets.

Restricted for Public Safety – These funds are restricted for law enforcement purposes, supplementing but not supplanting other public safety funding.

Restricted for Public Works – Street Maintenance and Improvements – This restriction represents amounts received from State and Local governments and developers that are required to be used for the construction and maintenance of streets within the City.

Restricted for Public Works – Street Lighting – This restriction represents property tax amounts assessed for expenditures for streetlights, traffic signal maintenance and construction.

Restricted for Public Works – Local Drainage Improvements – These amounts received from developers are restricted for expenditures for master planned drainage projects.

Restricted for Public Works – Other Purposes – These amounts are restricted to support a variety of grant funded and special programs as designated by law, the grant terms, or administrative regulations.

Restricted for Sanitary Sewer System – These amounts received from system users are restricted for maintenance and capital expenditures for the City’s sanitary sewer system.

Restricted for Recreation – This restriction represents amounts required to be used for future Recreation and Park District operating and capital activities.

Restricted for Recreation - Open Space Improvements – This restriction represents amounts received from developers that are required to be used for Recreation and Park District open space use.

Restricted for Recreation – Facility and Service Enhancements – This restriction represents amounts received from grants or other funding that are required to be used for the support of Recreation and Park District facilities, programs and services.

Restricted for Other – Pension Trust – This restriction represent the balance of the Pension Trust, a tax-exempt, irrevocable pension trust designed to pre-fund retirement plan obligations.

Restricted for Other - Promotional Activities – This restriction represents amounts contributed to the City by developers for the promotion of the City.

Restricted for Other - Low and Moderate Income Housing – This restriction represents amounts received to the City from the Agency upon dissolution that are required to be used for the rehabilitation and/or replacement of low and moderate income housing within the City.

Restricted for Other - Cable Television Equipment – These amounts are restricted to provide enhancements to the City’s equipment used for video PEG access services as designated by the terms of the cable franchise transfer agreement.

Restricted for Other – LEAP Grant – This restriction represents Local Early Action Planning grant funds to pay for online permitting software.

Restricted for Other – Tobacco Grant – This restriction represents grant funds to be used for the School Resource Officer position and related activities. 107

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(16) Classification of Net Position (Continued)
Restricted for Other – Community Development Block Grant – This restriction represents federal grant funds to be used for housing loans.

Restricted for Other – Office of Traffic Safety Grant – This restriction represents federal grant funds to be used to prevent serious injuries and deaths resulting from vehicle crashes on California highways.

Restricted for Other – Department of Justice Grant – This restriction represents federal grant funds to be used for the purchase of bulletproof vests for public safety personnel. . (17) Classifications of Fund Balances
The City has adopted the provisions of GASB Statement No. 54, “Fund Balance and Governmental Fund Type Definitions”. GASB 54 establishes fund balance classifications based largely upon the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. The governmental fund statements conform to the new classification and are summarized as follows.

Pandemic Recreation Nonmajor
General Response and Park Streets City Capital Governmental Fund Fund District Fund Fund Projects Fund Funds Totals Nonspendable
Prepaids $ 26,738 $ - $ - $ - $ - $ - $ 26,738
Notes Receivable 79,973 - - - - - 79,973
Advances from Other Funds 163,885 - - - - - 163,885
Total Nonspendable 270,596 - - - - - 270,596
Restricted
Notes Receivable - - - - - 72,828 72,828
Prepaids - - 26,759 - - - 26,759
Inventory - - 159 - - - 159
Community Promotion 28,944 - - - - - 28,944
Open Space - - 1,697 - - - 1,697
Youth League Renovations - - 67,596 - - - 67,596
Senior Center Enhancements - - 30,077 - - - 30,077
Facility and Service Enhancements - - 19,657 - - - 19,657 Recreation - - 4,060,569 - - - 4,060,569
Streets - - - 6,200,631 - - 6,200,631
Local Drainage - - - - - 1,050,302 1,050,302
Landscape Maintenance - - - - - 166,009 166,009
Street Lighting - - - - - 5,401,064 5,401,064
Cable Television Equipment - - - - - 703,735 703,735
Police - - - - - 1,041,827 1,041,827
Low and Moderate Income Housing - - - - - 1,473,569 1,473,569 Total Restricted 28,944 - 4,206,514 6,200,631 - 9,909,334 20,345,423 Committed
Stabilization Agreement 8,862,296 - - - - - 8,862,296
Captial Improvements - - - - 11,600,177 - 11,600,177
Total Committed 8,862,296 - - - 11,600,177 - 20,462,473 Assigned
Future Capital Improvements 3,200,000 - 2,200,000 - 79,127,970 - 84,527,970 Pension Investment 1,400,000 - - - - - 1,400,000
Business Relocation Stabilization 2,500,000 - - - - - 2,500,000 Budget Stabilization 2,000,000 - - - - - 2,000,000
Pandemic Recovery Plan 9,305,552 - - - - - 9,305,552
Storm Drainage 1,185,360 - - - - - 1,185,360
Carryover Appropriations 1,621,291 - - - - - 1,621,291
Total Assigned 21,212,203 - 2,200,000 - 79,127,970 - 102,540,173 Unassigned 1,043,486 - - - - (163,885) 879,601
Total Fund Balances $ 31,417,525 $ 6,406,514 - $ $ 6,200,631 $ 90,728,147 $ 9,745,449 $ 144,498,266 108

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(17) Classifications of Fund Balances (Continued)
The stabilization agreement amount of $8,862,296 presented as committed fund balance in the General Fund has been formally approved by the City Council and is for unforeseen situations (such as a temporary revenue interruption due to business activity or disaster). The amount is equal to 25% of the General Fund’s original annual operating budget for the upcoming fiscal year and may only be used should annual estimated revenues decrease by a minimum of 10 percent or annual expenditures are estimated to increase by over 10 percent. In addition to these variances in revenues or expenditures, it is further established that in order for these fund balance amounts to be expended such variances must create a situation in which the City’s ability to provide basic services (as defined by the City Council) is threatened. Further, City Council authorization is required for use of this amount.
(18) Contingent Liabilities
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the Federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. The City is a defendant in various other lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City attorney, the resolution of these matters will not have a material adverse effect on the financial condition of the City.
(19) Joint Venture
On December 23, 1996, the West Cities Communications Center Joint Powers Authority (JPA) was created under a joint exercise of powers agreement. It was formed to consolidate law enforcement communications for the cities of Cypress, Los Alamitos and Seal Beach. The governing board consists of one member appointed from each participating agency. The approval of budget and assumption of financial obligations must be approved by all members. The participant contributions are City of Cypress 45.3%, City of Los Alamitos 24.4% and the City of Seal Beach 30.3%.

The purpose of the JPA is to save the participants some individual expense through the sharing of communication obligations. The JPA intends to utilize the personnel and resources of the member agencies to provide financial, legal, personnel, risk management and other services as needed. The City of Cypress provides the JPA with financial and human resources services. The City has no equity interest in the JPA and does not receive a share of the operating results. Accordingly, the assets and liabilities of the JPA are shown in the City’s Custodial Fund. Separate audited financial statements of the West Cities Communications Center Joint Powers Authority are available by contacting the City of Cypress, P.O. Box 609, Cypress, CA 90630.
109

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(20) Successor Agency
The Cypress Redevelopment Agency (Agency) was activated in May 1979 by the City and dissolved as of February 1, 2012. The primary purpose of the Agency was to eliminate blighted areas within the City by encouraging development of residential, commercial, industrial, recreational and public facilities. The City’s Council members acted as the Agency directors and City staff acted as the Agency’s staff. The City and Agency were financially interdependent. The City made loans to the Agency to use on redevelopment projects and property tax revenues of the Agency were used to repay the loans. The fiscal year-end was June 30, the same as the City. As a result of legislation that dissolved all redevelopment agencies in the State, all assets and liabilities of the former Agency were transferred to either the City of Cypress or the Successor Agency to the City of Cypress Redevelopment Agency on February 1, 2012.

The non-housing assets and liabilities of the dissolved Redevelopment Agency were transferred to the Successor Agency to the Dissolved Cypress Redevelopment Agency on February 1, 2012 as a result of the dissolution of the former Redevelopment Agency. The City is acting in a fiduciary capacity for these non-housing assets and liabilities. All outstanding liabilities of the Successor Agency were satisfied during the previous fiscal year, 2019-20, and therefore the Successor Agency has no outstanding liabilities as of June 30, 2022.

Notes Receivable
The following is a summary of notes receivable transactions for Successor Agency activities for the fiscal year ended June 30, 2022:

The Redevelopment Agency had a promissory note from National Church Residences of Cypress, California for payment of offsite improvements and construction costs relating to the Cypress Sunrise Apartments. Upon dissolution of the Agency on February 1, 2012, the note was transferred to the Successor Agency. The promissory note was initially issued for up to $192,455 in September 1987 and due to mature February 1, 2029. On September 24, 1987, an amount of $120,384 was issued based on actual required assistance followed by a payment of $16,573 (September 29, 1987) leaving a net principal outstanding of $103,761. The note is not payable, in whole or in part, either to principal or interest, prior to February 1, 2029. The interest rate on the note is 9.25% per annum and is not compounded. The outstanding interest accrued on the note though June 30, 2022 is $333,929. The total combined principal and interest outstanding on the note at June 30, 2022 is $437,690.

Upon maturity and repayment of the note, the amount received will be remitted to the County of Orange for distribution to the affected taxing entities. At that time, the Successor Agency can be dissolved.

Balance Balance Due Within Due in More
Description July 1, 2021 Additions Deletions June 30, 2022 One Year than One Year Other Notes $ 428,092 $ 9,598 $ - $ 437,690 -$ 437,690 $ Total $ 428,092 $ 9,598 $ - $ 437,690 -$ 437,690 $
Classification
110

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(21) Economic Assistance Agreement – Tax Abatement
On November 27, 2017 the City Council adopted Ordinance No. 1171, approving a Third Amendment to a development agreement with a commercial landlord located in the City. The purpose of the amendment is to provide a sales tax reimbursement to the landlord in exchange for attracting and retaining a tenant who can provide significant employment opportunities to Cypress residents and increase sales tax revenue to the City.

To be eligible for a sales tax reimbursement the landlord was required to enter into a lease with a qualified tenant who could reasonably be expected to generate gross sales tax revenue to the City of at least $10 million over any 10-year period during the term of the lease.

Effective January 1, 2018, the City pays a monthly sales tax reimbursement payment to the landlord, who in turn credits the amount toward the tenant’s lease. The payment amount is based on annual sales tax generated by the tenant as follows:

If the sales tax generated falls below the $700,000 minimum annual threshold, the reimbursement payments are suspended until sales tax meets or exceeds the minimum annual threshold. The agreement also includes periodic cumulative review periods to ensure the City receives sufficient sales tax revenue to meet predefined minimum thresholds over defined time periods. If the sales tax received during these review periods does not meet the minimum threshold, the tenant is required to pay the City the amount of the shortfall in accordance with the following schedule:

During the fiscal year ended June 30, 2022, the landlord received $450,000 in economic assistance under this Third Amendment.
(22) Other Required Fund Disclosures
The Employees’ Benefit Internal Service Fund had a deficit net position of ($32,817,723) at June 30, 2022 primarily due to the net pension liability associated with the City’s CalPERS pension plans. The City has made all required annual contributions toward this long-term liability, and has committed to set-aside additional monies in the form of a trust to reduce or offset the liability.

The AB 2766 Special Revenue Fund had a deficit fund balance of ($163,885) at June 30, 2022 due to the purchase of a compressed natural gas sewer cleaning truck. The General Fund advanced $490,874 to the AB 2766 Fund for the purchase. The AB 2766 Fund will repay the advance with annual payments from the AB 2766 revenues, which are to be used to reduce air pollution from motor vehicles. The remaining balance of the advance at June 30, 2022 was ($163,885).

Minimum Cumulative
Cumulative Review Period Threshold
January 1, 2018 - June 30, 2019 $1,500,000
July 1, 2019 - June 30, 2024 $5,000,000
July 1, 2024 - June 30, 2029 $5,000,000
Annual Reimbursement
Annual Sales Tax Generated Payment to Landlord
$0 - $699,999 $0
$700,000 - $799,999 $360,000
$800,000 and up $450,000
111

CITY OF CYPRESS
Notes to the Basic Financial Statements, Continued
For the Fiscal Year Ended June 30, 2022
(23) Subsequent Event
On August 15, 2022, National Church Residences paid off the Note Receivable identified in Note 20 as part of a refinancing transaction. Full principal of $437,690 plus interest of $1,210 was received and subsequently remitted to the County for distribution to the taxing entities in accordance with redevelopment dissolution law.
112
113

CITY OF CYPRESS
Required Supplementary Information
For the Fiscal Year Ended June 30, 2022
(1) Budgets and Budgetary Accounting
A. Budgetary Control and Budgetary Accounting
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all governmental funds. The City follows these procedures in establishing the budgetary data reflected in the financial statements: After January 1, department heads prepare estimates for required appropriations for the fiscal year commencing the following July 1. The proposed budget includes estimated expenditures and forecasted revenues for the fiscal year. The data is presented to the City Manager for review. Prior to June 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 a summary of the proposed expenditures and financial resources of the City, as well as historical data for the preceding two fiscal periods. Prior to July 1, the budget is legally enacted through passage of an adopting resolution. All of the Governmental Funds have legally adopted budgets.

The City Manager is authorized to transfer budgeted amounts as follows: (1) Appropriations budgeted within a department or activity and capital outlay, may be transferred between accounts within the department; (2) Transfers of appropriations between departments and funds, and additional appropriation of fund balances may be made only by authority of the City Council. For budgeting purposes, the general fund is composed of several departments with budgetary control at the department level, while all other budgeted funds are considered a single department with budgetary control at the fund level. Formal budgetary integration is employed as a management control device during the fiscal year for governmental fund types. The budgets are adopted on a basis consistent with generally accepted accounting principles. Budgeted amounts contained within this report are the original and final amended amounts, as approved by the City Council. No budgetary comparisons are presented for the Internal Service and Fiduciary funds.

B. Encumbrances
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General Fund, Special Revenue Funds, and the Capital Projects Fund. Encumbrances outstanding at year-end do not constitute expenditures or liabilities.

Since unexpended and encumbered appropriations of the governmental funds automatically lapse at the end of the fiscal year, they are not included in reported expenditures and the authorization for expenditure must be reestablished through inclusion in the subsequent year’s appropriation.

C. Budgetary Comparison Schedules
The following are the budget comparison schedules for the General Fund, the Pandemic Response Fund, the Recreation and Park District Special Revenue Fund, and the Streets Special Revenue Fund.
114

CITY OF CYPRESS
Budgetary Comparison Schedule, General Fund
Variance with
Final BudgetPositive
Original Actual (Negative)
REVENUES:

Taxes $ 28,567,200 $ 28,567,200 $ 31,896,762 $ 3,329,562 Licenses and permits 808,890 1,234,090 1,326,104 92,014 Fines and forfeitures 210,000 210,000 167,159 (42,841)
From use of property 302,803 302,803 (2,894,980) (3,197,783) From other agencies 862,804 1,307,161 667,581 (639,580) Charges for services 3,484,551 3,757,851 3,540,366 (217,485) Other revenue 57,335 57,335 363,434 306,099
TOTAL REVENUES 34,293,583 35,436,440 35,066,426 (370,014)

EXPENDITURES:

Current:

General government - Legislative 778,521 870,880 802,657 68,223 General government - Administration 1,906,696 3,126,602 2,015,337 1,111,265 General government - Finance 2,119,287 2,144,287 2,015,268 129,019 Community development - Planning 1,520,018 2,506,043 1,245,046 1,260,997 Community development - Building 771,476 982,476 854,333 128,143 Public safety - Police 20,010,041 20,133,826 17,746,963 2,386,863 Public works - Engineering 1,592,188 1,836,000 1,622,647 213,353 Public works - Maintenance 5,303,560 5,336,883 4,566,916 769,967 TOTAL EXPENDITURES 34,001,787 36,936,997 30,869,167 6,067,830

EXCESS OF REVENUES
OVER EXPENDITURES 291,796 (1,500,557) 4,197,259 5,697,816 OTHER FINANCING SOURCES (USES):

Transfers in 1,245,160 12,772,160 12,602,563 (169,597)
Transfers out (1,596,842) (10,623,842) (10,574,959) 48,883

TOTAL OTHER FINANCING
SOURCES (USES) (351,682) 2,148,318 2,027,604 (120,714)
NET CHANGE IN FUND BALANCE $ (59,886) $ 647,761 6,224,863 $ 5,577,102 FUND BALANCE - BEGINNING OF YEAR 25,192,662
FUND BALANCE - END OF YEAR $ 31,417,525
Budgeted Amounts
Final
Required Supplementary Information, Continued
For the Fiscal Year Ended June 30, 2022
115
Budgetary Comparison Schedule, Pandemic Response Fund
REVENUES:

From other agencies $ $ - $ 11,717,000 - $ 11,717,000
TOTAL REVENUES - 11,717,000 - 11,717,000

OTHER FINANCING USES:

Transfers out (625,000) (11,767,000) (11,717,000) 50,000

TOTAL OTHER
FINANCING USES (625,000) (11,767,000) (11,717,000) 50,000

NET CHANGE IN FUND BALANCE $ (625,000) $ (11,767,000) - $ 11,767,000

FUND BALANCE - BEGINNING OF YEAR -
FUND BALANCE - END OF YEAR $ -
Final BudgetVariance with

CITY OF CYPRESS
Required Supplementary Information, Continued
For the Fiscal Year Ended June 30, 2022
Original Final Actual (Negative)
Budgeted Amounts Positive
116
Budgetary Comparison Schedule, Recreation and Park District Special Revenue Fund Final BudgetPositive
Original Actual (Negative)
REVENUES:

Taxes $ 6,192,000 $ 6,192,000 $ 6,222,354 $ 30,354
From use of property 370,410 370,410 190,760 (179,650)
From other agencies 72,000 72,000 53,076 (18,924)
Charges for services 862,255 862,255 6,831,408 5,969,153 Other revenue - - 27,104 27,104
TOTAL REVENUES 7,496,665 7,496,665 13,324,702 5,828,037

EXPENDITURES:

Current:

Recreation 5,610,468 5,648,651 4,532,507 1,116,144
Capital outlay 3,612,500 11,605,372 7,648,236 3,957,136 TOTAL EXPENDITURES 9,222,968 17,254,023 12,180,743 5,073,280

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (1,726,303) (9,757,358) 1,143,959 10,901,317 OTHER FINANCING SOURCES (USES):

Transfers out (1,299,718) (1,309,718) (1,079,991) 229,727

TOTAL OTHER FINANCING
SOURCES (USES) (1,299,718) (1,309,718) (1,079,991) 229,727

NET CHANGE IN FUND BALANCE $ (3,026,021) $ (11,067,076) 63,968 $ 11,131,044 FUND BALANCE - BEGINNING OF YEAR 6,342,546
FUND BALANCE - END OF YEAR $ 6,406,514
Budgeted Amounts
Final
Variance with

CITY OF CYPRESS
Required Supplementary Information, Continued
For the Fiscal Year Ended June 30, 2022
117
Budgetary Comparison Schedule, Streets Special Revenue Fund REVENUES:

From use of property $ 11,500 $ 11,500 $ 23,603 $ 12,103 From other agencies 3,115,931 3,251,412 3,420,933 169,521 Charges for services 500 500 404,131 403,631
Other revenue - - - -
TOTAL REVENUES 3,127,931 3,263,412 3,848,667 585,255

EXPENDITURES:

Current:

Public works 1,200,000 1,204,300 842,875 361,425
Capital outlay 100,000 1,018,485 713,140 305,345
TOTAL EXPENDITURES 1,300,000 2,222,785 1,556,015 666,770

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 1,827,931 1,040,627 2,292,652 1,252,025

OTHER FINANCING USES:

Operating transfers in - 343,605 326,288 (17,317)
Transfers out (1,407,888) (1,852,127) (1,306,015) 546,112

TOTAL OTHER
FINANCING USES (1,407,888) (1,508,522) (979,727) 528,795

NET CHANGE IN FUND BALANCE $ 420,043 $ (467,895) 1,312,925 $ 1,780,820

FUND BALANCE - BEGINNING OF YEAR 4,887,706
FUND BALANCE - END OF YEAR $ 6,200,631
Positive
Final BudgetVariance with

CITY OF CYPRESS
Required Supplementary Information, Continued
For the Fiscal Year Ended June 30, 2022
Original Final Actual (Negative)
Budgeted Amounts
118

CITY OF CYPRESS
Required Supplementary Information, Continued
For the Fiscal Year Ended June 30, 2022
(2) California Public Employees’ Retirement System (CalPERS) City of Cypress Miscellaneous Plan
Schedule of Proportionate Share of the Net Pension Liability Last Ten Fiscal Years (1)
Notes to Schedule:

Benefit Changes: There were no changes to benefits.

Changes in Assumptions:

Fiscal year ended June 30, 2016:

Amounts reported reflect an adjustment of the discount rate from 7.50% (net of administrative expenses) to 7.65% (without a reduction for pension plan administrative expense).

Fiscal year ended June 30, 2018:

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

Fiscal year ended June 30, 2019:

Demographic assumptions and the inflation rate were changed in accordance with the CalPERS Experience Study and Review of Actuarial Assumptions – December 2017.

(1) The City’s CalPERS Miscellaneous Plan was previously administered and reported as an agent multiple-employer plan, however, because the number of active members in the plan fell below 100, it is now administered as a cost-sharing multiple-employer plan, effective with the reporting for the fiscal year ended June 30, 2019.
2022 2021 2020 2019

0.24327% 0.20786% 0.20394% 0.19859%
$ 13,156,618 $ 22,615,628 $ 20,897,731 $ 19,136,711
$ 6,135,709 $ 6,072,109 $ 6,385,921 $ 6,863,694
214.43% 372.45% 327.25% 278.81%

85.67% 74.68% 75.87% 76.84%
$ 3,094,471 $ 2,980,733 $ 2,722,708 $ 2,418,263
Plan's proportionate share of the net pension liability as a percentage of covered payroll
Plan's proportionate share of the fiduciary net position as a percentage of the Plan's total pension liability
Plan's proportionate share of aggregate employer contributions Plan's proportion of the net pension liability
Plan's proportionate share of the net pension liability Plan's Covered Payroll
119

CITY OF CYPRESS
Required Supplementary Information, Continued
For the Fiscal Year Ended June 30, 2022
(2) California Public Employees’ Retirement System (CalPERS) (Continued) City of Cypress Miscellaneous Plan (Continued)
Schedule of Changes in the Net Pension Liability and Related Ratios Last Ten Fiscal Years (1)
Notes to Schedule:

Benefit Changes: There were no changes to benefits.

Changes in Assumptions:

Fiscal year ended June 30, 2016:

Amounts reported reflect an adjustment of the discount rate from 7.50% (net of administrative expenses) to 7.65% (without a reduction for pension plan administrative expense).

Fiscal year ended June 30, 2018:

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

Fiscal year ended June 30, 2019:

Demographic assumptions and the inflation rate were changed in accordance with the CalPERS Experience Study and Review of Actuarial Assumptions – December 2017. 2018 2017 2016 2015
Total Pension Liability:

Service cost $ 1,241,908 $ 1,042,402 $ 983,336 $ 1,067,782 Interest on total pension liability 5,374,496 5,227,927 4,985,622 4,778,432 Differences between expected and actual experience (726,719) 177,725 (249,155) - Changes in assumptions 4,509,183 - (1,246,317) -
Changes in benefits - - - -
Benefit payments, including refunds of employee contributions (3,538,721) (3,108,674) (2,909,007) (2,789,811) Net Change in Total Pension Liability 6,860,147 3,339,380 1,564,479 3,056,403 Total Pension Liability - Beginning of Year 72,533,703 69,194,323 67,629,844 64,573,441 Total Pension Liability - End of Year (a) $ 79,393,850 $ 72,533,703 $ 69,194,323 $ 67,629,844 Plan Fiduciary Net Position:

Contributions - employer $ 1,298,683 $ 1,242,386 $ 997,118 $ 859,007 Contributions - employee 552,260 622,404 529,141 529,155 Net investment income 6,191,774 274,070 1,253,565 8,456,694 Benefit payments (3,538,721) (3,108,674) (2,909,007)
Administrative expense (81,255) (34,153) (63,073)
Plan to plan resource movement - - (406) (2,789,811)
Net Change in Plan Fiduciary Net Position 4,422,741 (1,003,967) (192,662) 7,055,045 Plan Fiduciary Net Position - Beginning of Year 55,035,012 56,038,979 56,231,641 49,176,596 Plan Fiduciary Net Position - End of Year (b) $ 59,457,753 $ 55,035,012 $ 56,038,979 $ 56,231,641 Net Pension Liability - Ending (a)-(b) $ 19,936,097 $ 17,498,691 $ 13,155,344 $ 11,398,203 Plan fiduciary net position as a percentage of the
total pension liability 74.89% 75.88% 80.99% 83.15%
Covered Payroll $ 6,994,962 $ 7,139,555 $ 6,539,007 $ 6,744,885 Net pension liability as percentage of
covered payroll 285.01% 245.09% 201.18% 168.99%
120

CITY OF CYPRESS
Required Supplementary Information, Continued
For the Fiscal Year Ended June 30, 2022
(2) California Public Employees’ Retirement System (CalPERS) (Continued) City of Cypress Miscellaneous Plan (Continued)
Schedule of Plan Contributions
Last Ten Fiscal Years (1)
(1) Historical information is required only for measurement periods for which GASB 68 is applicable. The fiscal year ended June 30, 2015 was the first year of implementation.
2022 2021 2020 2019 2018 2017 2016 2015
$ 2,447,524 $ 2,230,654 $ 2,002,390 $ 1,729,721 $ 1,487,869 $ 1,298,683 $ 1,244,868 $ 1,001,586 (2,447,524) (2,230,654) (2,002,390) (1,729,721) (1,487,869) (1,298,683) (1,244,868) (1,001,586) $ - $ - $ - $ - $ - $ - $ - $ -
$ 5,866,594 $ 6,135,709 $ 6,072,109 $ 6,385,921 $ 6,863,694 $ 6,994,942 $ 7,139,555 $ 6,539,007

41.72% 36.36% 32.98% 27.09% 21.68% 18.57% 17.44% 15.32% Contribution deficiency (excess)
Covered Payroll
Contributions as a percentage of covered
payroll
Actuarially determined contribution
Contributions in relation to the actuarially
determined contributions
121

SCHEDULE OF PLAN CONTRIBUTIONS
Last Ten Fiscal Years *
*Historical information is required only for measurement periods for which GASB 68 is applicable. The fiscal year ended June 30, 2015 was the first year of implementation.

Notes to Schedule:

Valuation Date June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 Methods and Assumptions Used to Determine Contribution Rates:

Actuarial cost method Entry age Entry age Entry age Entry age Entry age Entry age Entry age Entry age Amortization method (1) (1) (1) (1) (1) (1) (1) (1)
Asset valuation method Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value 15-Year Smoothed Market
Inflation 2.50% 2.50% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% Salary increases (2) (2) (2) (2) (2) (2) (2) (2)
Investment rate of return 7.15% (3) 7.15% (3) 7.375% (3) 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) 7.50% (3) Retirement age (4) (4) (4) (4) (4) (4) (4) (4)
Mortality (5) (5) (5) (5) (5) (5) (5) (5)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation (4) 50 (3.0% at 50); 50 - 57 (2.7% at 57)
(5) Mortality assumption are based on mortality rates resuting from the most recent CalPERS Experience Study adopted by the CalPERS Board. 122

0.36205% 0.28006% 0.27150% 0.26653% 0.25531% 0.25420% 0.24622% 0.23884% $ 19,580,447 $ 30,471,506 $ 27,821,165 $ 25,683,654 $ 25,320,193 $ 21,996,187 $ 16,900,538 $ 14,861,787 $ 5,651,021 $ 5,590,681 $ 5,953,364 $ 5,823,413 $ 5,539,232 $ 5,634,190 $ 5,200,954 $ 5,075,058 346.49% 545.04% 467.32% 441.04% 457.11% 390.41% 324.95% 292.84%

82.06% 71.35% 72.54% 73.38% 72.73% 73.87% 79.00% 80.99% $ 4,784,748 $ 3,927,236 $ 3,222,885 $ 2,986,119 $ 2,331,004 $ 2,149,038 $ 2,163,119 $ 1,792,684 Plan's proportion of the net pension
liability
Plan's proportionate share of the
net pension liability
Plan's Covered Payroll
Plan's proportionate share of the
net pension liability as a percentage
of covered payroll
Plan's proportionate share of the
fiduciary net position as a
percentage of the Plan's total
pension liability
Plan's proportionate share of
aggregate employer contributions
123

CITY OF CYPRESS
Required Supplementary Information, Continued
For the Fiscal Year Ended June 30, 2022
(2) California Public Employees’ Retirement System (CalPERS) (Continued) City of Cypress Safety Plan (Continued)
Schedule of Proportionate Share of the Net Pension Liability Last Ten Fiscal Years (*)
Notes to Schedule:

Benefit Changes: There were no changes to benefits.

Changes in Assumptions:

Fiscal year ended June 30, 2016:

Amounts reported reflect an adjustment of the discount rate from 7.50% (net of administrative expenses) to 7.65% (without a reduction for pension plan administrative expense).

Fiscal year ended June 30, 2018:

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

Fiscal year ended June 30, 2019:

Demographic assumptions and the inflation rate were changed in accordance with the CalPERS Experience Study and Review of Actuarial Assumptions – December 2017.
*Historical information is required only for measurement periods for which GASB 68 is applicable. The fiscal year ended June 30, 2015 was the first year of implementation.
124

Cypress City CouncilJanuary 23, 2023

Cypress City Council
January 23, 2023