Agenda packet, first session — East Palo Alto City Council, January 21, 2025 (part 1 of 2)

East Palo Alto City Council January 21, 2025, Agenda

EAST PALO ALTO CITY COUNCIL

REGULAR SESSION AMENDED
AGENDA
Tuesday, January 21, 2025, 6:30 PM
EPA Government Center
2415 University Avenue, First Floor
East Palo Alto, CA 94303
NOTICE
This meeting will be held virtually and in- person at the Council Chambers located on 2415 University Ave, First Floor East Palo Alto, CA 94303. The virtual portion of this City Council meeting will be conducted in accordance with City of East Palo Alto Resolution adopted pursuant to Assembly Bill 361.

The public may participate in the City Council Meeting via Zoom Meeting or by attending inperson in the Council Chambers at 2415 University Ave, First Floor East Palo Alto, CA 94303.

Community members may provide comments by emailing [email protected], submitting a speaker card at the meeting, or using the RAISE HAND feature when the Mayor or City Clerk call for public comment. Emailed comments should include the specific agenda item on which you are commenting.

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International numbers available: https://zoom.us/u/aMWYF4KT 1 East Palo Alto City Council January 21, 2025, Agenda

REQUESTS TO APPEAR REMOTELY

Pursuant to Government Code Section 54953, members of the body may appear remotely for the following reasons:

a. Teleconference Exception (Gov’t Code § 54953(b)): None. b. Just Cause (Gov’t Code § 54953(f)(A)(i)): Mayor Martha Barragan, contagious illness, Gov’t Code § 54953(j)(2)(B)).
c. Emergency Circumstances (Gov’t Code § 54953(f)(A)(ii) (Approval Required)): None.

1. CALL TO ORDER AND ROLL CALL

2. APPROVAL OF THE AGENDA

3. APPROVAL OF CONSENT CALENDAR

3.1 Monthly Cash Treasury Report for November 2024
Recommendation: Accept and file the Cash Treasury Report for the month of November 2024.

3.2 Primary Grant Agreement for San Mateo County Transportation Authority Measure A and W
Recommendation:

Adopt a resolution authorizing the execution of a primary grant agreement with the San Mateo County Transportation Authority for future Measure A and Measure W funding.

3.3 Clarification on the 2025 City Council Meeting Calendar Recommendation:

Approve the revisions to the 2025 City Council meeting calendar to correct scheduling errors and address conflicts.

3.4 Consent to Joint Representation
Recommendation: Adopt a resolution authorizing the City Attorney to execute a consent letter agreeing to the joint representation by Goldfarb & Lipman of City of East Palo Alto and Habitat for Humanity, regarding 1532 Ursula Way.

3.5 Authorization to Amend Telepath Corporation contract to Increase Purchase Order for Installation of Emergency Communication Equipment with Maintenance Services.
2 East Palo Alto City Council January 21, 2025, Agenda
Recommendation:

Adopt a resolution authorizing the City Manager to amend the current contract with Telepath Corporation of Fremont, California, in a form approved by the City Attorney, for an Increase Purchase Order for installation of police vehicle emergency and radio equipment with maintenance services for the Police Department for three years with two one -year options to extend in the amount not to exceed $86,157.38 per year for a total not to exceed amount of $430,786.90.85 over five years.

3.6 City Council Meeting Minutes
Recommendation:

Adopt the January 7, 2025, City Council Meeting Minutes.

3.7 Mayoral Committee Appointments and Assignments
Recommendation:

By motion, update or confirm existing appointments and assignment list to regional boards, committees, and commissions, and direct staff to file a revised appointments and assignments list with affected agencies.

4. CLOSED SESSION

5. PUBLIC COMMENT

6. INFORMATIONAL REPORTS

7. SPECIAL PRESENTATIONS

8. ADJOURN CITY COUNCIL REGULAR MEETING TO THE EAST PALO

ALTO SANITARY DISTRICT BOARD MEETING

9. APPROVAL OF EPASD BOARD MEETING CONSENT CALENDAR

9.1 EPASD Cash Disbursement Report
Recommendation: Accept the cash disbursement report required pursuant to California Health and Safety Code Section 6794

9.2 Clarification on EPASD Advisory Committee Meeting Schedule Recommendation: Approve the updated meeting schedule for the East Palo Alto Sanitary District (EPASD) Advisory Committee to avoid conflicts with other committee meetings. The Advisory Committee will now meet on the fourth Wednesday of every even month at 6:30 PM instead of the previously proposed first Wednesday of every even month.
3 East Palo Alto City Council January 21, 2025, Agenda

9.3 Appointment of EPASD Advisory Committee Alternate Seat Recommendation: Appoint Larry Moody to the alternate position for the East Palo Alto Sanitary District (EPASD) Advisory Committee for the term 2025-2028, with a subsequent term of 2028-2031.

10. EPASD POLICY AND ACTION

10.1 Adopting a Resolution regarding EPASD Board Member Compensation Recommendation:

1. Take one of the following actions:
a. Adopt a resolution setting Board member compensation in amount not exceed $100 per day and adopt an ordinance repealing Ordinance No. 48; or
b. Adopt a resolution directing staff to notice a public hearing to determine board member compensation exceeding $100 (up
to $150) per day; and

11. ADJOURN EAST PALO ALTO SANITARY DISTRICT BOARD MEETING

AND RECONVENE CITY COUNCIL REGULAR MEETING

12. PUBLIC HEARINGS

13. POLICY AND ACTION

13.1 Accept Annual Financial Reports for Fiscal Year 2023-24 Recommendation:

Adopt a resolution accepting and directing staff to file the State Controller’s Office the Annual Financial Reports for Fiscal Year 2023-24, including:

1. Annual Comprehensive Financial Report (ACFR),

2. Single Audit Report,

3. Measure A Fund Report,

4. Measure C Fund Report,

5. Measure HH Fund Report,

6. Measure W Fund Report, and

7. Report on Agreed-Upon Procedures Applied to Appropriations Limit Schedule (Fiscal Year 2024-25).
4 East Palo Alto City Council January 21, 2025, Agenda

13.2 Implementation of 2020 Local Preference Policy
Recommendation:

Adopt a resolution:

1. Adopting an updated Local Preference Policy that applies to City subsidized affordable housing units, density bonus units, and units produced through the City’s Inclusionary Housing Ordinance;

2. Directing the City Manager to adopt updated guidelines to administer the Local Preference Policy and take any other action with respect to the policy consistent with the resolution and its purpose; and

3. Updating the Local Preference Policy to be non-durational and applied only to the extent that other funding sources for the project permit such preferences.

13.3 2025 Summer Park Activation Recommendations
Recommendation:

Adopt a resolution authorizing the City Manager to award, negotiate, and execute contracts with the following eleven (11) organizations listed alphabetically to provide programming for the 2025 Summer Park Activation series, in a form approved by the City Attorney, for various amounts, for a total, not-to-exceed amount of $178,000:

1. Bay Area Urban Eagles (up to $16,000)

2. Camp Doza (up to $16,000)

3. East Palo Alto Boxing Club (up to $16,000)

4. East Palo Alto Razorbacks (up to $18,000)

5. East Palo Alto T-Ball & Pitching Machine (up to $18,000)

6. East Palo Alto Tennis & Tutoring (up to $18,000)

7. Lewis & Joan Platt East Palo Alto YMCA (up to $16,000)

8. Silverscape Ventures formerly Sign Gypsies (up to $12,000)

9. Step It Up Dance (up to $12,000)

10. Streetcode Academy (up to $18,000)

11. Youth Community Services (up to $18,000)

13.4 Update on Code Enforcement Priorities
Recommendation:

Receive a report from staff concerning Code Enforcement.

14. COUNCIL REPORTS
5 East Palo Alto City Council January 21, 2025, Agenda

15. ADJOURNMENT
Upcoming meetings:

Council Teambuilding Retreat February 1, 2025 9:00 am
Regular Meeting February 4, 2025 6:30 pm
Regular Meeting February 18, 2025 6:30 pm
This AGENDA is posted in accordance with Government Code Section 54954.2(a) This Notice of Availability of Public Records: All public records relating to an open session item which are not exempt from disclosure pursuant to the Public Records Act, that are distributed to the majority of the City Council will be available for public inspection at the City Clerk’s Office, 2415 University Avenue, East Palo Alto, CA at the same time that the public records are distributed or made available to the City Council. Such documents may also be available on the East Palo Alto website www.cityofepa.org subject to staff’s ability to post the documents prior to the meeting. Information may be obtained by calling (650) 853-3100.

The City Council meeting packet may be reviewed by the public in the Library or the City Clerk's Office. Any writings or documents pertaining to an open session item provided to a majority of the City Council less than 72 hours prior to the meeting, shall be made available for public inspection at the front counter at the City Clerk's Office, 2ND Floor, City Hall, 2415 University Avenue, East Palo Alto, California 94303 during normal business hours. Information distributed to the Council at the Council meeting becomes part of the public record. A copy of written material, pictures, etc. should be provided for this purpose.

East Palo Alto City Council Chambers is ADA compliant. Requests for disability related modifications or accommodations, aids or services may be made by a person with a disability to the City Clerk's office at (650) 853-3127 no less than 72 hours prior to the meeting as required by Section 202 of the Americans with Disabilities Act of 1990 and the federal rules and regulations adopted in implementation thereof.

DECLARATION OF POSTING
This Notice is posted in accordance with Government Code §54954.2(a) or §54956. Members of the public can view electronic agendas and staff reports by accessing the City website. Under penalty of perjury, this Agenda was posted to the public at least 72 hours prior to the meeting.

POSTED: January 10, 2025
AMENDED: January 14, 2025
ATTEST:

James Colin
City Clerk
6 CONSENT ITEM 3.1

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Tomohito Oku, Finance Director
Bo-kyoung Kim, Finance Services Manager
Jessica Y Caballero, Senior Accountant
SUBJECT: Monthly Cash Treasury Report for November 2024 Recommendation
Accept and file the Cash Treasury Report for the month of November 2024.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 4: Ensure Our Financial and Organizational Health Background
Pursuant to Section 53646 of the Government Code of the State of California, the City Treasurer may submit a quarterly report to the City Council regarding the funds and investments of the City. Further, City Investment Policy Section XVIII requires monthly reporting of investment transactions, as specified. Because the City participates in State and County investments pools and does not independently broker or engage outside investment advisors to transact investments, the monthly reporting provides a snapshot of overall cash receipts, transfers, and disbursements.

Analysis
The Monthly Cash Treasury Report (“Report”) covers cash and investments of the City in the four cash and investment accounts: Wells Fargo Bank, San Mateo County Pool, California State Local Agency Investment Fund, and the California Asset Management Program (CAMP). The 7 CONSENT ITEM 3.1
Report does not include petty cash, or the California State Community Infrastructure Program (SCIP) bond proceeds held by a trustee in the name of the City. For investment purposes, City cash is pooled, except for bond proceeds held by a trustee. The City does not have, nor is it legally required to have, separate bank accounts for each individual fund. However, all cash is segregated in the City’s accounting records. Monthly cash transactions for the monthly period ending November 30, 2024, are as follows:

The Wells Fargo cash balance reflects the book value balance (i.e., total outstanding checks not cashed are deducted from the account balance). The month-to-date cash and investment balance decreased by approximately $0.1M compared to the balance as of October 31, 2024.

November receipts, a total of approximately $2.2M, consist of Four Seasons Hotel Transient Occupancy Tax ($0.3M), Veolia water vendor ($0.3M), Woodland Park Euclid Improvements project ($0.3M), Tax distribution ($0.3M), grant reimbursement from the San Mateo County Transportation Authority (SMCTA) for the East Bayshore Road Pedestrian Improvements project ($0.2M), and other various receipts.

November disbursements, a total of approximately $3.2M, primarily consist of Payroll costs ($1.2M), Axon Enterprise for police’s body-worn cameras ($0.1M), Kaiser Foundation Health Plan ($0.1M), and other recurring operating expenditures.

The table below reflects recent treasury yield comparisons up to five-year notes since that is the maximum maturity the City may invest:1
Local Agency Investment Fund (LAIF) average monthly effective yields were 4.477% in November compared to 4.518% in October 2024. San Mateo County monthly gross earnings for November were 3.768% compared to 3.862% in October 2024. The County Pool earnings estimates for FY 24-25 are at 3.85%. As of November 2024, the current annualized yield for CAMP is 4.81% compared to 5.01% in October 2024.

Staff believes the City has investment liquidity and anticipated revenues to meet the City’s anticipated expenditure requirements for the ensuing six months. 1 Daily US Treasury Yield Curve. Treasury.gov
Account Beginning
Balance Receipts Disbursements Interest Allocation
Inter-Account
Transfers Ending Balance
Wells Fargo Bank 2,444,263.87 2,219,466.39 (3,213,521.62) - - 1,450,208.64 LAIF 10,219,875.42 - - - - 10,219,875.42
San Mateo County Pool 26,521,004.53 480,269.91 - - - 27,001,274.44 CAMP 101,256,760.16 - - 404,239.03 - 101,660,999.19
Total 140,441,903.98 2,699,736.30 (3,213,521.62) 404,239.03 - 140,332,357.69 Nov-24 Oct-24 Nov-23
6-month Treasury Bill 4.30 4.31 5.18
2-year Treasury Note 4.13 4.16 4.73
5-Year Treasury Note 4.05 4.15 4.31
8 CONSENT ITEM 3.1
The following table shows a breakdown of cash and investment balance by fund type.

The book market value totals $141,456,715 including an unrealized gain2 of $141,498, reflecting treasury yields during the calendar year. All except for the General Fund balance is restricted by either City Council or external parties for specific purposes. Unrestricted cash and investment balance under General Fund ($36,892,822) may be used at Council discretion.

Fiscal Impact
None. This report is informational.

Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.

Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(4), in that it is related to government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.

Government Code § 84308

Applicability of Levine Act: No, as the proposed action does not involve an entitlement.

Analysis of Levine Act Compliance: Not applicable.
2 Investment Fair Market Value (FMV) factor is provided on a quarterly basis. Thus, as of June 30, 2024, FMV factor is used to calculate Unrealized Gain on Investments.

Deposit Value Market Value
General Fund (Inc. Petty cash of $10,800) $ 36,892,822 $ 36,892,822 General Sub-Funds (Commited/Reserved) $ 17,864,854 $ 17,864,854 City Funds Restricted and Committed $ 86,058,069 $ 86,058,069 Successor Agency Trust $ 499,472 $ 499,472
Unrealized Gain/(Loss) on Investment Pools $ - $ 141,498 $ 141,315,217 $ 141,456,715
Summary November 30, 2024
9 CONSENT ITEM 3.2

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Nancy Murguia, Management Analyst
Humza Javed, Public Works Director
SUBJECT: Primary Grant Agreement for San Mateo County Transportation Authority Measure A and W
Recommendation
Adopt a resolution authorizing the execution of a primary grant agreement with the San Mateo County Transportation Authority for future Measure A and Measure W funding.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Improve Public facilities and Infrastructure
Background
Historically, the San Mateo County Transportation Authority (SMCTA) has executed separate funding agreements and memoranda of understanding for each of their project awards and use of Measure A and Measure W funds for transportation programs and projects through San Mateo County.

To streamline and expedite future contracting processes, the SMCTA has developed a new primary grant agreement (PGA) through which the SMCTA and city project sponsors will document the structure of the relationship and related obligations.

To be eligible for SMCTA Measure A and W funding over the next ten years, the SMCTA requires sponsors’ governing boards to adopt resolutions authorizing their chief executives, or designees, to sign PGAs with the SMCTA.
10 CONSENT ITEM 3.2
Analysis
Staff is requesting the adoption of the proposed resolution to ensure continued eligibility for future Measure A and W funds.

Measure A Programs:

San Mateo County voters first approved Measure A in 1988 in San Mateo County. Measure A is a half-cent sales tax dedicated towards transportation facilities, services, and programs. In 2004, voters reauthorized Measure A to run between January 1, 2009, and December 31, 2033.

The Measure A Transportation Expenditure Plan (TEP) identifies six primary categories for investment: Transit, Highways, Local Streets/Transportation, Grade Separations, Pedestrian and Bicycle, and Alternative Congestion Relief Programs.

Measure W Programs:

Measure W, approved by San Mateo County voters in 2018, will generate additional funds from another half-cent sales tax authorized for a period of 30 years beginning July 2019 and ending June 30, 2038. Measure W contains the Congestion Relief Plan, which establishes five Investment Categories for these funds: Highway/Interchange, Local Safety/Pothole, Bicycle/Pedestrian, Regional Connections, and Public Transit.

Staff is projecting approximately $35 million dollars in project costs, related to Measure A and W eligible projects collectively, over the next ten years. Adoption of the PGA would allow the City access to grant awards covering the ten-year cost.

Fiscal Impact
There is no fiscal impact associated with adopting the PGA.

Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.

Environmental
The action being considered by the City Council is exempt from the California Environmental Quality Act (CEQA) because it is not a “project” pursuant to 15378(b)(4) because it is a fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant impact on the environment.

Government Code § 84308
Applicability of Levine Act: No, as the proposed agreement does involve expenditure of funds 11 CONSENT ITEM 3.2
by the approving agency.

Analysis of Levine Act Compliance: Not applicable.

Attachments

1. Resolution

2. Primary Grant Agreement Template
12 Resolution No. XX-2025 1 of 2
RESOLUTION NO. XX– 2025

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

RESOLUTION AUTHORIZING EXECUTION OF A PRIMARY GRANT AGREEMENT

WITH THE SAN MATEO COUNTY TRANSPORTATION AUTHORITY FOR FUTURE

MEASURE A AND MEASURE W FUNDING
WHEREAS, on June 7, 1988, the voters of San Mateo County approved a ballot measure to allow the collection and distribution by the San Mateo County Transportation Authority (TA) of a halfcent transactions and use tax in San Mateo County for 20 years with the tax revenues to be used for highway and transit improvements pursuant to the Transportation Expenditure Plan presented to the voters (Original Measure A); and
WHEREAS, on November 2, 2004, the voters of San Mateo County approved the continuation of the collection and distribution by the TA of the Measure A half cent transaction and use tax for an additional 25 years to implement the 2004 Transportation Expenditure Plan, beginning January 1, 2009 (New Measure A); and
WHEREAS, on November 6, 2018, the voters of San Mateo County authorized a new one-half percent sales tax in San Mateo County for transportation purposes, and tasked the TA with administering four of the five transportation program categories described in the Congestion Relief Plan presented to the voters (Measure W); and
WHEREAS, the City of East Palo Alto is eligible for funding under certain programs in the 1988 Transportation Expenditure Plan, 2004 Transportation Expenditure Plan, and 2018 Congestion Relief Plan; and
WHEREAS, the TA requires East Palo Alto’s governing board to adopt a resolution authorizing the City Manager or a designee to sign a Primary Grant Agreement with the TA to receive Measures A and W grants over the next ten years, and to take any other actions necessary to give effect to this resolution.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of East Palo Alto Hereby:

1. Finds the foregoing recitals are true and correct, and are incorporated by this reference into this action;

2. Authorizes the City Manager or designee to execute a primary grant agreement with the TA to be eligible to receive Measure A and Measure W grants over the next ten years; and

3. Certifies that any funds awarded by the TA will be used to supplement existing funds for program activities, and will not replace existing funds or resources; and

4. Authorizes the City Manager or designee to take any other actions necessary to give effect to this resolution.

PASSED AND ADOPTED this 21st day of January 2025, by the following vote:

AYES:

NOES:
13 Resolution No. XX-2025 2 of 2
ABSENT:

ABSTAIN:

Martha Barragan, Mayor
ATTEST: APPROVED AS TO FORM:

James Colin, City Clerk John D. Lê, City Attorney
14

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20016287.14

PRIMARY GRANT AGREEMENT

SAN MATEO COUNTY TRANSPORTATION AUTHORITY

MEASURE A AND/OR MEASURE W FUNDS
This Primary Grant Agreement (Agreement) is made __________________ by and between the San Mateo County Transportation Authority (TA) and the [Project Sponsor] (Sponsor), each of which is referred to herein individually as “Party” and jointly as “Parties.”

RECITALS
WHEREAS, on June 7, 1988, the voters of San Mateo County approved a ballot measure to allow the collection and distribution by the TA of a half-cent transactions and use tax in San Mateo County for 20 years with the tax revenues to be used for highway and transit improvements pursuant to the Transportation Expenditure Plan presented to the voters (Original Measure A); and
WHEREAS, on November 2, 2004, the voters of San Mateo County approved the continuation of the collection and distribution by the TA of the Measure A half cent transaction and use tax for an additional 25 years to implement the 2004 Transportation Expenditure Plan, beginning January 1, 2009 (New Measure A); and
WHEREAS, on November 6, 2018, the voters of San Mateo County authorized a new one-half percent sales tax in San Mateo County for transportation purposes, and tasked the TA with administering four of the five transportation program categories described in the Congestion Relief Plan presented to the voters (Measure W); and
WHEREAS, the TA and Sponsor desire to enter into this Agreement to establish the process, terms and conditions governing the allocation and expenditure of Measures A/W Funds by Sponsor for capital projects.

Now therefore, the Parties agree as follows:

SECTION 1: Form of Agreements

1.1. Primary Grant Agreement. This Primary Grant Agreement outlines the general terms and conditions applicable to all TA allocations of Measures A/W Funds to Sponsor for capital projects. As allocations are made, the TA and Sponsor will enter into subsequent arrangements for each allocation (Project Supplements). From time to time the Parties may enter into Project Supplements with third parties for cosponsored projects.

1.2. Project Supplements. Each Project Supplement will be substantially in a form attached hereto as described in Exhibit A, "Form of Project Supplements " and will be attached to this Agreement and incorporated herein by this reference.

SECTION 2: Term and Termination

2.1. Term. The term of this Agreement will commence on Execution Date and will terminate after 10 years, unless terminated by Sponsor or the TA pursuant to this Section 2. Work begun under the Agreement will continue to be governed by this Agreement until the Scope of Work is complete.
15

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20016287.14

2.2. Sponsor’s Right to Terminate; Repayment upon Termination. Sponsor may at any time terminate the Agreement or a Project Supplement by giving ten (10) days’ written notice to the TA of its election to do so. Upon such termination, Sponsor will not be reimbursed for any further Scope of Work Costs associated with the Agreement or the Project Supplement, as applicable, and will reimburse the TA for all monies paid by the TA and costs incurred by the TA in connection with the applicable Scope of Work as well as all reasonable costs and expenses incurred to effect such termination within ninety (90) days of the TA’s submission to Sponsor of a detailed statement of such payments and costs.

2.3. Termination by the TA. The TA may terminate this Agreement or a Project Supplement, with or without cause, by giving ten (10) days’ written notice of such termination.

If the TA terminates the Agreement for Sponsor’s default, Sponsor will reimburse the TA for all funds paid to Sponsor in connection with all Scopes of Work, and for all costs incurred by the TA in connection with the Scope of Work as well as all reasonable costs and expenses incurred to effect such termination, within ninety (90) days of the TA’s submission to Sponsor of a detailed statement of such payments and costs.

If the TA terminates a Project Supplement for Sponsor’s default, Sponsor will reimburse the TA for all funds paid to Sponsor in connection with the Scope of Work for the applicable Project Supplement, and for all costs incurred by the TA in connection with the Scope of Work as well as all reasonable costs and expenses incurred to effect such termination, within ninety (90) days of the TA’s submission to Sponsor of a detailed statement of such payments and costs.

If the TA terminates the Agreement or a Project Supplement for convenience, the TA is obligated to pay to Sponsor all costs and expenses incurred thereunder by Sponsor up to the date of notice of termination, as well as all reasonable costs and expenses incurred to effect such termination.

2.4. Expiration/Suspension of TA’s Financial Obligations. Any and all financial obligations of the TA pursuant to this Agreement expire upon the expenditure of TA’s maximum contribution to each Scope of Work as established in each Project Supplement or the conclusion of the Term as defined in Section 2.1, whichever occurs first. The TA reserves the right to suspend its financial obligation, with ten (10) days’ advance notice, if Sponsor identifies a risk of not being able to complete a Scope of Work within budget. If Sponsor cannot provide a credible funding plan acceptable to the TA to fund and complete each Scope of Work, the Sponsor will be in default and the TA may terminate this Agreement. If Sponsor identifies a risk of not being able to complete each Scope of Work within budget, failure to report such risk to the TA constitutes default and is cause for termination under Section 2.3.

2.5. Supplementing Existing Revenue. Sponsor agrees that it will use funds provided pursuant to this Agreement to supplement existing revenue. Sponsor will not use Measures A/W Funds to replace other local taxes or revenues already programmed and available for use for the same purpose. Sponsor will use funds provided pursuant to this Agreement only for the Scope of Work for each Project Supplement. 16

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20016287.14

2.6. Misuse of Funds. If the TA determines that Sponsor has used Measures A/W Funds other than for the approved Scope of Work or Project Costs, the TA will notify Sponsor of its determination. Within thirty (30) days of notification Sponsor will either (a) repay such funds to the TA, or (b) explain in writing how the funds in question were spent for the approved Scope of Work. The TA will respond to Sponsor’s written explanation within thirty (30) days of receipt. Unless otherwise stated in the response, the TA’s response will be final, and Sponsor will repay any funds used other than for the approved Scope of Work within thirty (30) days.

SECTION 3: Time of Performance

3.1. Time of Performance. The time of performance will be specified in each Project Supplement (Time of Performance).

3.2. Time Extension. If the Scope of Work cannot be completed within the Time of Performance as defined in Section 3.1, Sponsor must submit a request in writing to the TA no later than six (6) months before the Time of Performance for an extension for the Time of Performance. The TA will review the request and may grant the extension via a letter of concurrence if it is justified in TA’s sole and complete discretion. Extensions longer than one (1) year will require a formal amendment to the Project Supplement.

Costs incurred for the Scope of Work after the Time of Performance are at risk of denial for reimbursement by the TA. The unreimbursed portion of Measures A/W allocation will be retained by the TA for the Measures A/W Program.

SECTION 4: Insurance

4.1. Insurance. For the purposes of this Section, “Entity” is defined as any entity designing, approving designs and/or performing each Scope of Work specified in the Project Supplements funded by this Agreement. Entities may include Sponsor, a contractor of Sponsor, another body on behalf of which Sponsor submitted its funding application, and/or a contractor of such other body.

For each Project Supplement, all Entities will provide the appropriate insurance covering the work being performed as specified in the Project Supplement. The insurance requirements specified in this Section will cover each Entity’s own liability and any liability arising out of work or services of Entity subcontractors, subconsultants, suppliers, temporary workers, independent contractors, leased employees, or any other persons, firms or corporations (hereinafter collectively referred to as “Agents”) working on each Project (as defined in each Project Supplement). If Sponsor itself is an Entity, Sponsor must also provide its own insurance meeting the requirements of this Section. a) Minimum Types and Scope of Insurance. Each Entity is required to procure and maintain at its sole cost and expense insurance subject to the requirements set forth below. Such insurance will remain in full force and effect throughout performance of the Scope of Work. All policies will be issued by insurers acceptable to the TA (generally with a Best’s Rating of A-10 or better). Each Entity is also required to assess the risks associated with work to be performed by Agents and to require that Agents maintain adequate insurance coverages with appropriate limits and endorsements to cover such risks. To the extent that its Agent does not procure and maintain such insurance coverage, an Entity is responsible for and assumes any and all costs and expenses that may be 17

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20016287.14
incurred in securing said coverage or in fulfilling Entity’s indemnity obligations as to itself or any of its Agents in the absence of coverage. Entities may self-insure against the risks associated with the Scope of Work, but in such case, waive subrogation in favor of the TA respecting any and all claims that may arise. i. Workers’ Compensation and Employer’s Liability Insurance. Worker’s Compensation coverage must meet statutory limits and Employer’s Liability Insurance must have minimum limits of $1 million. Insurance must include a Waiver of Subrogation in favor of the TA. ii. Commercial General Liability Insurance. The limit for Commercial General Liability Insurance will be specified in each Project Supplement.

Commercial General Liability Insurance must be primary to any other insurance, name the TA as an Additional Insured, include a Separation of Interests endorsement and include a Waiver of Subrogation in favor of the TA.
iii. Business Automobile Liability Insurance. The limit for Business Automobile Liability Insurance will be specified in each Project Supplement. Insurance must cover all owned, non-owned and hired autos, and include a Waiver of Subrogation in favor of the TA. iv. Property Insurance. Property Insurance must cover an Entity’s and/or Agent’s own equipment as well as any materials to be installed. Property Insurance must include a Waiver of Subrogation in favor of the TA. v. Professional Liability Insurance. If specified in a Project Supplement, Professional Liability insurance should cover each Entity’s and any Agent’s professional work on the Project.
vi. Cyber Liability Insurance. If specified in a Project Supplement, and if contract deals with Personally Identifiable Information (PII), then Professional Liability Insurance policy, should also include coverage for Cyber risk coverages including Network and Internet Security Liability coverage, Privacy coverage and Media coverage.
vii. Employee Theft Insurance/Crime Insurance. If specified in a Project Supplement, then an Employee Theft Insurance policy covering the loss of money, securities or other property resulting from theft by employees.

The policy should include Third-Party Crime or Client Crime coverage viii. Contractors’ Pollution Liability Insurance and/or Environmental Liability Insurance. If specified in a Project Supplement, Contractors’ Pollution Liability Insurance and/or Environmental Liability insurance should cover potential pollution or environmental contamination or accidents. The limit for Pollution and/or Environmental Liability Insurance in each appropriate contract and subcontract should not be less than $1 million. Such insurance must name the TA as an Additional Insured and include a Waiver of Subrogation in favor of the TA.
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ix. Railroad Protective Liability Insurance. Insurance is required if the Project will include any construction or demolition work within 50 feet of railroad tracks. The limit for Railroad Protective Liability Insurance in each appropriate contract and subcontract cannot be less than $2 million per occurrence and $6 million annual aggregate. On the Entity’s Commercial General Liability insurance policy, the contractual liability exclusion for liability assumed shall be deleted.
b) Special Requirement for Caltrain Shuttles. If Sponsor and/or Entity is operating shuttle(s) with the Caltrain logo on the vehicle(s) or on any shuttle public information materials, the Commercial General Liability, Business Automobile, and Pollution and/or Environmental Liability (if applicable) policies also must name as Additional Insureds: the Peninsula Corridor Joint Powers Board, the San Mateo County Transit District, the Santa Clara Valley Transportation Authority, the City and County of San Francisco, TransitAmerica Services, Inc. or any successor Operator of the Service, and the Union Pacific Railroad Company and their respective directors, officers, employees, volunteers and agents while acting in such capacity, and their successors or assignees, as they now, or as they may hereafter be constituted, singly, jointly or severally. c) Excess or Umbrella Coverage. Sponsor and/or any other Entity may opt to procure excess or umbrella coverage to meet the above requirements, but in such case, these policies must also satisfy all specified endorsements and stipulations for the underlying coverages and include provisions that the policy holder’s insurance is to be primary without any right of contribution from the TA. d) Deductibles and Retentions. Sponsor must ensure that deductibles or retentions on any of the above insurance policies are paid without right of contribution from the TA. Deductible and retention provisions cannot contain any restrictions as to how or by whom the deductible or retention is paid. Any deductible or retention provision limiting payment to the named insured is unacceptable.

In the event that any policy contains a deductible or self-insured retention, and in the event that the TA seeks coverage under such policy as an additional insured, Sponsor will ensure that the policy holder satisfies such deductible to the extent of loss covered by such policy for a lawsuit arising from or connected with any alleged act or omission of the Entity or Agents, even if neither the Entity nor Agents are named defendants in the lawsuit.
e) Claims Made Coverage. If any insurance specified above is provided on a claimmade basis, then in addition to coverage requirements above, such policy must provide that:
i. Policy retroactive date coincides with or precedes the Entity’s start of work (including subsequent policies purchased as renewals or replacements).
ii. Entity will make every effort to maintain similar insurance for at least three (3) years following Project completion, including the requirement of adding all additional insureds.
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iii. If insurance is terminated for any reason, each Entity agrees to purchase an extended reporting provision of at least three (3) years to report claims arising from work performed in connection with this Agreement. iv. Policy allows for reporting of circumstances or incidents that might give rise to future claims.
f) Failure to Procure Adequate Insurance. Failure by any Entity to procure sufficient insurance to financially support the indemnification requirements of this Agreement does not excuse Sponsor from meeting all obligations of the indemnification requirements and the remainder of this Agreement, generally. g) Prior to beginning work under this Agreement, Sponsor must obtain, and produce upon request of the TA, satisfactory evidence of compliance with the insurance requirements of this Section.

SECTION 5: Additional Terms Applicable to Sponsor-Performed Capital Projects The following additional terms apply when the Sponsor is performing the scope of work for capital projects as described in each Project Supplement.

5.1. Project Performance. Sponsor will oversee completion of the scope of work for each TA funded project as described in each Project Supplement (Scope of Work).

Sponsor is responsible for procuring and administering any professional service and/or other contracts entered into in connection with each such Scope of Work. Sponsor may appoint a designee or engage contractor(s) to perform work necessary for completion of work, but Sponsor remains responsible to the TA for the completion of each Scope of Work.

5.2. Required Approvals. Prior to commencement of each Scope of Work, Sponsor or its designee (e.g., a consultant) will obtain all applicable local, state and federal approvals and permits for each Scope of Work. In addition, Sponsor must comply with all applicable federal, state and local laws and regulations applicable to the Project. All real property appraisals must comply with Uniform Standards of Professional Appraisal Practice (USPAP). Any right-of-way activities involving property on the Caltrans right-ofway must be conducted in accordance with the current version of the Caltrans Right-ofWay manual.

5.3. Contract Award and Change Orders. Sponsor must comply with state and local agency requirements for the award of any contract(s) for the performance of each Scope of Work and any change orders. As each Scope of Work proceeds, Sponsor must advise the TA of any contracts awarded and change orders as part of the regular progress reporting requirements. Notice of any contracts and change orders provided to the TA will not constitute approval by the TA of the contracts and change orders nor obligate the TA to provide funds in excess of its maximum contribution stated in each Project Supplement.

5.4. Progress Reports. Sponsor will prepare and submit to the TA quarterly progress reports during the entire term of each Scope of Work and covering all Scope of Work activities for work completed during the previous month using the template in Exhibit B or in other formats specified by the TA. The reports must describe:
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a) The current status of, and any changes in, scope, schedule, budget, and funding plans of each Scope of Work and each Project;
b) Any risk factors;
c) The work performed during the previous quarter and projected for the next three months;
d) Scope of Work Costs (as defined in Section 5.8 below) projected to be expended during the next three months; and
e) Any other information requested by the TA.

5.5. Final Report. Within ninety (90) days of Sponsor’s final acceptance of each Scope of Work and all incidental work, Sponsor must prepare and submit to the TA a final report detailing the following and all other relevant information:
a) A description of the Project, including a statement detailing the overall progress and success of the Scope of Work and the Project, a compilation of any data collected during the active phase(s) of the Project, and changes/additions to the scope of the Project.
b) Total costs for the Scope of Work, including an accounting of all Measures A/W Funds expended in connection with the Scope of Work, and reflecting any unexpended Measures A/W Funds.
c) An explanation and the status of any outstanding obligations or potential obligations related to the Scope of Work.
d) A discussion of any pertinent issues or problems that arose during the implementation of the Scope of Work.
e) Any copies of press articles, press releases, newsletter articles and any other publicity materials regarding the Project.
f) Written confirmation or, for the final project phase, a Project Close-out form that no further reimbursements associated with the Scope of Work are anticipated and that all draw-down requests have been made.
g) Photographs for all construction projects that satisfactorily demonstrate: 1) site conditions before the project was implemented; 2) work in progress; and 3) completed improvements.

5.6. Funding Commitment. The TA allocates to Sponsor up to the amount specified in each Project Supplement for reimbursement of expenditures related to the Scope of Work (Scope of Work Costs). Sponsor will contribute, or provide for the contribution of matching funds as specified in each Project Supplement. Sponsor also will contribute, or provide for the contribution of the entire amount in excess of the total project cost specified in the Project Supplement needed to complete each Scope of Work. The TA’s funding commitment under this Agreement in no way establishes a right for Sponsor to receive additional funding from the TA. All funding obligations of the TA under this 21

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Agreement are subject to downward adjustment based on actual sales tax receipts for the fiscal years indicated.

Sponsor will assess and confirm its ability to complete the Scope of Work described in each Project Supplement within budget as part of the quarterly reporting requirements established in 5.4, above. Sponsor must further notify the TA between reporting cycles if Sponsor determines that the budget will not be sufficient to complete each Scope of Work. The TA reserves the right to suspend its funding obligation as set forth in applicable Project Supplements upon such notice, and until Sponsor develops a credible funding plan acceptable to the TA to fund and complete the associated Scope of Work.

5.7. Use of Funds.
a) Measures A/W Funds must be used only for direct eligible costs to complete the Scope of Work. The Sponsor is responsible for demonstrating to the TA that the expenses incurred were necessary to deliver each Scope of Work.

Reimbursement for the following costs will require detailed documentation in accordance with generally-accepted accounting principles:
i. Scope of Work phases or components such as stakeholder/public outreach; development of planning studies, project initiation documents (PID), project study reports (PSR), environmental clearance and mitigation for up to three years following project completion, project approval and environmental document (PA&ED), project design, and plans specifications and estimates (PS&E); regulatory agency review; acquisition of right-of-way; construction, and construction management; ii. Sponsor staff time for Scope of Work implementation; iii. Project administration costs for each Scope of Work under this Agreement.
iv. Costs directly tied to the implementation of each Project Scope of Work as more specifically defined in Exhibit C, “Eligible Costs for Reimbursement,” which is attached to this Agreement and incorporated herein by this reference. Eligible costs are defined in greater detail in Exhibit C. If Sponsor wishes to undertake items of work not covered under each Scope of Work concurrent with performing each Scope of Work, the cost for including and undertaking the additional work must be segregated, and the costs borne exclusively by the Sponsor from a nonMeasures A/W Program funding source(s). In the event that an activity is not listed in Exhibit C but Sponsor believes that it is an eligible cost, Sponsor may request that the TA consider reimbursing the Sponsor for the activity. The TA will have sole discretion to grant or deny Sponsor’s requests.
b) The following costs are not eligible for Measures A/W Funds reimbursement:
i. Sponsor’s costs which are unrelated to each Scope of Work; ii. Costs for entering into this Agreement and each Project Supplement; 22

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iii. Maintenance, rehabilitation, routine operations of each Project or other facilities or programs except as specifically identified in the Scope of Work for each Project Supplement; and
iv. Development of proposals, applications or agreements for Measure A, Measure W, or other funding programs.

5.8. Reimbursement Basis. Unless otherwise specified in the Project Supplement, Sponsor may seek reimbursement for Scope of Work Costs incurred on or after the Execution Date. Scope of Work Costs must be incurred and paid by Sponsor prior to requesting reimbursement from the TA. Sufficient documentation must accompany all requests for reimbursement, including the submittal of all due monthly progress reports.

5.9. Accounting and Request for Reimbursement Procedures. Sponsor, in coordination with and to the satisfaction of the TA, will establish procedures for Scope of Work accounting and requests for reimbursement. These procedures will track and reflect the accumulation of the TA’s pro rata share of Scope of Work Costs. Sponsor will detail the TA’s pro rata share of Scope of Work costs for all work funded under this Agreement with each “Reimbursement Claim Form,” which is attached to this Agreement as Exhibit D and incorporated herein, or in other formats specified by the TA. Sponsor will maintain all necessary books and records in accordance with generally accepted accounting principles.

5.10. Invoices; Payments.
a) Sponsor must prepare and submit billing statements consistent with the Reimbursement Claim Form with all required supporting documentation.

Supporting documentation may include, but is not limited to, copies of vendor invoices, timesheets, backup documentation, checks, and payment advice, and must include an accounting of the TA’s share of costs for the Scope of Work as contemplated by this Agreement.
b) For any property acquisitions for which Sponsor seeks reimbursement from the TA, Sponsor must provide the following supporting documentation for each property:
i. Copies of the final real estate appraisal and any appraisal review conducted on behalf of Sponsor;
ii. For any right-of-way activities involving property on the Caltrans right-ofway, written confirmation that the acquisition process was conducted in accordance with the then-current version of the Caltrans Right-of-Way manual;
iii. A Phase One Environmental Assessment and any recommended additional testing (unless waived by the TA);
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v. Copy of the Notice of Exemption or other required document for environmental clearance under CEQA/NEPA for the purchase of the property, and evidence of the date of filing such Notice; and vi. Written justification acceptable to the TA of any settlement at an amount higher than the offer.
c) For each voluntary real property transaction, Sponsor must also provide:
i. Copy of the fully executed purchase and sale agreement; ii. Copy of an executed and recorded deed, in a form consistent with the requirements set forth in the then-current Caltrans Right-of-Way manual; iii. Copy of the Policy of Title insurance; and
iv. Copy of the final closing statement from the escrow. d) For each real property acquisition undertaken through condemnation, Sponsor must also provide:
i. Copy of the recorded Final Order of Condemnation; and ii. Copy of the litigation guarantee issued by a title insurer. e) Sponsor must detail the tasks performed, associated costs, and pro rata share of Scope of Work Costs to be borne by the TA with each reimbursement request. f) The TA will endeavor to disburse reimbursements for approved Scope of Work Costs within thirty (30) days after the TA’s approval of each claim, subject to the limits on the TA’s maximum contribution as established in each Project Supplement. The TA’s obligation to reimburse Scope of Work Costs to Sponsor as provided in this Section is conditioned upon the TA’s prompt receipt of quarterly progress reports from Sponsor.
g) Invoices may be submitted, no more frequently than once a quarter, by e-mail to:
[email protected], [email protected], and the designated TA Project Manager at the email address specified in the Project Supplement.

Sponsor must submit a minimum of one reimbursement claim for each fiscal year (July through June) and no more frequently than quarterly. If Sponsor does not submit a reimbursement claim for two consecutive quarters (six months), then Sponsor will be deemed inactive. If the Sponsor does not submit a reimbursement claim within the next two quarters after being deemed inactive then project may be deprogrammed. Sponsor must submit a letter to the TA to seek administrative approval for an exemption.

5.11. Return of Project Cost Savings. Upon submission of the Final Report, if the total Scope of Work Costs are less than the amount specified in the Project Supplement, Sponsor will return to the TA that proportion of the Project cost savings that is equal to 24

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the percentage of the original Scope of Work budget that consisted of Measure A/W Funds.

5.12. Indemnity by Sponsor.

Sponsor will indemnify, keep and save harmless the TA and its directors, officers, agents and employees against any and all suits, claims or actions related to the performance of this Agreement, each Scope of Work or each Project including, but not limited to, those arising out of any of the following:
a) Any injury to persons or property that may occur, or that may be alleged to have occurred, arising from the performance of each Project or implementation of this Agreement; or
b) Any allegation that materials or services developed, provided or used for each Project infringe or violate any copyright, trademark, patent, trade secret, or any other intellectual-property or proprietary right of any third party.

Sponsor further agrees to defend any and all such actions, suits or claims and pay all charges of attorneys and all other costs and expenses of defenses as they are incurred.

If any judgment is rendered, or settlement reached, against the TA or any of the individuals enumerated above in any such action, Sponsor will, at its expense, satisfy and discharge the same.

This indemnification will survive termination or expiration of the Agreement.

SECTION 6: Additional Terms Applicable to TA-Performed Capital Projects The following additional terms apply when the TA is performing the scope of work for capital projects as described in each Project Supplement (Scope of Work).

6.1. Funding Commitment. The TA will provide in lieu contributions, expenditures on consultants, and/or funds up to the amount specified in each Project Supplement for the Scope of Work tasks specified in the Project Supplement (Scope of Work Costs).

6.2. Cost Savings. Any cost savings of the funds allocated for each Project Supplement will revert to the applicable program for the TA to reallocate to any eligible project through its usual fund programming and allocation activities.

6.3. Insufficient Funding. In the event that additional funding is needed to complete the Scope of Work specified in a Project Supplement, the TA will identify the additional amounts needed and review those estimates with the Sponsor. The Parties will work together to identify potential sources of funding, as well as obtain the necessary funds to complete the Scope of Work for the Project Supplement. If additional funding is needed due to a change in the Project Supplement Scope of Work, as requested by the Sponsor, the TA will identify the additional amounts needed and review those estimates with the Sponsor. In such case, it is the responsibility of the Sponsor to identify the potential sources of funding, as well as obtain the necessary funds to complete the changed Project Supplement Scope of Work. The TA may consider requests for additional funding, but is under no obligation to grant such requests. 25

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6.4. TA Responsibilities. For purposes of delivering the Scope of Work, the TA agrees to perform the following tasks, unless otherwise specified in a Project Supplement:
a) The TA will perform and complete the Scope of Work, either through its own forces or the use of one or more third-party consultants or contractors. b) The TA will make available to the Project up to the amount(s) specified in the Project Supplement(s) for the Scope of Work.
c) For purposes of delivering the Scope of Work, the TA agrees to perform the following tasks, unless otherwise specified in a Project Supplement:
i. Manage the Scope of Work, including developing and carrying out the Scope of Work on schedule and within budget;
ii. Provide technical oversight for performance of the Scope of Work; iii. Lead coordination with Caltrans and/or other permitting agencies as necessary for the Scope of Work;
iv. Obtain the necessary permits and approvals required for the Scope of Work;
v. Procure and administer the consultant/contractor services to complete the Scope of Work;
vi. Organize and facilitate regular meetings of a Project Development Team (PDT), the Sponsor and representatives from involved local and regional entities to provide input and guidance on the Scope of Work; vii. Keep Sponsor apprised of developments, such as award of contracts or potential changes that may affect the scope, schedule, or budget of the Project or Scope of Work; and
viii. Consult with Sponsor where necessary/appropriate. d) To the extent applicable, the TA will execute an agreement with Caltrans for oversight services associated with the Scope of Work.
e) The TA will prepare and provide to Sponsor status reports including anticipated and expended costs and Scope of Work delivery milestones and schedule forecasts.
f) The TA will review, process, and audit (at its discretion) invoices and other documentation of expenditures for work performed under each Project Supplement. The TA will also track the accumulation and expenditure of funds allocated for Scope of Work, and process other documentation of expenditures in compliance with TA accounting and budgeting requirements. 26

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6.5. Sponsor Responsibilities. For purposes of delivering the Scope of Work, the Sponsor agrees to perform the following tasks, unless otherwise specified in a Project Supplement:
a) The Sponsor will be responsible for championing the effort of obtaining political and public support for the Project.
b) The Sponsor will be the public face of the Project for purposes of leading outreach efforts to local stakeholders and community members, including coordination of public meetings and solicitation of public comment. c) The Sponsor will provide input and oversight based on local policies and desires regarding the outcome of and deliverables of the Project. d) The Sponsor will actively participate in the PDT meetings related to the Scope of Work.
e) The Sponsor may, at its discretion, review any professional services agreements, change orders and any other agreements that the TA has entered into for the performance of Scope of Work; however the TA retains ultimate authority over contracting and related decisions.
f) The Sponsor may, at its discretion, review the work products and deliverables produced by the TA and/or its contractors/consultants for the Scope of Work, including reports, designs, drawings, plans, specifications, schedules and other materials; however, the TA retains authority to accept or reject contractor/consultant work.
g) The Sponsor will approve or endorse, in writing, the final deliverables or work products produced by the TA and/or its contractors/consultants for the Scope of Work.
h) The Sponsor will review progress reports prepared and provided by the TA. i) The Sponsor may, at its discretion, review and audit invoices and other documentation of the expenditure of funds allocated for the Scope of Work, however the TA retains ultimate authority for expenditure of allocated funds on the Project.

6.6. Indemnification.
a) Each of the Parties will indemnify, hold harmless and defend the other Party and its directors/councilmembers, officers, employees and agents (collectively, "Indemnitees") against all liability, claims, suits, actions, costs or expenses related to performance of the Scope of Work or the Project, including but not limited to those arising from loss of or damage to property, and injuries to or death of any person (including but not limited to the property or employees of each Party) when arising out of or resulting from any act or omission by the indemnifying Party, its agents, employees, contractors or subcontractors in connection with any aspect of the Project, including Project design, construction and/or maintenance.
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b) Each of the Parties will also fully release, indemnify, hold harmless and defend the other Party and Indemnitees from and against any and all claims or suits that may be brought by any of the indemnifying Party's contractors or subcontractors performing work in connection with or related to the Project. c) The indemnifying Party's obligation to defend includes the payment of all reasonable attorneys' fees and all other costs and expenses of suit, and if any judgment is rendered, or settlement entered, against any Indemnitee, the indemnifying Party must, at its expense, satisfy and discharge the same.

Indemnitees may require the indemnifying Party to obtain counsel satisfactory to the Indemnitees.
d) This indemnification will survive termination or expiration of this Agreement.

SECTION 7: Additional Terms Applicable to Shuttle Operations The following additional terms apply to shuttle projects as described in each Project Supplement (Project).

7.1. Sponsor Oversight; Work Plan. Sponsor is responsible for implementation of the Project as described in each Project Supplement. Sponsor assumes responsibility for procuring and administering any professional service and/or other contracts entered into in connection with the Project.

Though Sponsor may appoint a designee or engage contractor(s) to perform work necessary for Project implementation, Sponsor will remain ultimately responsible to the TA for performance of all responsibilities set forth herein.

7.2. Required Approvals. Prior to commencement of each Project, Sponsor or its designee (e.g., a consultant) will obtain all required local, state and federal approvals and permits for Project work. In addition, Sponsor must comply with all federal, state and local laws and regulations applicable to the Project.

7.3. Contract Award and Scope Changes. Sponsor must comply with state and local agency requirements for the award and amendment of any contract(s) for the implementation of each Project. Sponsor must advise the TA in writing (electronic mail is acceptable) as soon as possible of any contracts awarded and any amendments thereto, such as for any changes in service. Notice of any contracts and amendments provided to the TA will not constitute approval by the TA nor obligate the TA to provide funds in excess of its maximum contribution stated in the Project Supplement.

7.4. Monthly & Annual Operations Reports. Within eight (8) calendar days after the end of each month a given Project Supplement is in effect, Sponsor or its agent must submit to the TA a monthly operations report (Operations Report) based on National Transit Database (NTD) reporting requirements, attached as Exhibit E, “National Transit Database Reporting Requirements.” The Operations Report must include such items as the average daily ridership of the Project, and the Project’s total boardings, total revenue miles, hours, vehicles in service, road calls, accidents and any other information pertinent to assess the performance of the service for purposes of local, state or federal reporting requirements for the month just ended. Any monthly service mileage and/or hours that were scheduled, but where service was not operated for any reason, must be 28

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deducted from monthly reporting totals. An explanation for all lost service miles and/or hours must be included in the monthly report. Sponsor or its agent must review all required reporting for accuracy prior to submittal to the TA. The form of all reports must be determined by the TA. Within eight (8) calendar days of the end of the performance of the work under a Project Supplement, and/or any extension thereof, Sponsor or its agent must submit to the TA an annual report on the same statistics. All Operations Reports must be submitted via Excel spreadsheet or other format as approved by the TA to [email protected] or as specified in the Project Supplement.

7.5. Quarterly Progress Reports. Sponsor must prepare and submit to the TA quarterly progress reports by January 31, April 30, July 31 and October 31 of each year during the entire term of the Project. Reports must be presented in the form provided as Exhibit F, “Quarterly/Annual Shuttle Program Progress Report Form,” which is attached to this Agreement and incorporated herein by this reference, or in other formats specified by the TA. The reports must describe Project performance and expenditures during the previous quarter.

The reports must include actions expected to be taken and any projected changes in the service plan / schedule during the next quarter, and any other information requested by the TA. Additionally, each progress report must include information on any potential issues that may impact any of the performance measures set forth in Exhibit F as well as the ability of Sponsor to meet the conditions outlined in this Agreement.

7.6. Annual Report. By October 1 of each year, Sponsor must provide the TA with an annual report in the form provided as Exhibit F, or in other formats specified by the TA, summarizing the quarterly progress reports from the prior fiscal year.

The reports must include actions expected to be taken and any projected changes in the service plan /schedule for the next year (if the Project is continuing), and any other information requested by the TA. Additionally, each Annual report must include information on any potential issues that may impact any of the performance measures set forth in Exhibit F as well as the ability of Sponsor to meet the conditions outlined in this Agreement for the next year (if the Project is continuing). If the Annual Report is submitted after the second year of the Time of Performance, the Annual Report should include written confirmation that no further reimbursements associated with the Project are anticipated and that all reimbursement requests have been made or are being submitted with the Annual Report.

7.7. Funding Commitment. The TA allocates to Sponsor up to the amount specified in each Project Supplement for reimbursement of expenditures related to the Project (Project Costs). The Sponsor will contribute, or provide for the contribution of matching as specified in each Project Supplement, as well as the entire amount in excess of TA's allocation needed to implement the Project. The TA’s funding commitment under this Agreement in no way establishes a right for the Sponsor to receive additional funding from the TA.

All funding obligations of the TA under this Agreement are subject to downward adjustment based on actual sales tax receipts for the fiscal years indicated, or if Sponsor receives funding for Project Costs from other sources which allow Sponsor to provide more than the matching funds specified in the Project Supplement over the term of the Agreement.
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The Sponsor will assess and confirm its ability to implement the Project within budget as part of the quarterly reporting requirements established in Section 7.5, above. The Sponsor must further notify the TA between reporting cycles if the Sponsor determines that the budget will not be sufficient to implement the Project. The TA retains authority to suspend its funding obligation as set forth in Section 2.4 of this Agreement upon such notice, and until the Sponsor develops a credible funding plan acceptable to the TA to fund and implement the Project.

7.8. Reimbursement Basis. Sponsor may seek reimbursement for Project Costs incurred on or after the Execution Date. Project Costs must be incurred and paid by the Sponsor prior to requesting reimbursement from the TA. Sufficient documentation must accompany all requests for reimbursement, including the submittal of all due operations and progress reports.

7.9. Accounting and Reimbursement Procedures. Sponsor, in coordination with and to the satisfaction of the TA, will establish procedures for Project accounting and requests for reimbursement. These procedures will track and reflect the accumulation of the TA’s pro rata share of costs for the Project. Sponsor will detail the TA’s pro rata share of Project Costs for all work funded under this Agreement with each “Reimbursement Claim Form” which is attached to this Agreement as Exhibit D and incorporated herein, or in other formats specified by the TA. Sponsor will maintain all necessary books and records in accordance with generally accepted accounting principles.

7.10. Invoices; Payments. Once per quarter following submission of the quarterly progress reports, Sponsor must prepare and submit billing statements consistent with the Reimbursement Claim Form with all required supporting documentation. Supporting documentation may include, but is not limited to, copies of associated vendor invoices, timesheets, backup documentation, checks and payment advice, and must include an accounting of the TA's share of costs for the Project as contemplated by this Agreement.

Claims and supporting documentation for reimbursement may be submitted by e-mail to:
[email protected] and [email protected]
The TA will endeavor to disburse reimbursements for approved Project Costs within thirty (30) days after the TA's approval of each claim, subject to the limits on the TA's maximum contribution as established in the Project Supplement. The TA's obligation to reimburse Project Costs to the Sponsor as provided in this section is conditioned upon the TA’s prompt receipt of reports from Sponsor pursuant to Sections 7.4–7.6, above.

7.11. Indemnity by Sponsor. The Sponsor will indemnify, keep and save harmless the TA (and, if the Project includes shuttle(s) with the Caltrain logo on the vehicle(s) or on any shuttle public information materials, the Peninsula Corridor Joint Powers Board, the San Mateo County Transit District, the Santa Clara Valley Transportation Authority, the City and County of San Francisco, TransitAmerica Services, Inc. or any successor Operator of the Service, and the Union Pacific Railroad Company and each of its/their directors, officers, agents and employees against any and all suits, claims or actions related to the performance of this Agreement including, but not limited to, those arising out of any of the following:
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a) Any injury to persons or property that may occur, or that may be alleged to have occurred, arising from the performance of the Project or implementation of this Agreement; or
b) Any allegation that materials or services developed, provided or used for the Project infringe or violate any copyright, trademark, patent, trade secret, or any other intellectual-property or proprietary right of any third party.

The Sponsor further agrees to defend any and all such actions, suits or claims and pay all charges of attorneys and all other costs and expenses of defenses as they are incurred. If any judgment is rendered, or settlement reached, against the TA or any of the other agencies or individuals enumerated above in any such action, the Sponsor will, at its expense, satisfy and discharge the same.

This indemnification will survive termination or expiration of the Agreement.

SECTION 8: Additional Terms Applicable to All Other Project Supplements for Operations The following additional terms apply to operational projects as described in each Project Supplement (Project).

8.1. Sponsor Oversight; Work Plan. Sponsor is responsible for the completion of the Scope of Work as described in each Project Supplement. Sponsor is responsible for procuring and administering any professional service and/or other contracts entered into in connection with the Scope of Work. Sponsor will oversee completion of the Scope of Work. Sponsor may appoint a designee or engage contractor(s) to perform work necessary for Scope of Work completion, but Sponsor remains responsible to the TA for the completion of the Scope of Work.

8.2. Required Approvals. Prior to commencement of the Scope of Work, Sponsor or its designee (e.g., a consultant) will obtain all applicable local, state and federal approvals and permits for the Scope of Work. In addition, Sponsor must comply with all applicable federal, state and local laws and regulations applicable to the Project.

8.3. Contract Award and Change Orders. Sponsor must comply with state and local agency requirements for the award of any contract(s) for the performance of the Scope of Work and any amendments. As the Scope of Work proceeds, Sponsor must advise the TA of any contracts awarded and amendments as part of the regular progress reporting requirements pursuant to Section 8.4 below. Notice of any contracts and amendments provided to the TA will not constitute approval by the TA of the contracts and amendments nor obligate the TA to provide funds in excess of its maximum contribution stated in the Project Supplement.

8.4. Progress Reports. For each of the projects in the Scope of Work, Sponsor will prepare and submit to the TA quarterly progress reports as the program proceeds and covering all Scope of Work activities for work completed during the previous month using the template in Exhibit B, or in other formats specified by the TA. The reports must describe:
a) The current status of, and any changes in, scope, schedule, budget, and funding plans of the Scope of Work and the Project;
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b) Any risk factors;
c) The work performed during the previous quarter and projected for the next three months;
d) Scope of Work Costs (as defined in Section 8.8, below) projected to be expended during the next three months; and
e) Any other information requested by the TA.

8.5. Closeout. Within ninety (90) days of Sponsor’s final acceptance of the Scope of Work and all incidental work, Sponsor must notify the TA with a final closeout letter detailing the following and all other relevant information: Total costs for the Scope of Work, including an accounting of all Measures A/W expended in connection with the Scope of Work, and reflecting any unexpended Measure A/W Funds.

8.6. Funding Commitment. The TA allocates to Sponsor up to the amount specified in each Project Supplement related to the Scope of Work (Scope of Work Costs). Funds cannot be transferred between projects without separate approval from the TA. The TA Executive Officer, or designee, can approve funds transfers administratively with a letter.

The TA’s funding commitment under this Agreement in no way establishes a right for Sponsor to receive additional funding from the TA.

8.7. Use of Funds.
a) Measures A/W Funds must be used only for direct eligible costs to complete the Scope of Work. The Sponsor is responsible for demonstrating to the TA that the expenses incurred were necessary to deliver the Scope of Work. b) The following costs are not eligible for reimbursement:
i. Sponsor’s costs which are unrelated to the Scope of Work; ii. Costs for entering into this Agreement;
iii. Maintenance, rehabilitation, routine operations of the Project or other facilities or programs; and
iv. Development of proposals, applications or agreements for Measure A, Measure W, or other funding programs.

8.8. Indemnity by Sponsor.

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b) Any allegation that materials or services developed, provided or used for the Project infringe or violate any copyright, trademark, patent, trade secret, or any other intellectual-property or proprietary right of any third party.

Sponsor further agrees to defend any and all such actions, suits or claims and pay all charges of attorneys and all other costs and expenses of defenses as they are incurred.

If any judgment is rendered, or settlement reached, against the TA or any of the individuals enumerated above in any such action, Sponsor will, at its expense, satisfy and discharge the same. This indemnification will survive termination or expiration of the Agreement.

SECTION 9: Miscellaneous

9.1. Access to Records and Record Retention. At all reasonable times, Sponsor will permit the TA access to all reports, designs, drawings, plans, specifications, schedules and other materials prepared, or in the process of being prepared, for each Scope of Work by Sponsor or any contractor or consultant of Sponsor. Sponsor will also make available to the TA upon request any professional service agreements, change orders and any other agreements that are related to each Scope of Work. Sponsor will provide copies of any documents described in this Section to the TA upon request. Sponsor will retain all records pertaining to each Scope of Work for at least three years after completion of each Project.

9.2. Audits. The TA, or its authorized agents, may, at any reasonable time during business hours, conduct an audit of Sponsor’s performance under this Agreement.

Sponsor will permit the TA, or its authorized agents, to examine, inspect, make excerpts from, transcribe or photocopy books, documents, papers and other records of Sponsor which the TA reasonably determines to be relevant to this Agreement.

Sponsor will transmit to the TA the Independent Auditor’s Report prepared for Sponsor’s Annual Comprehensive Financial Report within thirty (30) days of receipt by Sponsor and highlight the section that pertains to the Measures A/W Funds.

9.3. No Waiver. No waiver of any default or breach of any covenant of this Agreement by either Party will be implied from any omission by either Party to take action on account of such default if such default persists or is repeated. Express waivers are limited in scope and duration to their express provisions. Consent to one action does not imply consent to any future action.

9.4. Assignment. Parties are prohibited from assigning, transferring or otherwise substituting their interests or obligations under this Agreement without the written consent of all other Parties.

9.5. Governing Law. This Agreement is governed by the laws of the State of California as applied to contracts that are made and performed entirely in California.

9.6. Compliance with Laws. In performance of this Agreement, the Parties must comply with all applicable Federal, State and local laws, regulations and ordinances.

9.7. Accessibility of Services to Persons with Disabilities. The Project implementation must comply with, and not subject the TA or Sponsor to liability under, the Americans 33

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with Disabilities Act, the California Disabled Persons Act, or any other state or federal laws protecting the rights of persons with disabilities.

9.8. Modifications. This Agreement may only be modified in a writing executed by both Parties.

9.9. Attorneys’ Fees. In the event legal proceedings are instituted to enforce any provision of this Agreement, the prevailing Party in said proceedings is entitled to its costs, including reasonable attorneys’ fees.

9.10. Relationship of the Parties. It is understood that this is an Agreement by and between Independent Contractors and does not create the relationship of agent, servant, employee, partnership, joint venture or association, or any other relationship other than that of Independent Contractor.

9.11. Ownership of Work. All reports, designs, drawings, plans, specifications, schedules, studies, memoranda, and other documents assembled for or prepared by or for, in the process of being assembled or prepared by or for, or furnished to Sponsor under this Agreement, are the joint property of the TA and Sponsor, and will not be destroyed without the prior written consent of the TA. The TA is entitled to copies and access to these materials during the progress of the Project and upon completion or termination of the Project or this Agreement. Sponsor may retain a copy of all material produced under this Agreement for its use in its general activities. This Section does not preclude additional shared ownership of work with other entities under contract with Sponsor for funding of the Project.

9.12. Non-discrimination. Sponsor and any contractors performing services on behalf of Sponsor will not discriminate or permit discrimination against any person or group of persons on the basis of race, color, religion, national origin or ancestry, age, sex, sexual orientation, marital status, pregnancy, childbirth or related conditions, medical condition, mental or physical disability or veteran’s status, or in any manner prohibited by federal, state or local laws.

9.13. Attribution to the TA. Sponsor must include attribution that indicates work was funded with “Measure A Funds” or “Measure W Funds” or “Measures A/W Funds from the TA." This provision applies to any project, or publication, that was funded in part or in whole by “Measure A Funds” or “Measure W Funds” or “Measures A/W Funds." Acceptable forms of attribution include TA branding on Project-related documents, construction signs, public information materials, and any other applicable documents.

Sponsor must comply with the TA's External Attribution Guide which may be updated from time to time and will be available on the TA's website.

9.14. Warranty of Authority to Execute Agreement. Each Party to this Agreement represents and warrants that each person whose signature appears hereon is authorized and has the full authority to execute this Agreement on behalf of the entity that is a Party to this Agreement.

9.15. Severability. If any portion of this Agreement, or the application thereof, is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining portions of this Agreement, or the application thereof, will remain in full force and effect. 34

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9.16. Electronic Signatures. This Agreement may be executed through the use of digital or electronic signatures in accordance with Government Code Section 16.5. The presence of an electronic signature on this Agreement will be construed as the Parties’ consent to do business electronically.

9.17. Counterparts. This Agreement may be executed in counterparts.

9.18. Entire Agreement. This Agreement constitutes the entire agreement between the Parties pertaining to its subject matter and supersedes any prior or contemporaneous written or oral agreement between the Parties on the same subject.

IN WITNESS WHEREOF, the Parties have hereunder subscribed their names as of the last date written below (Execution Date).
[SPONSOR]
By:

Name:

Its:

Date:

Approved as to Form:

Legal Counsel for the [SPONSOR]
Date:

SAN MATEO COUNTY TRANSPORTATION

AUTHORITY
By:

Name: April Chan
Its: Executive Director
Date:

Approved as to Form:

Legal Counsel for the TA
Date:

Exhibit A: Form of Project Supplements
Exhibit B: Progress Reporting Template
Exhibit C: Permissible Costs for Reimbursement
Exhibit D: Reimbursement Claim Form
Exhibit E: National Transit Database Reporting Requirements Exhibit F: Quarterly/Annual Shuttle Program Progress Report Form 35

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Exhibit A: Form of Project Supplements
SECTION A: Primary Agreement
The San Mateo County Transportation Authority (TA) and [Project Sponsor] (Sponsor) entered into a Primary Grant Agreement on ________, 20__ (Primary Agreement).

This Project Supplement is entered into on ________, 20__ pursuant to the Primary Grant Agreement and is subject to the terms set forth therein.

SECTION B: Project Background
Measure(s):
☐ Original Measure A
☐ New Measure A
☐ Measure W
Program Category:

Measure A Measure W
☐ Transit
☐ Highways
☐ Local Streets/Transportation
☐ Grade Separations
☐ Pedestrian and Bicycle
☐ Alternative Congestion Relief Programs
☐ Countywide Highway Congestion
Improvements
☐ Local Safety, Pothole & Congestion Relief
Improvements – Local Investment Share
☐ Local Safety, Pothole & Congestion Relief
Improvements – Grade Separation
☐ Bicycle and Pedestrian Improvements
☐ Regional Transit Connections
Program Subcategory (if applicable):

Project: [Add project name]
Scope of Work: [Specify phase(s)]
Scope of Work Costs: [Specify amount programmed and allocated for each phase] TA Technical Assistance (if applicable):

Date Funding Programmed:

Date Funding Allocated:
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Applicable Resolutions (attached):

Additional Terms: The following Agreement Section(s) apply to this Project Supplement:
☐ Section 5 (Additional Terms Applicable to Sponsor-Performed Projects) ☐ Section 6 (Additional Terms Applicable to TA-Performed Projects) ☐ Section 7 (Additional Terms Applicable to Shuttle Operations) ☐ Section 8 (Additional Terms Applicable to All Other Project Supplements for Operations)
SECTION C: Invoices; Payments [ALTERNATIVE CLAUSE TO AGREEMENT SECTION

5.10(a) – DELETE IF NOT APPLICABLE]
Section 5.10(a) of the Agreement does not apply to this Project Supplement. Instead, the TA will make one upfront lump sum payment of $_______ to the Sponsor to complete the Scope of Work.

SECTION D: Matching Funds
Sponsor will contribute, or provide for the contribution of, the entire amount in excess of $________ needed to complete the Scope of Work [and must provide at least __% pro rata share of the Scope of Work Costs.]
OR
Sponsor agrees to contribute the matching funds to the TA in one upfront lump sum payment of $________ (Matching Funds) following Sponsor's approval of an invoice from TA describing the expenses to which the Matching Funds will be applied, subject to the following terms and conditions:

TA agrees that the Matching Funds are to be expended solely for the Project and agrees to: (i) prioritize application of the Matching Funds to expenses under the Scope of Work with the objective of utilizing all of the Matching Funds not later than _________; (ii) promptly return to Sponsor any and all unspent Matching Funds upon termination of the Project Supplement, or, absent termination, that have not been expended for the Project by _________.

SECTION E: Description of Scope of Work
Sponsoring Agency:

Lead/Implementing Agency:

Contact:
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Project Description and Scope of Work:

Project Schedule:

Begin End

Project Budget/ Source of Funding:

Include funding plan for the project defined above, including use of TA Technical Assistance if applicable
* The other fund sources are provided for informational purposes.

Operating Responsibility:

Maintenance Responsibility:

Project Implementation Responsibility:

Project Oversight Responsibility:

SECTION F: Third Party Roles

1. Third Party Roles. The [THIRD PARTY] is responsible for [LIST ALL RELEVANT RESPONSIBILITIES] for the Project.

2. Caltrans Roles. Caltrans as owner operator of the facility proposed for modification is responsible for reviewing and approving the [RELEVANT DOCUMENTS] for the Project.

3. Other Agreements. A Cooperative Agreement must be executed between Caltrans and the TA that lists the terms and conditions, roles and responsibilities and fee payment associated with Caltrans’ review and approval of the [RELEVANT DOCUMENTS].

SECTION G: Time of Performance

1. Time of Performance. The Scope of Work must be completed no later than the end of __ quarter, Fiscal Year 20__-20__ (the TA's fiscal year runs July 1 through June 30).

2. Timely Use of Funds. Sponsor must expend Measures A/W funds expeditiously. If Sponsor fails to invoice the TA for two consecutive quarters, the TA will require a meeting with Sponsor’s executive and Project staff to review project progress. A Project Supplement found to be non-compliant with this requirement may be terminated for default by the TA. 38

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SECTION H: Notice
Notices. All notices required or permitted to be given under this Agreement, be in writing and delivered by email to the addresses specified below. Notices will be deemed given when the email was sent. A recipient’s failure to acknowledge receipt of the emailed notice will not affect the effectiveness of notice if (a) the sender can show that the notice was properly addressed and sent by email, and (b) the sender did not receive any email system notification that the email could not be delivered.

To TA: San Mateo County Transportation Authority
1250 San Carlos Avenue
P.O. Box 3006
San Carlos, CA 94070-1306
Attn: TA Secretary and Executive Director
Emails:

To [Sponsor]: [Sponsor]

ADDRESS LINE ONE

ADDRESS LINE TWO
Attn: Project Sponsor Contact
TITLE
Email:

In 2025, the TA plans to relocate its administrative building to 166 N. Rollins Road in Millbrae, California and when that occurs, the TA’s address will be at that location.

SECTION I: Insurance [The TA and Sponsor will determine what types and levels of insurance are required for each Project Supplement]
The following types of insurance are required for this Project Supplement. See Section 6 of the Primary Agreement for additional requirements.

Insurance Type Required Coverage Amount
Workers’
Compensation and
Employer’s Liability
Insurance
Yes Statutory limits for Workers’ Compensation and
at least $1 million for Employers Liability.

Commercial General
Liability Insurance
Yes [$1/5/10 million]
• For all projects: $1M for Project Planning,
Project Initiation, Project Approval &
Environmental Design and Right of Way
Phases and for operations.
• For capital projects with budgets of up to
$10M (e.g., road widening): $1M for Design
and Construction Phases.
• For capital projects with budgets between
$10M and $40M (e.g., freeway
interchange): $5M for Design and
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Construction Phases.
• For capital projects with budgets of $40M
or more: $10M limits for Design and
Construction Phases.

Business Automobile
Liability Insurance
Yes [$1/5/10 million]
• For all projects: $1M for Project Planning,
Project Initiation, Project Approval &
Environmental Design and Right of Way
Phases.
• For capital projects with budgets of up to
$10M (e.g., road widening): $1M for Design
and Construction Phases.
• For capital projects with budgets between
$10M and $40M (e.g., freeway
interchange): $5M for Design and
Construction Phases.
• For capital projects with budgets of $40M
or more: $10M limits for Design and
Construction Phases.
• For operations projects: $10M
Property Insurance Yes
Professional Liability
Insurance
[Yes/No] [$1/2/5 million]
For most projects with professional liability
exposure, such as consulting: At least $1
million
For capital projects with some design: At
least $2 million.

For capital projects with significant design:

At least $5M.

Cyber Liability
Insurance
[Yes/No] If contract deals with Personally Identifiable Information (PII): At least $1 million and part of
the Professional Liability Insurance program.

Crime Insurance [Yes/No] If Entity’s employees have access to funds, securities and other property: At least
$250,000 for Employee Dishonesty Insurance
and $250,000 for Third-Party/Client Property.

If Entity has access to significant funds,
securities or other property: Limits should
reflect cumulative exposure.

Contractors’ Pollution
Liability Insurance
and/or Environmental
[Yes/No] At least $1 million
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Liability Insurance
Railroad Protective
Liability Insurance
[Yes/No] At least $2 million per occurrence and $6 million annual aggregate
IN WITNESS WHEREOF, the Parties have hereunder subscribed their names as of the last date written below.
[SPONSOR]
By:

Name:

Its:

Date:

Approved as to Form:

Legal Counsel for the [SPONSOR]
Date:

SAN MATEO COUNTY TRANSPORTATION

AUTHORITY
By:

Name: April Chan
Its: Executive Director
Date:

Approved as to Form:

Legal Counsel for the TA
Date:
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Exhibit B: Progress Reporting Template
REPORTING PERIOD: FROM mm/dd/yyyy TO mm/dd/yyyy
SMCTA Project # 00XXX – [Project Title/Phases]
[Carryover to additional pages as necessary]
Contact: [Name, Title, Phone, email, address]
1) Scope:
[Describe Scope of Work here, specify Project limits, phases of Project. Identify the [Original Measure A and/or New Measure A and/or Measure W] funded components]
Status Summary: [Provide Status]
Issues: [List any issues, i.e. potential scope changes] ____________________________________________________________________________ 2) Schedule: Original Baseline Current Baseline Current Forecast Major Milestones: Start Finish Start Finish Start Finish [Activity] MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY [Activity] MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY [Activity] MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY [Activity] MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY Progress This Reporting Period:
[Describe progress and activities]
[Original Measure A and/or New Measure A and/or Measure W] Funds Expended This Reporting Period: $ Future Activities, Next Reporting Period:
[Describe planned future activities]
Projected [Original Measure A and/or New Measure A and/or Measure W] Funds Expenditure Next Reporting Period: $ Issues: [List any issues, such as impacts to schedule]
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_______________________________________________________________________ 3) Scope of Work Total Budget:
____________________________________________________________________________ 4) Scope of Work [Original Measure A and/or New Measure A and/or Measure W] Budget:

Phase/Activity

A B C D E F
Original allocation
(per Project
Supplement)
Current
allocation (Per
Amendments)
Change in
allocation from
Project
Supplement (B-A)
Total
Measure
[A/W]
Expended to
date
% of
current
allocation
expended
(D/B)
% of Work
Completed
#DIV/0!
#DIV/0!
#DIV/0!
Total Scope of
Work $0 $0 $0 $0 #DIV/0!
Issues: [List any issues, i.e. potential cost increases] ____________________________________________________________________________ 5) Funding: [List additional sources as needed, Fill out the following matrix for each phase for the Scope of Work. i.e. environmental, design, etc.]

Issues: [List any issues such as changes in non-Measure [A/W] funding] Submit Progress Reports To: [email protected] or
SMCTA
Planning & Development
1250 San Carlos Avenue
San Carlos, CA 940701
1 In 2025, the TA plans to relocate its administrative building to 166 N. Rollins Road in Millbrae, California and when that occurs, the TA’s address will be at that location.

A B C D E F
Phase/Activity
Original Budget
(per Funding
Agreement)
Updated Cost
Estimate
Total Change
from Approved
(B-A)
Total Expended
to Date
% of Revised
Budget
Expended
(D/B)
% of Work
Completed
- 0.00% 0.00%
- 0.00% 0.00%
- 0.00% 0.00%
Total Project - - - #DIV/0! -
Original Original % Current Current %
Estimated at
Completion EAC %
SMCTA #DIV/0! #DIV/0! #DIV/0!
Others:

Federal (specify) #DIV/0! #DIV/0! #DIV/0!
State (specify) #DIV/0!
Other (specify)
Total #DIV/0! - #DIV/0! - #DIV/0! -
Contribution Contribution Contribution
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Exhibit C: Eligible Costs for Reimbursement
Program / Promotions – activities pertaining to marketing/promotional programs detailed in the Scope of Work.

Planning – activities necessary to implement planning studies covered under the Scope of Work.

Project Initiation Documents (PID) – activities necessary to complete PIDs covered under the Scope of Work.

Environmental Studies – environmental studies costs, including determination of the appropriate environmental document, preparation of all preliminary engineering for each alternative, including geomantic layouts, determination of right-of-way needs, environmental technical studies (such as air, noise, energy, cultural resources and hazardous waste), and all other studies or activities necessary to prepare and finalize the appropriate documents for Project and environmental approval.

Design – design activities such as preparation of design studies; materials and foundation reports; drainage, hydrology and hydraulic reports; surveying and mapping; preparation of the plans, specifications and estimate; preparation of bid documents and Project files; preparation of permit applications and maintenance agreements; coordination of agency reviews and any other activities necessary to prepare final plans specifications and estimate (PS&E) for bid advertisement and award; and management oversight of these tasks except as limited in the Agreement.

Right-of-Way Acquisition – all activities related to right-of-way including determination of rightof-way needs; title searches; preparation of appraisal maps, legal descriptions and plat maps; parcel appraisals and appraisal reviews; hazardous materials testing and analysis; preparation of right-of-way acquisition documents; activities involved with acquiring rights-of-way including negotiation with property owners and cost associated with condemnation proceedings (including legal costs, expert witness costs, etc., but not including costs related to claims for inverse condemnation), right-of-way capital costs and cost-to-cure impacts related to the acquisition. To the extent allowed by law, Sponsor will undertake all best efforts so that cleanup of existing hazardous materials will remain the liability of the property owner.

Services provided for right-of-way activities involved with property not necessary for the Measure A or Measure W Highway Program-funded Project as defined in the Scope of Work, and the associated costs for all such property, will be at the sole expense of the Sponsor.

Any property not used for construction of the Project, or used for any purpose other than construction of the Project as defined in the Scope of Work, should be identified and the funding agencies should be informed. Any excess right-of-way will be identified as early as possible in the Project design process and sold. The proceeds from the sale of such property must be returned to the funding agencies, prorated based on the percentage of funds each agency contributed to the purchase of the property.

Construction – construction expenditures for the Project (construction capital, management and inspection, surveys, public outreach, and related activities) that are part of the Scope of Work agreed to by the TA. Sponsor must submit all change orders over $50,000 to the TA for 45

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review and written approval before the TA will reimburse the Sponsor with Measure A Funds or Measure W Funds.

In addition, Measures A and W Funds are eligible for reimbursement of Sponsor’s Project management oversight expenses associated with the construction of the Project. This would include activities such as construction management inspection, expenses associated with reviewing proposed change orders, and activities involved with submitting final costs to the appropriate agencies to secure other leveraged funds. Expenditure of Measure A and Measure W Funds remains subject to the limits set forth in the Agreement.

The Sponsor may include additional work beyond the Scope of Work for the Project at its own expense. The TA will require these costs to be segregated from the other item work expenses and paid for with non-Measure A or Measure W Highway Program funds.

Miscellaneous – fees from other agencies, including permit fees or reimbursement for review or oversight costs needed for the Project are eligible costs. However, the cost of permits or fees from the Project Sponsor will not be eligible. Utility relocation costs are eligible for reimbursement according to previous agreements establishing rights for those utilities. The costs for specialized equipment for testing, analysis or production of documents for Projectrelated work are also eligible. 46

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Exhibit D: Reimbursement Claim Form
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Exhibit E: National Transit Database Reporting Requirements The NTD was established by Congress to be the Nation’s primary source for information and statistics on the transit systems of the United States. Recipients or beneficiaries of grants from the Federal Transit Administration (FTA) under the Urbanized Area Formula Program (§5307) or Other than Urbanized Area (Rural) Formula Program (§5311) are required by statute to submit data to the NTD. Over 660 transit providers in urbanized areas currently report to the NTD through the Internet-based reporting system. Each year, NTD performance data is used to apportion over $5 billion of FTA funds to transit agencies in urbanized areas (UZAs). Annual NTD reports are submitted to Congress summarizing transit service and safety data.

Below is a partial list of reported elements that may change at any time. For additional information, please go to the National Transit Database website at:
https://www.transit.dot.gov/ntd.
a) Deadhead (Miles/Hours): The miles and hours that a vehicle travels when out of revenue service.
i) Deadhead includes:
1) Leaving or returning to the garage or yard facility; 2) Changing routes;
3) When there is no expectation of carrying revenue
passengers;
ii) However, deadhead does not include:
1) Charter service;
2) School bus service;
3) Operator training;
4) Maintenance training;
b) Fuel Consumed: The quantity of fuel consumed for the service (by fuel type);
c) Mechanical System Failure - Major: A failure of some mechanical element of the revenue vehicle that prevents the vehicle from completing a scheduled revenue trip or from starting the next scheduled revenue trip because actual movement is limited or because of safety concerns; d) Mechanical System Failure - Other: A failure of some other mechanical element of the revenue vehicle that, because of local agency policy, prevents the revenue vehicle from completing a scheduled revenue trip or from starting the next scheduled revenue trip even though the vehicle is physically able to continue in revenue service. Any mechanical problem that delayed service more than five minutes, even if no Road Call was required;
e) Passenger Miles Traveled (PMT): The cumulative sum of the distances ridden by each passenger;
f) Reportable Incident: A safety or security incident occurring on transit property or otherwise affecting revenue service that results in one or more of the following conditions:
i) A fatality confirmed within 30 days of the incident; ii) An injury requiring immediate medical attention away from the scene for one or more persons;
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iii) Property damage equal to or exceeding $25,000;
iv) An evacuation for life safety reasons; or
v) A mainline derailment.
g) Revenue Service (Miles, Hours, and Trips): The time when a vehicle is available to the general public and there is an expectation of carrying passengers. Vehicles operated in fare free service are considered in revenue service.
i) Revenue service includes:
1) Layover / recovery time.
ii) Revenue service excludes:
1) Deadhead
2) Vehicle maintenance testing
3) School bus service, and
4) Charter service.
h) Total Service (Miles or Hours): The time or miles from when a transit vehicle starts (pull-out) from a garage to go into revenue service to the time or miles it returns to the garage (pull-in) after completing its revenue service.
i) Since total service covers the time or miles between:
1) Pullout; and
2) Pull-in;
ii) It therefore includes both:
1) Deadhead; and
2) Revenue service;
i) Unlinked Passenger Trips (UPT): The number of passengers who board public transportation vehicles. Passengers are counted each time they board vehicles no matter how many vehicles they use to travel from their origin to their destination.
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Exhibit F: Quarterly/Annual Shuttle Program Progress Report Form 50 CONSENT ITEM 3.3

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: James Colin, City Clerk
SUBJECT: Clarification on the 2025 City Council Meeting Calendar Recommendation
Approve the revisions to the 2025 City Council meeting calendar to correct scheduling errors and address conflicts.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority: Ensure Our Financial and Organizational Health Background
The City Council previously adopted the 2025 meeting calendar; however, staff has identified three areas requiring clarification and correction:

1. June Meetings:
o The previously adopted calendar incorrectly scheduled regular meetings for June 10 and June 24. Regular Council meetings are held on the first and third Tuesdays of each month. The calendar will be updated to reflect the correct dates: June 3 and June 17.

2. September Study Session:
 A study session was scheduled for September 23, which falls on Rosh Hashana.

To avoid this conflict, the study session will be rescheduled to September 25. 51 CONSENT ITEM 3.3

3. November Study Session:
o A study session was scheduled for November 11, which falls on Veterans Day, a federal holiday. To avoid this conflict, the study session will be rescheduled to Thursday, November 13.

Analysis
The proposed revisions ensure compliance with the City’s standard meeting schedule and accommodate holidays. These updates do not affect the overall frequency of Council meetings or study sessions but provide clarity and alignment with established practices.

Fiscal Impact
There is no fiscal impact associated with this change.

Environmental Review
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.

Government Code § 84308
Applicability of Levine Act: No, as the proposed action does not involve an entitlement.

Analysis of Levine Act Compliance: Not applicable.

Attachments

1. Updated Schedule
52 Su Mo Tu We Th Fr Sa JAN Su Mo Tu We Th Fr Sa APR
1 2 3 4 7 - Regular Meeting @ 6:30 pm 1 2 3 4 5
5 6 7 8 9 10 11 21 - Regular Meeting @ 6:30 pm 6 7 8 9 10 11 12 12 13 14 15 16 17 18 13 14 15 16 17 18 19
19 20 21 22 23 24 25 20 21 22 23 24 25 26
26 27 28 29 30 31 27 28 29 30
Su Mo Tu We Th Fr Sa FEB Su Mo Tu We Th Fr Sa MAY
1 1 2 3
2 3 4 5 6 7 8 4 5 6 7 8 9 10
9 10 11 12 13 14 15 11 12 13 14 15 16 17
16 17 18 19 20 21 22 18 19 20 21 22 23 24
23 24 25 26 27 28 25 26 27 28 29 30 31
Su Mo Tu We Th Fr Sa MAR Su Mo Tu We Th Fr Sa JUN
1 1 2 3 4 5 6 7 3 - Regular Meeting @ 6:30 pm
2 3 4 5 6 7 8 8 9 10 11 12 13 14
9 10 11 12 13 14 15 15 16 17 18 19 20 21
16 17 18 19 20 21 22 22 23 24 25 26 27 28
23 24 25 26 27 28 29 29 30
30 31
4 - Regular Meeting @ 6:30 pm
18 - Regular Meeting @ 6:30 pm
25 - Study Session @ 6:00 pm
15 - Regular Meeting @ 6:30 pm
22 - Study Session @ 6:00 pm
18 - Regular Meeting @ 6:30 pm
1 Council Teambuilding Retreat - @ 9:00 am
27 - Budget Meeting @ 6:00 pm
8 - Strategic Planning Retreat @ 9:00 am
2025
4 - Regular Meeting @ 6:30 pm
20 - Regular Meeting @ 6:30 pm

CITY COUNCIL MEETING

SCHEDULE
6 - Regular Meeting @ 6:30 pm
13 - Budget Meeting @ 6:00 pm
1 - Regular Meeting @ 6:30 pm
17 - Regular Meeting @ 6:30 pm
53 Su Mo Tu We Th Fr Sa JUL Su Mo Tu We Th Fr Sa OCT
1 2 3 4 5 1 2 3 4
6 7 8 9 10 11 12 5 6 7 8 9 10 11
13 14 15 16 17 18 19 12 13 14 15 16 17 18
20 21 22 23 24 25 26 19 20 21 22 23 24 25
27 28 29 30 26 27 28 29 30 31
Su Mo Tu We Th Fr Sa AUG Su Mo Tu We Th Fr Sa NOV
1 2 1 4 - Regular Meeting @ 6:30 pm
3 4 5 6 7 8 9 2 3 4 5 6 7 8
10 11 12 13 14 15 16 9 10 11 12 13 14 15 18 - Regular Meeting @ 6:30 pm 17 18 19 20 21 22 23 16 17 18 19 20 21 22
24 25 26 27 28 29 30 23 24 25 26 27 28 29
31 30
Su Mo Tu We Th Fr Sa SEP Su Mo Tu We Th Fr Sa DEC
1 2 3 4 5 6 1 2 3 4 5 6
7 8 9 10 11 12 13 7 8 9 10 11 12 13
14 15 16 17 18 19 20 14 15 16 17 18 19 20
21 22 23 24 25 26 27 21 22 23 24 25 26 27
28 29 30 28 29 30 31
2025 CITY COUNCIL MEETING

SCHEDULE
7 - Regular Meeting @ 6:30 pm
21 - Regular Meeting @ 6:30 pm
2 - Regular Meeting @ 6:30 pm
16 - Regular Meeting @ 6:30 pm
2 - Regular Meeting @ 6:30 pm
16 - Regular Meeting @ 6:30 pm
25 - Study Session @ 6:00 pm
13 - Study Session @ 6:00 pm
9 - Council Reorganization @ 6:00 pm
19 - Cancelled Meeting (Council Recess)
5 - Cancelled Meeting (Council Recess)
8 - Special Council Meeting @ 6:30 pm
15 - Regular Meeting @ 6:30 pm
29 - Study Session @ 6:00 pm
54 CONSENT ITEM 3.4

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Mayor and Members of the City Council
VIA: John D. Lê, City Attorney
SUBJECT: Consent to Joint Representation
Recommendation
Adopt a resolution authorizing the City Attorney to execute a consent letter agreeing to the joint representation by Goldfarb & Lipman LLP of City of East Palo Alto and Habitat for Humanity, regarding 1532 Ursula Way.

Alignment with City Council Strategic Plan
Priority No. 3: Increase Organizational Effectiveness and Efficiency Background
Goldfarb & Lipman LLP advised the City Attorney of a potential conflict of interest of Goldfarb & Lipman to represent the City of East Palo Alto and Habitat for Humanity Greater San Francisco, a California nonprofit public benefit corporation (“Habitat”), with activities regarding the 1532 Ursula Way (“Property”), and both parties’ right to exercise an option to purchase homes originally purchased by Habitat using Low to Moderate Income Housing Funds. The owner has been provided a notice of intent to transfer the Property and Habitat has exercised their right to purchase it.

Goldfarb & Lipman LLP have represented and continue to represent the city in connection with a number of matters, including land use and affordable housing matters. The City of East Palo Alto and Habitat are existing clients of Goldfarb & Lipman LLP.

Habitat has expressed willingness to consent to the joint representation.

Analysis
The Rules of Professional Responsibility require Goldfarb & Lipman LLP to obtain the informed 55 CONSENT ITEM 3.4
written consent of both Habitat and the City to represent both parties in any matter concerning legal representation. Goldfarb & Lipman LLP prepared a letter describing the potential for a conflict of interest to arise from joint representation. The City Attorney has reviewed the letter, and potential consequences of joint representation, has concluded that the potential for a conflict of interest is remote, and that joint representation is feasible and desirable. The City Attorney recommends that the City Council agree to joint representation by authorizing the City Attorney to execute a consent agreeing to the joint representation.

Alternative
Direct the City Attorney to hire separate legal counsel.

Fiscal Impact
There is no fiscal impact for this item.

Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.

Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.

Government Code § 84308
Applicability of Levine Act: No, as the proposed action does not entail an entitlement.

Analysis of Levine Act Compliance: Not applicable.

Attachments

1. Resolution.
56 Resolution No. XX-2025 1 of 2
RESOLUTION NO. XX– 2025

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

AUTHORIZING THE CITY ATTORNEY TO EXECUTE A CONSENT LETTER AGREEING TO

THE JOINT REPRESENTATION BY GOLDFARB & LIPMAN LLP OF CITY OF EAST PALO ALTO AND HABITAT FOR HUMANITY GREATER SAN FRANCISCO, REGARDING 1532

URSULA WAY
WHEREAS, Goldfarb & Lipman LLP advised the City Attorney of a potential conflict of interest of Goldfarb & Lipman to represent the City Habitat for Humanity Greater San Francisco (“Habitat”) in connection with activities regarding certain real property at 1532 Ursula Way, in East Palo Alto, CA; and
WHEREAS, the City is an existing client of Goldfarb & Lipman LLP. They have represented and continue to represent the city in several matters regarding land use and affordable housing matters; and
WHEREAS, Habitat is an existing client of Goldfarb & Lipman. They represent Habitat in connection with several other affordable housing projects and the preservation of existing affordable units; and
WHEREAS, the Rules of Professional Responsibility require Goldfarb & Lipman LLP to obtain the informed written consent of both Habitat and the City in order to represent both parties in the activities; and
WHEREAS, Goldfarb & Lipman prepared a letter describing the potential for a conflict to arise from joint representation; and
WHEREAS, the City Attorney has reviewed the letter, and potential consequences of joint representation, concluded that the potential for a conflict of interest is remote. The City Attorney recommends that the City Council agree to joint representation.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY:

1. Finds the foregoing recitals are true and correct, and are incorporated by this reference into this action;

2. Consents to joint representation of City and Habitat by Goldfarb & Lipman LLP;

3. Authorizes the City Attorney to execute a consent letter agreeing to the joint representation; and

4. Finds that the proposed action does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines sections 15378(b)(4) and (5) in that it is a governmental fiscal, organizational or administrative activity that will not result in direct or indirect changes in the environment. 57 Resolution No. XX-2025 2 of 2
PASSED AND ADOPTED this 21st day of January 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Martha Barragan, Mayor
ATTEST: APPROVED AS TO FORM:

James Colin, City Clerk John D. Lê, City Attorney
58 CONSENT ITEM 3.5

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Jeff Liu, Chief of Police
SUBJECT: Authorization to Amend Telepath Corporation Contract to Increase Purchase Order for Installation of Emergency Communication Equipment with Maintenance Services.

Recommendation
Adopt a resolution authorizing the City Manager to amend the current contract with Telepath Corporation, in a form approved by the City Attorney, to increase the contract amount by $20,625.21 for a one-year total of $86,157.38, or a total amount over five years increasing from $327,660.85 to $348,286.06.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 1: Enhance Public Safety and Emergency Preparedness Priority No. 3: Increase Organizational Effectiveness and Efficiency Priority No. 6: Create a Healthy and Safe Community
59 CONSENT ITEM 3.5
Background
On December 6, 2005, the City Council, via Resolution #2532A, adopted the Vehicle Fleet and Replacement Guidelines. These guidelines outline the standards by which the City will replace vehicles. According to the guidelines, patrol vehicles shall be replaced at five years or 100,000 miles. This policy ensures City vehicles remain operable with reasonable maintenance. This policy ensures police vehicles are safe and effective, especially considering the high-risk nature of police driving.

On February 6, 2024, the City Council approved the RFP with Telepath Corporation and Resolution #07-2024 for three years with an optional additional two years.

Analysis
The current purchase order is short of funding due to the new purchases of electric police vehicles that City Council approved on December 17, 2024. The addition of the latest EV vehicles was not listed in the original RFP, since at the time the addition of three EV was not being considered. The requested amount of $20,625.21 will allow upfitting of the EV’s for police services. This is a one-time addition of funds only in FY24-25 from $65,532.17 to $86,157.38. In years 2 through 5, the annual amount would revert to $65,532.17. Thus, the total amount over five years will increase from $327,660.85 to $348,286.06.

Staff recommends that we amend the current contract with Telepath Corporation to increase funding to complete the installation of three electric unmarked police vehicles since our City Council approved the vehicles' purchases on December 17, 2025, via Council Resolution. That resolution did not cover the actual cost of installing emergency and communication equipment.

It should be noted the Telepath Corporation is very specialized in their contract and that other vendors will not provide 24/7 mobile response. Staff recommends increasing the purchase order would be the course of action.

Fiscal Impact
The amended Purchase Order increase will be $20,625.21 would be added to the current purchase order of $65,532.17 and will be paid by our Supplement Law Enforcement Services Fund grant. This amount is a one-time increase to an amended contract. If approved, the annual amount reverts to $65,532.17 per year in years 2 through 5 as directed by Resolution 07-2024.

No fiscal impact to the current FY24-25 budget.

Public Notice
60 CONSENT ITEM 3.5
The public was provided notice by making the agenda and report available on the City's website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.

Environmental
The action being considered does not constitute a "Project" within the meaning of the California Environmental Quality Act (CEQA), under CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.

Government Code § 84308
Applicability of Levine Act: Yes.

Analysis of Levine Act Compliance: The signatory(ies) for the agreement(s) is/are Jo Jo Tran, Chief Executive Officer of Telepath Corporation. Staff is unaware of any other parties or participants relevant to the Council’s consideration of this item.

Attachments

1. Resolution

2. Telepath Quotes
61 RESOLUTION NO. XX– 2024

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

AUTHORIZING THE CITY MANAGER TO AMEND THE CURRENT CONTRACT

WITH TELEPATH CORPORATIONIN A FORM APPROVED BY CITY ATTORNEY, FOR AN INCREASED PURCHASE ORDER FOR $20,625.21 ADDED TO THE CURRENT AMOUNT OF $65,532.17 FOR FY24-25 FOR A TOTAL CONTRACT AMOUNT INCREASING FROM $327,660.85 TO $348,286.06 OVER FIVE YEARS.

WHEREAS, the City of East Palo Alto Police Department must periodically purchase and install emergency equipment, electrical components and safety equipment to comply with State laws (sometimes referred to as "upfitting") to have an official police vehicle, in addition to maintenance and repair to its fleet vehicles; and WHEREAS, the City desires to contract with qualified vendor to provide upfitting and repair services for its entire fleet police vehicles; and WHEREAS, the Police Department is required to have well-maintained vehicles and safety equipment for its employees to provide services to City residents; and WHEREAS, on December 17, 2024, the City Council approved three electric vehicles for the Police Department.; and
WHEREAS, the original purchase order was limited for gasoline vehicles via the original contract that was approved by City Council on February 6, 2024; and WHEREAS, Telepath Corporation was the only company to provide both vital services components for the Police Department; and
WHEREAS, staff has determined that additional funding is needed to amend the Telepath Corporation contract to resolve the underfunding of the new electric vehicles; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of East Palo Alto hereby:

1. Finds the foregoing recitals are true and correct, and are incorporated by this action; and

2. Adopts a resolution authorizing the City Manager to amend the current Telepath Corporation contract, in a form approved by the City Attorney, for a $20,660.85 increase in the FY24-25 purchase order from $65,532.17 to $86,157.38, or a total amount over five years increasing from $327,660.85 to $348,286.06, for upfitting three EV’s police vehicles for police services. 62 PASSED AND ADOPTED this 21st day of January 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Martha Barragan, Mayor
ATTEST: APPROVED AS TO FORM:

James Colin, City Clerk John D. Lê, City Attorney
63 64
65 66
CONSENT ITEM 3.6

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: James Colin, City Clerk
SUBJECT: City Council Meeting Minutes
Recommendation
Adopt the January 7, 2025, City Council Meeting Minutes.

Attachments

1. January 7, 2025, City Council Meeting Minutes.
67 EAST PALO ALTO CITY COUNCIL

REGULAR SESSION MINUTES
Tuesday, January 7, 2025, 6:30 PM
EPA Government Center
2415 University Avenue, First Floor
East Palo Alto, CA 94303

1. CALL TO ORDER AND ROLL CALL
The City Council meeting was called to order by Mayor Barragan at 6:31 PM.

Attendee Name Title Status Arrived
Martha Barragan Mayor Present
Mark Dinan Vice Mayor Present
Carlos Romero Councilmember Present
Ruben Abrica Councilmember Present
Webster Lincoln Councilmember Present

2. APPROVAL OF THE AGENDA
A motion to approve the agenda was made by Councilmember Romero, seconded by Vice Mayor Dinan, and passed unanimously.

3. APPROVAL OF CONSENT CALENDAR
A motion to approve the consent calendar was made by Councilmember Romero, seconded by Vice Mayor Dinan, and passed unanimously.

3.1 Proclamation of the City of East Palo Alto Commemorating the Contributions of the Reverend Dr. Martin Luther King, Jr., in the Fight for Equality.

3.2 Proclamation Taking a Stand Against Human Trafficking in the Bay Area

4. CLOSED SESSION

5. PUBLIC COMMENT
The following speakers provided public comment:
- Horacio Barrera
- Gail Wilkerson-Dixon
- Gavi
- Marisela Ramos

6. INFORMATIONAL REPORTS

7. SPECIAL PRESENTATIONS 68

8. ADJOURN CITY COUNCIL REGULAR MEETING TO THE EAST PALO

ALTO SANITARY DISTRICT BOARD MEETING

9. SANITARY DISTRICT MEETING

9.1 East Palo Alto Sanitary District (EPASD) Advisory Committee Scope and Regular Meeting Schedule
City Clerk, James Colin, presented the East Palo Alto Sanitary District (EPASD) Advisory Committee Scope and Regular Meeting Schedule.

The following speakers provided public comment:
- Adrienne Bryant
- Jeff Poetsch
A motion to approve item 9.1 was made by Councilmember Romero, seconded by Mayor Barragan and passed unanimously.

9.2 East Palo Alto Sanitary District (EPASD) Advisory Committee Appointments
City Clerk, James Colin, presented the item and facilitated the appointments of the EPASD Advisory Committee.

After interviewing the applicants, the Council made the following appointments:

Name Seat Initial Term Subsequent Term
Deborah LewisVirgesCity of East Palo Alto
Seat 2
2025-28 2028-2031
Mario H. Mendoza City of East Palo Alto
Seat 3
2025-28 2028-2031
Grace Popple City of East Palo Alto
Seat 4
2025-27 2027-2030
Stephanie R. Griffin City of East Palo Alto
Seat 5
2025-27 2027-2030
*TBD City of East Palo Alto
Alternate Seat
2025-28 2028-2031
69 *The alternate seat for the EPASD Advisory Committee remains open as a result of a last-minute withdrawal of the seat by one of the applicants. Staff, along with the Council, will determine who will be appointed to the position in the upcoming month.

10. ADJOURN EAST PALO ALTO SANITARY DISTRICT MEETING AND

RECONVENE CITY COUNCIL REGULAR MEETING

11. PUBLIC HEARINGS

12. POLICY AND ACTION

12.1 Commission Appointments
City Clerk, James Colin, presented the item and facilitated the appointments of the Public Works and Transportation Commission.

Name Seat Term
Isabel Lopez Ysmael Seat 1 5/31/2024-5/31/2027
Marianna Sumina Seat 3 5/31/2024-5/31/2027
Tonga Victoria Seat 5 5/31/2024-5/31/2027

12.2 Project WeHOPE’s Proposed Use of 1798 Bay Road for Functional Zero Effort
Pastor Paul Baines, from Project WeHope presented on item 12.2 The following speakers provided public comment:
- Christopher Kao
- Marianna Sumina

12.3 Measure HH Pilot Workforce Development Program: Streetcode Academy Final Performance Report and Draft Evaluation Plan
Hanson Hom, Deputy Manager Special Projects, Olatunde Sobomehin, Juanita Croft from StreetCode Academy and Evan Gatozzi from Informing Change provided a presentation on item 12.3.

12.4 Ending Temporary Water Rate Reductions and Implementing July 1, 2023, Water Rate Schedule
Richard Perez, Utilities Manager, provided a presentation on item 12.4. 70 A motion to approve item 12.4 was made by Vice Mayor Dinan, seconded by Councilmember Romero and passed unanimously.

13. COUNCIL REPORTS

14. ADJOURNMENT
The meeting was adjourned at 11:47PM
71 CONSENT ITEM 3.7

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: James Colin, City Clerk
SUBJECT: Mayoral Committee Appointments and Assignments Recommendation
By motion, update or confirm existing appointments and assignment list to regional boards, committees, and commissions, and direct staff to file a revised appointments and assignments list with affected agencies.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority: Ensure Our Financial and Organizational Health Background
Individual members of the City Council represent the City of East Palo Alto on various local and regional boards, committees, and commissions. The existing appointment and assignment list needs to be updated to reflect Council changes and filed with affected agencies for notification purposes. The existing appointment and assignment list is attached as Attachment

1. Analysis
The process of appointing representatives to boards, committees, and commissions in the City involves collaboration between the Mayor, Vice Mayor, and the City Council. Traditionally, the Mayor and Vice Mayor play a pivotal role in selecting individuals to serve on these bodies, taking into consideration their expertise, qualifications, and commitment to community service. 72 CONSENT ITEM 3.7
Once these selections are made, the City Council then reviews and approves the appointments. Councilmembers can also decide to make changes to these appointments.

Fiscal Impact
There is no fiscal impact for this item.

Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.

Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.

Government Code § 84308
Applicability of Levine Act: No.

Analysis of Levine Act Compliance: Not applicable.

Attachments

1. List of Proposed East Palo Alto Committee Assignments. 73 Regional Agencies Council Representative Council Alternate Meeting Time Location Policy Area City Council Committee Assignments
Association of Bay Area Governments
(ABAG)
Meetings & Events | Association of Bay Area
Governments(ca.gov)
Barragan Romero Times vary
375 Beale Street
Suite 700
San Francisco
Housing
Bay Area Water Supply and
Conservation Agency (BAWSCA)
Meeting Agendas (bawsca.org)
Lincoln Abrica
6:30 – 8:45 PM
Every 3rd Thursday of the Month
Burlingame Community Center –
Sequoia Room
850 Burlingame Ave. Burlingame Water
City and County Association of
Governments(CCAG)
Board of Directors | C/CAG
Barragan Dinan
6:30 – 9:00 PM
Every 2nd Thursday of the Month
San Mateo County
Transit District Office,
1250 San Carlos Ave,
2nd Fl. Auditorium,
San Carlos, CA
Transportation,
Stormwater Runoff,
Hazardous Waste,
Solid Waste and
Recycling, Air Quality,
Land Use Near
Airports…
Commute.org (Peninsula CleanEnergy
JPA)
About - Commute
Romero Dinan Every Third Thursday of Every other month Virtual Transportation Penisula Clean Energy JPA Board of
Directors - Peninsula Clean Energy Romero Barragan 2075 Woodside Road Redwood City Every fourth Thursday of every
month (except September,
November, and December) at
6:30 p.m.

Recycled Water Advisory Committee
Santa Clara Valley Water District - Board
Meetings(legistar.com)
Lincoln Romero
Times Vary
2nd & 4th Tuesday of the Month
Hybrid
San Jose 5700 Almaden Exressway
Re-Think Waste
Meetings – RethinkWaste Romero Lincoln 3:30 PM
Every 4th Thursday of the Month
Silicon Valley Clean Water
Administrative Offices 2nd floor
Pelican Conference Room
1400 Radio Road 2nd floor
San Francisquito Creek JPA
Santa Clara Valley Water District - Board
Meetings(legistar.com)
Abrica Dinan Every 4th Thursday of the Month
San Mateo County Libraries JPA
JPA Governing Board | San Mateo County
Libraries(smcl.org)
Dinan Romero Times and dates vary 125 Lessingia Court, San Mateo San Mateo County Office of Emergency
Services
Department of Emergency Management |
Barragan Abrica 5:30 PM – 7:00 PM Virtual
74 San Mateo County Mosquito and
Vector Control
Board Meetings - San Mateo County
Mosquito and Vector Control District
(smcmvcd.org)Board Meetings - San Mateo
County Mosquito and Vector Control
District (smcmvcd.org)
Donna Rutherford
(Representative not required to be on Council N/A Times and dates vary 1351 Rollins Road, Burlingame CA 94010
SFO Airport/Community Roundtable
Meetings – SFO Airport/Community
Roundtable (sforoundtable.org)
Barragan Lincoln Times and dates vary David J. Chetcuti Community Room 450 Poplar Ave | Millbrae, CA 94030
Economic Development (ED) Strategic Plan
City Council Ad Hoc Subcommittee
Dinan
Lincoln TBD TBD
75 SANITARY DISRICT CONSENT ITEM 9.1

EAST PALO ALTO

SANITARY

DISTRICT BOARD

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Members of the City of East Palo Alto City Council, Governing Board to the East Palo Sanitary District, a Subsidiary of the City of East Palo Alto
VIA: Melvin E. Gaines, General Manager
BY: Tomohito Oku, District Treasurer
SUBJECT: Cash Disbursement Report
Recommendation
Accept the cash disbursement report required pursuant to California Health and Safety Code Section 6794.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
 Promote Health & Public Safety.
 Ensure Our Financial and Organizational Health
Background
On November 15, 2024, the San Mateo Local Area Formation Commission (“LAFCo”) unanimously approved the City of East Palo Alto’s application requesting that the East Palo Alto Sanitary District (“District”) be made a subsidiary of the City of East Palo Alto.

On October 1, 2024, the reorganization of the East Palo Alto Sanitary District (EPASD) as a subsidiary of the City of East Palo Alto (City), and the City Council its governing board, became effective. Prior to and since that time, staff has worked diligently toward a peaceful and smooth transition. To that end, one aspect of that transition has required staff to review local rules and regulations of EPASD that may require amendment in light of the reorganization.
76 SANITARY DISRICT CONSENT ITEM 9.1
California Health and Safety Code (H&S) Section 6794 allows the Board to adopt a procedure that provides for checks or warrants to pay claims and demands without approval by the Board of Directors before payment if the District Treasurer determines that the demands are payable within the District’s approved budget.

On December 3, 2024, the Board adopted an ordinance amending various provisions of the Sanitary District Code including Section 303 Appointed Positions, which authorizes District Treasurers to perform duties including the deposit and withdrawal of funds of the District, issuance of checks or warrants to pay claims and demands without approval by the Board before payment if the District Treasurer determines that the demands are payable within the District’s approved budget.

Furthermore, H&S Section 6794 requires staff to present cash disbursements to the Board at the next regular board meeting and seek Board approval if demands exceed the District approved budget.

This staff report is informational and includes all cash disbursements from October 1, 2024, to December 31, 2024, approved by District Treasurer. As of December 31, 2024, the actual expenses did not exceed the District’s approved budget.

Analysis
The following cash disbursements have been approved by District Treasurer pursuant to the District Code Section 303, and are hereby reported to the Board:

EPASD Cash Disbursement Reports
For Period Ending December 31, 2024
Name Description
Check
Amount
Check
Number
Check Issue
Date
CALIF PUBLIC EMPLOYEES' EPASD CALPERS OCT 2024 $ 7,529.13 746 10/1/2024 CALIF PUBLIC EMPLOYEES' EPASD CALPERS OCT 2024 $ 15,863.46 746 10/1/2024 SPEEDY PRINTING & MAILING Postage requirement EDDM self mailer $ 1,688.27 70743 10/18/2024 40 Hrs, Inc. STAFF PAYMENT W/E 9/29/24 $ 8,619.60 70712 10/18/2024 40 Hrs, Inc. STAFF PAYMENT W/E 10/6/24 $ 8,323.20 70712 10/18/2024 40 Hrs, Inc. Staffing Services $ 4,786.24 70719 10/18/2024 40 Hrs, Inc. Staffing Services $ 4,744.52 70719 10/18/2024 AT&T PHONE LINE FOR EPASD $ 584.22 70762 10/25/2024
AT&T EPASD $ 604.89 70770 10/25/2024

ENGINEERING DATA SOFTWARE
EPASD SEWER SERVICE CHARGES ON THE 24-25
SMC TAX ROLL $ 5,961.30 70779 10/25/2024
JO ANN WRIGHT Catering for 9/17/24 $ 550.00 70790 10/25/2024 PACIFIC GAS & ELECTRIC Utilities $ 328.52 70802 10/25/2024 RECOLOGY SAN MATEO COUNTY EPASD $ 707.04 70809 10/25/2024 RECOLOGY SAN MATEO COUNTY EPASD MAILER $ 493.25 70813 10/25/2024 RECOLOGY SAN MATEO COUNTY Monthly car allowance Oct 2024 $ 400.00 70756 10/25/2024 RECOLOGY SAN MATEO COUNTY ADP FOR EPASD EE $ 9,120.98 743 10/31/2024 RECOLOGY SAN MATEO COUNTY ADP FOR EPASD EE $ 3,745.41 743 10/31/2024 RECOLOGY SAN MATEO COUNTY ADP FOR EPASD ER $ 186.57 743 10/31/2024 RECOLOGY SAN MATEO COUNTY ADP FOR EPASD $ 55.86 743 10/31/2024 77 SANITARY DISRICT CONSENT ITEM 9.1
COMCAST Business servcies recurring charges $ 808.05 70870 11/8/2024 Concentra Health Services Inc
DOT W/HEP B VACC-1ST INJ, DOT PHYSICAL
(NATAIEL) $ 123.00 70872 11/8/2024
PITNEY BOWES INC Reissue ck#16031 for inv#1025517699 $ 128.29 70890 11/8/2024 PITNEY BOWES INC Purchase Power $ 255.49 70891 11/8/2024 PITNEY BOWES INC Purchase Power $ 45.78 70891 11/8/2024

PITNEY BOWES INC

WATER BILLS PAYMENT FOR THREE ACCOUNTS
415720 386303 385576 $ 347.07 70910 11/8/2024
PITNEY BOWES INC WATER BILLS $ 645.56 70910 11/8/2024
PITNEY BOWES INC STAFF PAYMENT W/E 10/13/24 $ 9,825.80 70852 11/8/2024 RFC Wireless, Inc. Monthly repeater service $ 132.00 70894 11/8/2024 Golden Touch Computer Consultants Reissue chekc#16241 for inv#39 $ 5,200.00 70878 11/8/2024 Professional Communication Services Answering servie fo r8/28/24 $ 385.03 70892 11/8/2024 Sierra West Consultants, Inc
Reissue check#16232 for inv#2024-135, 2024-136,
2023-140 $ 6,993.80 70898 11/8/2024
UniFirst Corporation Maint Uniforms and Supplies $ 308.32 70909 11/8/2024 UniFirst Corporation Maint Uniforms and Supplies $ 288.57 70909 11/8/2024 UniFirst Corporation Maint Uniforms and Supplies $ 288.57 70909 11/8/2024 Dennis Scherzer
Reimbersement for special board meeting on
9/30/24 for Taqueria La Cazuela $ 175.16 70873 11/8/2024 ADP Wages $ 0.02 751 11/8/2024
AA LOCK & ALARM INC. Service call to rekey lock $ 218.02 70915 11/19/2024 AA LOCK & ALARM INC.

Service call to rekey of 11 exterior cylinders , 26
interior cylinders and new master $ 4,055.30 70915 11/19/2024 AA LOCK & ALARM INC. Service call to rekey 9 cyliners and provide 12 keys $ 985.75 70915 11/19/2024 AA LOCK & ALARM INC. Current PG&E delivery charges $ 45.32 70945 11/19/2024 Everon LLC Equipment lease $ 1,072.62 70933 11/19/2024
Everon LLC Equipment lease $ 1,072.62 70933 11/19/2024
Everon LLC STAFF PAYMENT W/E 10/27/24 $ 8,594.53 70914 11/19/2024 Everon LLC Staffing Services WE 10/19/24 $ 5,120.00 70917 11/19/2024 Everon LLC Maint Uniforms and Supplies $ 288.57 70950 11/19/2024 Everon LLC Maint Uniforms and Supplies $ 288.57 70950 11/19/2024 Everon LLC Janitorial Services for Oct 2024 $ 1,320.00 70939 11/19/2024 Everon LLC Accounting, HR and Consulting Services for Oct 2024 $ 10,156.94 70941 11/19/2024 Everon LLC PACIFIC GAS & ELECTRIC EPASD $ 8,840.17 70996 11/22/2024 QUALITY PLUMBING Plumbing repair at EPASD $ 799.00 71000 11/22/2024

QUALITY PLUMBING
Current meter base fee for water servcies and capital
improvement base fee $ 645.56 71015 11/22/2024
QUALITY PLUMBING Monthly repeater service $ 132.00 71002 11/22/2024 QUALITY PLUMBING Answering service for Sept to Oct $ 197.06 70999 11/22/2024 Michael Woo Forensic Accounting Services for EPASD $ 5,775.00 70990 11/22/2024 California Special Districts Associaton Annual membership dues for 2025 $ 1,809.00 70965 11/22/2024 JS Transcription Services Transcription services for special board meetings $ 600.00 70985 11/22/2024 Nigel Spears REISSUE EPASD CK#16206 RDI FEE $ 210.00 70995 11/22/2024 Nigel Spears Nov 2024 charges $ 615.40 71025 11/26/2024 Nigel Spears STAFF PAYMENT W/E 11/03/24 $ 8,904.06 71018 11/26/2024 Nigel Spears Staffing Services $ 5,719.04 71021 11/26/2024 Calvin Lin Permit refund fees $ 700.00 71023 11/26/2024 Calvin Lin FEE $ 49.85 747 11/29/2024
Calvin Lin TAX $ 186.56 747 11/29/2024
Calvin Lin TAX $ 3,745.41 747 11/29/2024
Calvin Lin FEE $ 49.85 747 11/29/2024
Calvin Lin TAX $ 186.56 747 11/29/2024
Calvin Lin TAX $ 3,745.41 747 11/29/2024
Calvin Lin Wages $ 9,120.98 747 11/29/2024
Calvin Lin Wages $ 9,120.98 747 11/29/2024
Calvin Lin PHONE CHARGES $ 591.82 71049 12/6/2024
Calvin Lin STAFF PAYMENT W/E 11/10/24 $ 7,869.99 71042 12/6/2024 Calvin Lin Staffing Services $ 4,765.38 71047 12/6/2024 Akintunde A Okupe Monthly car allowance NOV 2024 $ 400.00 71044 12/6/2024 Akintunde A Okupe Maint Uniforms and Supplies $ 292.20 71087 12/6/2024 Akintunde A Okupe Maint Uniforms and Supplies $ 288.57 71087 12/6/2024 78 SANITARY DISRICT CONSENT ITEM 9.1
Jeanpierre Wegem Alabi And CO LLP Accounting, HR and Consulting Services for Nov 2024 $ 10,156.94 71066 12/6/2024 Dooley Insurance Services Life & Dental Insurance for Oct and Nov 2024 $ 739.74 71060 12/6/2024 Dooley Insurance Services Life & Dental Insurance for Dec 2024 $ 369.37 71060 12/6/2024 U.S.BANK CORPORATE PAYMENT SYSTEM office supplies EPASD $ 352.82 71094 12/10/2024 U.S.BANK CORPORATE PAYMENT SYSTEM
Fraud Audit for East Palo Alto Sanitary District
(11/19/2024 - 12/4/2024) $ 2,887.50 71093 12/10/2024
David Farnsworth, CPA Audit for Sanitary District $ 11,300.00 71092 12/10/2024 David Farnsworth, CPA EPASD $ 410.13 71112 12/13/2024
David Farnsworth, CPA PACIFIC GAS & ELECTRIC $ 74.37 71138 12/13/2024 David Farnsworth, CPA PACIFIC GAS & ELECTRIC $ 169.22 71138 12/13/2024 David Farnsworth, CPA Machine Postage - Refill and Equipment $ 214.18 71139 12/13/2024 David Farnsworth, CPA STAFF PAYMENT W/E 11/17/24 $ 8,767.05 71095 12/13/2024 David Farnsworth, CPA STAFF PAYMENT W/E 11/24/24 $ 7,949.13 71095 12/13/2024 AppleOne, Inc Staffing Services $ 3,451.20 71100 12/13/2024 AppleOne, Inc Staffing Services $ 4,096.00 71100 12/13/2024 AppleOne, Inc Staffing Services $ 5,108.18 71100 12/13/2024 AppleOne, Inc Staffing Services $ 4,747.15 71100 12/13/2024 AppleOne, Inc Staffing Services $ 5,089.66 71100 12/13/2024 AppleOne, Inc Answering service for OCT 23 TO NOV 8 $ 133.34 71141 12/13/2024 AppleOne, Inc Maint Uniforms and Supplies $ 288.57 71151 12/13/2024 AppleOne, Inc Maint Uniforms and Supplies $ 286.41 71151 12/13/2024 Marquee Pest Management, Inc. R&M Ants/Roach /GP on 9/27/24 $ 77.00 71134 12/13/2024 Marquee Pest Management, Inc. R&M Ants/Roach /GP on 11/15/24 $ 77.00 71134 12/13/2024 Degree HVAC, Inc Quarterly Maintenance on 11/19 $ 250.00 71118 12/13/2024 Degree HVAC, Inc EPASD PHONE LINE $ 591.93 71164 12/20/2024 BACKFLOW PREVENTION SPECI Backflow inspection AT epasd $ 199.00 71165 12/20/2024 BACKFLOW PREVENTION SPECI EPASD $ 416.28 71169 12/20/2024

BACKFLOW PREVENTION SPECI
LEASE SETTLEMENT BREAKING LEASE#0041432868
QUOTE#4060052 $ 4,695.87 71194 12/20/2024
RECOLOGY PENINSULA SERVIC Water charges $ 1,414.08 71196 12/20/2024 RECOLOGY PENINSULA SERVIC EPASD MAILER $ 714.95 71202 12/20/2024 VEOLIA WATER NORTH AMERIC EPASD WATER BILLS $ 186.29 71209 12/20/2024 VEOLIA WATER NORTH AMERIC EPASD WATER BILLS $ 451.85 71209 12/20/2024 VEOLIA WATER NORTH AMERIC EPASD WATER BILLS $ 26.00 71209 12/20/2024 VEOLIA WATER NORTH AMERIC EPASD WATER BILLS $ 645.65 71209 12/20/2024 VEOLIA WATER NORTH AMERIC Equipment lease $ 1,072.62 71179 12/20/2024 VEOLIA WATER NORTH AMERIC Staffing Services $ 5,082.31 71163 12/20/2024 VEOLIA WATER NORTH AMERIC Monthly repeater service $ 132.00 71198 12/20/2024 VEOLIA WATER NORTH AMERIC uniforms and supplies $ 287.88 71207 12/20/2024 Green Source Janitorial DECEMBER MONTHLY JANITORIAL SERVICES $ 1,888.57 71183 12/20/2024 Burk, Williams & Sorensen, LLP PROFESSIONAL SERVICES $ 7,770.75 71167 12/20/2024 Burk, Williams & Sorensen, LLP INSTALLATION OF 5 NEW EBS STATIONS $ 250.00 71187 12/20/2024 Burk, Williams & Sorensen, LLP Life & Dental Insurance for Jan 2025 $ 369.37 71176 12/20/2024 Burk, Williams & Sorensen, LLP Services for electric bill $ 298.49 71229 12/27/2024 Burk, Williams & Sorensen, LLP Services for electric bill $ 289.55 71229 12/27/2024 STATE WATER RESOURCES CON Annual permit fee 7/1/24-6/30/25 for EPASD $ 3,945.00 71236 12/27/2024 STATE WATER RESOURCES CON STAFF PAYMENT W/E 10/20/24 $ 8,648.95 71213 12/27/2024 STATE WATER RESOURCES CON STAFF PAYMENT W/E 12/1/24 $ 6,724.89 71213 12/27/2024 STATE WATER RESOURCES CON STAFF PAYMENT W/E 12/8/24 $ 5,491.31 71213 12/27/2024 STATE WATER RESOURCES CON STAFF PAYMENT W/E 12/15/24 $ 5,858.67 71213 12/27/2024 STATE WATER RESOURCES CON Staffing Services $ 3,920.24 71217 12/27/2024 STATE WATER RESOURCES CON Staffing Services $ 4,970.51 71217 12/27/2024 STATE WATER RESOURCES CON Staffing Services $ 3,423.39 71217 12/27/2024 STATE WATER RESOURCES CON IT SUPPORT $ 5,200.00 71224 12/27/2024 STATE WATER RESOURCES CON IT SUPPORT $ 5,200.00 71224 12/27/2024 STATE WATER RESOURCES CON IT SUPPORT $ 5,200.00 71224 12/27/2024 STATE WATER RESOURCES CON uniforms and supplies $ 892.75 71243 12/27/2024 STATE WATER RESOURCES CON uniforms and supplies $ 233.97 71243 12/27/2024 STATE WATER RESOURCES CON 5 Visits for Rat Interior $ 425.00 71227 12/27/2024 Total $362,734.14
79 SANITARY DISRICT CONSENT ITEM 9.1
Fiscal Impact
There are no budget impacts by this action as the year-to-date cash disbursements did not exceed the District approved budget.

Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.

Environmental
The proposed action is not a “project” under California Environmental Quality Act (CEQA) pursuant to CEQA Guideline section 15378(b)(4) because it is a fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant impact on the environment.

Government Code § 84308
Applicability of Levine Act: No, as no contract or permit is involved.

Analysis of Levine Act Compliance: Not applicable.

Attachments: None
80 SANITARY DISTRICT CONSENT ITEM 9.2

EAST PALO ALTO

SANITARY DISTRICT
BOARD

STAFF REPORT
DATE: January 21, 2024
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, General Manager/City Manager
BY: James Colin, City Clerk/Board Secretary
SUBJECT: Clarification on EPASD Advisory Committee Meeting Schedule Recommendation
Approve the updated meeting schedule for the East Palo Alto Sanitary District (EPASD) Advisory Committee to avoid conflicts with other committee meetings. The Advisory Committee will now meet on the fourth Wednesday of every even month at 6:30 PM instead of the previously proposed first Wednesday of every even month.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 3: Increase Organizational Effectiveness and Efficiency Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 5: Improve Communication and Enhance Community Engagement Background
During the January 7, 2025, City Council meeting, the proposed meeting schedule for the EPASD Advisory Committee was outlined as bi-monthly on the first Wednesday of even months.

However, it has since been identified that this schedule conflicts with another committee meeting held at the same time. To ensure effective participation and avoid scheduling conflicts, staff has reviewed alternative options.

Analysis
To address this conflict, staff proposes that the EPASD Advisory Committee adjust its meeting schedule to the fourth Wednesday of every even month at 6:30 PM. Additionally, the committee will have the ability to schedule special meetings as needed to address time-sensitive or urgent matters that may arise.
81 SANITARY DISTRICT CONSENT ITEM 9.2
In alignment with our protocol, the committee will also take a recess in August. This adjustment aligns with standard practices for committee operations and provides a consistent framework for scheduling.

The meeting schedule adjustment does not affect the scope, composition, or objectives of the EPASD Advisory Committee as previously approved by the City Council. Staff recommends that the City Council approve this updated schedule.

Fiscal Impact
There is no fiscal impact associated with this change.

Government Code § 84308
Applicability of Levine Act: No, as the proposed action does not involve an entitlement.

Analysis of Levine Act Compliance: Not applicable.

Attachments:

1. Updated Resolution
82 Resolution No. XX-2024 1 of 2
RESOLUTION NO. XX– 2025

A RESOLUTION OF THE EAST PALO ALTO

SANITARY DISTRICT

APPROVING THE SCOPE AND REGULAR MEETING SCHEDULE FOR THE EAST PALO ALTO

SANITARY DISTRICT (EPASD) ADVISORY COMMITTEE
WHEREAS, on November 10, 2022, the City of East Palo Alto submitted a proposal application to the San Mateo Local Area Formation Commission (LAFCo) to establish the East Palo Alto Sanitary District (EPASD) as a subsidiary of the City; and
WHEREAS, on November 15, 2023, LAFCo unanimously approved the City’s application, as documented in LAFCo Resolution 1312, which established terms and conditions including the creation of an advisory committee for the subsidiary district; and
WHEREAS, Condition 6 of LAFCo Resolution 1312 requires the City to submit a plan for the advisory committee, ensuring collaboration with the City of Menlo Park and including at least one seat for a resident of the Menlo Park portion of the EPASD service area; and
WHEREAS, on July 16, 2024, the City Council approved a preliminary plan for the EPASD Advisory Committee, directing staff to finalize the committee structure upon the issuance of LAFCo’s certificate of completion, which was recorded on September 17, 2024; and WHEREAS, on October 1, 2024 the East Palo Alto Sanitary District became a subsidiary of the City of East Palo Alto; and
WHEREAS, on October 1, 2024 the East Palo City Council became the East Palo Alto Sanitary District Governing Board; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of East Palo Alto hereby:

1. Approves the following scope and objectives of the EPASD Advisory Committee:
 Administrative and financial matters.
 Annual budgets and capital improvement planning.
 Service rates

2. Approves the following committee composition, appointment procedures, and staggered term structure:
 Five members, plus one alternate, all residing within EPASD boundaries and aged 18 or older.  Menlo Park City Council will appoint one member for a reserved seat, with flexibility to appoint a nonresident if no suitable resident is available.  East Palo Alto City Council will appoint four members and an alternate.  Members will serve staggered three-year terms, with the inaugural Committee having two members who serve two-year terms.
83 Resolution No. XX-2024 2 of 2
Table 1: Example of Terms

3. Approves the regular meeting schedule, with bi-monthly meetings on the fourth Wednesday of evennumbered months at 6:30 P.M., with the understanding that additional meetings may be scheduled as necessary.

4. Authorizes the General Manager or designee to take all necessary actions to implement this resolution, including collaboration with the City of Menlo Park and coordination of recruitment efforts.

PASSED AND ADOPTED this 21st day of January 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Mark Dinan, Board President
ATTEST: APPROVED AS TO FORM:

James Colin, Secretary John D. Lê, District Counsel
Appointing Body Initial Term Subsequent Term
City of Menlo Park 1 2025-28 2028-2031
City of East Palo Alto 2 2025-28 2028-2031
City of East Palo Alto 3 2025-28 2028-2031
City of East Palo Alto 4 2025-27 2027-2030
City of East Palo Alto 5 2025-27 2027-2030
City of East Palo Alto
Alternate
2025-28 2028-2031
84 SANITARY DISTRICT CONSENT ITEM 9.3

EAST PALO ALTO

SANITARY DISTRICT
BOARD

STAFF REPORT
DATE: January 21, 2024
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, General Manager/City Manager
BY: James Colin, City Clerk/Board Secretary
SUBJECT: Appointment of EPASD Advisory Committee Alternate Seat Recommendation
Appoint Larry Moody to the alternate position for the East Palo Alto Sanitary District (EPASD) Advisory Committee for the term 2025-2028, with a subsequent term of 2028-2031.

Background
At the January 7, 2025, City Council meeting, the Council made the following appointments to the East Palo Alto Sanitary District Advisory Committee:

Name Seat Initial Term Subsequent Term
Deborah Lewis-Virges City of East Palo Alto Seat 2 2025-2028 2028-2031 Mario H. Mendoza City of East Palo Alto Seat 3 2025-2028 2028-2031 Grace Popple City of East Palo Alto Seat 4 2025-2027 2027-2030 Stephanie R. Griffin City of East Palo Alto Seat 5 2025-2027 2027-2030 City of East Palo Alto Alternate 2025-2028 2028-2031
At the meeting the Council voted to fill the alternate seat. The vote resulted in a tie between Larry Moody and Tonga Victoria. After further discussion, Tonga Victoria was ultimately elected to the alternate position. However, Ms. Victoria resigned at the conclusion of the meeting, as 85 SANITARY DISTRICT CONSENT ITEM 9.3
she had also applied for another board position and chose to accept that role instead.

Analysis
Larry Moody’s demonstrated interest and qualifications make him a strong candidate for this position. His appointment aligns with the Council's prior deliberations and voting results, and it allows the City to fill the vacancy promptly without additional delays.

Given these circumstances, President and President Pro Tem recommend appointing Larry Moody to the alternate position, as he was the top vote-getter behind Tonga Victoria.

Fiscal Impact
There is no fiscal impact associated with this change.

Government Code § 84308
Applicability of Levine Act: No, as the proposed action does not involve an entitlement.

Analysis of Levine Act Compliance: Not applicable.
86 SANITARY DISTRICT POLICY AND ACTION ITEM 10.1
368472.1

EAST PALO ALTO

SANITARY

DISTRICT BOARD

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Members of the City of East Palo Alto City Council, Governing Board to the East Palo Sanitary District, a Subsidiary of the City of East Palo Alto
VIA: Melvin E. Gaines, General Manager
BY: Shiri Klima, Assistant General Manager
SUBJECT: Adopting a Resolution regarding EPASD Board Member Compensation Recommendation

2. Find that the action is exempt from the California Environmental Quality Act (CEQA) because it is not a “project” pursuant to 15378(b)(4) and (b)(5). Adopting Board member compensation is a fiscal activity that does not involve any commitment to any specific project which may result in a potentially significant impact on the environment. Repealing a prior compensation ordinance is an organizational or administrative activity of government that will not result in direct or indirect physical changes in the environment.
87 SANITARY DISTRICT POLICY AND ACTION ITEM 10.1
368472.1
Background
On November 15, 2023, the San Mateo Local Agency Formation Commission (“LAFCo”) unanimously approved the City of East Palo Alto’s application requesting that the East Palo Alto Sanitary District (“EPASD”) be made a subsidiary of the City of East Palo Alto (“City”). On October 1, 2024, the reorganization of the EPASD as a subsidiary of the City became effective, with the City Council as its governing board.

In this agenda report, staff recommends that the Council, in its capacity as the governing board of the EPASD, adopt a resolution determining its own compensation as the EPASD Board, over and above its compensation as the City Council.

Analysis
State law sets compensation for the District’s Board. California Health and Safety Code section 6489(a) and (b) sets Board compensation at $100, unless the Board acts by ordinance to set it above that limit:
“(a) Subject to subdivision (b), each of the members of the board shall receive compensation in an amount not to exceed one hundred dollars ($100) per day for each day’s attendance at meetings of the board . . . , not exceeding a total of six days in any calendar month, together with any expenses incident thereto. (b) The district board, by ordinance adopted pursuant to Chapter 2 (commencing with Section 20200) of Division 10 of the Water Code, may increase the compensation received by board members above the amount of one hundred dollars ($100) per day.” Significantly, an ordinance setting compensation above $100 must be published pursuant to Water Code Section 20203, which requires a public hearing noticed twice in a newspaper of general circulation over a two-week period.

In 2001 the board adopted Ordinance No. 48 (attached), which sets the boards current compensation. It states that EPASD Board Members shall receive $207.00 for each day’s meetings. Commencing in 2003, and each year thereafter, director compensation is eligible to increase by five percent (5%) per year. According to EPASD staff, the Board did not implement that five percent (5%) increase every year. Most recently, in meeting minutes from March 2, 2023, staff noted that Board members were compensated $307.93 per board meeting and $150 per committee meeting.. Regardless, the current EPASD Board must determine its own compensation. This compensation would be paid completely out of the EPASD’s funds.

Accordingly, the board has two choices. First, it can adopt a resolution setting compensation in an amount not to exceed $100 per day for each day’s attendance at meetings of the Board, not exceeding a total of six days in any calendar month, together with any expenses incident thereto. 88 SANITARY DISTRICT POLICY AND ACTION ITEM 10.1
368472.1
This resolution is listed as option 1, and then second correlating ordinance in option 1 repeal the Ordinance No. 48. Second if the Board elects to increase the compensation above $100 per day, it must hold a noticed public hearing and do so by ordinance. The resolution in option 2 directs staff to prepare for this public hearing as required by law.

It is worth noting that the EPASD Board is currently also the City Council, and as the City Council, the members are paid according to EPA Municipal Code section 2.08.150(A), which states in relevant part: “Pursuant to the provisions of Section 36516(a)(1) of the California Government Code, each Councilmember shall receive as salary the sum of nine hundred fifty dollars ($950.00) per month.” This amount is paid completely from the City’s General Fund. So, the relevant question is how much over that $950.00 per month should the Council-members each receive due to their additional responsibilities of being on the EPASD Board.

Also, Government Code section 36516(c) permits additional Council compensation when serving on a “commission, committee, board, authority, or similar body,” if specifically authorized by another statute, and only up to the maximum set forth therein; if the other statute authorizes additional compensation but does not specify a maximum, then maximum additional compensation is $150.00 per month for each commission, committee, board, authority, or similar body. California Health and Safety Code Section 6489 is a statute that authorizes additional compensation but does not specify a maximum, so the Council may authorize up to $150.00 per month for the Councilmembers’ participation on the EPASD Board.

Fiscal Impact
The impact on EPASD’s funds depends on the amount the EPASD Board determines it should pay its members for serving on the Board, exclusive of the amount Councilmembers already make due to those responsibilities. The FY 2024-25 EPASD Budget includes $69,500 for Board compensation.

Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.

Environmental
The proposed action is exempt from the California Environmental Quality Act (CEQA) because it is not a “project” pursuant to 15378(b)(4) and (b)(5). Adopting Board member compensation is a fiscal activity that does not involve any commitment to any specific project which may result in a potentially significant impact on the environment. Repealing a prior compensation ordinance is an organizational or administrative activity of government that will not result in direct or indirect physical changes in the environment. 89 SANITARY DISTRICT POLICY AND ACTION ITEM 10.1
368472.1
Government Code § 84308
Applicability of Levine Act: No, as no contract or permit is involved.

Analysis of Levine Act Compliance: Not applicable.

Attachments

1. Option 1: Resolution Determining Board Member Compensation, which Amount Does Not Exceed $100 per Day

2. Option 1: Ordinance repealing EPASD Ordinance No. 38

3. Option 2: Resolution Directing Staff to Notice a Public Hearing to Determine Board Member Compensation Exceeding $100 per Day

4. Ordinance No. 48
90 Option 1 (for compensation that does not to exceed $100 per meeting):

RESOLUTION NO. ________

RESOLUTION OF THE BOARD OF DIRECTORS OF THE EAST

PALO ALTO SANITARY DISTRICT (EPASD) DETERMINING

BOARD MEMBER COMPENSATION, WHICH AMOUNT DOES
NOT EXCEED $100 PER DAY
WHEREAS, on November 23, 2023, the San Mateo Local Agency Formation Commission (LAFCo) approved, and on September 16, 2024, LAFCo finalized the action to establish the East Palo Alto Sanitary District (EPASD) as a subsidiary district of the City of East Palo Alto (City); and
WHEREAS, pursuant to the LAFCo’s Certificate of Completion designates the City Council of the City as the Board of Directors of the EPASD; and WHEREAS, accordingly, the action to establish EPASD as a subsidiary district of the City became effective October 1, 2024; and
WHEREAS, California Health and Safety Code section 6489(a) states in relevant part that Board members must receive compensation in the amount not to exceed $100 per meetings, not exceeding a total of six meeting per calendar month, together with any expenses incident thereto, and the Board wishes to adopt such compensation.

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE EAST PALO ALTO SANITARY DISTRICT, as follows:

1. The recitals set forth in this resolution are incorporated as findings and determinations by the Board of Directors.

2. Pursuant to California Health and Safety Code section 6489(a), EPASD Board members shall receive compensation in the amount of $________, which amount does not to exceed $100 per meeting. Board members shall receive this amount for each day’s attendance at meetings of the Board, not exceeding a total of six meetings in any calendar month, together with any expenses incident thereto.

3. This Resolution shall take effect upon the effective date that Ordinance No. 48 is repealed.

4. The proposed action is exempt from the California Environmental Quality Act (CEQA) because it is not a “project” pursuant to 15378(b)(4). Adopting Board member compensation is a fiscal activity that does not involve any commitment to any specific project which may result in a potentially significant impact on the environment.
91 PASSED AND ADOPTED this 21st day of January, 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

SIGNED:
_____________________________
Mark Dinan, Board President
ATTEST: APPROVED AS TO FORM:
_____________________________ ______________________________ James Colin, District Secretary John D. Lê, District Counsel 92 1
Option 1 (for compensation that does not exceed $100 per meeting):

ORDINANCE NO. ___

AN ORDINANCE OF THE BOARD OF DIRECTORS

OF THE EAST PALO ALTO SANITARY DISTRICT (EPASD)
REPEALING EPASD ORDINANCE NO. 48.

WHEREAS, on November 23, 2023, the San Mateo Local Agency Formation Commission (LAFCo) approved, and on September 16, 2024, LAFCo finalized the action to establish the East Palo Alto Sanitary District (EPASD) as a subsidiary district of the City of East Palo Alto (City); and
WHEREAS, pursuant to the LAFCo’s Certificate of Completion designates the City Council of the City as the Board of Directors of the EPASD; and WHEREAS, accordingly, the action to establish EPASD as a subsidiary district of the City became effective October 1, 2024; and
WHEREAS, California Health and Safety Code section 6489(a) states in relevant part that Board members must receive compensation in the amount not to exceed $100 per meeting, not exceeding a total of six meetings in any calendar month, together with any expenses incident thereto, and the Board is adopting a resolution that authorizes compensation in an amount not to exceed $100 per meeting; and WHEREAS, the prior EPASD Board adopted Ordinance No. 48 in 2001, determining its compensation, and that ordinance now needs to be repealed.

THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO DOES ORDAIN AS FOLLOWS:

SECTION 1. FINDINGS. The Board hereby finds the foregoing recitals true and correct and incorporated by reference into this action.

SECTION 2. REPEAL OF PRIOR ORDINANCE. Any prior ordinances, resolutions, or regulations (including but not limited to EPASD Ordinance 48) relating to the same subject matter or otherwise in conflict with this Ordinance are hereby repealed in their entirety.

SECTION 3. CEQA FINDINGS. The City Council finds that this action is exempt from the California Environmental Quality Act (CEQA) because it is not a “project” pursuant to 15378(b)(5). Repealing a prior compensation ordinance is an organizational or administrative activity of government that will not result in direct or indirect physical changes in the environment.

The foregoing Ordinance was adopted at a regular meeting of the EPASD Board held on the January 21, 2025, by the following vote:
93 376678.1 2
AYES:

NOES:

ABSENT:

ABSTAIN:

Mark Dinan, Board President
ATTEST: APPROVED AS TO FORM:

James Colin, District Secretary John D. Lê, District Counsel 94 Option 2 (for compensation exceeding $100 per meeting):

RESOLUTION NO. ________

RESOLUTION OF THE BOARD OF DIRECTORS OF THE EAST

PALO ALTO SANITARY DISTRICT (EPASD), DIRECTING STAFF

TO NOTICE A PUBLIC HEARING TO DETERMINE BOARD
MEMBER COMPENSATION EXCEEDING $100 PER DAY
WHEREAS, on November 23, 2023, the San Mateo Local Agency Formation Commission (LAFCo) approved, and on September 16, 2024, LAFCo finalized the action to establish the East Palo Alto Sanitary District (EPASD) as a subsidiary district of the City of East Palo Alto (City); and
WHEREAS, pursuant to the LAFCo’s Certificate of Completion designates the City Council of the City as the Board of Directors of the EPASD; and WHEREAS, accordingly, the action to establish EPASD as a subsidiary district of the City became effective October 1, 2024; and
WHEREAS, California Health and Safety Code section 6489(a) states in relevant part that Board members must receive compensation in the amount not to exceed $100 per day for each day’s attendance at meetings of the Board, not exceeding a total of six days in any calendar month, together with any expenses incident thereto; and WHEREAS, Health and Safety Code section 6489(b) allows the District Board to increase the compensation received by Board members above $100 per day if the Board passes an ordinance to this effect.

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE EAST PALO ALTO SANITARY DISTRICT, as follows:

1. The recitals set forth in this resolution are incorporated as findings and determinations by the Board of Directors.

2. Pursuant to California Health and Safety Code section 6489(b), the Board intends to hold a noticed public hearing to determine if Board members shall receive compensation of $_______, which exceeding $100 per day. Staff is directed to publish such notice, agendize the public hearing, and prepare such ordinance.

3. The proposed action is exempt from the California Environmental Quality Act (CEQA) because it is not a “project” pursuant to 15378(b)(4). Adopting Board member compensation is a fiscal activity that does not involve any commitment to any specific project which may result in a potentially significant impact on the environment.

PASSED AND ADOPTED this 21st day of January, 2025, by the following vote:
95 AYES:

NOES:

ABSENT:

ABSTAIN:

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Tomohito Oku, Finance Director
SUBJECT: Accept Annual Financial Reports for Fiscal Year 2023-24 Recommendation
Adopt a resolution accepting and directing staff to file with the State Controller’s Office the Annual Financial Reports for Fiscal Year 2023-24, including:

1. Annual Comprehensive Financial Report (ACFR),

2. Single Audit Report,

3. Measure A Fund Report,

4. Measure C Fund Report,

5. Measure HH Fund Report,

6. Measure W Fund Report, and

7. Report on Agreed-Upon Procedures Applied to Appropriations Limit Schedule (Fiscal Year 2024-25).

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority: Ensure Our Financial and Organizational Health Background
State law requires that every general law municipality issue annual financial reports prepared in accordance with generally accepted accounting principles (GAAP), so that the financial position and results of operations of each government entity is publicly available to residents, legislators, financial institutions, and other interested parties. 99 POLICY AND ACTION ITEM 13.1
On February 22, 2023, the City initiated a competitive request for proposal (RFP) to solicit bids/proposals for a new contract for audit services with a contract term of three years and an option to extend for two additional years. The City entered into an agreement with Eide Bailly LLP to provide annual auditing services through the fiscal year ending 2025 with an option to extend for additional two years.

Analysis
Eide Bailly LLP, Certified Public Accountants, have completed the annual audit and issued the City’s annual financial statements and other required special reports. An auditor representative will be presenting an overview of the audit results and will be available to answer any additional questions regarding the reports. The City received an “unmodified” audit opinion which means the independent auditor reviewed the financial records and found that they were presented fairly and accurately, according to the Generally Accepted Accounting Principles (GAAP) on the Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2024. In addition, the special financial reports issued by the City (e.g., Measure A, Single Audit, Measure C, Measure HH, Measure W, and Appropriations Limit) met applicable standards and no material exceptions were identified by the auditors.

Fiscal year 2022-23 marks the fifteenth year the City has produced an Annual Comprehensive Financial Report (ACFR). The City has been awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association (GFOA) in each of the preceding years and submitted the Fiscal Year 2023-24 ACFR to the award program. To receive the award, the ACFR must be presented in accordance with Generally Accepted Accounting Principles (GAAP) and meet a higher set of reporting and disclosure standards determined by the GFOA.

Below is a summary description of each report published:

1. Annual Comprehensive Financial Report (ACFR):

The ACFR includes three basic sections, as follows:

Introductory Section
Introduces the City’s organization structure and formally transmits and presents the ACFR to the City Council and citizens. The transmittal letter provides information and insights related to the City reporting entity, economic condition and fiscal outlook, and the long-term financial planning process.

Financial Section
The financial section contains the auditors “unmodified” (clean) audit opinion for Fiscal Year 2023-24, Management’s Discussion and Analysis (MD&A), and a complete set of the basic financial statements. In addition, the financial section also includes:
 Notes to the financial statements;
 Required Supplementary Information; and
 Supplementary Information.
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POLICY AND ACTION ITEM 13.1
Management’s Discussion and Analysis (MD&A) provides a high level, summary discussion of major operating activity for both the Government-Wide Financial Statements (prepared on an accrual basis of accounting), the Governmental Fund Financial Statements (prepared on a modified accrual basis which is typically the basis for Council’s adoption of the annual budget), and the Proprietary and Fiduciary Fund Financial Statements (prepared on the accrual basis of accounting).

Information regarding the City’s CalPERS pension plans and funding status is disclosed in Note 9 to the financial statements as well as in the required supplementary information.

Statistical Section
This section includes 17 additional information reports, many of which present ten years of historical data. This information helps the reader understand the financial statements in a broader context with the use of historical statistical information.

A summary of the net change in fund balance and position reported in the FY 2023-24 ACFR is as follows:

General CIP Restricted
Fund Fund Funds
Net change in fund balance $ 5,630,918 $ 1,465,853 $ 9,188,838 Beginning fund balance 53,786,680 18,577,832 50,505,947 Ending fund balance $ 59,417,598 $ 20,043,685 $ 59,694,785 Governmental
Water Garbage Total
Net change in net position $ 3,428,338 $ 110,075 $ 16,936,766 Beginning net position 22,972,746 1,501,508 194,849,854 Ending net position $26,401,084 $1,611,583 $ 211,786,620 Government-wide
Business-type
As mentioned above, high level discussion and analyses of the basic financial statements are available in the MD&A section (page 5) of the ACFR (attachment 2).

2. Measure A Fund Report
This financial statement reports the auditor’s examination of management’s assertion of compliance with the terms of use of the City’s share of Measure A Funds administered by San Mateo County Transportation Authority. Measure A is a half-cent sales tax dedicated towards transportation facilities, services, and programs. It was opined that the City complied with the terms.

3. Single Audit Report
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POLICY AND ACTION ITEM 13.1
This financial statement reports the audit results on mandated testing of the City’s federal grant expenditures in compliance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). An unmodified auditor’s report was issued for the single audit report.

4. Measure C Fund Report
This report is a separately issued financial statement of the City’s Measure C Special Revenue Fund, as required by the November 2006 local voter-approved Measure C parcel tax. An unmodified auditor’s report was issued for the Measure C report. Measure C funds have been completed exhausted at the end of the fiscal year and, therefore, no audit will be conducted in the next fiscal year and going forward.

5. Measure HH Fund Report
This financial statement reports the audit results on the City’s Measure HH Special Revenue Fund, as required by the November 2018 local voter-approved Measure HH parcel tax. An unmodified auditor’s report was issued for the Measure HH report.

6. Measure W Fund Report
This financial statement reports the auditor’s examination of management’s assertion of compliance with the terms of use of the City’s share of Measure W revenues administered by San Mateo County Transportation Authority. Measure W is a half-cent sales tax to support countywide transportation projects and programs. It was opined that the City complied with the terms.

7. Report on Agreed-upon Procedures Applied to Appropriations Limit Schedule This report presents findings of the agreed upon procedures to assist the City in meeting requirements of Section 1.5 of Article XIIIB of the California Constitution, also known as the Gann Appropriations Limit for FY 2024-25. No exceptions were noted as a result of the auditor’s procedures including examination of City’s calculation necessary to establish the City’s appropriations limit and compared the 2024-25 limit and annual adjustment factors.

The detail procedures are described in the report (Attachment 8).

On another note, East Palo Alto Sanitary District (EPASD) financial records were not included in the audit scope as EPASD was incorporated as a subsidiary district after the fiscal year audited. EPASD audit is currently in progress and its result will be presented in a future Council/Board meeting. Additionally, EPASD fund will be reported and audited with the rest of the City’s fund as a blended component unit starting from the next fiscal year (FY2024-25).

Fiscal Impact
There is no fiscal impact for this item.

Public Notice
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POLICY AND ACTION ITEM 13.1
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin, board located at City Hall: 2415 University Avenue, East Palo Alto.

Environmental
The proposed action does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is related to government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.

Government Code § 84308
Applicability of Levine Act: No, as the proposed action does not involve an entitlement.

Analysis of Levine Act Compliance: Not applicable.

Attachment:

1. Resolution.

2. Annual Comprehensive Financial Report (ACFR)

3. Single Audit Report

4. Measure A Report

5. Measure C Financial Report

6. Measure HH Financial Report

7. Measure W Report

8. Report on Agreed-Upon Procedures Applied to Appropriations Limit Schedule (FY 2024-25)

9. Communication letter to Council
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Resolution No. XX-2025 1 of 2
RESOLUTION NO. XX– 2025

A RESOLUTION OF THE CITY COUNCIL OF

THE CITY OF EAST PALO ALTO

ACCEPTING AND DIRECTING STAFF TO FILE THE ANNUAL FINANCIAL REPORTS WITH THE STATE CONTROLLER’S OFFICE: ANNUAL COMPREHENSIVE FINANCIAL REPORT (“ACFR”); AND THE

SINGLE AUDIT, MEASURE A, MEASURE C, MEASURE HH, AND MEASURE W FUND REPORTS FOR THE FISCAL YEAR ENDED JUNE 30, 2024; AND THE REPORT ON AGREED-UPON PROCEDURES APPLIED TO THE APPROPRIATIONS LIMIT SCHEDULE FOR FISCAL YEAR ENDING JUNE 30, 2025 WHEREAS, local government agencies are required by law to undertake an independent audit of the annual financial statements, and California Government Code Section 53891 requires each local agency to provide an annual report of financial transactions to the State Controller’s Office containing data from audited financial statements prepared in accordance with generally accepted accounting principles; and
WHEREAS, the City of East Palo Alto (“City”) engaged the firm of Eide Bailly LLP as the City’s independent auditor through the fiscal year ending 2025 with an option to extend for additional two years; and
WHEREAS, the annual financial audit for fiscal year ended June 30, 2024, was conducted in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards issued by the Controller of the United States and/or other procedures were conducted in accordance with applicable attestation standards established by the American Institute of Certified Public Accountants and/or agreed-upon procedures, as applicable; and
WHEREAS, the City received auditor opinions as applicable on related auditor financial reports indicating such reports are fairly stated, in material respects, in conformance with the applicable standards for the ACFR, Single Audit, Measure A, Measure C, Measure HH, and Measure W reports; and that no opinion is required or issued for the Report on Agreed-upon Procedures Applied to the Appropriations Limit Schedule as such report is solely for Council and management information and use.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO hereby:

1. Finds the foregoing recitals are true and correct, and are incorporated by this reference into this action;

2. Accepts the Annual Financial Reports, including the Annual Comprehensive Financial Report (“ACFR”), the Single Audit, Measure A, Measure C, Measure HH, and Measure W Fund Reports for the Fiscal Year ended June 30, 2024, and the Report on Agreed-Upon Procedures Applied to Appropriations Limit Schedule for Fiscal Year Ending June 30, 2025; and

3. Directs staff to file the annual financial reports with the State’s Financial Controller, as required by law.
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Resolution No. XX-2025 2 of 2
PASSED AND ADOPTED 21st day of January 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Martha Barragan, Mayor
ATTEST: APPROVED AS TO FORM:

James Colin, City Clerk John D. Lê, City Attorney
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East Palo Alto, California
Annual Comprehensive Financial Report
For the year ended June 30, 2024
Prepared by:

Finance Department
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City of East Palo Alto
Annual Comprehensive Financial Report
For the year ended June 30, 2024
Table of Contents
i
Page

INTRODUCTORY SECTION
Table of Contents.........................................................................................................................................................i Transmittal Letter......................................................................................................................................................iv Directory of City Officials .........................................................................................................................................x Map of City’s Location..............................................................................................................................................xi Organization Chart...................................................................................................................................................xii GFOA Certificate of Excellence in Financial Reporting......................................................................................xiii

FINANCIAL SECTION
Independent Auditors’ Report................................................................................................................................1 Management’s Discussion and Analysis...............................................................................................................5 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position..............................................................................................................................19 Statement of Activities ...................................................................................................................................20 Fund Financial Statements:

Governmental Fund Financial Statements
Balance Sheet ...............................................................................................................................................23 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position...........................................................................24 Statement of Revenues, Expenditures and Changes in Fund Balances................................................25 Reconciliation of the Governmental Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities.............................................................................................................................26 Proprietary Fund Financial Statements:

Statement of Net Position...........................................................................................................................28 Statement of Revenues, Expenses and Changes in Net Position...........................................................29 Statement of Cash Flows ............................................................................................................................30 Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position.........................................................................................................32 Statement of Changes in Fiduciary Net Position.....................................................................................33 Notes to Basic Financial Statements....................................................................................................................35 110
City of East Palo Alto
Annual Comprehensive Financial Report
For the year ended June 30, 2024
Table of Contents
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FINANCIAL SECTION, Continued
Required Supplementary Information (Unaudited):

Budgets and Budgetary Accounting...................................................................................................................77 Budgetary Comparison Schedules:

General Fund...................................................................................................................................................... 78 Defined Benefit Pension Plan:

Schedule of the City's proportionate share of the Net Pension Liability....................................................79 Schedule of Contributions ................................................................................................................................81 Supplementary Information:

Non-Major Governmental Funds:

Combining Balance Sheet .................................................................................................................................86 Combining Statement of Revenues, Expenditures and Changes in Fund Balances.................................. 90 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:

NPDES Fees Special Revenue Fund.............................................................................................................94 Gas Tax Special Revenue Fund.....................................................................................................................95 Federal and State Law Enforcement Special Revenue Fund.....................................................................96 Park in Lieu Special Revenue Fund .............................................................................................................97 Rent Stabilization Special Revenue Fund....................................................................................................98 Federal and State Grant Special Revenue Fund..........................................................................................99 Housing Assistance Special Revenue Fund .............................................................................................. 100 Measure A Special Revenue Fund.............................................................................................................. 101 CYSFF TOT Special Revenue Fund............................................................................................................ 102 Lighting District Special Revenue Fund.................................................................................................... 103 Drainage District Special Revenue Fund................................................................................................... 104 Measure C Special Revenue Fund.............................................................................................................. 105 Local Grants Special Revenue Fund........................................................................................................... 106 Silicon Valley Community Foundation (SVCF) Special Revenue Fund.................................................. 107 Low- and Moderate-Income Housing Special Revenue Fund................................................................... 108 Housing Lieu Special Revenue Fund......................................................................................................... 109 Housing TOT Special Revenue Fund.......................................................................................................... 110 Measure HH Special Revenue Fund.......................................................................................................... 111 Measure W Special Revenue Fund............................................................................................................. 112 111
City of East Palo Alto
Annual Comprehensive Financial Report
For the year ended June 30, 2024
Table of Contents
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STATISTICAL SECTION (Unaudited)
Net Position by Component – Last Ten Fiscal Years ..................................................................................... 114 Changes in Net Position – Last Ten Fiscal Years............................................................................................. 115 Fund Balances of Governmental Funds – Last Ten Fiscal Years................................................................... 116 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years .............................................. 117 Assessed Value of Taxable Property – Last Ten Fiscal Years........................................................................ 118 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ........................................................... 119 Principal Property Tax Payers – Current Year and Nine Years Ago............................................................ 120 Property Tax Levies and Collections – Last Ten Fiscal Years........................................................................ 121 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years........................................................................ 122 Computation of Direct and Overlapping Debt ............................................................................................... 123 Computation of Legal Bonded Debt Margin - Last Ten Fiscal Years ........................................................... 124 Demographic and Economic Statistics – Last Ten Fiscal Years..................................................................... 125 Principal Employers – Last Fiscal Year and Six Years Ago ........................................................................... 127 Number of Positions – City Government by Function – Last Ten Fiscal Years .......................................... 128 Operating Indicators by Function – Last Ten Fiscal Years ............................................................................ 129 Capital Asset Statistics by Function – Last Ten Fiscal Years. ......................................................................... 130 112
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December 23, 2024

CITY OF EAST PALO ALTO

DEPARTMENT OF FINANCE
Letter of Transmittal
Honorable Mayor
Honorable Members of the City Council Residents
of the City of East Palo Alto, California

THE ANNUAL COMPREHENSIVE FINANCIAL REPORT

OF THE CITY OF EAST PALO ALTO
We are pleased to present the Annual Comprehensive Financial Report (ACFR) of the City of East Palo Alto for the fiscal year ended June 30, 2024. It is the policy of the City of East Palo Alto to annually publish financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by an independent firm of certified public accountants. This ACFR report is published to fulfill that requirement.

Management assumes full responsibility for the accuracy of the information contained in this report.

We believe this ACFR to be complete and reliable in all material respects. In order to provide a reasonable basis for making this representation, we have established a comprehensive framework of internal controls designed to protect the City’s assets from loss, theft, or misuse and to record and compile the information necessary to produce financial statements in conformity with generally accepted accounting principles. Since the cost of internal controls should not exceed the anticipated benefits, the objective is to provide reasonable rather than absolute assurance that the financial statements are free of any material misstatements.

The City’s financial statements have been audited by an independent firm of Certified Public Accountants, Eide Bailly LLP, licensed to practice in the State of California. The auditors expressed an opinion that the City’s financial statements for the year ended June 30, 2024 are fairly stated in conformity with accounting principles generally accepted in the United States. This is the most favorable conclusion and is commonly known as an “unmodified” opinion. The auditor’s report is in the Financial Section of this report.
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Generally accepted accounting principles require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of a Management’s Discussion & Analysis (MD&A). The MD&A is designed to complement this letter of transmittal and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors.

REPORTING ENTITY
The City of East Palo Alto was incorporated in 1983 and is in San Mateo County in the Greater San Francisco Bay Area. It is in a desirable setting and is situated among three major metropolitan cities:

San Jose, Oakland, and San Francisco. East Palo Alto currently occupies 2.5 square miles and has a population of 29,078.

East Palo Alto operates under a Council-Manager form of government. Policy-making and legislative authority are vested in the governing body (City Council) consisting of the Mayor, the Vice-mayor and three other members. The City Council appoints the government’s Chief Executive Officer (known as City Manager), who in turn appoints the Directors of City departments; except for the City Attorney who is also appointed by the City Council. City Council members are elected by voters to serve overlapping four-year terms. The Mayor and Vice-Mayor are appointed by majority vote of the City Council on an annual basis to serve a one-year term. There are currently four Advisory Boards and Commissions that are appointed by the City Council: Rent Stabilization Board, Planning Commission, Public Works and Transportation Commission, and Senior Advisory Board.

The City of East Palo Alto provides a range of basic municipal services. These services include public safety police services, public works and maintenance, limited parks and recreation activities, building, planning and zoning, housing and rent stabilization services, community development, streetlighting, drainage, refuse collection, infrastructure construction, and general administrative services. The City also provides community grant programs to support community and socialservices organizations.

The ACFR includes all funds of the City, as well as all governmental organizations and activities for which the City Council has financial and/or fiduciary accountability. The Council serves in separate session as the governing body of the East Palo Alto Public Financing Authority; and, the Successor Agency to the former Redevelopment Agency of the City of East Palo Alto, for which it has fiduciary responsibility.

ECONOMIC CONDITION AND FISCAL OUTLOOK
The U.S. economy has demonstrated robust growth through November 2024. Real GDP increased at an annual rate of 2.8% in the third quarter, following a 3.0% rise in the second quarter. This growth has been largely driven by strong consumer spending, which saw a 3.7% increase—the most significant since early 2023. Business sentiment has improved, with the S&P U.S. service sector index reaching a 32-month high of 57.0 in November, indicating robust expansion. The Conference Board’s Consumer Confidence Index also rose to 111.7 in November, the highest level since July 2023, suggesting continued consumer optimism. Looking ahead, the Federal Reserve's GDP model forecasts a 2.7% growth rate for the fourth quarter of 2024, indicating sustained economic momentum.
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The Federal Reserve has adopted a more accommodative monetary policy stance, implementing two consecutive interest rate cuts in September and November 2024, bringing the federal funds target range down to 4.5%-4.75%. These actions aim to support economic growth amid cooling inflation, which is approaching the Fed's 2% target. Another rate cut is anticipated in December, contingent upon forthcoming economic data.

In summary, as of November 2024, the U.S. economy exhibits strong growth supported by resilient consumer spending and improved business sentiment. The Federal Reserve's recent rate cuts reflect a strategic shift to sustain this expansion, while forthcoming policy decisions and global economic conditions will play critical roles in shaping the economic outlook.

The City’s resident population has remained stable but has been in a slight downward trend over the past five years, with an average of approximately 29,244. The labor market exhibits signs of resilience and gradual recovery. However, the City’s unemployment rate slightly rose from 2.9% to

3.3% as of June 30, 2023 and June 30, 2024, respectively.

As of November 2024, the San Francisco Bay Area housing market exhibits a mix of resilience and emerging challenges. Home sales have increased significantly, with a 16.2% year-over-year rise in October 2024, indicating robust buyer demand. However, inventory remains constrained, leading to competitive bidding and elevated prices across the region. San Mateo County experienced a slight decline in median home prices, with a 4.8% decrease to $2 million in October 2024. Despite this dip, the county remains one of the most expensive in the Bay Area.

Property taxes, which are based on assessed values, are one of the City’s largest sources of revenue, accounting for approximately 50% of the City’s General Fund revenues. Assessed property values in fiscal year 2023-24 total $4.4 billion. The year-over-yearincrease is 4.0% compared to a 9.3% increase in the prior year. General Fund property tax revenues were $18.8 million – a decrease of 5.5% compared to the prior fiscal year due primarily to a decrease in property tax in lieu of VLF for $1.1 million related to the county-wide shortfalls in the revenue. Proposition 13, which governs property taxation in California, ties the annual inflation factor to the California Consumer Price Index (CCPI) issued by the California Industrial Relations Board and limits annual inflation increases of assessed value to no more than 2%. This year an annual inflation factor of 2.0% was applied to the 2022-23 assessed value of all real property that did not have a change in ownership or any new construction during 2023. Long- term growth potential remains highly positive due to undeveloped land in the Ravenswood Business District, unprecedented development planning activity, consolidation of industrial properties in the Ravenswood Business District, strategies to develop affordable housing, and incentives to intensify housing densities. The City is engaged in addressing the infrastructure, transit, environmental, and community impact challenges and opportunities attendant with the sustained interest in development. Solving these challenges increases the potential gap of time between project proposal and completion.

Sales tax revenues have declined for $375K (5.9%) compared to the previous year. The decrease reflects the broader economic conditions, including high interest rates and inflation, which have influenced consumer spending and, consequently, sales tax revenues. 116
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Compared to the pre-pandemic level of $3.0 million from the fiscal year 2018-19, Transient Occupancy Tax (TOT) revenues were $2.5 million in the fiscal year 2023-24; approximately 83% recovery from the pre-pandemic figure and a 13.6% increase from the previous year. Although we expect some recovery in the TOT revenues in the future years, the trend in the business meeting culture appears to be suppressing the recovery.

The City is focused on socially progressive milestones to support a vibrant, diverse community and workforce. The 2018 Measure HH special parcel tax generated approximately $1.7 million in additional annual taxes for affordable and supportive housing and for programs that facilitate resident access to job opportunities.

LONG TERM FINANCIAL PLANNING
As part of the strategic resource and budget planning process, management presents a multi-year financial projection to the City Council. The projection provides Council with the opportunity to plan for the management of financial resources and to address forecasted financial challenges.

Maintaining a sustainable budget and prudent fiscal planning is a key strategic priority of the Council supported by citizen survey.

The financial plan also calls for the City to exercise financial “best practices,” including achieving a targeted General Fund contingency reserve of 30% of the adopted General Fund expenditure budget.

The purpose of the reserve is to provide the City with fiscal capacity for responding to emergencies and economic uncertainties and vulnerabilities, thereby minimizing the impact on service levels to the community during such challenging times. Currentreserve and unassigned reserve levels exceed the established minimum reserve level.

We also note that California cities are subject to limits on the proceeds of taxes that may be appropriated for spending in a given fiscal year (i.e. the GANN Limit). While voters may approve an override of such limits, it is another important long-term planning factor to consider in long-term strategic resource planning.

FINANCIAL POLICIES AND INFORMATION
Budgetary Controls
The City Council is required to adopt a budget on an annual basis which is passed by June 30th of each year. In compliance with the City’s municipal ordinance, the Council adopted the Fiscal Year 2023-24 budget through a public hearing process conducted during June 2023. The budget serves as the foundation for the City of East Palo Alto’s financial planning and control. The budget is prepared by fund and division. Unless mandated by regulation, transfers between funds are approved by City Council.
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The City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the Adopted Budget and approved by the City Council. The level of control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the fund level. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control.

Financial Policies
The City has financial policies related to revenue and expenditure administration, reserve management, grants and debt management, cash and investments, and other financial policies.

Major Initiatives
The City developed major initiatives for the year through the budget planning process and with the guidance of the City Council as articulated through its Strategic Priorities process, as follows:

Promote Housing, Economic & Workforce Development: includes goals to implement Measure HH employment and First Source Hiring Programs and affordable housing strategy, to provide assistance to small local businesses, to investigate potential ballot measure to support affordable housing, and to create an Economic Development Strategy with focus on small/micro businesses.

Implement the Comprehensive Transportation and Mobility Plan: includes goals to develop a Comprehensive Transportation and Mobility Plan, to expand pedestrian/bicycle facilities and interconnectivity, to begin construction of the University Overpass Project, to investigate University Avenue Improvements/Changes, and to analyze funding strategies for public infrastructure including streets, parks and utilities.

Promote Health & Public Safety: includes goals to enhance flood protection forresidents, businesses, and property owners, to resolve Sanitation District incorporation matter, and to develop a Community Emergency Preparedness and Education Initiative.

Ensure Our Financial & Organizational Health: includes goals to address structural deficit through fiscal resiliency measures, to develop 10-year financial projections, to implement an Enterprising Resource Planning (ERP) System, and to focus on staff morale, retention, recruitment and succession planning.

Improve the City's Water Infrastructure: includes goals to focus on customer service and education and to advance key water infrastructure projects.

Develop and Implement a Comprehensive Facilities Master Plan: includes goals to coordinate with County Library District regarding the potential new library in the City, to investigate potential options for developing County vacant property located on Beech Street, to develop a detailed strategy for the location of the future police department, and to complete the City Hall improvement planning process.

Enhance Community Services and Parks for Residents: includes goals to foster community cultural events and activities, to complete a Parks Master Plan, to focus on youth engagement, and to engage with community and partner agencies to improve educational resources/outcomes. 118
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AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded the Certificate of Achievement for Excellence in Financial Reporting to the City for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2023. This is the fourteenth consecutive year the City has achieved this prestigious award. To qualify for the Certificate of Achievement, the governmental entity must publish an easily readable and efficiently organized ACFR, in conformance with program standards. The report also must satisfy generally accepted accounting principles as well as all applicable legal requirements.

The Certificate of Achievement is valid for one year only. The City believes the ACFR conforms to the GFOA Certificate of Achievement Program and will submit the report to the GFOA for consideration of the annual award.

The preparation of the ACFR was made possible by the dedicated staff of the Finance Department.

Sincere appreciation is extended to those staff - each of whom demonstrated exemplary personal dedication and professionalism during this process.

The Finance Department wishes to express our sincere appreciation to the City Council for providing policy direction and support for the pursuit of excellence in attaining the City’s goals.

Sincerely,
Tomohito Oku
Finance Director
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CITY OF EAST PALO ALTO

DIRECTORY OF OFFICIALS
City Council
Antonio Lopez
Mayor
Martha Barragan
Vice Mayor
Carlos Romero
Councilmember
Ruben Abrica
Councilmember
Lisa Gauthier
Councilmember
Executive Staff
Melvin Gaines
City Manager
John Le
City Attorney
(Vacant)
Assistant City Manager
Tomohito Oku
Finance Director
Jeff Liu
Police Chief
Humza Javed
Public Works Director
Amy Chen
Community & Economic Development Director
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Independent Auditor’s Report
To the honorable members of the City Council
of the City of East Palo Alto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of East Palo alto (City) as of and for the year ended June 30, 2024, 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 accompanying 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, 2024, 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.

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 audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Change Within the Financial Reporting Entity
As discussed in Note 1p to the financial statements, the City has adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 100, Accounting Changes and Error Corrections, for the year ended June 30, 2024. Accordingly, the presentation and disclosure of the change within the reporting entity in the financial statements conform to the requirements of the new standard for the year ended June 30, 2024, to restate beginning fund balance. Our opinions are not modified with respect to this matter.
1 What inspires you, inspires us. | eidebailly.com
4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 124 2 Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the 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.

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 opinions. 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.
125
3 Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management Discussion and Analysis, the Budgetary Comparison Schedules for the General Fund and each Major Special Revenue Fund, the Schedule of the City's Proportionate Share of the Net Pension Liability and the Schedule of Contributions 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 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 GAAS, 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 Non-Major Governmental Funds Combining Balance Sheet, Combining Statement of Revenues, Expenditures and Changes in Fund Balances, the nonmajor funds’ Schedules of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual and the Schedule of Revenues and Expenditures – Local Retail Transactions and Use tax 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 basic financial statements.

The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the Non-Major Governmental Funds Combining Balance Sheet, Combining Statement of Revenues, Expenditures and Changes in Fund Balances, the nonmajor funds’ Schedules of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual and the Schedule of Revenues and Expenditures – Local Retail Transactions and Use tax are 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 and statistical sections but does but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do 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 basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, 126
4 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 23, 2024 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.

Menlo Park, California
December 23, 2024
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MANAGEMENT'S DISCUSSION AND ANALYSIS
5 This section of the City’s Annual Comprehensive Financial Report presents a narrative overview and analysis of the City’s financial activities for the fiscal year ended June 30, 2024. We advise readers to consider the information presented here in conjunction with the accompanying transmittal letter and basic financial statements.

FISCAL YEAR 2023-24 FINANCIAL HIGHLIGHTS
Government-wide Statements
• Total net position equals $239.8 million, an increase of $20.5 million over the prior year balance of 219.3 million. The increase is comprised of $16.9 million in governmental activities and $3.5 million in business-type activities. • Total revenues equal $62.9 million compared to $65.7 million in the prior year; a decrease of $2.8 million. Of the total $62.9 million revenues reported, $55.7 million was generated by governmental activities, and $7.2 million was generated by business-type activities. The net decrease of $2.8 million is primarily due to decreased operating grants and contributions ($12.8M) offset by increases in capital grant and contributions ($5.3M) and investment earnings ($5.1M).
• Total expenses equal $42.4 million compared to $39.5 million in the prior year; an increase of $2.9 million. Of the total $42.4 million expenses reported, $38.4 million is reported in governmental activities and $4.1 million is reported in business-type activities. The significant increases were noted for $1.3 million in the public works, and $0.9 million in the general government.

Governmental Fund Statements
• Total governmental fund balances equal $139.2 million, an increase of $16.3 million over the prior year balance of $122.9 million. Of the total $139.2 million balance, $95.7 million is comprised of non-spendable, restricted, committed, and assigned balances; and $43.5 million is unassigned balances.
• General Fund total fund balance equals $59.4 million, an increase of $5.6 million over the prior year fund balance of $53.8 million. The net change is comprised of $37.7 million revenues offset by $28 million expenditures and $4.1 million net other financing uses. Net other financing uses are primarily for major capital projects and subsidies provided to special revenue funds.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
6 OVERVIEW OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT Government-wide Financial Statements
The government-wide financial statements are designed to provide the readers with a broad view of the City’s finances on a similar reporting basis as a private-sector business.

Statement of Net Position: Presents information on all the City’s assets, liabilities and deferred inflows/outflows with the difference reported as net position. Over time, the change in net position may serve as a useful indicator of whether the financial position of the City is improving or declining.

Statement of Activities: Presents information reflecting how the City’s net position changed during the most recent fiscal year. All changes in net position are reported in the period the event giving rise to the change occurs, regardless of timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flow in future fiscal periods.

Non-financial factors, such as changes in the City's property tax base and the condition of the City's infrastructure must be considered to properly assess the overall financial health of the City.

In the Statement of Net Position and the Statement of Activities, activities are divided into two types:
• Governmental activities - Most of the City's basic services are reported here, including police, public works, community development, and general administration. Taxes, user fees, and state and federal grants finance most of these activities. • Business-type activities - The City charges a fee to cover all or most of the cost of certain services it provides. The City's water system and residential garbage collection services are reported in this activity.

Fund Financial Statements
A fund is a grouping of related accounts 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 financial compliance with legal requirements. Fund financial statements also report the City's operations in more detail than the government- wide statements by providing information about the City's most significant funds.

The fund financial statements provide detailed information about the most significant funds, called major funds. Some funds are required to be established by State law and by bond covenants.

However, the City establishes many other funds to help control and manage funds for particular purposes (such as the Capital Improvements Fund) or to show that it is meeting legal responsibilities for using certain taxes, grants, and other monies (such as grants received from the Federal government). The City reports the following major funds: General Fund and Capital Improvements Fund. The remaining non-major funds of the City are summarized and presented in a single column. The City's different types of funds – governmental, proprietary, and fiduciary - use different accounting approaches.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
7 • Governmental funds - Most of the City's basic services are reported in the governmental funds, where the focus is on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near-term to finance the City's programs.

The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is described in detail in a reconciliation located after each of the fund financial statements. • Proprietary funds - the City maintains only one type of proprietary funds, enterprise funds, which are used to report the same functions presented as business-type activities in the government-wide financial statements but provide more detail and additional information, such as a statement of cash flows. The City uses enterprise funds to account for activities related to water system and garbage collection services. • Fiduciary funds – the City maintains a Private Purpose Trust Fund to account forthe activity of the former Redevelopment Agency of the City of East Palo Alto. The City’s fiduciary activities such as the Successor Agency are reported in a separate Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position. The accounting basis used for fiduciary funds is comparable to the proprietary funds. These activities are excluded from the City’s other financial statements because the City cannot use the assets to finance its own operations.

Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

GOVERNMENT-WIDE FINANCIAL ANALYSIS
The City provides two-year comparative financial information for the Government-wide financial statements. Net position serves as a useful indicator of a government’s financial position.

Analysis of Net Position
Government-wide assets ($263.1M) and deferred outflows ($7.9M) exceed liabilities ($30.9M) and deferred inflows ($0.3M) by $239.8 million on June 30, 2024. A significant portion of assets ($94.6M) are comprised of capital assets and are not available to pay current and future liabilities of the City.

The following table is a summary of the government-wide net position for both governmental and business-type activities:
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MANAGEMENT'S DISCUSSION AND ANALYSIS
8 2024 2023 2024 2023 2024 2023
Assets:

Current and other assets $ 147,700 $ 133,891 $ 20,787 $ 16,605 $ 168,487 $ 150,496 Capital Assets 82,433 76,367 12,195 12,072 94,627 88,440 Total assets 230,134 210,258 32,982 28,677 263,115 238,935 Deferred outflows of resources
Deferred pension outflows 7,845 7,670 70 68 7,914 7,738 Total deferred outflows 7,845 7,670 70 68 7,914 7,738
Liabilities:

Current and other liabilities 7,033 4,901 1,817 967 8,850 5,868 Noncurrent liabilities 18,823 17,644 3,218 3,299 22,041 20,943 Total liabilities 25,856 22,545 5,036 4,266 30,891 26,811 Deferred inflows of resources
Deferred inflows - pension 336 534 3 5 339 539
Total deferred inflows 336 534 3 5 339 539
Net Position:

Net Investment in capital assets 80,872 74,583 11,338 11,212 92,210 85,796 Restricted 62,510 58,078 13,778 5,589 76,288 63,667
Unrestricted 68,405 62,189 2,896 7,673 71,301 69,862
Total Net Position $ 211,787 $ 194,850 $ 28,013 $ 24,474 $ 239,799 $ 219,324

STATEMENT OF NET POSITION
(Dollars in thousands)
Governmental Activities Business-Type Activities Total
131

MANAGEMENT'S DISCUSSION AND ANALYSIS
9 Net Position – Governmental Activities
Total governmental activities assets of $230.1 million consist of current and other assets of $147.7 million and capital assets of $82.4 million. Total governmental activities assets increased $19.9 million and is comprised of increases in current and other assets ($13.8M) and capital assets ($6.1M).

Deferred outflows of $7.8 million consists of $2.6 million deferred employer pension contributions paid after the pension liability measurement date and $5.2 million of other pension valuation factors.

Total liabilities of $25.9 million consist of $7.0 million current liabilities and $18.8 million non- current liabilities. Of the non-current liabilities, the most significant portion ($16.1M) relates to net pension liability. Total governmental activities liabilities increased $3.3 million primarily due to an increase in in accounts payable ($2.4M) and another increase by net pension liabilities ($1.4M).

Deferred inflows of resources $0.3 million also relate to GASB 68 pension liability which is primarily related to net differences between projected and actual contributions and experience.

Of the $211.8 million governmental activities net position, $80.9 million (38.2%) represents investment in capital assets net of related debt. The City uses capital assets, such as roadways, storm drains, lighting, parks, and other infrastructure to provide services to residents; therefore, the assets do not provide cash liquidity to pay liabilities. Historically, the City has not issued a significant amount of debt to finance capital assets primarily due to a former focus on redevelopment contracts, grant-funded projects, and a lack of significant capital assets available for leveraged leaseback activity.

Total restricted net position equals $62.5 million (29.5%). Such amounts relate to resources subject to external restrictions on how they may be spent by the City. The restricted balance relates to local and county special taxes, tax districts, capital and grant agreements, housing funds, and other restricted uses. Total unrestricted net position equals $68.4 million (32.3%); however, a significant portion of the unrestricted balances are not liquid or are committed for capital projects and other intended uses.

Net Position - Business-type Activities
Business-type activities assets of $33.0 million consist of current and other assets of $20.8 million and capital assets of $12.2 million. Of the $20.8 million in current and other assets, approximately $3.2 million relates to garbage collection, and $17.6 million relates to water services, a significant portion of which is committed for capital infrastructure replacement. All capital assets are comprised of water-services infrastructure.

Business-type liabilities of $5.0 million primarily consist of garbage collection accounts payable ($1.5M) and amounts advanced from developers in connection with certain water service implementation agreements ($2.5M).
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MANAGEMENT'S DISCUSSION AND ANALYSIS
10 Net position of $28.0 million includes $11.3 million of investment in capital assets net of related debt, $13.8 million in restricted for capital projects, and $2.9 million in unrestricted net position.

Analysis of Statement of Activities
The statement of activities reports the change in government-wide net position during the fiscal year.

The following table indicates the changes in net position for governmental and business-type activities compared to the previous year. The City’s government-wide net position increased $20.5 million as further described on the following pages.
2024 2023 2024 2023 2024 2023
Revenues
Program revenues:

Charges for services $ 2,422 $ 2,904 $ 4,769 $ 4,221 $ 7,190 $ 7,125 Operating grants & contributions 3,165 15,917 - - 3,165 15,917 7,454 3,414 1,309 45 8,762 3,459
General revenues:

Property taxes 19,859 20,958 - - 19,859 20,958
Sales taxes 6,020 6,395 - - 6,020 6,395
Utility user tax 2,052 1,936 - - 2,052 1,936
2,526 2,224 - - 2,526 2,224
2,415 1,769 - - 2,415 1,769
Other taxes 1,780 1,783 - - 1,780 1,783
Investment Earnings 6,690 2,297 1,095 351 7,785 2,648
Miscellaneous 1,338 1,487 - - 1,338 1,488
Total revenues 55,722 61,084 7,171 4,617 62,894 65,700
Expenses
Program expenses:

General government 8,165 7,264 - - 8,165 7,264
Public safety 13,641 13,159 - - 13,641 13,159
Public works 7,292 5,996 - - 7,292 5,996
Culture and recreation 1,950 2,170 - - 1,950 2,170
Community development 7,245 7,099 - - 7,245 7,099
Water services - - 894 814 894 814
Garbage collection - - 3,171 2,940 3,171 2,939
Interest on long-term debt 58 74 - - 58 74
Total expenses 38,352 35,762 4,066 3,754 42,418 39,515
Excess before transfers or
special items 17,370 25,322 3,105 862 20,474 26,185
Transfers (433) (6,241) 433 6,241 - -
Change in Net Position 16,937 19,081 3,539 7,104 20,474 26,184 Net Position - Beginning 194,850 175,769 24,475 17,371 219,325 193,140 Net Position - Ending $ 211,787 $ 194,850 $ 28,013 $ 24,475 $ 239,799 $ 219,324 Capital grants & contribution
Transient Occupancy tax
Business taxes

STATEMENT OF ACTIVITIES
(Dollars in thousands)
Governmental Activities Business-Type Activities Total
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MANAGEMENT'S DISCUSSION AND ANALYSIS
11 Statement of Activities – Governmental
Governmental activities change in net position equals $16.9 million compared to prior year net change of $19.1 million; a decrease of $2.1 million. A depiction of sources and types of governmental activities revenues and expenses are illustrated in the following charts:

General
Government,
21%
Public Safety,
36%
Public Works,
19%
Culture and
Recreation,
5%
Community
Development,
19%
Interest on Long-term Debt,
0%
Governmental Activities
Expenses by Type
Charges for
Services, 4%
Grants &
Contributions,
19%
Property Taxes,
36%
Sales Taxes, 11%
Utility User Tax,
4%
Transient
Occupancy Tax,
5%
Business License
Tax, 4%
Other Taxes, 3% Other Revenues,
14%
Governmental Activities
Revenues by Source
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MANAGEMENT'S DISCUSSION AND ANALYSIS
12 Statement of Activities - Governmental, continued
• Total revenues before transfers equal $55.7 million; a decrease of $5.4 million (8.8%) over the prior year revenues of $61.1 million. The decrease in revenues is primarily comprised of decrease in operating grants and contributions ($12.8M) and property tax revenues ($1.1M) offset by increases in capital grants and contributions ($4.0M) and investment earnings ($4.4M). The decrease in operating grants and contributions are primarily attributable to a one-time award of the HCD affordable housing grant ($8M) in the previous year and the decrease in property tax revenues is due mainly from a decrease in property tax in lieu of VLF ($1.1M). The increase in investment earnings is primarily due to higher interest earnings as a result of the feds interest rate hike. The increase in capital grants and contributions are directly related to an increase in reimbursementrevenues from the granting agencies related to major capital projects.
• Total expenses equal $38.4 million, an increase of $2.6 million (7.2%) over the prior year expenses of $35.8 million. The increase in expenses primarily come from public works ($1.3M), general government ($0.9M) and public safety ($0.5M). The $1.3 million increase in public works is attributed from increases in professional service expenses ($0.7M) which are related to increased capital activities in the fiscal year. The increases in public safety and general government are primarily due to increases in personnel costs including pension expenses.

Statement of Activities - Business-type
• Business-type activities change in net position totaled $3.5 million compared to previous fiscal year of $7.1 million. The difference in change in net position is primarily comprised of water services ($3.5M).
• Total revenues before transfers equal $7.2 million, an increase of $2.6 million from prior year revenues of $4.6 million. The change mainly consists of increases in capital grants and contributions ($1.3M) and investment earnings ($0.7M).
• Total expenses before transfers equal $4.1 million – an increase of $0.3M from the prior year due primarily an increase in the garbage collection contract amount ($0.2M).

FINANCIAL ANALYSIS OF THE CITY'S 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 resources that are available for spending. Such information is useful in assessing the City’s financing requirements. Types of governmental funds reported by the City include the General Fund, Special Revenue Funds, and Capital Project Funds. 135

MANAGEMENT'S DISCUSSION AND ANALYSIS
13 At June 30, 2024, the City’s governmental funds reported combined fund balances of $139.2 million, an increase of $16.3 million in comparison with the prior year. Of this amount, $43.5 million, or

31.2%, constitutes unassigned fund balance, which is available for spending at the City’s discretion.

The remainder of the fund balance is either nonspendable, restricted, committed, or assigned to indicate that it is (1) not in spendable form or not spendable because it is legally required to be maintained intact, $0.9 million; (2), restricted for particular purposes, $61.0 million; (3) committed for particular purposes, $20.5 million; or (4) assigned for particular purposes, $13.2 million.

Analysis of Individual Funds
The general fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the general fund was $43.5 million, while total fund balance increased to $59.4 million. The remaining fund balance consists of nonspendable ($0.9M), restricted ($0.05M), committed ($11.2M), or assigned ($3.8M). As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total general fund expenditures. Unassigned fund balance represents 156% of total general fund expenditures, while total fund balance represents 213% of that same amount.

The City’s general fund balance increased by $5.6 million during the current fiscal year. This growth was primarily driven by significant salary savings of $4.0 million, planned but incomplete professional and technical services across various departments, totaling $5.9 million, and an underestimated total general fund revenue of $3.0 million offset by the budget deficit of $7.8M.

The capital projects fund, a major fund, had a $1.5 million increase in fund balance during the current fiscal year which put the overall fund balance to $20.0 million. The fund reports an assigned fund balance, $9.4 million comprised of encumbrances, earmarked by funding sources for $1.3 million, and committed, $9.4 million for flood preventative projects and other capital projects. The increase in fund balance was caused mainly by a timing difference between the revenues and expenditures related to reimbursement basis capital grants; the City received approximately $7.3 million from such grant reimbursements in the current year compared to the previous year receipt of $4.0 million.

Depending on the timing, however, those grant reimbursements are typically for the capital expenditures incurred in the previous year.

Proprietary Funds
The City’s proprietary funds provide the same type of information found in the business‐type activities portion of the government‐wide financial statements, but in more detail. Unrestricted net position of the water service fund at the end of the year was $1.3 million and for the garbage collection was $1.6 million. The total growth in net position for each of the funds was $3.4 million and $0.1 million, respectively. As noted earlier in the discussion of business‐type activities, the difference in change in net position in the water service fund is due primarily to increases in capital grants and contributions ($1.3M) and investment earnings ($0.7M).
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MANAGEMENT'S DISCUSSION AND ANALYSIS
14 GENERAL FUND BUDGETARY HIGHLIGHTS
Total adopted revenue budget (before transfers) was $34.7 million. During the year, there was no need for any significant amendments to increase the adopted budget appropriations.

Total adopted expenditure budget (before transfers) of $33.5 million increased $4.9 million to final amended expenditure budget of $38.4 million. The amendment is due primarily to the encumbrances carried forward from the previous year ($4.4M).

Following are the main components of the differences between final amended budget and actual results:
• Actual revenues total $37.7 million, approximately $3 million more than the final budget of $34.7 million which primarily came from the differences in property tax revenues and investment earnings. The excess actual property tax revenues are due to an unexpected backfill revenue related to the shortfall in property tax in-lieu of VLF revenue experienced in the FY22-23 ($1.5M). The actual investment earnings were significantly higher than the estimated earnings because of the lingering higher interest rates resulted from the stubborn inflation.
• Actual expenditures total $28.0 million, approximately $10.4 million less than the amended budget of $38.4 million. Of this amount, approximately $4.0 million is due to staff vacancy savings; $5.9 million is due to planned but incomplete professional and technical services across departments.

CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The capital assets for governmental and business-type activities balance as of June 30, 2024 total $94.6 million (net of accumulated depreciation/amortization), a net increase of $6.2 million (7.0%) overthe prior year. Almost all the increase is attributable from governmental activities. Total capital assets include land, construction in progress, buildings and improvements, machinery and equipment, and infrastructure.

Capital assets, net of accumulated depreciation and amortization,forthe governmental and businesstype activities are as follows:
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MANAGEMENT'S DISCUSSION AND ANALYSIS
15 2024 2023 2024 2023 2024 2023
Land $ 7,319 $ 7,319 $ 5,264 $ 5,264 $ 12,582 $ 12,582
Buildings and Improvements 20,267 20,267 11,302 11,212 31,569 31,479 Right-to-use Buildings 2,307 2,307 127 127 2,434 2,434
Construction in Progress 11,653 6,601 1,498 1,144 13,152 7,745 Furnishings & Equipment 2,457 2,269 - - 2,457 2,269
Vehicles 3,345 3,062 - - 3,345 3,062
Street and Roadways 84,588 80,594 - - 84,588 80,594
Storm Drain System 6,819 6,738 - - 6,819 6,738
Less: Accumulated Depreciation (56,321) (52,790) (5,996) (5,675) (62,317) (58,464) Total $ 82,433 $ 76,367 $ 12,195 $ 12,072 $ 94,627 $ 88,439 June 30, 2024
(Dollars in thousands)
Governmental Activities Business-Type Activities Total
Major capital assets events during the current fiscal year included the following:

Governmental Activities
Capital assets increased $6.1 million and is primarily comprised of $5.1 million construction in progress related to street and roadways, and $4.0 million additions to newly completed street and roadways, offset by $3.5 million depreciation expenses.

Business-Type Activities
Capital assets has barely changed from the prior year in the business-type activities. There were small additions to construction in progress related to water infrastructure and water meter projects ($0.4M) offset by depreciation expenses ($0.3M). For government-wide financial statements presentation, all depreciable capital assets are depreciated from acquisition date to the end of the current fiscal year utilizing a half-year convention. Fund financial statements record capital assets purchases as expenditures. The City’s infrastructure assets are recorded at historical cost in the government-wide financial statements as required by GASB Statement No. 34.

Additional information about capital assets can be found in Note 5 to the financial statements.

Debt Administration
Historically, the City has engaged in limited debt-financing activity due to reliance on outside grant and former redevelopment funding for major infrastructure improvements. This is due to several factors, including that the City owns minimal property assets that are easily debt-leveraged, and has not engaged in ad valorem or assessment district funding or other parcel tax-related capital funding since Redevelopment dissolution. Additionally, with the dissolution of the former RDA, the Successor Agency fiduciary fund assumed the long-term term debt of the former RDA. 138

MANAGEMENT'S DISCUSSION AND ANALYSIS
16 Business-type debt consists of a $0.6M note payable related to funding the Gloria Way Well project.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
Current economic concerns revolve around the Federal Reserve’s approach to the implementation of monetary policy to lower high inflation and how higher interest rates will impact the national and local economy over the next two years. The following economic factors were considered in the preparation of the City’s budget for fiscal year 2024-25:
• Near-term general revenue growth trajectory is stagnant as the known major drivers such as taxable development and significant property portfolio turnover are not expected in the near future for property tax revenues and as other tax revenues such as sales taxes and TOT are at risk of low-growth due to expected economic slowdown or recession accompanied by high inflation.
• Property tax projection is unusually uncertain primarily due to evolving property tax in lieu issues caused by the County’s negative ERAF condition and unknown recovery by the State’s backfill.
• Transient occupancy tax has recognized continued recovery in FY2023-24 yet has only reached 83% of the pre-pandemic figures. Due to the changes in business meeting culture and office working environment, uncertainty exists in the projection and recovery is expected to continue in slower pace.
• City will experience long-term cost pressures across various activity due to historical underinvestment in aged infrastructure; staff resource challenges, rising personnel costs; operational costs of new infrastructure and facilities; and increases in professional and outside services due to high inflation.
• The City has reserves available to maintain stable service delivery during FY 2024-25 and enable implementation of a strategic and prioritized budget plan. Additionally, temporary suspension of certain capital and operating transfers; delay of non- essential project initiation, and strategic utilization of general fund unassigned reserves will provide nearterm stability required to plan for more durable service delivery decisions in order to address resource constraints and uncertainty over an extended period.

CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City's finances and to ensure transparency relative to city fiscal operations. If you have questions about this report or need additional financial information, contact the City’s Finance Department, East Palo Alto Government Center, 2415 University Avenue, East Palo Alto, CA 94303.
139
BASIC

FINANCIAL STATEMENTS
17 140
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141

GOVERNMENT-WIDE

FINANCIAL STATEMENTS
18 142
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143
City of East Palo Alto
Statement of Net Position
June 30, 2024
19 Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash and investments $ 123,344,957 $ 22,651,983 $ 145,996,940 Restricted cash and investments with fiscal agents 423,747 203,762 627,509 Receivables:

Accounts receivable 912,355 152,061 1,064,416
Interest receivable 587,084 83,790 670,874
Taxes receivable 1,444,336 - 1,444,336
Intergovermental receivables 3,825,874 - 3,825,874
Deposits and prepayments 121,071 - 121,071
Internal balances 2,304,636 (2,304,636) -
Total current assets 132,964,060 20,786,960 153,751,020 Noncurrent assets:

Loans to Successor Agency 367,718 - 367,718
Loans and notes receivable 14,368,688 - 14,368,688
Capital assets:

Capital assets not being depreciated 18,971,963 6,762,117 25,734,080 Capital assets, net of accumulated depreciation/amortization 63,461,122 5,432,552 68,893,674 Total capital assets 82,433,085 12,194,669 94,627,754
Total noncurrent assets 97,169,491 12,194,669 109,364,160 Total assets 230,133,551 32,981,629 263,115,180

DEFERRED OUTFLOWS OF RESOURCES
Deferred employer pension contributions 2,640,100 23,402 2,663,502 Deferred outflows of resources - pension 5,204,475 46,116 5,250,591 Total deferred outflows of resources 7,844,575 69,518 7,914,093

LIABILITIES
Current liabilities:

Accounts payable 4,305,796 1,714,861 6,020,657
Accrued liabilities 365,420 49,577 414,997
Retentions payable 419,117 - 419,117
Unearned revenue 1,136,586 - 1,136,586
Compensated absences 173,642 - 173,642
Claims payable 114,127 - 114,127
Notes payable - 23,333 23,333
Leases payable 518,249 29,367 547,616
Total current liabilities 7,032,937 1,817,138 8,850,075 Noncurrent liabilities:

Deposits payable 1,339,177 26,360 1,365,537
Advances from developers 100,891 2,469,006 2,569,897
Compensated absences 758,516 - 758,516
Claims payable 136,308 - 136,308
Notes payable - 560,002 560,002
Leases payable 424,246 20,603 444,849
Net pension liablity 16,063,779 142,405 16,206,184
Total noncurrent liabilities 18,822,917 3,218,376 22,041,293 Total liabilities 25,855,854 5,035,514 30,891,368

DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources - pension 335,652 2,966 338,618 Total deferred inflows of resources 335,652 2,966 338,618

NET POSITION
Net investment in capital assets 80,872,067 11,338,141 92,210,208 Restricted for:

Streets and Infrastructure 20,314,190 - 20,314,190
Parks and Recreation 365,386 - 365,386
Housing Programs 33,955,113 - 33,955,113
Special Programs 2,870,088 - 2,870,088
Capital Projects 5,004,887 13,778,345 18,783,232
Total restricted 62,509,664 13,778,345 76,288,009
Unrestricted 68,404,889 2,896,181 71,301,070
$ 211,786,620 $ 28,012,667 $ 239,799,287
See accompanying Notes to Basic Financial Statements.

Primary Government
Total net position
144
City of East Palo Alto
Statement of Activities
June 30, 2024
20 Operating Capital
Charges for Grants and Grants and Governmental Business-Type Functions/Programs Expenses Services Contributions Contributions Total Activities Activities Total Primary Government:

Governmental activities:

General government $ 8,165,459 $ 8,981 $ 97,282 $ - $ 106,263 $ (8,059,196) $ - $ (8,059,196) Public safety 13,640,989 414,605 778,852 - 1,193,457 (12,447,532) - (12,447,532) Public works 7,292,278 304,110 - 7,453,564 7,757,674 465,396 - 465,396 Culture and recreation 1,950,423 10,555 1,913,965 - 1,924,520 (25,903) - (25,903) Community Development 7,244,815 1,683,411 375,039 - 2,058,450 (5,186,365) - (5,186,365) Interest on long-term debt 57,540 - - - - (57,540) - (57,540) Total governmental activities 38,351,504 2,421,662 3,165,138 7,453,564 13,040,364 (25,311,140) - (25,311,140) Business-type activities:

Garbage Collections 3,171,977 3,161,410 - - 3,161,410 - (10,567) (10,567) Water Services 894,227 1,606,313 - 1,308,516 2,914,829 - 2,020,602 2,020,602 Total business-type activities 4,066,204 4,767,723 - 1,308,516 6,076,239 - 2,010,035 2,010,035 Total primary government 42,417,708 7,189,385 3,165,138 8,762,080 19,116,603 (25,311,140) 2,010,035 (23,301,105) General Revenues:

Taxes:

Property taxes 19,858,720 - 19,858,720
Sales taxes 6,019,894 - 6,019,894
Utility users tax 2,052,280 - 2,052,280
Transient occupancy tax 2,526,290 - 2,526,290
Business license tax 2,414,887 - 2,414,887
Other taxes 1,779,640 - 1,779,640
Total taxes 34,651,711 - 34,651,711
Investment earnings 6,690,404 1,094,978 7,785,382
Miscellaneous 1,339,191 - 1,339,191
Transfers (433,400) 433,400 -
Total general revenues and transfers 42,247,906 1,528,378 43,776,284 Change in net position 16,936,766 3,538,413 20,475,179
Net position - beginning of year 194,849,854 24,474,254 219,324,108 Net position - end of year $ 211,786,620 $ 28,012,667 $ 239,799,287 Net (Expense) Revenue
Program Revenues and Changes in Net Position
See accompanying Notes to Basic Financial Statements.
145
FUND

FINANCIAL STATEMENTS
21 Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
146
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147
22 GOVERNMENTAL FUND FINANCIAL STATEMENTS
General Fund is the primary operating fund of the City and accounts for the revenues and expenditures to carry out basic governmental activities of the City such as general government, public safety, highway and street, culture and recreation, and community development. This fund accounts for all financial transactions not accounted for in other governmental funds.

Capital Improvements Capital Projects Fund accounts for capital project improvement revenues and expenditures financed by various sources primarily Federal and State grants, General Fund transfers, and community benefit payments for related capital projects.

Non-Major Governmental Funds is the aggregate of all the non-major governmental funds. 148
City of East Palo Alto
Balance Sheet
June 30, 2024
23 Capital
Improvements Non-Major Total
Capital Governmental Governmental
General Projects Fund Funds Funds
ASSETS
Cash and investments $ 57,692,050 $ 22,223,106 $ 43,429,801 $ 123,344,957 Restricted cash and investments - 323,647 100,100 423,747 Receivables:

Accrued interest 211,904 75,569 299,611 587,084
Taxes 1,310,147 - 134,189 1,444,336
Intergovernmental 1,584,820 1,934,357 306,697 3,825,874 Accounts receivable 684,714 - 227,641 912,355
Deposits and prepayments 121,071 - - 121,071
Advances to other funds 438,356 - 1,866,280 2,304,636
Loans to Successor Agency 367,718 - - 367,718
Loans and notes receivable - - 14,368,688 14,368,688
Total assets $ 62,410,780 $ 24,556,679 $ 60,733,007 $ 147,700,466

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable $ 1,329,378 $ 2,636,655 $ 339,763 $ 4,305,796 Retentions payable - 408,967 10,150 419,117
Deposits payable 1,334,177 5,000 - 1,339,177
Other accrued liabilities 264,869 2,801 97,750 365,420
Unearned revenue 42,419 878,647 215,520 1,136,586
Advances from developers - 100,891 - 100,891
Total liabilities 2,970,843 4,032,961 663,183 7,666,987 Deferred inflows of resources:

Unavailable revenues 22,339 480,033 375,039 877,411
Fund Balances: (Note 9)
Nonspendable 927,145 - - 927,145
Restricted 45,039 1,273,906 59,694,785 61,013,730
Committed 11,150,949 9,350,000 - 20,500,949
Assigned 3,824,125 9,419,779 - 13,243,904
Unassigned 43,470,340 - - 43,470,340
Total fund balances 59,417,598 20,043,685 59,694,785 139,156,068 Total liabilities, deferred inflows of
resources, and fund balances $ 62,410,780 $ 24,556,679 $ 60,733,007 $ 147,700,466 See accompanying Notes to Basic Financial Statements.
149
City of East Palo Alto
Reconciliation of the Governmental Funds Balance Sheet
To the Government-Wide Statement of Net Position
June 30, 2024
24 Total Fund Balances - Governmental Funds $ 139,156,068

Capital assets not being depreciated 18,971,963
Capital assets, net of accumulated depreciation/amortization 63,461,122 Total capital assets 82,433,085

Employer pension contributions are recorded as expenditures in the Governmental funds when paid based upon recommended actuarial contributions. In the Government-wide financial statements, these employer pension contributions are reported as deferred outflows of resources, to be applied against the net pension liability in the following fiscal year. 2,640,100

In the Government-Wide Financial Statements certain differences between actuarial estimates and actual results for pension, changes in assumptions, differences between actual and projected investment earnings, and differences resulting from changes in allocation percentages are deferred and amortized over a period of time, however in the governmental funds no transactions are recorded.

Deferred outflows of resources - pension 5,204,475
Deferred inflows of resources - pension (335,652)
Unavailable revenue recorded in the fund financial statements resulting from activities in which revenues were earned but funds were not available are reclassified as revenues in the GovernmentWide Financial Statements. 877,411 Long-term liabilities are not due and payable in the current period; therefore, they are not reported in the Governmental Funds Balance Sheet.

Compensated absences (932,158)
Claims payable (250,435)
Lease payable (942,495)
Net pension liability (16,063,779)
Total long-term liabilities (18,188,867)

Net Position of Governmental Activities $ 211,786,620
Governmental funds report capital outlays as expenditures. In the Government-wide financial statements, the cost of assets are capitalized and depreciated over the estimated useful lives of the assets and reported as depreciation expense. The capital assets, net of depreciation, are adjusted as follows:

Amounts reported for governmental activities in the Statement of Net Position are different from those reported in the Total Fund Balances - Governmental Funds above due to the following:

See accompanying Notes to Basic Financial Statements.
150
City of East Palo Alto
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the year ended June 30, 2024
25 Capital
Improvements Non-Major Total
General Capital Governmental Governmental
Fund Projects Fund Funds Funds
REVENUES:

Property taxes $ 18,796,350 $ - $ 1,062,370 $ 19,858,720 Sales taxes 6,019,894 - 1,108,425 7,128,319
Transient occupancy tax 2,021,494 - 504,796 2,526,290
Utility users tax 2,052,280 - - 2,052,280
Other taxes 2,392,631 - 3,280,985 5,673,616
Licenses, fees and permits 1,673,305 - 1,984,358 3,657,663 Charges for services 453,153 - 663,102 1,116,255
Fines and forfeitures 540,438 - - 540,438
Use of money and property 3,114,354 1,104,888 2,540,461 6,759,703 Grants and intergovernmental 102,370 7,286,326 3,292,240 10,680,936 Miscellaneous 546,286 - - 546,286
Total revenues 37,712,555 8,391,214 14,436,737 60,540,506 EXPENDITURES:

Current:

General government 6,532,973 28,316 928,733 7,490,022
Public safety 12,578,230 - 224,110 12,802,340
Public works 3,864,152 25,218 1,080,407 4,969,777
Culture and recreation 1,069,528 23,200 237,089 1,329,817 Community development 3,269,199 - 3,793,120 7,062,319
Capital outlay 120,585 9,238,459 265,286 9,624,330
Debt service:

Principal 471,388 - 13,964 485,352
Interest 55,885 - 1,655 57,540
Total expenditures 27,961,940 9,315,193 6,544,364 43,821,497 REVENUES OVER (UNDER) EXPENDITURES 9,750,615 (923,979) 7,892,373 16,719,009 OTHER FINANCING SOURCES (USES):

Transfers in - 2,389,832 1,296,465 3,686,297
Transfers out (4,119,697) - - (4,119,697)
Total other financing sources (uses) (4,119,697) 2,389,832 1,296,465 (433,400) Net change in fund balances 5,630,918 1,465,853 9,188,838 16,285,609 FUND BALANCES:

Beginning of year, as restated 53,786,680 18,577,832 50,505,947 122,870,459 End of year $ 59,417,598 $ 20,043,685 $ 59,694,785 $ 139,156,068 Major Funds See accompanying Notes to Basic Financial Statements. 151
City of East Palo Alto
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities For the year ended June 30, 2024
26 Net Change in Fund Balances - Total Governmental Funds $ 16,285,609 Governmental funds reported capital outlay as expenditures. However, in the Government-Wide Statement of Activities, the cost of those assets was allocated over the estimated useful lives as depreciation expense. This was the amount of capital assets recorded in the current period. 9,596,924 Depreciation and amortization expense on capital assets is reported in the Government-Wide Statement of Activities, but does not require the use of current financial resources. Therefore, depreciation and amortization expense is not reported as expenditures in the governmental funds. (3,531,047) Accrued compensated absences is reported as an expenditure in the Governmental funds when paid, but the accrued payable increased compensated leave liabilities in the Government-Wide Statement of Net Position. (6,193)
Payments on existing claims against the City are recorded as expenditures in governmental funds, but the payment reduced long-term liabilities in the Government-Wide Statement of Net Position.

Expenses related to new claims and changes in claim estimates do not require the use of current financial resources and therefore are not reported as an expenditure in Governmental funds. 15,714 Principal payments on lease liabilities are current expenditures in the fund financials, but reduce the lease liability in the Government-Wide Statement of Net Position 485,352 Current year employer pension contributions are recorded as expenditures in the Governmental funds, however these amounts are reported as a deferred outflow of resources in the GovernmentWide Statement of Net Position. 195,671 Pension expense is recorded as incurred in the Government-Wide Statement of Activities, however pension expense is not recognized in the governmental funds. (1,286,428) Grant and tax revenues that do not meet the revenue recognition criteria in the governmental funds but are recognized as revenue in the Government-Wide Financial Statements. (4,818,836)

Change in Net Position of Governmental Activities $ 16,936,766 Amounts reported as Change in Net Position of governmental activities in the Statement of Activities are different from those reported as Net Change in Fund Balances - Total Governmental Funds above due to the following:

See accompanying Notes to Basic Financial Statements.
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27 PROPRIETARY FUND FINANCIAL STATEMENTS
Garbage Collection Fund accounts for the certain activities associated with garbage collection services.

Water Service Fund accounts for activities related to water lease and capital improvement surcharge revenues utilized to improve and expand the City's water system infrastructure. 154
City of East Palo Alto
Statement of Net Position
Proprietary Funds
June 30, 2024
28 Total
Water Garbage Enterprise
Service Collection Funds
ASSETS
Current assets:

Cash and investments $ 19,536,251 $ 3,115,732 $ 22,651,983 Cash with fiscal agents 203,762 - 203,762
Accrued interest 72,347 11,443 83,790
Accounts receivable, net 121,625 30,436 152,061
Total current assets 19,933,985 3,157,611 23,091,596
Noncurrent assets:

Capital assets:

Non-depreciable 6,762,117 - 6,762,117
Depreciable, net 5,432,552 - 5,432,552
Total capital assets 12,194,669 - 12,194,669
Total noncurrent assets 12,194,669 - 12,194,669
Total assets 32,128,654 3,157,611 35,286,265
11,584,697

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources - pension 32,395 37,123 69,518 Total deferred outflows of resources 32,395 37,123 69,518

LIABILITIES
Current liabilities:

Accounts payable 235,589 1,479,272 1,714,861
Other accrued liabilities 25,196 24,381 49,577
Note payable 23,333 - 23,333
Lease payable 29,367 - 29,367
Total current liabilities 313,485 1,503,653 1,817,138
Noncurrent liabilities:

Deposits payable 26,360 - 26,360
Advances from developers 2,469,006 - 2,469,006
Advances from other funds 2,304,636 - 2,304,636
Note payable 560,002 - 560,002
Lease payable 20,603 - 20,603
Net pension liability 64,065 78,340 142,405
Total noncurrent liabilities 5,444,672 78,340 5,523,012 Total liabilities 5,758,157 1,581,993 7,340,150

DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources - pension 1,808 1,158 2,966 Total deferred inflows of resources 1,808 1,158 2,966

NET POSITION
Net investment in capital assets 11,338,141 - 11,338,141 Restricted for:

Capital projects 13,778,345 - 13,778,345
Unrestricted 1,284,598 1,611,583 2,896,181
Total net position $ 26,401,084 $ 1,611,583 $ 28,012,667 Business-type Activities
See accompanying Notes to Basic Financial Statements.
155
City of East Palo Alto
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the Year Ended on June 30, 2024
29 Total
Water Garbage Enterprise
Service Collection Funds
OPERATING REVENUES:

Charges for services and other fees $ 1,207,218 $ 2,874,307 $ 4,081,525 Other 399,095 287,103 686,198
Total operating revenues 1,606,313 3,161,410 4,767,723
OPERATING EXPENSES:

Outside services 443,545 2,918,649 3,362,194
Administration 129,099 253,328 382,427
Depreciation 321,583 - 321,583
Total operating expenses 894,227 3,171,977 4,066,204
OPERATING INCOME 712,086 (10,567) 701,519
NONOPERATING REVENUES (EXPENSES):

Interest income 974,336 120,642 1,094,978
-
Total nonoperating revenues (expenses) 974,336 120,642 1,094,978 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 1,686,422 110,075 1,796,497 Capital contributions 1,308,516 - 1,308,516
Transfers in 433,400 - 433,400
Change in net position 3,428,338 110,075 3,538,413

NET POSITION
Beginning of year 22,972,746 1,501,508 24,474,254
End of year $ 26,401,084 $ 1,611,583 $ 28,012,667
Business-type Activities
See accompanying Notes to Basic Financial Statements.
156
City of East Palo Alto
Statement of Cash Flows
Proprietary Funds
For the Year Ended on June 30, 2024
30 Total
Water Garbage Enterprise
Service Collection Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from others $ 399,095 $ 287,103 $ 686,198 Cash received from customers 1,295,012 2,897,962 4,192,974 Cash payments to suppliers for goods and services (414,749) (2,138,324) (2,553,073) Cash paid to employees and city administration (112,358) (221,547) (333,905) Net cash provided by operating activities 1,167,000 825,194 1,992,194 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Capital contributions 1,718,583 - 1,718,583
Acquisition of capital assets (443,799) - (443,799)
Payment of leases (27,402) (27,402)
Repayments on advances from other funds (101,369) - (101,369) Repayments on advances from developers (41,040) - (41,040) Net cash (provided by) capital and related financing activities 1,104,973 - 1,104,973 CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income received 1,025,140 124,836 1,149,976
Net cash provided by investing activities 1,025,140 124,836 1,149,976

NET INCREASE IN CASH AND CASH EQUIVALENTS
3,297,113 950,030 4,247,143
CASH AND CASH EQUIVALENTS - Beginning of year 16,442,900 2,165,702 18,608,602 CASH AND CASH EQUIVALENTS - End of year $ 19,740,013 $ 3,115,732 $ 22,855,745 FINANCIAL STATEMENT PRESENTATION:

Cash and investments $ 19,536,251 $ 3,115,732 $ 22,651,983 Cash with fiscal agents 203,762 - 203,762
Total $ 19,740,013 $ 3,115,732 $ 22,855,745

RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (used in) BY OPERATING ACTIVITIES:

Operating income $ 712,086 $ (10,567) $ 701,519
Adjustments to reconcile operating income
to net cash provided by operating activities:

Depreciation 321,583 - 321,583
Changes in assets, liabilities and related deferrals:

Accounts receivable 87,794 23,655 111,449
Pension related deferred outflows of resources (369) (1,181) (1,550) Accounts payable 43,220 780,325 823,545
Other accured liabilities - 24,381 24,381
Net pension liabilities 3,106 9,924 13,030
Pension related deferred inflows of resources (420) (1,343) (1,763) Total adjustments 454,914 835,761 1,290,675
Net cash provided by operating activities $ 1,167,000 $ 825,194 $ 1,992,194 NON-CASH INVESTMENT AND FINANCING ACTIVITY:

Forgiveness of long term debt $ 23,333 $ - $ 23,333
Business-type Activities
See accompanying Notes to Basic Financial Statements.
157
31 FIDUCIARY FUND FINANCIAL STATEMENTS
Private Purpose Trust Funds
Successor Agency Trust to the Redevelopment Agency Private-Purpose Trust Fund accounts for the accumulation of resources held and administered under trust for the benefit of others. In January 2012, all California Redevelopment Agencies were dissolved pursuant to the Dissolution Act. As such, the City elected to serve as the Successor Agency (SA) of the former Redevelopment Agency. The SA is responsible for winding down the affairs of the former agency. This fund accounts for receipts and payments related to an Enforceable Obligation Schedule; and the disposition of assets and property of the former Redevelopment Agency for the benefit of taxing agencies. The financial activities of the fund are excluded from the Government-wide financial statements, but are presented in the separate Fiduciary Fund financial statements.
158
City of East Palo Alto
Statement of Net Position
Fiduciary Funds
June 30, 2024
32 Successor Agency
Trust Fund
ASSETS
Current assets
Cash and investments $ 1,634,807
Receivables:

Taxes receivable 145,821
Interest receivable 17,290
Total current assets 1,797,918
Total assets 1,797,918

LIABILITIES
Liabilities:

Current liabilities
Other accrued liabilities 1,281
Loans payable to City 367,718
Bonds payable 1,140,000
Total current liabilities 1,508,999
Noncurrent liabilities
Bonds payable 10,840,000
Total noncurrent liabilities 10,840,000
Total liabilities 12,348,999

DEFERRED INFLOWS OF RESOURCES
Deferred gain on refunding 96,414

NET POSITION
Total net position (deficit) - Held in trust for dissolution of RDA $ (10,647,495) See accompanying Notes to Basic Financial Statements.

See accompanying Notes to Basic Financial Statements
159
City of East Palo Alto
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended on June 30, 2024
33 Successor Agency
Trust Fund
ADDITIONS:

RDA property tax trust fund distribution $ 3,546,233
Use of money and property 112,147
Total additions 3,658,380
DEDUCTIONS:

General government 43,026
Interest and fiscal charges 382,688
Total Deductions 425,714
Change in net position 3,232,666
NET POSITION (DEFICIT):

Beginning of year (13,880,161)
End of year $ (10,647,495)
See accompanying Notes to Basic Financial Statements.
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161

NOTES TO BASIC

FINANCIAL STATEMENTS
34 162
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163
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
35 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of East Palo Alto, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies.

The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below.

A. Financial Reporting Entity
The City of East Palo Alto (City) was incorporated in 1983, under the General Laws of the State of California and enjoys all the rights and privileges pertaining to "General Law" cities. The City uses the City Council/Manager form of government. The local government is comprised of five Council members who are elected every four years and act under powers granted under State law. The City provides a variety of services including general administration; police public safety; street/highway, storm drain, streetlight, and park maintenance; community development, and community services, including rent control services.

The basic financial statements present the City and its component units, entities for which the City is financially accountable. Blended component units, although legally separate entities are, in substance, part of the City’s operations and data from these units are combined with data of the City. The City has no discretely presented component units. The blended component unit has a June 30 year-end. The following entity is reported as a blended component unit:

The East Palo Alto Public Financing Authority - The East Palo Alto Public Financing Authority (Authority) was organized in October 1999 under a joint exercise of power agreement to provide financing for public improvements forthe City and the former East Palo Alto Redevelopment Agency (former Agency). The Authority and the City have a financial and operational relationship, which requires that the Authority’s financial statements be blended into the City’s financial statements. The Authority’s Board consists exclusively of all members of the City Council. Separate financial statements of the Authority are not prepared. There are currently no reportable financial transactions of the Authority.

B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on a fund basis, each of which is considered a separate accounting entity with its own self-balancing set of accounts that comprise its assets, liabilities, fund equity,revenues, and expenditures or expenses. These funds are established for the purpose of carrying out activities or certain objectives in accordance with specific regulations, restrictions, or limitation. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and how spending activities are controlled.

Government-Wide Financial Statements
The City’s Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column.
164
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
36 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Government-Wide Financial Statements, Continued
The financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting,revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liabilities are incurred.

Certain types of transactions reported as program revenues for the City are reported in three categories:
• Charges for services.
• Operating grants and contributions.
• Capital grants and contributions.

Certain eliminations have been made related to inter-fund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:
• Due to/from other funds.
• Transfers in/out.

The City applies all applicable GASB pronouncements including all NCGA Statements and Interpretations currently in effect.

Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the government-wide financial statements. The City has presented all major funds that meet specific qualifications.

All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Revenues are recognized when they have been earned and they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. 165
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
37 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements, Continued
The City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. The primary revenue sources that have been treated as susceptible to accrual by the City are property taxes, taxpayer-assessed tax revenues (sales taxes, transient occupancy taxes, franchise taxes, etc.), grant revenues and earnings on investments. Expenditures are generally recorded when a liability is incurred, as under accrual accounting.

The City reports the following funds as major governmental funds of the City:

General Fund accounts for resources traditionally associated with governmental activities that are not required legally or by sound financial management to be accounted for in another fund.

Capital Improvements Capital Projects Fund accounts for capital project improvement revenues and expenditures financed by various sources, primarily Federal and State grants, General Fund transfers, and capital-related community benefit receipts.

The City reports the following governmental funds as non-major governmental funds of the City:

NPDES Fees Special Revenue Fund accounts forthe revenues and expenditures from assessments levied on property in the City in compliance with the provisions of the National Pollutant Discharge Elimination System for prevention of storm water and flood related damage.

Gas Tax Special Revenue Fund accounts for funds received from the State of California to use for street and highway related projects.

Federal and State Law Enforcement Special Revenue Fund accounts for the receipt and use of State and Federal law enforcement related grant money.

Park in Lieu Special Revenue Fund accounts for park in lieu fees collected from developers.

Rent Stabilization Special Revenue Fund accounts for revenues and expenditures to support rent stabilization activities.

Federal and State Grants Special Revenue Fund accounts for grant money received and expended from various Federal and State government grants.

Housing Assistance Special Revenue Fund accounts for first time home buyer assistance program activities.

Measure A Special Revenue Fund accounts forthe City's share of Measure A revenues and expenditures.

Measure A is a half-cent sales tax to support countywide (San Mateo County) transportation projects and programs.

CYSFF TOT Special Revenue Fund accounts for 10% of transient occupancy taxes collected as approved by voters and the City Council approved funding for various non-profit organizations related to Children/Youth/Seniors/Family programs.
166
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
38 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements, Continued
Lighting District Special Revenue Fund accounts for revenues (property taxes) and expenditures for the Ravenswood Highway Lighting District.

Drainage District Special Revenue Fund accounts for revenues (property taxes) and expenditures forthe East Palo Alto Maintenance Drainage District.

Measure C Special Revenue Fund accounts for activities related to the Measure C Parcel tax. Measure C was an annual tax approved by the voters in November 2006 for a period of ten years. The remaining funds are to be used to support violence prevention and public safety intervention.

Local Grants Special Revenue Fund accounts for revenues and expenditures from local public and private grants including the C/CAG Shuttle and the CA Endowment grants.

Low- and Moderate-Income Housing Successor Special Revenue Fund accounts for the activities related to the housing assets assumed by the City as Housing Successor to the former Redevelopment Agency.

The activities are governed by California redevelopment law and must be used to provide housing for people with low and moderate incomes.

Housing in Lieu Special Revenue Fund accounts for developer fees in lieu of providing affordable housing and the expenditures related to affordable housing development activities.

Housing TOT Special Revenue Fund accounts for 10% set-aside of transient occupancy taxes collected as approved by voters, and the expenditures related to affordable housing development activities.

Measure HH Special Revenue Fund accounts for the revenues and expenditures of Measure HH-Parcel tax. Measure HH was approved by the voters in November 2018. The tax is annual parcel tax and the funds are to be used for affordable and supportive housing programs, programs that facilitate access to job opportunities in the S.T.E.M. sectors, building trades, and strengthen First Source Hiring.

Measure W Special Revenue Fund accounts for the City’s share of San Mateo County Measure W revenues and expenditures. Measure W is a half-cent sales tax to support countywide transportation projects and programs.
167
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
39 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements, Continued
CIP Impact Fees Capital Project Fund accounts for various development impact fees collected by the City for capital related activities.

Proprietary Fund Financial Statements
Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses and Change in Net Position, and a Statement of Cash Flows for all proprietary funds.

Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which a liability is incurred.

Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.

The City reports the Garbage Collection and Water Service enterprise funds as proprietary funds of the City.

Water Service Fund accounts for the certain activities related to water lease and capital surcharge revenues utilized to improve and expand the City’s water system infrastructure.

Garbage Collection Fund accounts for the activities associated with garbage collection services.

Fiduciary Fund Financial Statements
Fiduciary fund financial statements consist of a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. Private-purpose trust funds account for resources of all other trust arrangements in which principal and income benefit individuals, private organizations, or other governments (i.e. unclaimed property/escheat property). Fiduciary funds are accounted for using the accrual basis of accounting. The City reports the following fiduciary funds:
168
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
40 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Fiduciary Fund Financial Statements, Continued
Successor Agency Private Purpose Trust Fund – accounts for assets and liabilities held by the City pursuant to California Redevelopment Dissolution Law whereby the City elected to serve as the Successor Agency of the former Agency effective February 1, 2012. The Successor Agency serves as custodian for the assets of, and winding down affairs related to, the former Agency. The Successor Agency is allocated revenues necessary to pay enforceable obligations of the former Agency. The activities of the fund are excluded from the Government-wide financial statements but are presented in the separate Fiduciary fund financial statements.

C. Cash, Cash Equivalents, and Investments
The City pools cash resources from all funds to facilitate the management of cash. The balance in the pooled cash account is available to meet current operating requirements. Cash in excess of current requirements is invested in various interest-bearing accounts and other investments for varying terms.

In accordance with GASB Statement No. 40, Deposit and Investment Disclosures (Amendment of GASB No. 31), certain disclosure requirements for Deposits and Investment Risks were made in the following areas:
• Interest Rate Risk
• Credit Risk
o Overall
o Custodial Credit Risk
o Concentrations of Credit Risk
In addition, other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end, and other disclosures.

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. The City categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City does not have any investments that are measured using Level 3 inputs.

The City participates in an investment pool managed by the State of California entitled Local Agency Investment Fund (LAIF) which has invested a portion of the pooled funds in structured notes and assetbacked securities. LAIF investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these structured notes and asset-backed securities are subject to market risk as to the change in interest rates. 169
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
41 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Cash, Cash Equivalents, and Investments, Continued
Cash equivalents are considered amounts in demand deposits and short-term investments with a maturity date within three months of the date acquired by the City and are presented as “Cash and Investments” in the accompanying Basic Financial Statements.

The City considers all pooled cash and investments (consisting of cash and investments and restricted cash and investments) held by the City as cash and cash equivalents because the pool is used essentially as a demand deposit account from the standpoint of the funds. The City also considers all non-pooled cash and investments (consisting of cash with fiscal agent and restricted cash and investments held by fiscal agent) as cash and cash equivalents because investments meet the criteria for cash equivalents defined above.

D. Restricted Cash and Investments
Certain restricted cash and investments are held by fiscal agents under the provisions of bond indentures or trust arrangements. The City’s Investment Policy does not apply to trust accounts held by the fiscal agents, which are invested as directed by separate trust arrangements.

E. Prepayments
Payments made for services that will benefit periods beyond fiscal year end are recorded as prepaid items.

In the governmental fund types, there is a portion of non-spendable fund balance equal to the total prepaid items since these are not available for appropriation.

F. Capital Assets
Capital assets used in governmental fund operations, including infrastructure assets (i.e. roads, curbs, gutters, bridges, sidewalks, drainage systems, lighting systems, and other assets) are reflected in the government-wide financial statements, along with related depreciation. Capital assets are defined by the City as assets with an initial individual cost of more than $5,000 and an estimated life more than one year.

Purchased capital assets are valued at historical cost or estimated historical cost. Donated capital assets are valued at their acquisition value on the date donated. Capital assets acquired under lease or purchase agreements are capitalized when the City accumulates an ownership equity in the assets acquired.

The purpose of depreciation is to allocate the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year’s pro rata share of the cost of capital assets.

Depreciation is provided using the straight-line method whereby the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The City has assigned the useful lives listed below to capital assets:

Infrastructure 7-55 years
Buildings and Improvements 30 years
Furniture, Fixture, and Equipment 5-10 years
Automobiles and Trucks 10 years
170
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
42 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued F. Capital Assets, Continued
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period.

Right to use leased assets are recognized at the lease commencement date and represent the City's right to use an underlying asset for the lease term. Right to use leased assets are measured at the initial value of the lease liability plus any payments made to the lessor before commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease term, plus any initial direct costs necessary to place the lease asset into service. Right to use leased assets are amortized over the shorter of the lease term or useful life of the underlying asset using the straight-line method. The amortization period varies from 3 to 5 years.

G. Unearned revenue
Unearned revenue is recognized for transactions for which revenue has not yet been earned. Typical transactions recorded as unearned revenues in the Government-wide Financial Statements are prepaid fees and charges for services.

H. Long-Term Debt
Government-wide Financial Statements – Long-term debt and other long-term obligations are reported as liabilities in the appropriate activities.

Bond premiums and discounts, if any, are amortized over the life of the bonds using straight line method.

Bonds payable are reported net of the applicable bond premium or discount.

Fund Financial Statements – The governmental fund financial statements do not report long-term debt.

As such, long-term debt is shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position.

Premiums and discounts related to debt issuance are recognized during the current period as other financing sources or uses. Proceeds from debt issuance are reported as other financing sources.

Lease Liabilities represent the City's obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments expected to be made during the lease term. The present value of lease payments are discounted based on a borrowing rate determined by the City.

I. Property Taxes
State Constitution Article XIIIA provides for a maximum general property tax rate statewide of $1.00 per $100, or one percent (1%) of assessed value unless an additional override tax rate is levied to pay voterapproved indebtedness. At the time of transfer of ownership, assessed value is calculated at 100% of market value as defined by Article XIIIA; otherwise assessed value is applied to the adjusted 1975-76 value of the property plus new construction value added after the 1975-76 valuation. Taxable values on properties can rise or be adjusted at the lesser 2% per year or the inflation rate as determined by the Board of Equalization California Consumer Price Index.
171
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
43 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued J. Property Taxes, Continued
The State Legislature has determined the method of distribution of receipts from a $1.00 tax levy among the counties, cities, school districts and other districts. Counties, cities, school districts and other special districts, may levy such additional tax rate as is necessary to provide for voter-approved debt.

The County of San Mateo assesses properties and bills for and collects property taxes as follows:

Secured Unsecured
Valuation/Lien dates January 1 January 1
Levy Dates On or before November 1 July 1
Due Dates (deliquent after) 50% on November 1 (December 10) July 1 (August 31) 50% on February 1 (April 10)
K. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position (balance sheet) may report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of financial position 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 a future period(s) and will not be recognized as an inflow of resources (revenue) until that time.

L. Net Position
Government-Wide Financial Statements
In the Government-wide Financial Statements, net position is classified in the following categories:

Net Investment in Capital Assets – This amount consists of capital assets, net of accumulated depreciation and reduced by outstanding debt, that is attributed to the acquisition, construction, or improvement of the assets.

Restricted – This amount is restricted by external creditors, grantors, contributors, or laws or regulations of governments.

Unrestricted – This amount is the net position balance that does not meet the definition of “net investment in capital assets” or “restricted net position” as defined above.

When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City’s policy is to apply restricted net position first. 172
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
44 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued M. Fund Balance
Nonspendable Fund Balances
Non-spendable balances consist of amounts that do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, and land held for resale are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed, or assigned, then non-spendable amounts are required to be presented as a component of the applicable category.

Restricted Fund Balances
Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for specific purpose.

Encumbrances and nonspendable amounts subject to restrictions are included with spendable resources.

Committed Fund Balances
Committed fund balances have constraints imposed by resolution of the City Council which may be altered only by resolution of the City Council. Encumbrances and nonspendable amounts subject to Council commitments are included with spendable resources.

Assigned Fund Balances
Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. Intent is expressed by the City Council or its designee and may be changed at the discretion of the City Council or its designee. This category includes encumbrances and non-spendable balance when it is the City’s intent to use proceeds or collections for a specific purpose.

The City Council is the only entity that has authority to make assignments of fund balance. The City Council has not delegated the authority to make assignments of fund balance.

Unassigned Fund Balance
Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds.

Hierarchy of Expenditures to Classify Fund Balance Amounts For expenditures made in any governmental fund, the restricted amounts will be reduced first, followed by committed amounts, assigned amounts, and then unassigned amounts.

Minimum Fund Balance Policies
The City's Reserve Management Policy requires that the City maintain a contingency reserve balance targeting 30% of adopted general fund expenditures including recurring transfers in the unassigned general fund balance.
173
City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2024
45 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued M. Fund Balances, Continued
On June 30, 2024, the General Fund reported $42,470,340 in reserve which meets the City’s minimum 30% requirement level of $10,970,059. After the minimum fund balance requirement, the General Fund reserve fund balance is $32,500,281.

N. Compensated Leave Payable
Compensated absences are primarily comprised of unpaid vacation leave which is accrued as earned. All full-time, regular employees are entitled to earn a minimum of 80-hours of vacation per year. The accrual rate increases as length of related service exceeds five years. Maximum accrual of vacation ranges from 288 hours to 320 hours depending on length of related service. For governmental funds, compensated leave payable is recorded as current and noncurrent liabilities and as expenses only on the Governmentwide Financial Statements. Compensated absences are reported in governmental funds only if they have matured.

O. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plan (Plan) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by CalPERS. 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 liability for pension‐related debt is primarily liquidated by the General Fund.

P. Use of Estimates
The preparation of the Basic Financial Statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts and the disclosure. In addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions.

Q. Restatement
During the fiscal year, there was a change within the financial reporting entity which resulted in the Housing In-Lieu Fund being reported as a non-major governmental fund instead of a major governmental fund. This change resulted in restatements of beginning fund balances as follows:

Housing Non-major
In-Lieu Governmental
Fund Funds
Beginning, as previously reported on June 30, 2023 $ 13,313,682 $ 37,192,265 Change to or within the financial reporting entity (13,313,682) 13,313,682 Beginning, as restated on July 1, 2023 $ - $ 50,505,947 Governmental Funds
174
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
46 2. CASH AND INVESTMENTS
The City maintains a cash and investment pool for all funds. Certain restricted funds that are held and invested by independent outside custodians through contractual agreements are not pooled. These restricted funds include cash and investment held by trustees.

A. Summary of Cash and Investments
The following is a summary of cash and investments at June 30, 2024:

Governmental
Activities
Business-Type
Activities
Fiduciary
Funds Total
Cash Investments $ 123,344,957 $ 22,651,983 $ 1,634,807 $ 147,631,747 Reistricted cash and investments 423,747 203,762 - 627,509 Total cash and investments $ 123,768,704 $ 22,855,745 $ 1,634,807 $ 148,259,256 Government-Wide Statement of
Net Position
Cash and investments as of June 30, 2024 consist of the following:

Deposits:

Cash on hand $ 10,800
Deposits with Financial Institution 2,726,152
Total Deposits $ 2,736,952
Investments:

Local Agency Investment funds $ 14,854,966
San Mateo Investment Pool 34,850,799
California Asset Management Program 95,189,030
Total investments 144,894,795
Total cash and investments (unrestricted) 147,631,747
Restricted cash and investments:

Cash with fiscal agent 627,509
Total restricted Cash and Investments 627,509
Total cash and investments $ 148,259,256
175
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
47 2. CASH AND INVESTMENTS, Continued
B. Deposits
The carrying amount of the City’s cash deposits was $2,726,152 at June 30, 2024. Bank balances before reconciling items were a positive amount of $3,740,885 at June 30, 2024. The City has waived the collateral requirements for cash deposits up to the fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The remaining amount was collateralized with securities held by the pledging financial institutions in the City’s name.

The California Government Code (Code) requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. The Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is held in the City's name. The fair value of pledged securities must equal at least 110% of the City’s cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits.

The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures or trust arrangements. Interest income earned on pooled cash and investments is allocated to the various funds based on the period-end cash and investment balances.Interest income from cash andinvestments with fiscal agents is credited directly to the related fund.
176
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
48 2. CASH AND INVESTMENTS, Continued
C. Authorized Investments by the City
The City's Investment Policy and the California Government Code allow the City to invest in the following, provided the credit ratings of the issuers are acceptable to the City. The following also identifies certain provisions of the City and California Government Code that address interest rate risk, credit risk, and concentration of credit risk. This does not address the City's investments of debt proceeds held by fiscal agents that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the Entity's investment policy. Under the provisions of the City’s investment policy, and in accordance with the Code, the following investments are authorized:

Authorized Investment Type ****
Maximum
Maturity
Maximum %
Holdings*
Maximum %
per Issuer
Maximum
Rating**
Municipal Bonds 5 years 100% 5% N/A
U.S. Treasures and General Obligations 5 years 100% 100% N/A Federal Agency or U.S. Government
sponsored Enterprise (GSE) 5 years 100% 50% N/A
Bankers' Acceptance 180 days 40% 5% N/A
Commercial Paper*** 270 days 25% 5%
A-1/ P-1
plus A Long
Term
Negotiable Certificates of Deposit 5 years 30% 5% N/A
Medium Term (Corporate) Notes 5 years 30% 5% NA
Mutual and Money Market Funds 2(A) 7 Eligible 20% 10% AAA/AAA Shares of Beneficial Interest by a JPA 5 years 100% 50% N/A Supranationals (IBRD, IFC, and IDB) 5 years 30% 5% AA
Collateralized Bank Deposits 5 years 100% 20% N/A
Country Investment Pool N/A
Max
permitted by
County
Treasurer
Max
permitted by
County
Treasurer N/A
Local Agency Investment Fund (LAIF) N/A
Max
permitted by
State
Treasuerer
Max
permitted by
State
Treasuerer N/A
*Percentages are in compliance if within limits at time of purchase. Recomennded maximum % is more restrictive than allowed by code. Combine issuer types to determine maximum counterparty risk. **Rating category are inclusive of rating modifiers such as "+/-" or numbers from one NRSRO unless two ratings are noted
*** A-1 or equivalent plus A long term; total assets in excess of $500MM; no more than 10% outstanding from a simgle issuer.
**** Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.
177
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
49 2. CASH AND INVESTMENTS, Continued
D. Investments
Investments are stated at fair value using the aggregate method in all funds, resulting in the following investment income in all funds:

Interest Income $ 5,443,003
Unrealized gain/ (Loss) in changes in fair value of investments 2,454,792 Total Investment Income (Loss) $ 7,897,795
The City’s portfolio value fluctuates in an inverse relationship to any change in interestrate. Accordingly, if interest rates rise, the portfolio value will decline. If interest rates fall, the portfolio value will rise. The portfolio for year-end reporting purposes is treated as if it were all sold. Therefore, fund balance must reflect the portfolio’s change in value. These portfolio value changes are unrealized unless sold.

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 underthe oversight of the Treasurer of the State of California.

The City’s investments with LAIF at June 30, 2024, include a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments include the following:

Structured Notes – are debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or have embedded forwards or options.

Asset-Backed Securities – the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables.

The LAIF fair value factor of 0.996316 was used to calculate the fair value of the investments in LAIF.

The City is also a voluntary participant in the San Mateo County Investment Fund (County Pool) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the County. The City reports its investment in the County Pool at the fair value amount provided by the County. Included in the County Pool’s investment portfolio are US Treasury Notes, Obligations issued by agencies of the United States Government, LAIF, Corporate Notes, Commercial Paper, collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, and floating rate securities issuedby federal agencies, government-sponsored enterprises, and corporations. The fair value factor of 0.991300 was used to calculate the fair value of the investments in the County Pool.

The City also participates in the California Asset Management Program (CAMP), a California Joint Powers Authority that falls under California Government Code Section 53601(p), which is directed by a Board of Trustees. CAMP have adopted Governmental Accounting Standards Board (GASB) Statement No.79 which provides the safety and liquidity of public funds invested in the pool. GASB 79 incorporates robust guidance and accounting standards for local government investment pools to qualify for electing to measure its investments at amortized cost from a financial reporting perspective. 178
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
50 2. CASH AND INVESTMENTS, Continued
E. Risk Disclosures
Interest Risk: Interest rate risk is the fair value fluctuation due to overall changes in the interest rates. It is mitigated by limiting the average maturity of the City’s portfolio not to exceed three years.

Investments held in the City Treasury grouped by maturity date at June 30, 2024, are shown below:

Investment Type Fair Value 1 Year or Less 1-2 Years 2-3 Years 3+ Years City Local Agency Investment Fund $ 14,854,966 $ 14,854,966 $ - $ - $ - San Mateo County Pool 34,850,799 34,850,799 - - -
California Asset Management Program 95,189,030 95,189,030 Total $ 144,894,795 $ 144,894,795 $ - $ - $ -
Investment Maturities (in years)
Credit Risk: Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of June 30, 2024 for each investment type:

Moody's S&P Fair Value
City Local Agency Investment Fund Not Rated Not Rated $ 14,854,966 San Mateo County Pool Not Rated Not Rated 34,850,799
California Asset Management Program Not Rated Not Rated 95,189,030 Credit Quality Ratings
Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s Investment Policy limits its exposure to custodial credit risk by requiring that all security transactions entered into by the City, be conducted on a deliveryversus-payment basis.

F. Investment Valuation
Investments (except for money market accounts, time deposits, and commercial paper) are measured at fair value on a recurring basis. Recurring fair value measurements are those that Governmental Accounting Standards Board (GASB) Statements require or permit in the statement of net position at the end of each reporting period. Fair value measurements are categorized based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

Investments in LAIF, San Mateo County Pool, CAMP and restricted cash and investments included money market accounts and guaranteed investment contracts are not subject to levelling disclosure requirements.
179
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
51 3. INTERFUND TRANSACTIONS
A. Transfers
At June 30, 2024, the City had the following transfers in/out which arose in the normal course of operations:

Transfers Out
Capital
Improvements
Non-Major
Governmental
Funds Total
General Fund $ 2,389,832 $ 1,296,465 $ 433,400 $ 4,119,697 Total $ 2,389,832 $ 1,296,465 $ 433,400 $ 4,119,697
Transfers In
Water
Service
Enterprise
Fund
Transfers from the General Fund were made to 1) the Capital Improvements Fund to fund various capital projects mainly for streets and road improvement projects, 2) to non-major funds for gas tax, storm drain and street sweeping operations, and for housing successor share of loan reimbursements, and 3) to the Water Fund to support Woodland Palo Alto Intertie project.

B. Due to/from Other Funds
At June 30, 2024, the City had no balances in due to/from other funds:

C. Advances to/from Other Funds
Advances from the General Fund and Non-Major Governmental Funds (the SVCF Fund) were made to the Water Services Enterprise Fund to provide liquidity for the purchase of water assurance rights. The advances are repaid upon collection of development impact fees related to the cost of the water assurance rights acquired to increase development capacity within the City. At June 30, 2024, the City had the following advances to/from other funds:

Advances To
Advances From
Water Services
Fund
Major Funds:

General Fund $ 438,356
Non-Major Governmental Funds 1,866,280
Total $ 2,304,636
180
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
52 4. LOANS AND NOTES RECEIVABLE
Loans receivable as of June 30, 2024, composed of the following, were held by the City:

Balances as of
June 30, 2024
Nairobi Housing Associates Loan $ 4,537,555
Nugent Square Partners Loan 1,288,291
Bay Road Housing Loan 522,500
First Time Home Buyers Assistance Loans 42,806
University Senior Apts Loan 663,536
CalHome Loans 100,000
Colibri Commons Loans 7,214,000
Subtotal 14,368,688
Loans to Successor Agency 367,718
Total $ 14,736,406
A. Nairobi Housing Associates Loan
On June 1, 1999, the former Agency entered into a loan agreement with Nairobi Housing Associates (Nairobi), a California Limited Partnership. The $5,500,000 loan was used by Nairobi used to develop 129 affordable multi-family rental housing units, ancillary landscaping, and other improvements known as Peninsula Park Apartments (the Project). In February 2019, the City agreed to a $714,000 loan repayment and approved certain regulatory and loan agreement amendments in connection with developerrefinancing of the Project, including extending the loan maturity. The loan accrues simple interest at the rate of 1% per annum, commencing February 1, 2001. The amended loan matures on July 31, 2056 and is secured by a subordinated note and deed of trust on the property.

B. Nugent Square Partners Loan
On August 1, 2003, the former Agency entered into a loan agreement in the amount of $1,100,000 with Nugent Square Partners, L.P. (Nugent), a California Limited Partnership to develop 32 affordable multifamily rental housing units, ancillary landscaping, and other improvements known as Nugent Square Apartments. In March 2020, the City agreed to a $50,000 loan prepayment and approved certain regulatory and loan subordination amendments in connection with developer-refinancing of the Project.

On December 1, 2022, the City entered into an amended and restated loan agreement with Nugent. As of the date of the Amended Agreement, the Loan had accrued interest at the rate of 1% simple interest with a total accrued interest of $121,466, which is capitalized into the outstanding balance of the Loan for a total loan balance of $1,221,466. In accordance with the terms and conditions set forth in the Amended Agreement, the City is agreeing to restructure the Loan with interest accrues on the outstanding principal balance of the Loan at a rate of 3.43% compounding annually commencing on the effective date of the Amended Agreement. The loan matures in February 2045 and is secured by a deed of trust on the property.
181
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
53 4. LOANS AND NOTES RECEIVABLE, Continued
C. Bay Road Housing Loan
In December 2004, the former Agency entered into a loan agreement with Bay Road Housing, L.P., a California Limited Partnership to provide annual maximum operating gap subsidies related to the development and subsequent operation of 77 affordable multi-family rental housing units known as Courtyard at Bay Road Apartments. The loan provides a maximum annual operating subsidy of $60,000 over a period of twenty years, or a maximum loan of $1.2 million. The loan accrues simple interest at the rate of 2% per annum. The loan matures in January 2027 and is secured by a deed of trust on the property.

D. First Time Home Buyer Assistance Loans
On December 21, 2004, the City approved a program for down payment assistance loans to qualified homebuyers who met the criterion to purchase a below-market rate (BMR) home in East Palo Alto.

Generally, the assistance consists of 30-year loans at a fixed rate of 3% interest with payments deferred for the first five years.

E. University Senior Apartments Loan
On November 25, 2015, the City entered into a loan agreement in the amount of $700,000 with University Senior Apartments, L.P., a California limited partnership to develop 41 affordable multi-family senior housing units known as Serenity Senior Apartments. The loan bears an interest rate of 3% simple interest per annum, commencing on September 5, 2017. The loan is due on November 25, 2072 and is secured by a deed of trust on the property.

F. Colibri Commons Loans
On October 21, 2023, the City entered into loan agreement in the amount of $7,214,000 with MP 965 Weeks Street Associates, L.P., a California limited partnership to develop 135 units ranging from 30% to 60% Area Median Income (AMI) and one manager unit known as Colibri Commons Apartments. The loans consist of a loan in the amount of $714,000 (Housing Fund Loan) and a loan in the amount of $6,500,000 (State Grant Fund Loan). The Housing Fund Loan bear simple interest at the rate of 3% per annum commencing on October 21, 2023. The State Grant Fund Loan shall not bear interest. The loans are due, in full, on October 21, 2080 and are secured by a deed of trust on the property.

G. Loans to Successor Agency
At June 30, 2024, the outstanding balance of $367,718 is comprised of an advance to the former Agency which was assumed by the Successor Agency on February 1, 2012. The related agreement provided for the sale of the Ravenswood High School Site to the former Redevelopment Agency. This property was developed into a retail shopping center in the Gateway 101 Project Area. Repayment terms are subject to a formula outlined in the California Health and Safety Code and approved on an annual recognized obligation schedule (ROPS) under Dissolution Law. There is no interest provision. 182
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
54 5. CAPITAL ASSETS
Changes in capital assets during the year ended June 30, 2024, are comprised of the following:

Balance at
July 1, 2023 Additions
Deletions/
Reclassification
Balance at
June 30, 2024
Government activities
Capital assets not being depreciated
Land $ 7,318,724 $ - $ - $ 7,318,724
Construction in progress 6,601,121 9,126,538 (4,074,420) 11,653,239 Total capital assets not being depreciated 13,919,845 9,126,538 (4,074,420) 18,971,963 Capital assets being depreciated/amortized
Infrastructure:

Streets and roadways 80,594,290 - 3,993,863 84,588,153
Storm drain system 6,738,214 - 80,557 6,818,771
Building and improvements 20,266,962 - - 20,266,962
Right-to-use leased buildings 2,306,523 - - 2,306,523
Furniture, fixtures, and equpment 2,268,680 187,896 - 2,456,576 Vehicles 3,062,487 282,489 - 3,344,976
Total capital assets being depreciated/amortized 115,237,156 470,385 4,074,420 119,781,961 Less accumulated depreciation/amortization for:

Infrastructure:

Streets and roadways (36,051,060) (1,926,321) - (37,977,381) Storm drain system (2,920,865) (96,743) - (3,017,608)
Building and improvements (8,859,568) (738,172) - (9,597,740) Right-to-use leased buildings (964,570) (482,285) - (1,446,855) Furniture, fixtures, and equpment (2,107,568) (52,834) - (2,160,402) Vehicles (1,886,161) (234,692) - (2,120,853)
Total accumulated depreciation/amortization (52,789,792) (3,531,047) - (56,320,839) Total capital assets being depreciated or
amortized, net 62,447,364 (3,060,662) 4,074,420 63,461,122 Governmental activities capital assets $ 76,367,209 $ 6,065,876 $ - $ 82,433,085 183
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
55 5. CAPITAL ASSETS, Continued
Balance at
July 1, 2023 Additions
Deletions/
Reclassification
Balance at
June 30, 2024
Business - Type activities
Capital assets not being depreciated
Land and water rights $ 5,263,674 $ - $ - $ 5,263,674
Construction in progress 1,144,344 354,099 - 1,498,443
Total capital assets not being dep 6,408,018 354,099 - 6,762,117 Capital assets being depreciated/amortized
Building and improvements 11,212,061 89,700 - 11,301,761 Right-to-use leased buildings 127,066 - - 127,066
Total capital assets being depreciated/amortized 11,339,127 89,700 - 11,428,827 Less accumulated depreciation/amortization for:

Building and improvements (5,620,234) (294,354) - (5,914,588) Right-to-use leased buildings (54,458) (27,229) - (81,687) Total accumulated depreciation (5,674,692) (321,583) - (5,996,275) Total capital assets being depreciated/amortized 5,664,435 (231,883) - 5,432,552 Business-type activities capital assets $ 12,072,453 $ 122,216 $ - $ 12,194,669 A. Capital Asset Contributions
Some capital assets may be acquired using federal and State grant funds, or they may be contributed by developers or other governments. GASB Statement 34 requires that these contributions be accounted for as revenues at the time the capital assets are contributed.

B. Depreciation and amortization Allocation
Depreciation and amortization expense is charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or programs are as follows:

Governmental Activities
General Government $ 40,968
Public Safety 440,993
Culture Recreation 607,646
Public Works 2,391,902
Community Development 49,538
Total Government Activities $ 3,531,047
Business-Type Activirties
Water Service $ 321,583
Total Business-Type Activities $ 321,583
184
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
56 5. CAPITAL ASSETS, Continued
C. Capital Project Commitments
The City has commitments underthe following significant capital infrastructure projects and programs:

Project
Project
Authorization
Expended
through June 30,
2024 Commitments
Addison Avenue Steet Improvements $ 2,337,420 $ 1,904,528 $ 432,892 Joel Davis Restroom 424,695 363,090 61,605
Safer Bay - Flood Control 8,500,000 10,581 8,489,419
101/University Avenue Interchange 15,502,132 6,848,732 8,653,400 Water Main Project 1,104,450 527,079 577,371
Woodland Palo Alto Intertie 433,400 - 433,400
Water Meter Replacement 1,038,879 614,341 424,538
East Palo Alto Library Project (Design) 3,017,233 72,296 2,944,937 East Bayshore Pedestrian and Cyclist
improvements 419,832 74,753 345,079
Highway Safety Improvement Project 205,721 143,470 62,251 Signage and Bus shelter improvement
project 805,548 241,635 563,913
Cummings Loft Improvement 109,135 - 109,135
Total $ 33,898,445 $ 10,800,505 $ 23,097,940

6. LONG-TERM DEBT
The City’s debt issues and transactions are summarized below and discussed in detail thereafter:

Balance June
30, 2023 Additions Retirements
Balance June
30, 2024
Current
Portion
Government Activities
Leases $ 1,427,847 $ - $ (485,352) $ 942,495 $ 518,249
Total $ 1,427,847 $ - $ (485,352) $ 942,495 $ 518,249
Business-Type Activities
San Mateo County Housing
Promissory Note $ 606,668 $ - $ (23,333) $ 583,335 $ 23,333 Leases 77,372 - (27,402) 49,970 29,367
Total $ 732,919 $ - $ (50,735) $ 633,305 $ 52,700
185
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
57 6. LONG-TERM DEBT, Continued
A. San Mateo County Housing Promissory Note
In March 2018, the City entered into an agreement with the County of San Mateo Department of Housing (the County) whereby the County awarded a Community Development Block Grant (CDBG) Program assistance loan in the amount of $700,000 for the Gloria Way Well Rehabilitation project (the Project).

Annual principal of $23,333 is forgiven upon each full year of operation, or each July 3rd, provided the Project remains in compliance with CDBG Program requirements and the use is as originally intended.

The Note bears zero interest if the intended use requirements are met throughout the Note term and matures on July 3rd, 2048. If the Gloria Way Well property is sold or discontinued as a City water treatment well before the end of the Note term (unless to a non-profit for the same use); then the entire Note amount plus three percent (3%) accrued simple interest is due and payable to the County.

7. Leases
The City leases three major building facility sites under non-cancellable leases. The sites leased include two police facilities, and the maintenance corporation yard. Below is a summary of these leases and the corresponding principal and interest schedules.

Assets Interest Rate Lease End Special Terms
Balance June
30, 2024
Police Department 4.05% 10/31/2025 n/a $ 248,382
Police Substation 4.05% 10/31/2027 n/a 244,382
Corp Yard 4.05% 2/28/2026
Rent increases evrery February
by the prior changes in CPI for
the San Francisco Bay Area. 449,731
Fiscal Year
Ending June 30 Principal Interest Principal Interest
2025 $ 184,709 $ 5,338 $ 69,242 $ 7,363
2026 63,673 294 72,549 4,847
2027 - - 76,386 2,198
2028 - - 26,205 121
Total $ 248,382 $ 5,632 $ 244,382 $ 14,529
Police Department Police Substation
Government Activities Governmental Activities
186
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
58 6. LONG-TERM DEBT, Continued
B. Leases, Continued
Ending June 30 Principal Interest Principal Interest
2025 $ 264,298 $ 10,989 $ 29,367 $ 1,221
2026 185,433 1,965 20,603 219
Total $ 449,731 $ 12,954 $ 49,970 $ 1,440
Fiscal Year Governmental Activities Business-Type Activities Corp Yard
C. Legal Debt Margin
The City is subject to a statutory legal debt limit whereby the City may not incur indebtedness for public improvements which exceeds in the aggregate 3.75 percent of the taxable assessed value of all real and personal property of the City. This limit applies only to bonded indebtedness payable from the proceeds of taxes levied on taxable property. For the year ended June 30, 2024, the City’s maximum legal debt margin was $163,646,604 and the City had no outstanding debt subject to the margin.

7. COMPENSATED ABSENCES
Compensated absences are primarily comprised of unpaid vacation which is accrued as earned. The City’s liability for compensated absences is determined annually. Compensated absences are reported in governmental funds only if they have matured. The matured portion of governmental activities compensated absences is liquidated primarily by the General Fund.

Balance June
1, 2023 Additions Deletions
Balance
June 30, 2024
Due Within
One Year
Due in More
Than One Year
Government Activities
Compensated Leave Payable $ 925,966 740,654$ $ (734,460) $ 932,160 173,642$ $ 758,518 187
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
59 8. FUND BALANCE
Detailed classifications of the City's Fund Balances, as of June 30, 2024, are below:

General Fund
Capital
Improvements
Capital Projects
Fund
Other
Government
Funds Total
Nonspendable Fund Balance
Loans to Successor Agency $ 367,718 $ - $ - $ 367,718
Advance to other funds 438,356 - - 438,356
Deposits and prepayments 121,071 - - 121,071
927,145 - - 927,145
Restricted Fund Balance for:

NPDES Fees - - 359,059 359,059
Gas Tax - - 5,126,068 5,126,068
Park in Lieu - - 365,386 365,386
Rent Stabilization - - 483,932 483,932
Housing Assistance - - 496,766 496,766
Measure A/W - - 7,582,756 7,582,756
CYSFF TOT Fund - - 1,399,116 1,399,116
Lighting District - - 6,061,988 6,061,988
Drainage District - - 1,184,319 1,184,319
Silicon Valley Community Fd - - 2,000,000 2,000,000
Low and Moderate Income Housing - - 7,999,430 7,999,430 Housing in Lieu - - 13,735,913 13,735,913
Housing TOT - - 2,747,499 2,747,499
Measure HH - - 6,116,534 6,116,534
Capital projects - - 2,632,425 2,632,425
Other Purposes 45,039 1,273,906 1,403,594 2,722,539
45,039 1,273,906 59,694,785 61,013,730
Committed fund balance for:

CalPERS prefunding 3,000,000 - - 3,000,000
Community benefits reserve 299,770 - - 299,770
Information Technology Reserve 3,995,328 - - 3,995,328
Vehicles Equipment Reserve 1,330,107 - - 1,330,107
Self Insurance Reserve 2,095,744 - - 2,095,744
Capital projects - 9,350,000 - 9,350,000
Saving from ARPA contributions 430,000 - - 430,000
11,150,949 9,350,000 - 20,500,949
Assigned fund balance for:

Capital projects - 9,419,779 - 9,419,779
Subsequent yearʹs budget: appropriation
of fund balance 3,824,125 - - 3,824,125
3,824,125 9,419,779 - 13,243,904
Unassigned fund balance
Contigency reserve 10,970,059 - - 10,970,059
Other Purposes 32,500,281 - - 32,500,281
43,470,340 - - 43,470,340
Total Fund Balances $ 59,417,598 $ 20,043,685 $ 59,694,785 $ 139,156,068 188
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
60 9. RETIREMENT BENEFITS
A. City Employees; Retirement Plan (Defined Benefit Pension Plan) Plan Description
All qualified permanent and probationary employees are eligible to participate in the Public Agency CostSharing Multiple-Employer Defined Benefit Pension Plan (Plan) administered by the California Public Employees’ Retirement System (CalPERS). The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employerrate plan of the safety and miscellaneous risk pools. Accordingly,rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors four rate plans (two miscellaneous and two safety).

Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan 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 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: Basic Death Benefit, 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The City contracted for 2% cost of living adjustments.
189
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
61 9. RETIREMENT BENEFITS, Continued
A. City Employees; Retirement Plan (Defined Benefit Pension Plan), Continued The rate plan provisions and benefits in effect at June 30, 2024 are summarized as follows:

Safety Miscellaneous
Hire Date Prior to January 1, 2013 Prior to January 1, 2013 Benefit vesting schedule 5 years service 5 years service Benefit Formula 3.0% @ 55 2.5% @ 55
Benefit payment Monthly for life Monthly for life
Retirement age 50 50
Monthly benefits, as a % of annual salary 2.4 - 3% 2 - 2.5% Required employee contribution rates 8.99% 7.96%
Required employer contribution rates 22.83% 13.34%
Required unfunded accrued liability payment (UAL) $ 731,020 $ 446,241 Safety Miscellaneous
Hire Date On or after January 1, 2013 On or after January 1, 2013 Benefit vesting schedule 5 years service 5 years service Benefit Formula 2.7% @ 57 2.0% @ 62
Benefit payment Monthly for life Monthly for life
Retirement age 57 62
Monthly benefits, as a % of annual salary 2.70% 2.00%
Required employee contribution rates 13.75% 7.75%
Required employer contribution rates 13.54% 7.68%
Required unfunded accrued liability payment (UAL) $ - $ - Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers 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. Funding contributions for the Plan is determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

For the fiscal year ended on June 30, 2024, the contribution to the plan was $2,663,502, consisting of $1,461,649 for Safety and $1,201,853 for Miscellaneous. 190
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
62 9. RETIREMENT BENEFITS, Continued
A. City Employees; Retirement Plan (Defined Benefit Pension Plan), Continued Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2024, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan of $16,206,184. The City’s net pension liability for the Plan is measured as the proportionate share of the total net pension liability of the Plan. The net pension liability of the Plans is measured as of June 30, 2023, and the total pension liability for the Plan used to calculate the net pension liability was determined by actuarial valuations as of June 30, 2022 rolled forward to June 30, 2023 using standard update procedures. The City’s proportionate share of the net pension liability was based on the City’s plan liability and asset-related information where available, and proportional allocations of individual plan amounts as of the valuation date where not available.

The City’s proportionate share of the net pension liability for the Plan as of measurement date June 30, 2022 and 2023 were as follows:

Proportion - June 30, 2022 0.12753%
Proportion - June 30, 2023 0.12991%
Change - Increase (Decrease) 0.00238%
For the year ended June 30, 2024, the City recognized pension expense of $3,763,974. On June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows
of Resources
Deferred Inflows of
Resources
Pension Contributions subsequent to
measurement date $ 2,663,502 $ -
Changes of assumptions 958,962 -
Differences between expected and actual
experience 1,043,981 112,567
Changes in employer's proportion 571,027 -
Differences between the employer's contribution 295,154 226,051 Net differences between projected and actual
earnings on plan investments 2,381,467 -
Total $ 7,914,093 $ 338,618
191
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
63 9. RETIREMENT BENEFITS, Continued
A. City Employees; Retirement Plan (Defined Benefit Pension Plan), Continued Pension contributions subsequent to the measurement date in the amount of $2,663,502 and reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Fiscal Year Ending
June 30
Deferred
Outflows/
(Inflows) of
Resources
2025 $ 1,711,939
2026 1,140,711
2027 1,992,025
2028 67,298
Actuarial Assumptions – The total pension liabilities in the June 30, 2022 actuarial valuations were determined using the following actuarial assumptions:

Valuation Date June 30, 2022
Measurement Date June 30, 2023
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Projected Salary Increase Varies by entry age and service Investment Rate of Retum 6.90%
Mortality rate table(1) Derived using CalPERS' Membership Data for all Funds Post Retirement Benefit Increase Contract COLA up to 2.30% until Purchasing Power Protection Allowance Floor on Purchasing Power applies
(1)The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing mortality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.
192
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
64 9. RETIREMENT BENEFITS, Continued
A. City Employees; Retirement Plan (Defined Benefit Pension Plan), Continued Discount Rate – The discount rate used to measure the total pension liability for the Plan was 6.90%. 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. A detailed report testing these projections can be obtained from the CalPERS website.

The long-term expected rate of return on pension plan investments was determined using a buildingblock method in which best-estimate ranges of 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 considered both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical and forecasted information for 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 long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses.

Asset Class
Assumed Asset
Allocation
Real Return Years
1 - 101,2
Global equity - cap-weighted 30.00% 4.54%
Global equity non-cap-weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
100.00%
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021-22 Asset Liability Management study. 193
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
65 9. RETIREMENT BENEFITS, Continued
A. City Employees; Retirement Plan (Defined Benefit Pension Plan), Continued Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – The following presents the City’s proportionate share of the net pension liability forthe Plan, calculated using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:
1% Decrease 5.90%
Net Pension Liability $ 25,340,290
Current Discount Rate 6.90%
Net Pension Liability $ 16,206,184
1% Increase 7.90%
Net Pension Liability $ 8,715,799
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Payable to the Pension Plan
At June 30, 2024 the City reported a payable of $239,673 for outstanding amount of contributions to the pension plan required for the year ended June 30, 2024. All amounts were paid in July 2024 in a timely manner.

B. Deferred Compensation Plan
City employees may defer a portion of their compensation under optional City-sponsored deferred compensation plans created in accordance with Internal Revenue Code Section 457. Under the plan, participants are not taxed on the deferred portion of their compensation until it is distributed to them; distributions may be made only at termination, retirement, death, or in an emergency defined by governing documents of the plan. The City does not make contributions to the plan on behalf of the employees.

The laws governing deferred compensation plan assets require plan assets to be held by a Trust for the exclusive benefit of plan participants and their beneficiaries. The City has contracts with an outside thirdparty administrator to manage and invest the assets of the plan.

In the year 2021, the City evaluated the requirements of GASB Statement No. 84, Fiduciary Activities and GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensations Plans and determined that the plan didn’t meet the criteria to be reported as a fiduciary activity as required by the above mentioned GASB Statements since the assets held under this plan are not the City's property and are not subject to City control. Moreover, the plan is classified as other employee benefits for financial reporting purposes. 194
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
66 10. RISK MANAGEMENT
A. Insurance Coverage
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

The City participates in the Pooled Liability Assurance Network (PLAN), a joint powers authority established to provide liability insurance coverage, claims and risk management, and legal defense to its participating members. PLAN self-insures and purchases general and auto liability coverage for claims in an amount up to $30 million (subject to policy exclusions and sub-limits), and first-party property liability claims up to $1 billion (subject to policy exclusions and sub-limits). The City has a deductible or uninsured liability of up to $100,000 per liability claim and $5,000 per property claim. Once the City's deductible is met, PLAN becomes responsible for payment of all claims up to the limit.

The State Compensation Insurance Fund provides workers' compensation insurance with a $1 million per occurrence coverage. The City has no deductible for the worker's compensation insurance.

Liabilities are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. Claim liabilities are actuarially determined considering recent claim settlement trends including the frequency and costs of payouts and other economic and social factors.

B. Liability for Uninsured Claims
The City provides for the uninsured portion of claims and judgments in the Workers' Compensation and General Liability. Claims and judgments, including a provision for claims incurred but not reported, are recorded when a loss is deemed probable of assertion and the amount of the loss is reasonably determinable. As discussed above, the City has coverage for such claims, but it has retained the risk for the deductible or uninsured portion of these claims.

The City's liability for uninsured claims including a provision for claims incurred but not reported was computed as follows based on claims experience for the years ended June 30, 2022, 2023, and 2024:
2022 2023 2024
Beginning balance of claims payable $ 133,000 $ 180,000 $ 266,149 Increase in estimated claims liability 123,526 152,152 105,823 Claims period (76,526) (66,003) (121,537)
Ending balance of claims payable 180,000 266,149 250,435 Current portion $ 96,656 $ 113,979 $ 114,127
During the past three fiscal years none of the above programs of protection have had settlements or judgments that exceeded pooled orinsured coverage. There have been no significant reductions in pooled or insured liability coverage from the prior year. 195
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
67 11. JOINT VENTURES
The City participates in the joint ventures discussed below through formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these entities exercise full powers and authorities within the scope of the related Joint Powers Agreements; including, the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Each joint venture is governed by a board consisting of representatives from member municipalities. Each board controls the operations of the respective joint venture, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on that Board.

Obligations and liabilities of these joint ventures are not the City's responsibility and the City does not have an equity interest in the assets of each joint venture except upon dissolution of the joint venture.

A. City/County Association of Governments of San Mateo County (C/CAG) The City/County Association of Governments of San Mateo County is a joint powers agency formed in 1990 between the various cities and transportation agencies in San Mateo County to prepare, adopt, monitor and enforce state mandated plans related to transportation, airport land use, storm water pollution prevention, and climate protection. For the year ended June 30, 2024, the City contributed $89,850 for annual operations. An annual report may be obtained at 555 County Center 5th Floor, Redwood City, CA 94063.

B. Housing Endowment and Regional Trust of San Mateo County (HEART) The Housing Endowment and Regional Trust of San Mateo County (HEART) is a joint powers agency formed in 2003 as a public/private partnership comprised of the County of San Mateo, all twenty cities/towns within San Mateo County, and private sector members from business, nonprofit, and labor organizations. HEART is governed by a Board of Directors consisting of eleven elected officials from government member agencies and ten private sector members. HEART was established for the purpose of creating more affordable housing opportunities in the County. For the year ended June 30, 2024, the City contributed $9,190 for annual administrative operations. An annual report may be obtained at 2905 S. El Camino Real, San Mateo, CA 94403.

C. Peninsula Clean Energy
Peninsula Clean Energy (PCE) is a joint powers authority formed in 2016 and is comprised of the County of San Mateo and all twenty cities/towns in San Mateo County. The PCE is governed by a Board of Directors consisting of an elected representative from each member jurisdiction. PCE was established to provide electric power at competitive costs, as well as provide other benefits such as greenhouse gas emission reduction, development of local renewable resources, and promotion of long-term electric rate stability and energy reliability. PCE operates as a Community Choice Aggregation Program and derives no financial support from member agencies. Information may be obtained at 2075 Woodside Road, Redwood City, CA 94061.
196
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
68 11. JOINT VENTURES, Continued
D. Peninsula Traffic Congestion Relief Alliance
The Peninsula Traffic Congestion Relief Alliance (Alliance) is a joint powers authority formed in 2000 and is comprised of the County of San Mateo and seventeen cities/towns in San Mateo County. Alliance is governed by an eighteen-member Board of Directors consisting of an elected representative from each member jurisdiction. Alliance was established to perform transit systems management efforts to mitigate traffic congestion in member communities. The operations are funded by countywide Measure A transportation funds, grants, and contributions from members of a shuttle consortium. Forthe year ended June 30, 2024, the City did not make any member contribution to Alliance. An annual report may be obtained at 400 Oyster Point Blvd. Suite 409, South San Francisco, CA 94080.

E. San Francisquito Creek Joint Powers Authority
The City is one of five members of the San Francisquito Creek Joint Powers Authority (SFCJPA) formed in 1999 to manage and provide policy direction related to flood control measures, emergency response, stabilization and maintenance, and other environmental issues regarding the San Francisquito Creek. The City has no equity interest in the SFCJPA. For the year ended June 30, 2024, the City contributed $422,773 for annual SFCJPA administrative operations. Financial statements may be obtained by mailing a request to 2100 Geng Road Suite 210, Palo Alto, CA 94303.

F. South Bayside Waste Management Authority
The City is one of twelve members of the South Bayside Waste Management Authority (SBWMA), which is a joint powers authority that the City commenced on March 1, 2000. The SBWMA was formed in 1982 to provide cost-effective waste reduction, recycling, and solid waste programs to member agencies to meet and sustain a minimum 50% diversion of waste from landfill as mandated by California State Law, AB939. SBWMA owns the Shoreway Environmental Center which serves as a regional solid waste and recycling facility and is operated by South Bay Recycling (SBR) on behalf of the SBWMA. The City has no equity interest in SBWMA. Through the operation of franchise agreements with each member, RECOLOGY collects fees charged for the use of the facilities and remits them to the SBWMA. Pursuant to an Operations Agreement with the SBWMA, RECOLOGY is compensated based on costs, a provision for profit and incentives for cost savings and performance. For the year ended June 30, 2024, the City made payments to Recology in the amount of $2,866,810. Financial statements may be obtained by mailing a request to 610 Elm Street, Suite 202, San Carlos, CA 94070. 197
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
69 12. SERVICE CONCESSION ARRANGEMENT FOR WATER SERVICES A. Lease Agreement and Assignment from American Water Service, Inc. to Veolia Water North America Services, LLC.

In April 2001, the City entered into a twenty-five (25) yearlease agreement with American Water Services, Inc. (American Water) whereby the City agreed to lease the water system to American Water for the purpose of furnishing potable water service and water service fire protection to all customers within the City’s water service area.

In November 2018, at American Water’s request, the City authorized the assignment of all terms and conditions of the lease agreement from American Water to Veolia Water North America Operating Services LLC (Veolia) subject to certain conditions of approval, including State of California approval and issuance of a water permit to Veolia to operate the City’s water system. On June 1, 2020, the City entered into a consent to assignment of the lease agreement with American Water whereby Veolia assumed all the terms and conditions of lease agreement from American Water.

During the term of the lease, the lessee is responsible for operating, maintaining and managing the water system, as well as fulfilling customer services, emergency services, water quality testing, and other service operations related to the water system.

If total annual system maintenance and repair costs exceed $110,000, the excess costs are considered system improvements and paid through additional capital charges. The lessee bills and collects water services charges, capital surcharges, and utility tax from the City's water customers. Utility users’ taxes and capital-related surcharges billed and collected by the lessee are passed-through to the City.

The lessee may request water rate relief from the City to recover necessary and reasonable costs related to performing the water system services, including earning an operational rate of return of eight percent (8%) after-tax on defined, contractual gross revenues. The City agrees to enact water rates based upon such requirements and in accordance with applicable State Law regarding water rate increases. No water rate relief request was submitted to the City during the year ended June 30, 2024. Any fees or taxes billed and passed through to the City are not considered contractual gross revenues of the water system operation.

The City has retained title of the Water System and related capital assets underthe terms of the lease. Title for system improvements performed immediately vests with the City. The lessee may not retire, sell, transfer; convey, or encumber any real property or personal property of the Water System without the prior written consent of City. The City is not obligated to pay any costs or expense in connection with or related to the management, operation, improvement, repair, or maintenance of the water system during the lease term, except for costs related to environmental liabilities. The City currently has undertaken certain system improvements which are funded from grants, system impact fees, and water capital surcharges.

In consideration for the lease of the water system assets, the lessee agrees to pay the City a monthly lease payment equal to 6% and a monthly franchise fee equal to 5% of the annual gross revenues generated by the water system. For the year ended June 30, 2024, Veolia paid lease payments and franchise fees to the City in amount of $399,095 and $332,580, respectively. Further, for the year ended June 30, 2024, the City reported passed-through utility taxes and capital-related surcharges of $351,923 and $1,218,326, respectively.
198
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
70 13. CONTINGENT LIABILITIES AND COMMITMENTS
A. Contingent Liabilities
The City is subject to litigation arising in the normal course of operations. In the opinion of the City Attorney there is no pending litigation which is likely to have a material adverse effect on the financial position of the City.

B. Federal and State Grants
The City has received federal and state grants for specific purposes that are subject to reviews by the grantor agencies. Such reviews could lead to requests for reimbursements to the grantor agency for expenditures disallowed under the terms of the grant. The amount, if any, of expenditures that may be disallowed by the granting agencies cannot be determined at this time, although City expects such amounts, if any, to be immaterial.

C. California State Water Resources Control Board Corrective Action Plan On April 21, 2015 the City, along with several other regional water system (RWS) customers of the San Francisco Public Utilities Commission (SFPUC), was cited by the State Water Resources Control Board (SWRCB) for not providing multi-barrier treatment to raw surface water. This citation was due to an incident occurring in March of 2015, whereby untreated water was inadvertently allowed to flow into the RWS. The incident did not result in any adverse effects; however, the SWRCB citation directed that the City prepare a Corrective Action Plan. The CAP includes several corrective actions developed to prevent another similar incident.

On August 15, 2015 the SWRCB acknowledged the City’s Corrective Action Plan (CAP) whereby the City will take steps to ensure the water supply and/or storage of water is safe and sustainable in the event SFPUC water becomes unavailable. The critical elements of the CAP are the new groundwater wells, the construction of water system interties, and the construction of storage tanks over an estimated period of seven (7) years. However, the CAP recognizes that the timing for the construction of the storage tanks is less certain due to the prioritization of the groundwater wells, staffing limitations and complexities securing site control. The highest priority water system improvements have estimated costs of roughly $15.5 million. The City enacted a capital improvement surcharge, contributed general and community benefit funds to the water system, secured grant funding and completed refurbishment of the Gloria Way Water Well, and has funding for the water system interties. As of June 30, 2024, the City has capital water reserves of approximately $13.7 million.
199
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
71 13. CONTINGENT LIABILITIES AND COMMITMENTS, Continued D. Water Rights Acquisition and Related Agreement
Water Rights Acquisition Agreements
In August 2018, the City entered into an agreement with the City of Mountain View to transfer all right, title, and interest to 1,000,000 gallons per day (1 MGD) of its guaranteed water supply (ISG) under the City and County of San Francisco Water Supply Agreement. The acquisition price of $5,000,000 was funded from the following sources:

Silicon Valley Community Foundation (SVCF) Gift Agreement/Advance $2.0 Million– In June 2017, the City entered into a gift agreement with the SVCF for $2.5 million whereby the gift is restricted for the purpose of incentivizing the development of affordable housing within the City. Up to $2,000,000 was authorized and utilized for an inter-fund advance from SVCF special revenue fund to acquire permanent water rights. The advance is repaid upon the receipt ofrelated water capacity charge orrelated impact, or charge imposed by the City. The remaining funds are restricted to fund not less than $500,000 for an affordable housing manager over a minimum period of five years. As of June 30, 2024, the inter-fund advance amount totaled $1,866,280.

General Fund Advance $0.47 Million - The City approved a long-term inter-fund advance to the Water Service Enterprise Fund for purpose of facilitating the permanent water rights transfer. Reimbursement of the funds advanced will be made solely from capacity charges established by the City, as allowed, to cover the entire cost the water rights transfer and charged for new or expanded water connections to its water system. As of June 30, 2024, the inter-fund advance amount totaled $438,356.

Amendment to Water Supply Implementation Agreement $1.53 Million – In June 2017, the City approved an amendment to the Water Supply Implementation Agreement (Amended WSIA) in order to establish terms for payment of the attributed share of the costs of the permanent water rights transfer. Under the terms of the amendment; 2020 Bay Road LLC, the Primary School LLC, and the Sobrato Organization LLC (collectively “developers”) agreed to advance a collective total of $1.53 million as the developers’ attributed share of the cost of the water rights transfer. For a period of eight (8) years after the effective date of the water rights transfer, if entitlement for a developer site is approved in accordance with the City’s laws and policies, any payments made under the Amended WSIA will be credited against a water capacity charge or related impact or buy-in charge imposed by the City typically upon issuance of building permits. As of June 30, 2024, the Primary School and Sobrato development projects were entitled; however, no building permits have been issued. 200
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
72 13. CONTINGENT LIABILITIES AND COMMITMENTS, Continued D. Water Rights Acquisition and Related Agreement, Continued Water Rights Acquisition Agreements, Continued
Sobrato Organization LLC Reimbursement Agreement $1.0 Million - The City approved a reimbursement agreement (Agreement) with the Sobrato Organization LLC (Sobrato) to provide funds in the amount of $1,000,000 forthe purpose of facilitating the permanent waterrights transfer. Reimbursement of the funds advanced will be made solely from capacity charges established by the City, as allowed, to coverthe entire cost the water rights transfer and charged for new or expanded water connections to its water system.

The Agreement expires upon the earlier of the date of full reimbursement of the advance or August 4, 2037 (twenty years from Agreement effective date). Upon expiration, the City’s commitments under the agreement terminate. In December 2019, in accordance with approved project entitlements and conditions of approval, Sobrato agreed to forego all outstanding amounts advanced under the Agreement upon the issuance of a building certificate of occupancy, which did not occur as of year-end. As of June 30, 2024, the balance of the advance totaled $933,141.

As of June 30, 2024, the advance from the Developers was outstanding for a collective total of $2,463,141.

E. Affordable Housing and Sustainable Communities Grant Commitments In June 2019, the City received a jointly submitted grant award of $20 million in partnership with Eden Housing, EPA CAN DO, and the San Mateo County Transit District (SamTrans). The grant funding consists of $13.5 million in loans for affordable housing development, and $6.5 million for transit and infrastructure improvements. Under the terms of the grant award, applicants are held jointly and severally liable to provide accountability and ensure the full scope of the project application is implemented. The City entered into cooperation and indemnification agreements with the grant coapplicants to mitigate risks among the parties. Of the $20 million, the City is responsible for completing $3.75 million in sustainable transportation infrastructure, and transit-related amenities in a timely manner. As of June 30, 2024, no projects have been completed.

F. CalOES Grant Commitment for SAFER Bay Project
In September 2018, the City authorized the San Francisquito Creek Joint Powers Authority (SFCJPA) to submit an application on behalf of the City to the California Office of Emergency Services (CalOES), Hazard Mitigation Grant Program for $22 million for the East Palo Alto Safer Bay Project, Phase I, protecting East Palo Alto with a levee from San Francisquito Creek through Bay Road and constructing related and necessary environmental mitigations. The grantrequired the City to reserve the required local funding match (25%) which was equal to $5.5 million, and the City of East Palo Alto has committed $5.5M in capital funding to construct the portion of the project in East Palo Alto. The engineering and design phase of the project was approved and awarded for $3.5 million by FEMA in September 2022. 201
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
73 13. CONTINGENT LIABILITIES AND COMMITMENTS, Continued G. Flood and Sea Level Resiliency Agency
In March 2019, in conjunction with the County of San Mateo, C/CAG and other cities and towns in San Mateo County, the City agreed to fund the startup costs to modify the existing San Mateo County Flood Control District including expanding the scope and modifying the governance structure. The estimated startup costs approved total $1.1 million, of which the City agreed to fund $40,000 per year for a threeyear period. For the year ended June 30, 2022, the City paid its final $40,000 commitment.

H. Encumbrances
Encumbrance accounting is utilized to the extent necessary to assure effective budgetary control and accountability and to facilitate effective cash planning and control. At year end, the amount of encumbrances expected to be honored upon performance by the vendor in the next year were as follows:

General Fund $ 3,824,125
Capital Projects Fund 12,598,337
Non-major Governmental Funds 3,191,786
Total $ 19,614,248

14. REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES A. Redevelopment Dissolution
On June 28, 2011 the State of California adopted ABx1 26 (AB 26) which, in Late December 2011, was upheld by the California Supreme Court to be largely constitutional. This action, together with AB 1484 enacted on June 27, 2012, are referred to as “Dissolution Law” as related to former redevelopment agencies. Under the existing Dissolution Laws, California redevelopment agencies were dissolved as of February 1, 2012 and cannot engage in new projects, obligations, or commitments. Beginning in February 2012, Successor Agencies, together with other designated entities, initiated the process under AB 26 to unwind the affairs of the dissolved agencies. This action impacted the reporting entity of the City of East Palo Alto in that the City had previously reported a redevelopment agency (former Agency) as a blended component unit of the City.

On January 10, 2012, the City Council elected to serve as the Successor Agency to the former Agency whereby the Successor Agency holds assets, reports obligations, and otherwise oversees the wind-down of the affairs of the former Agency as dictated by the Dissolution Laws and subject to control and approval of an established Oversight Board and the California Department of Finance.

Furthermore, on January 10, 2012, the City also elected to serve as the former Agency’s Housing Successor and retain the housing assets of the former Agency. On February 1, 2012 certain housing assets were transferred to the City's Housing Successor Special Revenue Fund. 202
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
74 14. REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES, Continued
Since February 1, 2012, the Successor Agency has complied with existing Dissolution Laws, including completing a due diligence review, obtaining a finding of completion, obtaining approval of the longrange property management plan, completing timely reporting of recognized obligation schedules. The Successor Agency continues to conduct the fiduciary activities of the Dissolution Laws until such time the affairs and obligations of the former Agency are complete.

Cash and investments of the Successor Agency as of June 30, 2024 are discussed in Note 2. Information presented in the following footnotes represents other assets and liabilities of the Successor Agency as of June 30, 2024.

B. Long-Term Debt
The Successor Agency’s debt issues and transactions are summarized below and discussed in detail thereafter.

Issue
Amount
Balance at
June 30, 2023 Retirements
Balance at
June 30, 2024
Due within
One Year
Successor Agency
2015 Tax Allocation
Refunding Bonds Series A

3.625%-4% due 10/1/2032 16,950,000 $ $ 13,065,000 $ (1,085,000) $ 11,980,000 $ 1,140,000 Total Successor Agency 16,950,000 $ $ 13,065,000 $ (1,085,000) $ 11,980,000 $ 1,140,000 2015 Tax Allocation Refunding Bonds
On September 1, 2015, the Successor Agency issued $16,950,000 Tax Allocation Refunding Bonds, Series 2015A and $2,500,000 Taxable Tax Allocation Refunding Bonds, Series 2015B. The bonds were issued to refund the 1999 Tax Allocation Bonds, the 2003 Series A Bonds, and the 2003 Series B Bonds. Certain proceeds of the refunding bonds were subsequently used to call the East Palo Alto Public Financing Authority 2005 Revenue Bonds on October 1, 2015. The economic gain on refunding of these bonds was $2,560,798. The Series 2015B Refunding Bonds had been paid off in the fiscal year ending June 30, 2019.

Series 2015A Refunding Bonds
The 2015A Refunding Bonds mature annually starting October 1, 2018 through 2032, with semi-annual installments ranging from $45,000 to $1,515,000. The interest on the 2015A Refunding Bonds is payable semi-annually on each April 1 and October 1, with coupon rates ranging from 3.00% to 5.00%. The Series 2015A Bonds maturing on or after Octobers 1, 2026, are subject to redemption, at the option of the Successor Agency on any date on or after October 1, 2025, in whole or in part, by such maturities as are determined by the Successor Agency and by lot within a maturity, from any available source of funds, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium.
203
City of East Palo Alto
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
75 15. REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES, Continued
B. Long-Term Debt, Continued
The annual debt service requirements of the Series 2015 A bonds are as follows:

Year Ending
June 30, Principal Interest Total
2025 $ 1,140,000 $ 411,800 $ 1,551,800
2026 1,195,000 353,425 1,548,425
2027 1,250,000 304,800 1,554,800
2028 1,295,000 266,625 1,561,625
2029-2033 7,100,000 648,581 7,748,581
Total $ 11,980,000 $ 1,985,231 $ 13,965,231
Pledged Revenues
The 2015 Tax Allocation Refunding Bonds of the Successor Agency are payable solely from and secured by tax revenues deposited into Redevelopment Property Tax Trust Fund. Principal and interest on the Series 2015A bonds are guaranteed under an insurance policy.

C. Deferred Inflows of Resources
The Successor Agency recorded the following item as deferred inflows of resources as of June 30, 2024.

Balance June
30, 2023 Additions Retirements
Balance June
30, 2024
2015 Tax Allocation Refunding
Bonds - Gain on refunding $ 123,013 $ (26,599) - $ $ 96,414 Total $ 123,013 $ (26,599) - $ $ 96,414
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205

REQUIRED SUPPLEMENTARY

INFORMATION
76 206
City of East Palo Alto
Notes to Required Supplementary Information
For the Year Ended June 30, 2024
77 1. BUDGETS AND BUDGETARY ACCOUNTING
A. Budgetary Procedures
The City adopts a budget annually for all governmental fund types, except for capital projects. This budget is effective July 1 for the ensuing fiscal year. From the effective date of the budget, which is adopted at the fund level, the amounts stated therein as proposed expenditures become appropriations to the various City departments. The legal level of budgetary control is the fund level. The City Council may amend the budget by resolution during the fiscal year. The City Manager has the authority to make adjustments to the operating budget between departments within the same fund. Transfers of operating budgets between funds, use of unappropriated fund balances, and significant changes in capital improvement project budgets require the approval of the City Council.

Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States except for the Housing Assistance Fund and the Capital Improvements Capital Projects Fund which are adopted on a project length basis.

B. Encumbrances
The City uses an encumbrance accounting system under which purchase orders, contracts and other commitments for the expenditure of moneys are recorded in order to set aside that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of formal budgetary integration in all budgeted funds. Encumbrances outstanding at year end are reappropriated in the following year. Unexpended appropriations lapse at year end and must be reappropriated in the following year.
207
City of East Palo Alto
Required Supplementary Information
For the Year Ended June 30, 2024
78 1. BUDGETS AND BUDGETARY ACCOUNTING, CONTINUED
C. Budgetary Comparison Schedules
Budgetary Comparison Schedule, General Fund
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Property taxes $ 17,010,000 $ 17,010,000 $ 18,796,350 $ 1,786,350 Sales taxes 6,030,000 6,030,000 6,019,894 (10,106)
Transient occupancy tax 2,200,000 2,200,000 2,021,494 (178,506) Utility users tax 1,726,043 1,726,043 2,052,280 326,237 Other taxes 2,688,735 2,688,735 2,392,631 (296,104)
Licenses, fees and permits 1,590,600 1,590,600 1,673,305 82,705 Charges for services 818,200 818,200 453,153 (365,047)
Fines and forfeitures 225,000 225,000 540,438 315,438
Use of money and property 652,000 652,000 3,114,354 2,462,354 Grants and intergovernmental 55,000 55,000 102,370 47,370 Miscellaneous 1,747,000 1,747,000 546,286 (1,200,714)
Total revenues 34,742,578 34,742,578 37,712,555 2,969,977 EXPENDITURES:

Current:

General government 7,031,488 8,132,125 6,532,973 1,599,152 Public safety 15,407,077 15,379,452 12,578,230 2,801,222 Public works 4,700,398 6,254,579 3,864,152 2,390,427
Culture and recreation 1,046,854 1,485,206 1,069,528 415,678 Community development 5,270,014 7,022,611 3,269,199 3,753,412 Capital outlay - 120,585 120,585 -
Debt service:

Principal - - 471,388 (471,388)
Interest - - 55,885 (55,885)
Total expenditures 33,455,831 38,394,558 27,961,940 10,432,618 REVENUES OVER (UNDER) EXPENDITURES 1,286,747 (3,651,980) 9,750,615 13,402,595 OTHER FINANCING SOURCES (USES):

Transfer out (1,139,438) (4,119,697) (4,119,697) -
Total other financing sources (uses) (1,139,438) (4,119,697) (4,119,697) - Net change in fund balance $ 147,309 $ (7,771,677) $ 5,630,918 $ 13,402,595 FUND BALANCE:

Beginning of year 53,786,680
End of year $ 59,417,598
Budget Amounts
208
City of East Palo Alto
Required Supplementary Information
For the Year Ended June 30, 2024
79 2. DEFINED BENEFIT PENSION PLAN
A. Schedule of the City’s Proportionate share of the Net Pension Liability – Last 10 years 6/30/2024 6/30/2023 6/30/2022 6/30/2021
Measurement date 6/30/2023 6/30/2022 6/30/2021 6/30/2020 Proportion of the net pension liability 0.129910% 0.127530% 0.120670% 0.115570% Proportionate share of the net pension
liability $ 16,206,184 $ 14,730,175 $ 6,526,289 $ 12,574,721 Covered payroll $ 10,323,474 $ 10,120,545 $ 10,344,561 $ 9,673,702 Proportionate share of the net liability
as a percentage of covered payroll 156.98% 145.55% 63.09% 129.99% Plan fiduciary net position as a
percentage of the total pension liability 76.21% 76.68% 88.29% 75.10% Notes to Schedule:

The CalPERS discount rate was increased from 7.5% to 7.65% in fiscal year 2016, decreased from 7.65% to 7.15% in fiscal year 2018, and then decreased from 7.15% to 6.90% in fiscal year 2023. The CalPERS mortality assumptions were adjusted in fiscal year 2019. 209
City of East Palo Alto
Notes to Required Supplementary Information
For the Year Ended June 30, 2024
80 2. DEFINED BENEFIT PENSION PLAN
B. Schedule of the City’s Proportionate share of the Net Pension Liability – Last 10 years* 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014

0.112300% 0.110450% 0.109441% 0.109310% 0.118190% 0.126260% $ 11,507,754 $ 10,642,902 $ 10,853,587 $ 9,458,584 $ 8,112,375 $ 7,856,469 $ 9,577,025 $ 9,257,855 $ 8,464,356 $ 8,078,420 $ 7,962,595 $ 7,773,690 120.16% 114.96% 128.23% 117.08% 101.88% 101.06%

75.26% 75.26% 73.31% 74.06% 78.40% 79.82%
210
City of East Palo Alto
Notes to Required Supplementary Information
For the Year Ended June 30, 2024
81 2. DEFINED BENEFIT PENSION PLAN
B. Schedule of Contributions – Last 10 years*
2024 2023 2022 2021
Fiscal Year
Contractually required contribution
(actuarially determined) $ 2,663,502 $ 2,466,089 $ 2,366,071 $ 2,261,018 Contribution in relation to the actuarially
determined contributions $ (2,663,502) $ (2,466,089) $ (2,366,071) $ (2,261,018) Contribution deficiency (excess) - - - -
Covered payroll $ 11,274,563 $ 10,323,474 $ 10,120,545 $ 10,344,561 Contributions as a percentage of covered
payroll 23.62% 23.38% 23.38% 21.86%
Notes to schedule:
*Fiscal year 2015 was the first year of implementation, threfore only nine years are shown Variation Date (for
contractually required contribution) 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Actuarial cost method Entry Age Entry Age Entry Age Entry Age Amortization method (1) (1) (1) (1)
Assets valuation method Market Value Market Value Market Value Market Value Inflation 2.30% 2.50% 2.50% 2.50%
Salary increases (2) (2) (2) (2)
Investment rate of return 6.80% 7.00% 7.00% 7.00%
Retirement age (3) (3) (3) (3)
Mortality (4) (4) (4) (4)
(1) Level percentage Level percentage of payroll, closed (3) 2% @62
(2) Depending on age, service, and type of employment 50 for all plans, with the exception of 52 for Miscellaneous PEPRA (4) Mortality assumptions ar ebased on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS board.
211
City of East Palo Alto
Notes to Required Supplementary Information
For the Year Ended June 30, 2024
82 3. DEFINED BENEFIT PENSION PLAN
C. Schedule of Contributions – Last 10 years*
2020 2019 2018 2017 2016 2015
$ 1,976,048 $ 1,812,899 $ 1,642,560.0 $ 1,493,218.0 $ 1,371,578.0 $ 1,477,383.0 $ (1,976,048) $ (1,812,899) $ (1,642,560.0) $ (1,493,218.0) $ (1,371,578.0) $ (1,477,383.0) - - - - - -
$ 9,673,702 $ 9,577,025 $ 9,257,855 $ 8,464,356 $ 8,078,420 $ 7,962,595

20.43% 18.93% 17.74% 17.64% 16.98% 18.55%
6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012 Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age (1) (1) (1) (1) (1) (1)
Market Value Market Value Market Value Market Value Market Value 15 Year Smoothed
Market Method

2.63% 2.75% 2.75% 2.75% 2.75% 2.75%
(2) (2) (2) (2) (2) (2)

7.25% 7.375% 7.50% 7.50% 7.50% 7.50%
(3) (3) (3) (3) (3) (3)
(4) (4) (4) (4) (4) (4)
212
City of East Palo Alto
Notes to Required Supplementary Information
For the Year Ended June 30, 2024
This page intentionally left blank.
213

SUPPLEMENTARY INFORMATION
83 214
84 NON-MAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS
NPDES Fees Fund accounts for the revenues and expenditures from assessments levied on property in the City in compliance with the provisions of the National Pollutant Discharge Elimination System for prevention of storm water and flood related damage.

Gas Tax Fund accounts for funds received from the State of California to use for street and highway related projects.

Federal and State Law Enforcement Fund accounts for the receipt and use of State and Federal law enforcement related grant money.

Park in Lieu Fund accounts for park in lieu fees collected from developers.

Rent Stabilization Fund accounts for revenues and expenditures to support rent stabilization activities.

Federal and State Grants Fund accounts for grant money received and expended from various Federal and State government grants.

Housing Assistance Fund accounts for first time home buyer assistance program activities.

Measure A Fund accounts for the City's Measure A revenues and expenditures. Measure A is a half-cent sales tax to support countywide (San Mateo County) transportation projects and programs.

CYSFF TOT Fund accounts for 10% of TOT taxes collected as approved by voters and the City Council approved funding for various non-profit organizations related to Children/Youth/Seniors/Family programs.

Lighting District Fund accounts for revenues (property taxes) and expenditures for the Ravenswood Highway Lighting District.

Drainage District Fund accounts for revenues (property taxes) and expenditures for the East Palo Alto Maintenance Drainage District.

Measure C Fund accounts for activities related to the Measure C Parcel tax. Measure C was an annual tax approved by the voters in November 2006 for a period of ten years. The fund has been expended and closed as of June 30, 2024.

Local Grants Fund accounts for revenues and expenditures from local public and private grants.

Silicon Valley Community Foundation (SVCF) Special Revenue Fund accounts for gift monies from the Silicon Valley Community Foundation to be used for the purpose of incentivizing the development of affordable housing within the City. Up to $2,000,000 was authorized for an inter-fund advance to provide monies to purchase certain water rights. Remaining funds are restricted to pay a minimum amount of $500,000 for an affordable housing manager position over a minimum period of five years. 215
85 SPECIAL REVENUE FUNDS (CONTINUED)
Low and Moderate Income Housing Successor Fund accounts for the activities related to the housing assets assumed by the City as Housing Successor to the former Redevelopment Agency. The activities are governed by California redevelopment law and must be used to provide housing for those with low and moderate incomes.

Housing in Lieu Special Revenue Fund accounts for developer fees in lieu of providing affordable housing and the expenditures related to affordable housing development activities.

Housing TOT Special Revenue Fund accounts for 10% set-aside of transient occupancy taxes collected as approved by voters, and the expenditures related to affordable housing development activities.

Measure HH Special Revenue Fund accounts for the revenues and expenditures of Measure HH Parcel tax.

Measure HH was approved by the voters in November 2018. The tax is an annual parcel tax and the funds are to be used for affordable and supportive housing programs, programs that facilitate access to job opportunities in the S.T.E.M. sectors, building trades, and strengthen First Source Hiring.

CAPITAL PROJECT FUND
CIP Impact Fees Capital Project Fund accounts for various development impact fees collected by the City for capital related activities.
216
City of East Palo Alto
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2024
86 Federal and Rent
NPDES State Law Park in Stabilization
Fees Gas Tax Enforcement Lieu Fund
ASSETS
Cash and investments $ 427,873 $ 4,975,230 $ 432,404 $ 364,009 $ 511,050 Restricted cash and investments - - - - -
Receivables:

Accrued interest 2,148 18,401 1,657 1,377 2,307
Taxes - - - - -
Intergovernmental - 206,504 - - -
Accounts receivable - - - - 4,751
Advances to other funds - - - - -
Loans and notes receivable - - - - -
Total assets $ 430,021 $ 5,200,135 $ 434,061 $ 365,386 $ 518,108

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable $ 55,318 $ 55,110 $ 17,791 $ - $ 8,034 Retentions payable - - - - -
Other accrued liabilities 15,644 18,957 - - 26,598
Unearned revenue - - - - (456)
Total liabilities 70,962 74,067 17,791 - 34,176
Deferred inflows of resources:

Unavailable revenue - - - - -
Fund Balances:

Restricted 359,059 5,126,068 416,270 365,386 483,932
Total fund balances 359,059 5,126,068 416,270 365,386 483,932 Total liabilities, deferred inflows
of resources, and fund balances $ 430,021 $ 5,200,135 $ 434,061 $ 365,386 $ 518,108 Special Revenue
217
City of East Palo Alto
Combining Balance Sheet
Non-Mjor Governmental Funds
For the Year Ended June 30, 2024
87 Federal
and State Housing CYSFF Lighting Drainage Local
Grants Assistance Measure A TOT District District Measure C Grants $ 243,430 $ 386,833 $ 6,304,649 $ 1,369,144 $ 5,998,174 $ 1,195,284 $ 18,940 $ 685,505 100,000 - - - - - - -
1,872 1,468 23,376 5,479 22,462 4,499 - 2,343
- - - - 125,891 8,298 - -
100,193 - - - - - - -
- - 57,653 24,493 - - - 750
- - - - - - - -
100,000 108,949 - - - - - -
$ 545,495 $ 497,250 $ 6,385,678 $ 1,399,116 $ 6,146,527 $ 1,208,081 $ 18,940 $ 688,598 $ 11,637 $ 484 $ - $ - $ 71,413 $ 17,565 $ 18,940 $ 19,137 - - - - 10,150 - - -
19 - - - 2,976 6,197 - -
189,627 - - - - - - 26,349
201,283 484 - - 84,539 23,762 18,940 45,486
- - - - - - - -
344,212 496,766 6,385,678 1,399,116 6,061,988 1,184,319 - 643,112 344,212 496,766 6,385,678 1,399,116 6,061,988 1,184,319 - 643,112 $ 545,495 $ 497,250 $ 6,385,678 $ 1,399,116 $ 6,146,527 $ 1,208,081 $ 18,940 $ 688,598 Special Revenue
218
City of East Palo Alto
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2024
88 Low and
Moderate
Income
Housing Housing Housing Measure
SVCF Successor in Lieu TOT HH
ASSETS
Cash and investments $ 133,720 $ 1,267,889 $ 7,211,128 $ 2,040,863 $ 6,085,231 Restricted cash and investments - - 100 - -
Receivables:

Accrued interest - 122,335 27,401 24,957 23,306
Taxes - - - - -
Intergovernmental - - - - -
Accounts receivable - - - 35,534 45,949
Advances to other funds 1,866,280 - - - -
Loans and notes receivable - 6,996,203 6,500,000 663,536 - Total assets $ 2,000,000 $ 8,386,427 $ 13,738,629 $ 2,764,890 $ 6,154,486

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable $ - $ 15,023 $ 2,716 $ - $ 24,919
Retentions payable - - - - -
Other accrued liabilities - 14,326 - - 13,033
Unearned revenue - - - - -
Total liabilities - 29,349 2,716 - 37,952
Deferred inflows of resources:

Unavailable revenue - 357,648 - 17,391 -
Fund Balances:

Restricted 2,000,000 7,999,430 13,735,913 2,747,499 6,116,534 Total fund balances 2,000,000 7,999,430 13,735,913 2,747,499 6,116,534 Total liabilities, deferred inflows
of resources, and fund balances $ 2,000,000 $ 8,386,427 $ 13,738,629 $ 2,764,890 $ 6,154,486 Special Revenue
219
City of East Palo Alto
Combining Balance Sheet
For the Year Ended June 30, 2024
89 Capital
Special Revenue Project
Total
Non-Major
Measure CIP Governmental
W Impact Fees Funds
$ 1,134,378 $ 2,644,067 $ 43,429,801
- - 100,100
4,189 10,034 299,611
- - 134,189
- - 306,697
58,511 - 227,641
- - 1,866,280
- - 14,368,688
$ 1,197,078 $ 2,654,101 $ 60,733,007
$ - $ 21,676 $ 339,763
- - 10,150
- - 97,750
- - 215,520
- 21,676 663,183
- - 375,039
1,197,078 2,632,425 59,694,785
1,197,078 2,632,425 59,694,785
$ 1,197,078 $ 2,654,101 $ 60,733,007
220
City of East Palo Alto
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds
For the Year Ended June 30, 2024
90 Federal and Rent
NPDES State Law Park in Stabilization
Fees Gas Tax Enforcement Lieu Fund
REVENUES:

Property taxes $ - $ - $ - $ - $ -
Sales taxes - - - - -
Transient occupancy tax - - - - -
Other taxes - 1,603,720 - - -
Licenses, fees and permits - - - - -
Charges for services 132,261 - - - 529,098
Use of money and property 23,529 250,799 21,121 21,575 40,256 Grants and intergovernmental - - 186,159 - -
Total revenues 155,790 1,854,519 207,280 21,575 569,354 EXPENDITURES:

Current:

General government 155,995 215,599 - - 275,470
Public safety - - 73,070 - -
Public works 370,989 376,839 - - -
Culture and recreation - - - - -
Community development - - - - 465,157
Capital outlay 108,850 - - - -
Debt service:

Principal 13,964 - - - -
Interest 1,655 - - - -
Total expenditures 651,453 592,438 73,070 - 740,627

REVENUES OVER
(UNDER) EXPENDITURES (495,663) 1,262,081 134,210 21,575 (171,273) OTHER FINANCING SOURCES (USES):

Transfers in 531,244 64,500 - - -
Total other financing sources (uses) 531,244 64,500 - - - Net change in fund balances 35,581 1,326,581 134,210 21,575 (171,273) FUND BALANCES:

Beginning of the year, as restated 323,478 3,799,487 282,060 343,811 655,205 End of year $ 359,059 $ 5,126,068 $ 416,270 $ 365,386 $ 483,932 Special Revenue
221
City of East Palo Alto
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ds
ed June 30, 2024
91 Federal
and State Housing CYSFF Lighting Drainage Local
Grants Assistance Measure A TOT District District Measure C Grants $ - $ - $ - $ - $ 881,364 $ 181,006 $ - $ -
- - 768,691 - - - - -
- - - 252,398 - - - -
- - - - - - - -
- - - - - - - -
1,528 215 - - - - - -
5,034 24,982 328,803 76,231 319,202 62,630 1,199 38,683 2,652,831 - 300,000 - - - - 153,250
2,659,393 25,197 1,397,494 328,629 1,200,566 243,636 1,199 191,933 - 1,691 1,770 47,997 49,453 97,391 - 6,214
- - - - - - 15,407 135,633
33,731 - - - 134,654 108,721 - -
30,847 - - 82,000 - - 124,242 -
2,044,207 1,482 - - - - - 2,000
- - 37,500 - 113,326 - - -
- - - - - - - -
- - - - - - - -
2,108,785 3,173 39,270 129,997 297,433 206,112 139,649 143,847 550,608 22,024 1,358,224 198,632 903,133 37,524 (138,450) 48,086 - - - - - 146,284 - -
- - - - - 146,284 - -
550,608 22,024 1,358,224 198,632 903,133 183,808 (138,450) 48,086 (206,396) 474,742 5,027,454 1,200,484 5,158,855 1,000,511 138,450 595,026 $ 344,212 $ 496,766 $ 6,385,678 $ 1,399,116 $ 6,061,988 $ 1,184,319 $ - $ 643,112 Special Revenue
222
City of East Palo Alto
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds
For the Year Ended June 30, 2024
92 Low and
Moderate
Income
Housing Housing Housing Measure
SVCF Successor in Lieu TOT HH
REVENUES:

Property taxes $ - $ - $ - $ - $ -
Sales taxes - - - - -
Transient occupancy tax - - - 252,398 -
Other taxes - - - - 1,677,265
Licenses, fees and permits - - 39,576 - -
Charges for services - - - - -
Use of money and property - 196,557 498,254 154,067 324,789 Grants and intergovernmental - - - - -
Total revenues - 196,557 537,830 406,465 2,002,054
EXPENDITURES:

Current:

General government - 13,396 34,686 28,917 154
Public safety - - - - -
Public works - 661 - - -
Culture and recreation - - - - -
Community development - 343,675 80,913 - 855,686
Capital outlay - - - - -
Debt service:

Principal - - - - -
Interest - - - - -
Total expenditures - 357,732 115,599 28,917 855,840

REVENUES OVER
(UNDER) EXPENDITURES - (161,175) 422,231 377,548 1,146,214 OTHER FINANCING SOURCES (USES):

Transfers in 157,027 397,410 - - -
Total other financing sources (uses) 157,027 397,410 - - - Net change in fund balances 157,027 236,235 422,231 377,548 1,146,214 FUND BALANCES:

Beginning of the year, as restated 1,842,973 7,763,195 13,313,682 2,369,951 4,970,320 End of year $ 2,000,000 $ 7,999,430 $ 13,735,913 $ 2,747,499 $ 6,116,534 Special Revenue
223
City of East Palo Alto
Combining Statement of Revenues, Expenditures and Changes in Fund Balances s
For the Year Ended June 30, 2024
93 Capital
Special Revenue Project
Total
Non-Major
Measure CIP Governmental
W Impact Fees Funds
$ - $ - $ 1,062,370
339,734 - 1,108,425
- - 504,796
- - 3,280,985
- 1,944,782 1,984,358
- - 663,102
53,918 98,832 2,540,461
- - 3,292,240
393,652 2,043,614 14,436,737
- - 928,733
- - 224,110
- 54,812 1,080,407
- - 237,089
- - 3,793,120
5,610 - 265,286
- - 13,964
- - 1,655
5,610 54,812 6,544,364
388,042 1,988,802 7,892,373
- - 1,296,465
- - 1,296,465
388,042 1,988,802 9,188,838
809,036 643,623 50,505,947
$ 1,197,078 $ 2,632,425 $ 59,694,785
224
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual NPDES Special Revenue Fund
For the Year Ended June 30, 2024
94 Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services $ 151,500 $ 151,500 $ 132,261 $ (19,239) Use of money and property 4,800 4,800 23,529 18,729
Grants and intergovernmental revenue 92,000 92,000 - (92,000) Total revenues 248,300 248,300 155,790 (92,510)
EXPENDITURES:

Current:

General government 452,111 590,111 155,995 434,116
Public works 317,433 332,926 370,989 (38,063)
Capital outlay - - 108,850 (108,850)
Debt service:

Principal - 13,964 (13,964)
Interest - 1,655 (1,655)
Total expenditures 769,544 923,037 651,453 271,584
REVENUES OVER (UNDER) EXPENDITURES (521,244) (674,737) (495,663) 179,074 OTHER FINANCING SOURCES (USES):

Transfer in 531,244 531,244 531,244 -
Total other financing sources (uses) 531,244 531,244 531,244 - Net change in fund balance $ 10,000 $ (143,493) $ 35,581 $ 179,074 FUND BALANCE:

Beginning of year 323,478
End of year $ 359,059
Budget Amounts
-
-
225
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Gas Tax Special Revenue Fund
For the Year Ended June 30, 2024
95 Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Other taxes $ 1,455,000 $ 1,455,000 $ 1,603,720 $ 148,720 Use of money and property 41,600 41,600 250,799 209,199 Total revenues 1,496,600 1,496,600 1,854,519 357,919
EXPENDITURES:

Current:

General government 214,152 214,152 215,599 (1,447)
Public works 898,741 1,032,170 376,839 655,331
Capital outlay 550,000 550,000 - 550,000
Total expenditures 1,662,893 1,796,322 592,438 1,203,884 REVENUES OVER (UNDER) EXPENDITURES (166,293) (299,722) 1,262,081 1,561,803 OTHER FINANCING SOURCES (USES):

Transfer in 64,500 64,500 64,500 -
Total other financing sources (uses) 64,500 64,500 64,500 - Net change in fund balance $ (101,793) $ (235,222) $ 1,326,581 $ 1,561,803 FUND BALANCE:

Beginning of year 3,799,487
End of year $ 5,126,068
Budget Amounts
226
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Federal and State Law Enforcement Special Revenue Fund
For the Year Ended June 30, 2024
96 Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property $ 3,520 $ 3,520 $ 21,121 $ 17,601 Grants and intergovernmental 160,000 160,000 186,159 26,159 Total revenues 163,520 163,520 207,280 43,760
EXPENDITURES:

Current:

Public safety 176,229 176,229 73,070 103,159
Total expenditures 176,229 176,229 73,070 103,159
Net change in fund balance $ (12,709) $ (12,709) $ 134,210 $ 146,919 FUND BALANCE:

Beginning of year 282,060
End of year $ 416,270
Budget Amounts
227
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Park in Lieu Special Revenue Fund
For the Year Ended June 30, 2024
97 Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property $ 4,800 $ 4,800 $ 21,575 $ 16,775 Total revenues 4,800 4,800 21,575 16,775
Net change in fund balance $ 4,800 $ 4,800 $ 21,575 $ 16,775 FUND BALANCE:

Beginning of year 343,811
End of year $ 365,386
Budget Amounts
228
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Rent Stabilization Special Revenue Fund
For the Year Ended June 30, 2024
98 Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services $ 605,000 $ 605,000 $ 529,098 $ (75,902) Fines and forfeitures 2,500 2,500 - (2,500)
Use of money and property 7,360 7,360 40,256 32,896
Total revenues 614,860 614,860 569,354 (45,506)
EXPENDITURES:

Current:

General government 272,197 272,197 275,470 (3,273)
Community development 528,331 608,103 465,157 142,946
Total expenditures 800,528 880,300 740,627 139,673
Net change in fund balance $ (185,668) $ (265,440) (171,273) $ 94,167 FUND BALANCE:

Beginning of year 655,205
End of year $ 483,932
Budget Amounts
229
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Federal and State Grants Special Revenue Fund
For the Year Ended June 30, 2024
99 Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services $ - $ - $ 1,528 $ -
Use of money and property 7,360 7,360 5,034 (2,326)
Grants and intergovernmental 488,251 2,736,542 2,652,831 (83,711) Miscellaneous
Total revenues 495,611 2,743,902 2,659,393 (86,037)
EXPENDITURES:

Current:

Public works - 14,629 33,731 (19,102)
Culture and recreation 84,350 84,350 30,847 53,503
Community development 100,500 1,191,015 2,044,207 (853,192) Capital outlay - 2,248,291 - 2,248,291
Total expenditures 184,850 3,538,285 2,108,785 1,429,500 Net change in fund balance $ 310,761 $ (794,383) 550,608 $ 1,343,463 FUND BALANCE:

Beginning of year (206,396)
End of year $ 344,212
Budget Amounts
230
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Housing Assistance Special Revenue Fund
For the Year Ended June 30, 2024
100
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services $ - $ - $ 215 $ 215
Use of money and property 4,800 4,800 24,982 20,182
Total revenues 4,800 4,800 25,197 20,397
EXPENDITURES:

Current:

General government 1,691 1,691 1,691 -
Community development 4,655 7,334 1,482 5,852
Total expenditures 6,346 9,025 3,173 5,852
Net change in fund balance $ (1,546) $ (4,225) 22,024 $ 26,249 FUND BALANCE:

Beginning of year 474,742
End of year $ 496,766
Budget Amounts
231
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure A Special Revenue Fund
For the Year Ended June 30, 2024
101
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Sales taxes $ 650,000 $ 650,000 $ 768,691 $ 118,691
Use of money and property 70,400 70,400 328,803 258,403 Grants and intergovernmental - - 300,000 300,000
Total revenues 720,400 720,400 1,397,494 677,094
EXPENDITURES:

Current:

General government 3,459 3,459 1,770 1,689
Capital outlay 550,000 640,665 37,500 603,165
Total expenditures 553,459 644,124 39,270 604,854
Net change in fund balance $ 166,941 $ 76,276 1,358,224 $ 1,281,948 FUND BALANCE:

Beginning of year 5,027,454
End of year $ 6,385,678
Budget Amounts
232
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual CYSFF TOT Special Revenue Fund
For the Year Ended June 30, 2024
102
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Transient occupancy tax $ 275,000 $ 275,000 $ 252,398 $ (22,602) Use of money and property 14,400 14,400 76,231 61,831
Total revenues 289,400 289,400 328,629 39,229
EXPENDITURES:

Current:

General government 47,997 47,997 47,997 -
Culture and recreation 275,000 604,089 82,000 522,089
Total expenditures 322,997 652,086 129,997 522,089
Net change in fund balance $ (33,597) $ (362,686) 198,632 $ 561,318 FUND BALANCE:

Beginning of year 1,200,484
End of year $ 1,399,116
Budget Amounts
233
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Lighting District Special Revenue Fund
For the Year Ended June 30, 2024
103
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Property taxes $ 801,900 $ 801,900 $ 881,364 $ 79,464
Use of money and property 60,800 60,800 319,202 258,402 Total revenues 862,700 862,700 1,200,566 337,866
EXPENDITURES:

Current:

General government 53,231 53,231 49,453 3,778
Public works 140,018 173,674 134,654 39,020
Capital outlay - 810,465 113,326 697,139
Total expenditures 193,249 1,037,370 297,433 739,937
Net change in fund balance $ 669,451 $ (174,670) 903,133 $ 1,077,803 FUND BALANCE:

Beginning of year 5,158,855
End of year $ 6,061,988
Budget Amounts
234
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Drainage District Special Revenue Fund
For the Year Ended June 30, 2024
104
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Property taxes $ 153,440 $ 153,440 $ 181,006 $ 27,566
Use of money and property 9,600 9,600 62,630 53,030
Total revenues 163,040 163,040 243,636 80,596
EXPENDITURES:

Current:

General government 97,582 97,582 97,391 191
Public works 211,742 250,370 108,721 141,649
Total expenditures 309,324 347,952 206,112 141,840
REVENUES OVER (UNDER) EXPENDITURES (146,284) (184,912) 37,524 222,436 OTHER FINANCING SOURCES (USES):

Transfer in 146,284 146,284 146,284 -
Total other financing sources (uses) 146,284 146,284 146,284 - Net change in fund balance $ - $ (38,628) 183,808 $ 222,436 FUND BALANCE:

Beginning of year 1,000,511
End of year $ 1,184,319
Budget Amounts
235
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure C Special Revenue Fund
For the Year Ended June 30, 2024
105
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property $ 2,880 $ 2,880 $ 1,199 $ (1,681) Total revenues 2,880 2,880 1,199 (1,681)
EXPENDITURES:

Current:

Public safety - 15,407 15,407 -
Culture and recreation - 124,242 124,242 -
Total expenditures - 139,649 139,649 -
Net change in fund balance $ 2,880 $ (136,769) (138,450) $ (1,681) FUND BALANCE:

Beginning of year 138,450
End of year $ -
Budget Amounts
236
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Local Grants Special Revenue Fund
For the Year Ended June 30, 2024
106
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property $ 8,000 $ 8,000 $ 38,683 $ 30,683 Grants and intergovernmental 720,000 722,500 153,250 (569,250) Total revenues 728,000 730,500 191,933 (538,567)
EXPENDITURES:

Current:

General government - - 6,214 (6,214)
Public safety 150,000 157,930 135,633 22,297
Culture and recreation 570,000 570,000 -
Community development - 8,400 2,000
Total expenditures 720,000 736,330 143,847 16,083
Net change in fund balance $ 8,000 $ (5,830) 48,086 $ (522,484) FUND BALANCE:

Beginning of year 595,026
End of year $ 643,112
Budget Amounts
237
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Silicon Valley Community Foundation (SVCF) Special Revenue Fund For the Year Ended June 30, 2024
107
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
OTHER FINANCING SOURCES (USES):

Transfer in $ - $ 157,027 157,027 $ -
Total other financing sources (uses) - 157,027 157,027 - Net change in fund balance $ - $ 157,027 157,027 $ -
FUND BALANCE:

Beginning of year 1,842,973
End of year $ 2,000,000
Budget Amounts
238
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Low and Moderate Income Housing Special Revenue Fund
For the Year Ended June 30, 2024
108
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property $ 32,000 $ 92,000 $ 196,557 $ 104,557 Total revenues 32,000 92,000 196,557 104,557
EXPENDITURES:

Current:

General government 50,487 50,487 13,396 37,091
Public works - - 661 (661)
Community development 1,567,898 1,261,323 343,675 917,648 Total expenditures 1,618,385 1,311,810 357,732 954,078
REVENUES OVER (UNDER) EXPENDITURES (1,586,385) (1,219,810) (161,175) 1,058,635 OTHER FINANCING SOURCES (USES):

Transfer in 397,410 397,410 397,410 -
Total other financing sources (uses) 397,410 397,410 397,410 - Net change in fund balance $ (1,188,975) $ (822,400) 236,235 $ 1,058,635 FUND BALANCE:

Beginning of year 7,763,195
End of year $ 7,999,430
Budget Amounts
239
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Housing in Lieu Special Revenue Fund
For the Year Ended June 30, 2024
109
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Licenses, fees and permits $ 38,000 $ 38,000 $ 39,576 $ 1,576 Use of money and property 96,000 96,000 498,254 402,254 Grants and intergovernmental 1,000,000 - - -
Total revenues 1,134,000 134,000 537,830 402,254
EXPENDITURES:

Current:

General government 31,970 31,970 34,686 (2,716)
Community development 2,840,950 8,590,950 80,913 8,510,037 Total expenditures 2,872,920 8,622,920 115,599 8,507,321 REVENUES OVER (UNDER) EXPENDITURES (1,738,920) (8,488,920) 422,231 8,909,575 Net change in fund balance $ (1,738,920) $ (8,488,920) 422,231 $ 8,909,575 FUND BALANCE:

Beginning of year 13,313,682
End of year $ 13,735,913
Budget Amounts
240
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Housing TOT Special Revenue Fund
For the Year Ended June 30, 2024
110
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Transient occupancy tax $ 275,000 $ 275,000 $ 252,398 $ (22,602) Use of money and property 38,400 38,400 154,067 115,667 Total revenues 313,400 313,400 406,465 93,065
EXPENDITURES:

Current:

General government 28,917 28,917 28,917 -
Total expenditures 28,917 28,917 28,917 -
Net change in fund balance $ 284,483 $ 284,483 377,548 $ 93,065 FUND BALANCE:

Beginning of year 2,369,951
End of year $ 2,747,499
Budget Amounts
241
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure HH Special Revenue Fund
For the Year Ended June 30, 2024
111
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Other taxes $ 1,677,000 $ 1,677,000 $ 1,677,265 $ 265
Use of money and property 70,400 70,400 324,789 254,389 Total revenues 1,747,400 1,747,400 2,002,054 254,654
EXPENDITURES:

Current:

General government 3,700 3,700 154 3,546
Community development 844,421 1,364,297 855,686 508,611 Total expenditures 848,121 1,367,997 855,840 512,157
REVENUES OVER (UNDER) EXPENDITURES 899,279 379,403 1,146,214 766,811 Net change in fund balance $ 899,279 $ 379,403 1,146,214 $ 766,811 FUND BALANCE:

Beginning of year 4,970,320
End of year $ 6,116,534
Budget Amounts
242
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure W Special Revenue Fund
For the Year Ended June 30, 2024
112
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Sales taxes $ 300,000 $ 300,000 $ 339,734 $ 39,734
Use of money and property 8,000 8,000 53,918 45,918
Total revenues 308,000 308,000 393,652 85,652
EXPENDITURES:

Current:

General government 1,689 1,689 - 1,689
Capital outlay 220,000 238,190 5,610 232,580
Total expenditures 221,689 239,879 5,610 234,269
Net change in fund balance $ 86,311 $ 68,121 388,042 $ (148,617) FUND BALANCE:

Beginning of year 809,036
End of year $ 1,197,078
Budget Amounts
243

STATISTICAL

SECTION
113
This part of the City's Annual Comprehensive Financial Report presents detailed information as a context for understanding what the information in the financial statements, noted disclosures, and required supplementary information says about the City's overall financial health. In contrast to the financial section, the statistical section information is not subject to independent audit.

Financial Trends
These schedules contain trend information to help the reader understand how the City's financial performance and well being have changed over time:

1. Net Position by Component

2. Changes in Net Position

3. Fund Balances - Governmental Funds

4. Changes in Fund Balances - Governmental Funds
Revenue Capacity
These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax:

1. Assessed Value of Taxable Property

2. Direct and Overlapping Property Tax Rates

3. Principal Property Taxpayers

4. Property Tax Levies and Collections
Debt Capacity
These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future:

1. Ratio of Outstanding Debt by Type

2. Computation of Direct and Overlapping Debt

3. Computation of Legal Bonded Debt Margin

4. Bonded Debt Pledged Revenue Coverage - Successor Agency Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place:

1. Demographic and Economic Statistics

2. Principal Employers
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs:

1. Number of Positions - City Government by Function

2. Operating Indicators by Function

3. Capital Asset Statistics by Function
Operating Information
Unless otherwise noted, the information in these schedules is derived from the Annual Comprehensive Financial Reports for the relevant year. The City Implemented GASB Statement 34 in 2003; schedules presenting government-wide information include information beginning in that year. 244
114
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Government activities
Net investment in capital assets $ 35,561,630 $ 41,044,530 $ 42,278,404 $ 48,784,281 $ 55,197,664 $ 56,070,993 $ 63,227,229 $ 64,005,813 $ 74,583,002 $ 80,872,067 Restricted For:

Debt Service - - - - - - - - - -
Low and moderate income housing - - - - - - - - - -
Streets and Infrastructure 5,538,340 5,816,534 6,411,718 7,700,051 9,885,470 11,354,052 12,774,681 14,736,889 16,118,821 20,314,190 Parks and Recreation 550,014 1,120,082 1,117,148 1,089,920 340,827 348,880 344,094 334,082 343,811 365,386 Measure C programs 1,464,460 1,405,053 1,510,846 1,015,232 592,734 253,401 223,160 217,659 138,450 - Housing Programs 14,012,643 17,325,494 20,518,013 20,824,081 21,669,184 24,277,027 25,891,744 26,780,234 31,735,201 33,955,113 Special Programs 954,220 1,168,856 853,741 1,262,039 1,522,452 1,755,499 2,012,599 2,010,100 2,529,780 2,870,088 Capital projects 188,644 279,184 3,796,398 3,012,787 9,816,132 10,159,391 6,707,412 8,602,288 7,172,849 5,004,887 Total restricted 22,708,321 27,115,203 34,207,864 34,904,110 43,826,799 48,148,250 47,953,690 52,681,252 58,038,912 62,509,664 Unrestricted 23,123,638 28,798,504 33,919,154 40,774,262 40,040,582 46,185,712 49,482,293 59,082,008 62,177,856 68,404,889 Total governmental activities net position $ 81,393,589 $ 96,958,237 $ 110,405,422 $ 124,462,653 $ 139,065,045 $ 150,404,955 $ 160,663,212 $ 175,769,073 $ 194,799,770 $ 211,786,620 Business-type activities
Net investment in capital assets 3,548,303 3,353,012 4,050,566 11,161,837 10,964,954 10,880,048 11,205,575 11,306,820 11,212,431 11,338,141 Restricted For:

Capital Projects¹ 835,114 926,770 928,562 682,991 585,636 591,828 591,909 1,943,955 5,589,148 13,778,345 Total restricted 835,114 926,770 928,562 682,991 585,636 591,828 591,909 1,943,955 5,589,148 13,778,345 Unrestricted¹ 1,889,840 4,919,239 5,592,490 1,949,538 3,292,824 4,362,698 5,216,208 4,120,165 7,672,675 2,896,181 Total business-type activities net position $ 6,273,257 $ 9,199,021 $ 10,571,618 $ 13,794,366 $ 14,843,414 $ 15,834,574 $ 17,013,692 $ 17,370,940 $ 24,474,254 $ 28,012,667 Primary Government
Net investment in capital assets 39,109,933 44,397,542 46,328,970 59,946,118 66,162,618 66,951,041 74,432,804 75,312,633 85,795,433 92,210,208 Restricted 23,543,435 28,041,973 38,624,491 34,904,110 43,826,799 48,740,078 48,545,599 54,625,207 63,628,060 76,288,009 Unrestricted 25,013,478 33,717,743 36,023,579 43,406,791 43,919,042 50,548,410 54,698,501 63,202,173 69,850,531 71,301,070 Total primary government net position $ 87,666,846 $ 106,157,258 $ 120,977,040 $ 138,257,019 $ 153,908,459 $ 166,239,529 $ 177,676,904 $ 193,140,013 $ 219,274,024 $ 239,799,287 ¹ Certain amounts have been reclassified to present historical information in conformance with current classification.

City of East Palo Alto, California
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
245
115
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
General Revenues and Other Changes in Net Position
Governmental activities:

Taxes
Property Taxes $ 10,260,689 $ 11,428,331 $ 12,288,670 $ 14,642,402 $ 16,411,143 $ 16,099,035 $ 15,097,898 $ 17,295,600 $ 20,957,659 $ 19,858,720 Sales Taxes 3,798,237 4,364,562 4,078,803 5,923,229 5,793,668 5,171,001 5,422,953 5,738,443 6,394,903 6,019,894 Utility Users Tax 1,513,088 1,516,104 1,520,017 1,680,279 1,537,991 1,584,592 1,630,879 1,631,049 1,936,239 2,052,280 Transient Occupancy Tax 2,803,542 2,809,127 2,906,241 3,089,942 2,990,217 1,962,256 200,886 1,447,892 2,223,732 2,526,290 Business License Tax¹ 668,138 602,245 616,653 1,428,860 1,452,963 1,585,841 1,223,696 1,269,802 1,768,500 2,414,887 Other Taxes¹ 1,741,988 1,621,994 1,824,599 1,254,845 86,410 1,796,955 1,833,719 1,677,265 1,782,881 1,779,640 Investment earnings 232,001 312,707 394,890 849,716 2,029,009 2,113,187 (9,692) (2,010,393) 2,296,615 6,690,404 Miscellaneous 493,864 719,437 194,024 49,306 1,147,440 1,277,393 1,595,376 1,273,166 1,487,771 1,339,191 Transfers - - (531,049) (238,312) - - - - (6,241,000) (433,400) Extraordinary Items - 3,246,461 - - - - - - - -
Total Governmental activities 21,511,547 26,620,968 23,292,848 28,680,267 31,448,841 31,590,260 26,995,715 28,322,824 32,607,300 42,247,906 Business-type activities:

Investment earnings 9,557 12,984 34,159 32,939 79,415 234,047 (13,745) (298,202) 351,464 1,094,978 Transfers - - - 531,049 238,312 - - (140,423) 6,241,000 433,400 Total Business-type activities 9,557 12,984 34,159 563,988 317,727 234,047 (13,745) (438,625) 6,592,464 1,528,378 Total Primary Government 21,521,104 26,633,952 23,327,007 29,244,255 31,766,568 31,824,307 26,981,970 27,884,199 39,199,764 43,776,284 Change in Net Position
Governmental Activites 13,017,227 16,775,305 8,669,812 11,833,818 11,198,491 14,852,802 13,928,077 14,796,305 19,080,781 16,936,766 Business-type Activities 639,162 821,593 2,939,180 1,378,989 1,132,728 910,518 1,179,118 72,225 7,103,314 3,538,413 Change in Net Position $ 13,656,389 $ 17,596,898 $ 11,608,992 $ 13,212,807 $ 12,331,219 $ 15,763,320 $ 15,107,195 $ 14,868,530 $ 26,184,095 $ 20,475,179 ¹ Certain amounts have been reclassified to present historical information in conformance with current classification descriptions.

City of East Palo Alto, California
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year Ending June 30
246
116
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
General Fund
Nonspendable $ 11,769,991 $ 11,932,475 $ 12,066,847 $ 11,743,001 $ 10,938,871 $ 8,826,647 $ 6,554,760 $ 5,282,165 $ 2,875,868 $ 927,145 Restricted - - - - - 20,065 23,784 27,297 38,659 45,039 Committed - - - - - 980,355 980,355 10,097,589 11,844,496 11,150,949 Assigned 187,141 383,658 1,188,899 1,886,415 1,839,551 2,183,599 4,128,219 6,658,000 6,000,000 3,824,125 Unassigned 13,221,866 16,293,653 17,235,337 24,191,919 26,426,148 30,996,166 31,116,240 26,407,109 33,027,657 43,470,340 Total General Fund 25,178,998 28,609,786 30,491,083 37,821,335 39,204,570 39,204,570 42,803,358 48,472,160 53,786,680 59,417,598 All Other Governmental Funds
Restricted 22,684,977 26,537,401 34,122,255 34,904,110 43,826,799 47,339,670 45,250,665 45,389,536 51,986,249 60,968,691 Committed - - - - - - 5,500,000 9,000,000 10,414,734 9,350,000 Nonspendable - - - - - - - - - -
Assigned 1,913,459 4,803,773 7,289,475 6,772,150 7,874,189 11,936,316 10,908,746 5,600,829 6,889,192 9,419,779 Unassigned (233,356) (197,068) - - - - (61,923) (111,371) (206,396) - Total all other governmental funds 24,365,080 31,144,106 41,411,730 41,676,260 51,700,988 51,700,988 61,597,488 59,878,994 69,083,779 79,738,470 Total Governmental Funds $ 49,544,078 $ 59,753,892 $ 71,902,813 $ 79,497,595 $ 90,905,558 $ 90,905,558 $ 104,400,846 $ 108,351,154 $ 122,870,459 $ 139,156,068 Fiscal Year Ended June 30
City of East Palo Alto, California
Fund Balances-Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
247
117
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Revenues
Taxes $ 20,271,896 $ 22,015,184 $ 22,570,573 $ 26,465,002 $ 28,911,799 $ 30,593,515 $ 27,551,942 $ 31,488,448 $ 38,052,255 $ 37,239,225 Licenses, fees, and permits 932,302 8,225,539 2,276,892 2,945,418 2,816,522 1,425,267 2,665,772 2,344,950 1,734,484 3,657,663 Charges for services 2,638,045 2,778,293 2,090,795 1,942,517 2,027,506 2,901,680 1,487,373 1,340,766 1,387,903 1,116,255 Fines and fortfeitures 368,621 532,143 442,911 745,766 421,661 401,717 242,042 263,437 379,861 540,438 Use of money and property 245,602 474,624 410,003 878,892 2,082,517 2,730,055 207,416 (2,323,287) 2,802,993 6,759,703 Grants and intergovernmental 4,941,401 3,589,152 8,724,241 5,177,790 7,459,093 1,285,504 5,659,603 4,897,399 17,631,163 10,680,936 Miscellaneous 609,570 1,212,731 205,096 119,862 385,940 260,257 1,915,735 1,700,286 975,524 546,286 Total revenues 30,007,437 38,827,666 36,720,511 38,275,247 44,105,038 39,597,995 39,729,883 39,711,999 62,964,183 60,540,506 Expenditures
Current
General Government 3,804,928 4,037,015 4,270,123 4,286,525 4,696,638 5,126,419 6,144,761 6,332,990 6,646,083 7,490,022 Public Safety 10,237,181 10,200,118 10,159,814 10,165,174 11,240,702 10,920,002 11,629,425 11,767,310 12,671,959 12,802,340 Public Works 2,698,224 3,106,375 3,560,158 4,251,301 4,150,097 3,844,254 4,134,384 4,097,153 4,189,669 4,969,777 Culture and recreation 789,369 1,036,572 959,888 1,243,981 1,203,631 1,001,494 700,691 1,219,765 1,553,917 1,329,817 Community Development 2,263,113 2,257,570 2,397,396 2,984,606 3,589,412 4,823,525 5,758,006 5,146,245 7,001,196 7,062,319 Capital Outlay 6,877,626 2,524,109 3,290,362 7,716,265 7,800,356 2,505,041 9,244,588 7,067,172 9,614,380 9,624,330 Debt Service (a)
Principal repayment 45,254 61,347 52,302 31,399 16,085 - - - 452,677 499,126 Interest & fiscal charges 4,180 4,325 2,347 1,214 154 - - 6,561 73,997 43,766 Total expenditures 26,719,875 23,227,431 24,692,390 30,680,465 32,697,075 28,220,735 37,611,855 35,637,196 42,203,878 43,821,497 Excess of revenues
over (under) expenditures 3,287,562 15,600,235 12,028,121 7,594,782 11,407,963 11,407,963 2,118,028 4,074,803 20,760,305 16,719,009 Other financing sources (uses)
Transfers in 4,024,730 1,236,787 3,876,948 2,121,910 8,637,770 8,266,603 3,506,089 2,381,000 5,133,238 3,686,297 Transfers (out) (4,024,730) (3,498,787) (3,811,148) (2,121,910) (8,637,770) (8,266,603) (3,506,089) (2,381,000) (11,374,238) (4,119,697) Capital leases 121,666 - - - - - - - - -
Total other financing sources(uses) 121,666 (2,262,000) 65,800 - - - - - (6,241,000) (433,400) Special item and extraordinary item - - - - - - - - - - Net change in fund balances 3,409,228 13,338,235 12,093,921 7,594,782 11,407,963 11,407,963 2,118,028 4,074,803 14,519,305 16,285,609 Debt service as a percentage of noncapital
expenditures 0.25% 0.32% 0.26% 0.14% 0.07% 0.08% 0.00% 0.02% 1.62% 1.59% Debt service as a percentage of total expenditures
expenditures 0.19% 0.28% 0.22% 0.11% 0.05% 0.06% 0.00% 0.02% 1.25% 1.24% City of East Palo Alto, California
Changes in Fund Balances-Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
248
118
Secured Total Unsecured Factor of
Fiscal Gateway 101 University Secured Gateway 101 University Unsecured Total Taxable Estimated Taxable Assessed Year City Corridor Circle Ravenswood Property City Corridor Circle Ravenswood Property Assessed (1) Actual Value (2) Value (3) 2015 1,272,051,647 341,894,816 378,514,734 83,231,935 2,075,693,132 6,198,106 18,472,810 25,681,636 4,601,336 54,953,888 2,130,647,020 $3,549,905,090 1.000000 2016 1,387,303,962 366,869,951 386,077,451 89,606,753 2,229,858,117 5,895,578 21,087,072 32,434,814 5,307,991 64,725,455 2,294,583,572 $4,990,019,421 1.000000 2017 1,496,819,954 383,867,913 391,965,125 128,424,119 2,401,077,111 5,357,954 21,336,520 31,608,639 6,300,157 64,603,270 2,465,680,381 $4,932,990,577 1.000000 2018 1,860,043,257 493,901,959 399,943,872 139,127,273 2,893,016,361 5,568,741 21,568,793 28,727,193 3,838,839 59,703,566 2,952,719,927 $7,145,582,223 1.000000 2019 1,987,717,844 589,570,833 491,664,014 149,310,365 3,218,263,056 16,763,127 24,130,526 26,264,047 3,792,066 70,949,766 3,289,212,822 $7,232,431,631 1.000000 2020 2,141,077,211 610,407,047 501,497,289 167,894,435 3,420,875,982 16,924,357 24,269,647 25,817,541 3,956,073 70,967,618 3,491,843,600 $6,049,029,684 1.000000 2021 2,256,060,762 626,312,724 511,628,461 247,209,411 3,641,211,358 5,172,050 36,754,744 23,863,678 4,876,777 70,667,249 3,711,878,607 $7,490,106,321 1.000000 2022 2,334,992,280 647,462,524 520,340,698 261,727,649 3,764,523,151 17,480,486 36,132,686 17,381,330 4,386,585 75,381,087 3,839,904,238 $7,074,714,408 1.000000 2023 2,496,505,848 702,048,413 688,427,574 245,346,193 4,132,328,028 6,909,334 39,183,992 13,391,529 4,677,616 64,162,471 4,196,490,499 $6,827,322,921 1.000000 2024 2,599,989,651 738,414,743 702,195,861 253,694,547 4,294,294,802 7,407,119 40,374,317 16,148,352 5,684,837 69,614,625 4,363,909,427 5,951,367,349 1.000000 Source: San Mateo County Assessors, MuniServices, LLC / an Avenu Insights & Analytics Company Source: Prior published ACFR
Notes:
(1) Total Assessed Taxable Value is net of all exemptions, including homeowners' exemption. (2) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices.

Based on these calculations a factor was extrapolated and applied to current assessed values. (3) California cities do not set their own direct tax rate. The State constitution establishes the rate at 1% and allocates a portion of that amount to all the taxing entities within a tax rate area.

City of East Palo Alto, California
Assessed Value of Taxable Property
Last Ten Fiscal Years
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Millions Unsecured Property Secured Property
249
119
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Basic County-wide Rate 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 Override Assessments
Ravenswood School District 0.0360 0.0304 0.0376 0.0352 0.0616 0.0522 0.0341 0.0369 0.0415 0.0674 Sequoia Union High School District 0.0433 0.0434 0.0391 0.0383 0.0365 0.0340 0.0315 0.0290 0.0286 0.0391 San Mateo Community College District 0.0190 0.0250 0.0247 0.0235 0.0175 0.0266 0.0213 0.0227 0.0193 0.0190 Midpeninsula Open Space District 0.0000 0.0008 0.0006 0.0009 0.0018 0.0016 0.0015 0.0015 0.0013 0.0012 TOTAL 0.0983 0.0996 0.1020 0.0979 0.1174 0.1144 0.0884 0.0901 0.0907 0.1267 Total Tax Rate 1.0983 1.0996 1.1020 1.0979 1.1174 1.1144 1.0884 1.0901 1.0907 1.1267 Source: County Auditor data, MuniServices, LLC / Avenu Insights & Analytics Source: Previously published ACFR Report
Tax Rate as represented by TRA 021-000
City of East Palo Alto, California
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
250
120
Taxpayer Taxable Value
($)
Percent of Total
City Taxable
Value (%)
Taxable Value
($)
Percent of Total
City Taxable
Value (%)
Columbia REIT University Circle LP $ 545,794,936 12.51% Woodland Park Property Owner Llc 468,181,845 10.73%
University Plaza EPA LLC 213,258,337 4.89%
SHR Palo Alto LLC 151,710,591 3.48% $ 51,049,052 2.40%
Ikea Property Inc 105,424,948 2.42% 84,436,034 3.96%
Bayshore 1771 LLC 55,312,866 1.27%
Four Corners EPA Property Owner LLC 44,149,498 1.01%
Sycamore Real Estate Investment LLC 43,203,890 0.99%
HPI ASVRF 1990 Bay LLC 38,089,757 0.87%
Light Tree Three LP 35,567,492 0.82%
Wells REIT II - University Circle 326,635,338 15.33%
EQR Woodland Park 156,581,269 7.35%
Gateway 101 LLC 25,947,282 1.22%
HD Devel of Maryland Inc 19,650,979 0.92%
Nairobi Housing Inc & Housing Assoc Lessee 13,296,168 0.62% Avery H Smith & Co 12,374,260 0.58%
East Palo Alto at 101 LLC 10,764,770 0.51%
Storage Portfolio I LLC 8,393,049 0.39%
Principal Taxpayers $ 1,700,694,160 38.97% $ 709,128,201 33.28% Total Taxable Value $ 4,363,909,429 100.00% $ 2,130,647,020 100.00% Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics 2023-24 2014-15
City of East Palo Alto, California
Principal Property Taxpayers
Current Fiscal Year and Nine Years Ago
251
121
Total Tax Levied Current Tax Percentage Delinquent Tax Total Tax Percentage for Fiscal Year (1) Collections (2) of Levy Collections (3) Collections of Levy 2015 5,326,772 5,197,898 97.5% 5,197,898 97.5%
2016 5,751,125 5,515,510 95.9% 5,515,510 95.9%
2017 6,158,288 5,864,760 95.2% 5,864,760 95.2%
2018 7,498,588 7,137,824 95.2% 7,137,824 95.2%
2019 8,006,496 7,755,634 96.9% 7,755,634 96.9%
2020 8,571,769 8,357,638 97.5% 8,357,638 97.5%
2021 8,941,750 8,660,036 96.8% 8,660,036 96.8%
2022 9,304,588 9,847,946 105.8% 9,847,946 105.8%
2023 9,866,504 9,928,335 100.6% 9,928,335 100.6%
2024 10,255,973 10,141,505 98.9% 10,141,505 98.9%
Source: San Mateo County Controller, City General Ledger Notes:
(1) Prior to the dissolution of the former Redevelopment Agency effective January 2012, the table data includes secured and unsecured tax levies for the City, City districts, and the former Redevelopment Agency. Beginning in FY 2012-13, the amounts levied are related to the City and City districts only.
(2) Beginning in 1993, Current Tax Collections are reduced by a mandatory tax allocation imposed by the State of California (Educational Revenue Augmentation Fund (ERAF)). (3) The County of San Mateo collects and allocates property taxes under the Teeter Plan whereby the City receives property tax revenues based on the total amount assessed, but not collected; therefore, the City has no direct delinquent tax collections.

City of East Palo Alto, California
Property Tax Levies and Collections
Last Ten Fiscal Years
June 30
Fiscal Year Ended
Fiscal Year of the Levy
Collected Within the
Total Collections To Date
252
122
Business-Type
Activities
Fiscal
Year
End
Capitalized
Lease Debt
(1)
Redevelopment
Tax Allocation
Bonds (2)
Revenue
Bonds (2)
Less:

Restricted
Bonds Held (3)
Notes Payable
Total Primary
Government
Debt
Percentage
of Personal
Income (5)
Outstanding
Debt Per
Capita (5)
Outstanding
Debt to Taxable
Assessed Value
2015 161,133 - - - - 161,133 0.03% 5.28 0.01%
2016 99,786 - - - - 99,786 0.02% 3.29 0.00%
2017 47,484 - - - - 47,484 0.01% 1.54 0.00%
2018 16,085 - - - $ 700,000 716,085 0.10% 23.48 0.02%
2019 - - - - 700,000 700,000 0.09% 22.73 0.02%
2020 - - - - 676,667 676,667 0.09% 22.30 0.02%
2021 2,306,523 - - - 653,334 653,334 0.08% 21.53 0.02%
2022 1,880,524 - - - 630,001 2,510,525 0.07% 21.75 0.07% 2023 1,427,847 - - - 2,487,192 3,915,039 0.06% 21.22 0.09% 2024 942,495 - - - 583,335 1,525,830 0.13% 52.47 0.03%
Notes:
(1) Capitalized Lease Debt due to Police Vehicles acquired in 2013 and 2015. (2) Tax Allocation Bonds and Revenue Bonds related to financing Redevelopment Agency projects and activities. (3) Bond proceeds invested and, in October of 2010, used as part of a purchase in lieu of redemption structure. In 2009 the Public Finance Authority proceeds were used to purchase, and hold as investment, the 1999 Tax Allocation Bonds. (4) During FY 2011-12, the former Redevelopment Agency was dissolved and all debts transferred to a Successor Trust. (5) Population Projections prepared by State of California Department of Finance, Personal Income Data by MuniServcies LLC Governmental Activities
City of East Palo Alto, California
Ratios of Outstanding Debt by Type
253
123
2023-24 Assessed Valuation $ 4,376,844,027
City's Share
Total Debt Percentage of Debt
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT 6/30/2024 Applicable (1) 6/30/2024 City of East Palo Alto $ 942,495 100.000% $ 942,495
Total Direct Debt $ 942,495 $ 942,495
San Mateo Community College District $ 682,237,216 1.422% $ 9,701,413 Sequoia Union High School District 488,322,000 3.288% 16,056,027 Ravenswood School District 133,740,000 40.550% 54,231,570 Midpeninsula Regional Open Space District 80,700,000 1.077% 869,139 California Statewide Communities Development Authority 1915 Act Bonds 2,242,416 100.000% 2,242,416 Total Overlapping Debt 1,387,241,632 83,100,565
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ 1,388,184,127 $ 84,043,060

OVERLAPPING GENERAL FUND DEBT
San Mateo County General Fund Obligations $ 554,571,645 1.422% $ 7,886,009 San Mateo County Board of Education Certificates of Participation 5,735,000 1.422% $ 81,552 Midpeninsula Regional Open Space District General Fund Obligations 79,795,600 1.077% $ 859,399 San Mateo County Mosquito and Vector Control District General Fund Obligations 3,404,654 1.422% $ 48,414 TOTAL OVERLAPPING GENERAL FUND DEBT $ 643,506,899 $ 8,875,373 OVERLAPPING TAX INCREMENT DEBT (Successor Agency)
2015A Refunding Tax Allocation Bonds $ 11,980,000 100.000% $ 11,980,000 COMBINED TOTAL DEBT $ 104,898,433 (2)
Ratios to 2023-24 Assessed Valuation:

Direct Debt 0.022%
Direct and Overlapping Tax and Assessment Debt 1.920%
Direct and Overlapping Tax, Assessment and Increment Debt 2.123% Combined Total Debt 2.397%
Ratios to Redevelopment Successor Agency Incremental Valuation ($1,427,707,876):

Overlapping Tax Increment Debt 0.800%
Source: Avenu Insights & Analytics, California Municipal Statistics, Inc.

Notes:
(1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and non-bonded capital lease obligations.

City of East Palo Alto, California
Computation of Direct and Overlapping Debt
June 30, 2024
254
124
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Taxable Assessed Valuation $ 2,130,647,020 $ 2,294,583,572 $ 2,465,680,381 2,952,719,927 $ 3,289,212,822 Conversion Percentage 25% 25% 25% 25% 25%
Adjusted Assessed Valuation 532,661,755 573,645,893 616,420,095 738,179,982 822,303,206 Debt service limit percentage 15% 15% 15% 15% 15%
Debt Limit 79,899,263 86,046,884 92,463,014 110,726,997 123,345,481 Debt Applicable to Limit:

Less: Outstanding General Obligations - - - - -
Legal Debt Margin $ 79,899,263 $ 86,046,884 $ 92,463,014 $ 110,726,997 $ 123,345,481 2019-2020 2020-2021 2021-22 2022-23 2023-24
Taxable Assessed Valuation $ 3,491,843,600 $ 3,711,878,607 $ 3,839,904,238 $ 4,196,490,499 $ 4,363,909,427 Conversion Percentage 25% 25% 25% 25% 25%
Adjusted Assessed Valuation 872,960,900 927,969,652 959,976,060 1,049,122,625 1,090,977,357 Debt service limit percentage 15% 15% 15% 15% 15%
Debt Limit 130,944,135 139,195,448 143,996,409 157,368,394 163,646,604 Debt Applicable to Limit:

Less: Outstanding General Obligations - - - - -
Legal Debt Margin $ 130,944,135 $ 139,195,448 $ 143,996,409 $ 157,368,394 $ 163,646,604 Source: San Mateo County Assessors, MuniServices, LLC / an Avenu Insights & Analytics Company Note:

California Government Code, Section 43605 sets the debt limit at 15%. The Code section was enacted prior to the change in basing assessed value to full market value when it was previously 25% of market value. 15% of 25% is the equivalent of 3.75% of Total Taxable Valuation. Amounts are calculated accordingly.

City of East Palo Alto, California
Computation of Legal Bonded Debt Margin
Last Ten Fiscal Years
255
125
Fiscal Year Population (1)
City
Unemployment
Rate (2)
City Per Capita
Personal Income
(3)
County
Unemployment
Rate (2)
County Per Capita
Personal Income
(3)
Public School
Enrollment (4)
2014-15 29,137 5.10% 20,438 3.20% 77,414 4,216
2015-16 30,545 5.40% 20,785 3.40% 78,728 4,058
2016-17 30,340 4.80% 21,785 3.00% 82,517 3,853
2017-18 30,917 2.70% 23,171 2.20% 87,767 3,632
2018-19 30,499 1.80% 24,440 1.70% 92,576 3,436
2019-20 30,794 11.90% 25,419 11.10% 96,285 3,269
2020-21 30,350 8.97% 27,437 6.84% 103,929 2,993
2021-22 28,963 2.30% 31,515 1.70% 119,375 2,793
2022-23 28,586 2.90% 36,759 2.70% 139,239 2,640
2023-24 29,078 3.30% 41,158 2.90% 155,903 2,555
Source: San Mateo County Assessors, MuniServices, LLC / an Avenu Insights & Analytics Company Source: 2022-23 and prior, previously published CAFR Report The California Department of Finance demographics estimates now incorporate 2010 Census counts as the benchmark.

Notes:
(1)
(2)
(3)
(4)
Income Data is provided by the U.S. Census Bureau
Student Enrollment reflects the total number of students enrolled in the Ravenswood Elementary School.

City of East Palo Alto, California
Last Ten Fiscal Years
Demographic and Economic Statistics
Population Projections are provided by the California Department of Finance Projections.

Unemployment Data provided by Employment Development Department Bureau of Labor Statistics. 26,000
27,000
28,000
29,000
30,000
31,000
32,000
City Population
0%
5%
10%
15%
20%
25%
30%
256
126
Fiscal Increment Payments to
Year ( Gross RPTTF) Principal Interest Total Coverage PFA Principal Interest Total Coverage 2015 7,635,260 620,000 1,325,004 1,945,004 3.9 1,415,138 670,000 745,138 1,415,138 1.0 2016 8,369,650 655,000 1,037,717 1,692,717 4.9 15,242,245 ³ 14,880,000 362,245 15,242,245 1.0 2017 9,214,713 795,000 732,249 1,527,249 6.0 - - - - -
2018 10,573,336 865,000 703,178 1,568,178 6.7 - - - - - 2019 14,617,765 885,000 686,850 1,571,850 9.3 - - - - - 2020 ⁴ 13,545,644 900,000 659,550 1,559,550 8.7 - - - - - 2021 14,396,863 935,000 618,175 1,553,175 9.3 - - - - - 2022 14,414,377 975,000 570,425 1,545,425 9.3 - - - - - 2023 17,258,476 1,030,000 520,300 1,550,300 11.1 - - - - - 2024 17,167,429 1,085,000 407,425 1,492,425 11.5
Notes:
¹ Proceeds from the 2005 East Palo Alto Public Financing Authority revenue bonds were used to purchase the outstanding 1999 Tax Allocation bonds (TABs) on October 01, 2009. The 1999 TABS were held with a fiscal agent and recorded as an asset in the Public Financing Authority (PFA); a blended component unit.

The 2015 Refunding Bonds were issued to defease the 1999, 2003A, and 2003B TABS and subsequently redeem the 2005 PFA Revenue Bonds.
² Effective January 10, 2012, tax increments of the former Redevelopment Agency are deposited into a a Redevelopment Property Tax Trust Fund (RPTTF) and are only available to pay approved, enforceable obligations of the former Redevelopment Agency. ³ Payments from 1999 TABS includes proceeds from 2015 Refunding Bonds paid to PFA.

Total increment includes approximately $2.3 million in supplemental tax payments for prior activity.

RDA Tax Allocation (Refunding) Bonds Public Financing Authority (PFA) Revenue Bonds¹ Debt Service Debt Service
Last Ten Fiscal Years
257
127
Business Name Number of
Employees
Percent of Total
Employment
Number of
Employees
Percent of Total
Employment
Amazon Web Services 1,613 11.28%
Ravenswood Family Health Center* 334 2.34% 183 1.22%
Ikea* 270 1.89% 331 2.21%
Ravenswood City School District 253 1.77% 551 3.67%
Four Seasons Hotel - Silicon Valley 214 1.50% 296 1.97% Home Depot 180 1.26% 156 1.04%
City of East Palo Alto* 120 0.84% 106 0.71%
Target 0.00%
DLA Piper LLP 110 0.77% 216
Eastside College Preparatory School 87 0.61% 72
US Post Office 0.00%
NTT i3 111 0.74%
Nordstrom Rack 45 70 0.47%
Ropes and Gray Law Firm 0.00%
Total Top Employers 3,226 22.25% 2,092 13.95%
Total City Employment (1) 14,300 15,000
Source: MuniServices, LLC / Avenu Insights & Analytics
Source: 2014-15 count is from prior published ACFR
Results based on direct correspondence with city’s local businesses. *Includes full and part time.
(1) Total City Labor Force provided by EDD Labor Force Data.

Note: Amazon Web Services has not responded with the employee headcount. Prior year number applied. 2023-24 2014-15
Principal Employers
Last Fiscal Year and Nine Years ago
258
128
Function 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-20 2020-21 2021-22 2022-23 2023-24 General Government 25.1 21.0 23.0 23.0 23.0 24.0 24.0 21.0 21.0 22.0 Public Safety 44.0 45.5 45.5 46.0 46.3 47.2 48.2 48.2 49.6 49.6 Police
Officers 36.0 36.0 36.0 36.5 37.3 36.5 37.5 37.5 38.4 38.4 Civilians 8.0 9.5 9.5 9.5 9.0 10.7 10.7 10.7 11.3 11.3
Public Works¹ - 19.0 19.0 19.0 19.0 19.0 20.3 21.5 21.5 21.5 Culture & Recreation² - 4.4 4.4 4.4 4.2 4.2 3.7 8.2 8.2 7.2 Community Development 36.0 15.0 17.0 19.9 20.5 20.5 17.5 19.0 20.0 20.0 Administration 8.0 4.0 4.0 5.9 6.5 6.5 3.5 4.0 4.0 4.0
Economic Development/Redevelopment Agency - - - - - - - - - - Planning Division 3.0 3.0 4.0 4.0 4.0 4.0 4.0 4.0 5.0 5.0 Building Services Division 5.0 6.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 Housing Division ( includes Rent Stabilization) 2.0 2.0 2.0 3.0 3.0 3.0 3.0 4.0 4.0 4.0 Engineering Services (To Public Works FY2015-16) 6.0 - - - - - - - - - Maintenance Division (To Public Works FY2015-16) 12.0 - - - - - - - - - Administration Division - 2.0 2.0 2.0 2.0 2.0 4.5 4.5 4.5 4.5 Engineering Services Division - 5.0 5.0 5.0 5.0 5.0 3.8 5.0 5.0 5.0 Maintenance Division - 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 Administration - 1.8 1.0 1.0 1.0 1.0 1.0 3.0 3.0 2.0
Recreation - 1.0 1.0 1.0 1.0 1.0 0.9 2.9 2.9 2.9
Senior Services - 1.6 2.4 2.4 2.2 2.2 1.8 2.3 2.3 2.3
Total 105.1 104.9 108.9 112.3 112.9 114.8 113.6 117.8 120.2 120.20 Source: City of East Palo Alto Adopted Budget ¹ Public Works transferred to Community Development during Great Recession. ² Culture and Recreation transferred to General Government during Great Recession.

City of East Palo Alto, California
Number of Positions - City Government by Function
Last Ten Fiscal Years
259
129
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 Function
Public Safety
Calls for Service 28,253 31,312 30,745 28,087 29,375 26,344 24,969 20,855 23,701 24,254 Number of serious crimes ¹ 387 174 116 319 164 129 172 359 216 179 Number of burglaries 180 93 97 78 82 64 92 80 43 27
Number of assaults 306 284 239 238 276 323 292 284 315 369 Number of auto thefts reported 132 393 86 101 192 110 212 158 150 141 Number of homicides 6 4 1 1 3 2 7 6 3 2
Number of robberies 65 77 48 69 57 49 65 55 63 50
Number of physical arrests 965 1,462 1,433 984 904 602 481 465 395 396 Public Works
Streets
Street Resurfacing (lane miles) 0.8 - - - - 2 2.5 6.3 6.2 - Potholes repaired 61 94 98 159 152 159 89 75 81 133
Engineering
Encroachment permits 57 109 67 - 44 101 150 87 92 119
Culture & recreation
Facility Rentals 24 41 67 58 55 101 24 106 242 558
Senior Lunches 3,471 6,662 9,112 6,509 3,094 5,742 8,548 10,155 6,075 5,640 Senior Transportation 3,012 3,020 2,996 2,606 2,349 2,041 - 7,854 1,744 1,828 Community Event participants 3,300 2,600 3,762 3,600 3,820 426 - 1,700 2,540 6,000 Fit Zone/Clean Zone Participants 6,300 1,116 2,655 194 500 130 - - 75 125 Community Development
Building Permits
Residential - Count 297 391 590 506 442 397 397 352 407 455 Commercial Count 49 43 60 29 31 31 44 34 37 43
Transportation 2
Shuttle Passengers
Caltrain/Commuter Shuttle 85,259 28,901 7,978 - - - - - - - Shopper Shuttle (now Redwood City #4) - - - - - - - - - - Youth Shuttle (now MidTown #3) - - - - - - - - - -
Weekend Shuttle - - - - - - - - - -
Water Service³
Hydrant Breaks 8 12 3 4 7 15 - 10 12 9
Water main breaks 18 19 7 3 13 16 10 14 21 10
Average daily consumption per family (in gallons) 201.0 200.0 217.0 222.7 258.0 226.0 229.0 258.0 270.8 282.2 Notes: ¹ Crimes against a person (homicide, rape, robbery, assault) ² Services reduced in FY2014-15 and all routes eliminated September 2016. ³ Data obtained from American Water/Veolia Companies serving City water customers comprising approximately 90% of all water customers in East Palo Alto.

Source: City Departments
City of East Palo Alto, California
Operating Indicators by Function
Last Ten Fiscal Years
260
130
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-20 2020-21 2021-22 2022-23 2023-24

FUNCTION
General Government
Public Works/Community Development 1 1 1 1 1 1 1 1 1 1
Community Development - Housing 1 1 1 1 1 1 1 1 1 1
Highways & Streets
Streets (miles) 38 38 38 38 38 38 38 38 38 38
Streetlights 846 846 846 846 846 846 846 846 846 846
Traffic Signals 14 14 14 14 14 14 14 14 14 14
Culture & recreation
Parks (number of parks) 6 6 6 6 6 6 6 6 6 6
Parks acreage (acres) 25 25 25 25 25 25 25 25 25 25
Senior Center 1 1 1 1 1 1 1 1 1 1
Cooley Landing Learning Center - - 1 1 1 1 1 1 1 1
Water Service¹
Water pipelines (miles) 39 39 39 39 39 39 39 40 40 40
Fire hydrants 283 290 330 330 330 330 330 272 325 325
Maximum daily capacity 2.0 2.0 2.0 3.0 3.0 3.0 3.0 1.5 3.0 3.0 (millions of gallons per day)
Notes: ¹ Data obtained from American Water/Veolia Companies serving City water customers comprising approximately 90% of allwater customers in East Palo Alto.

Source: Various city departments
City of East Palo Alto, California
Capital Asset Statistics by Function
Last Ten Fiscal Years
261
East Palo Alto, California
Single Audit Reports
For the year ended June 30, 2024
262
City of East Palo Alto
Single Audit Report
For the Year Ended June 30, 2024
Table of Contents
Page
Independent Auditor’s 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...................................................................1 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance....................................................3 Schedule of Expenditures of Federal Awards ......................................................................................................6 Notes to the Schedule of Expenditures of Federal Awards................................................................................7 Schedule of Findings and Questioned Costs ........................................................................................................8 263
1 Independent Auditor’s 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
To the honorable members of the City Council
of the City of East Palo Alto, California
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of East Palo Alto, California (City), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated December 23, 2024.

Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 264 2 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City 's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Menlo Park, California
December 23, 2024
265
Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
To the honorable members of the City Council
of the City of East Palo Alto, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of East Palo Alto’s (the City) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2024. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2024.

Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City’s federal programs.
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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 266 4 Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. 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, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, 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 City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. 267
5 Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated December 23, 2024, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is 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 basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Menlo Park, California
December 23, 2024
268
6 City of East Palo Alto
Notes to the Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2024
Assistance
Listing Pass-through Federal
Federal Grantor / Pass-through Grantor / Program or Cluster Title Number Number Expenditures U.S Department of Housing and Urban Development:

Direct Programs
Economic Development Initiative, Community Project Funding Grants 14.251 B-23-CP-CA-0227 $ 72,296 Subtotal Economic Development Initiative, Community Project Funding Grants 72,296 Total U.S Department of Housing and Urban Development
U.S. Department of Transportation:

Passed through State of California Department of Transportation (CalTrans) Highway Planning and Construction 20.205 COOP 04-2544 A1 245,272 Highway Planning and Construction 20.205 HSIPSL-5438(019) 142,110 Subtotal Highway Planning and Construction 387,382
Total U.S. Department of Transportation 387,382
U.S. Department of Health and Human Services:

Aging Cluster
Passed through County of San Mateo Area Agency on Aging Congregate lunch program/transportation 93.045 R079795E 40,650 Congregate lunch program/transportation 93.044 R079795E 4,901 Congregate lunch program/transportation 93.044 R079428F 3,201 Subtotal Aging Cluster 48,752
Total U.S. Department of Health and Human Services 48,752 U.S. Department of Homeland Security
Direct Program
Distaster Grant - Public Assistance (Presidentially Declared Disasters) 97.036 4683DR-CA 134,063 Passed through State of California Governor's Office of Emergency Services Hazard Mitigation Grant 97.039 DR-4344-541-93R 10,581
Total U.S. Department of Transportation 144,644
Total Federal Financial Assistance $ 653,074
See accompanying Notes to Schedule of Expenditures of Federal Awards 269
7 City of East Palo Alto
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2024
A. Summary of Significant Accounting Policies
Expenditures reported in the schedule are reported on the modified accrual basis of accounting.

No federal assistance has been provided to a subrecipient. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

B. Basis of Presentation
The accompanying schedule of expenditures of federal awards (schedule) includes the federal award activity of the City under programs of the federal government for the year ended June 30, 2024. The information is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or cash flows of the City.

C. Pass-Through Entities’ Identifying Number
When federal awards were received from a pass-through entity, the Schedule shows, if available, the identifying number assigned by the pass-through entity. When no identifying number is shown, the City determined that no identifying number is assigned for the program or the City was unable to obtain an identifying number from the pass-through entity.

D. Indirect Costs
The City did not elect to use the 10% de minimis indirect cost rate. 270
8 City of East Palo Alto
Notes to the Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2024
Section I - Summary of Auditor's Results
Unmodified
Internal control over financial reporting:
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? None noted
Noncompliance material to the financial statements noted? No Internal control over major programs:
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? None noted
Type of auditor’s report issued on compliance for major programs Unmodified No
Identification of major programs:

Assistance Listing
Number(s) Name of Federal Program or Cluster Expenditures

20.205 Highway Planning and Construction $ 387,382
Total Expenditures of All Major Federal Programs $ 387,382 Total Expenditures of Federal Awards $ 653,074
Percentage of Total Expenditures of Federal Awards 59%
Dollar threshold used to distinguish between type A and type B programs $ 750,000 Auditee qualified as low-risk auditee Yes
Financial Statements
Types of auditors’ report issued
Any audit findings disclosed that are required to be reported in accordance with Uniform Guidance 200.516(a)?
Federal Awards
271
City of East Palo Alto
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2024
9 Section II – Current Year Findings
A. Financial Statement Audit
No current year financial statement findings.

B. Federal Award Program Audit
No current year federal award program audit findings.

Section III- Prior Year Findings
A. Financial Statement Audit
No prior year financial statement findings.

B. Federal Award Program Audit
No prior year federal award program audit findings.
272
273
274
275
276
277
City of East Palo Alto
Measure HH Fund
Financial Statements
For the year ended June 30, 2022
Table of Contents
Measure C Fund
East Palo Alto, California
Financial Statements and
Independent Auditor’s Reports
For the year ended June 30, 2024
278
City of East Palo Alto
Measure C Fund
Financial Statements
For the Year Ended June 30, 2024
Table of Contents
Table of Contents
Independent Accountants’ Report ...............................................................................................................................1 Balance Sheet ................................................................................................................................................................... 4 Statement of Revenues, Expenditures and Changes in Fund Balances .................................................................. 5 Notes to Financial Statements ....................................................................................................................................... 6 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 ..................... 9 279
1 Independent Auditor’s Report
To the honorable members of the City Council
of the City of East Palo Alto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of Measure C Special Revenue Fund (Fund), a nonmajor special revenue fund of the City of East Palo alto (City) as of and for the year ended June 30, 2024, and the related notes to the financial statements, as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of the Fund of the City, as of June 30, 2024, and the changes in financial position, 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 (Government Auditing Standards). 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 audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matter
The financial statements present only the Fund and do not purport to, and do not, present fairly the financial position of the City as of June 30, 2024, the changes in its financial position, or, where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the 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.

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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 280 2 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 opinions. 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.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 23, 2024 on our consideration of the Fund 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 Fund 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 Fund of the City’s internal control over financial reporting and compliance.

Menlo Park, California
December 23, 2024
282
City of East Palo Alto
Measure C Fund
Balance Sheet
June 30, 2024
Balance Sheet
4 Public Violence
Safety Prevention
Program Program
ASSETS:

Cash and Investments $ - $ 18,940
Accrued interest - -
Total assets $ - $ 18,940
LIABILITIES AND FUND BALANCES:

Accounts payable and accrued liabilities - 18,940
Total liabilities - 18,940
FUND BALANCES:

Restricted - -
Total fund balances - -
Total liabilities and fund balances $ - $ 18,940
Measure C
Special Revenue
Fund
See accompanying notes to the financial Statements.
283
City of East Palo Alto
Measure C Fund
Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2024
Statement of Revenues, Expenditures and Changes in Fund Balances 5 Public Violence
Safety Prevention
Program Program
REVENUES:

Interest income $ - $ 1,199
Total revenues - 1,199
EXPENDITURES:

Administration:

General government - -
Program expenditures:

Public safety 32,101 -
Violence prevention - 107,548
Total expenditures 32,101 107,548
REVENUES OVER (UNDER) EXPENDITURES: (32,101) (106,349)
FUND BALANCES:

Beginning of year 32,101 106,349
End of year $ - $ -
Measure C
Special Revenue
Fund
See accompanying notes to the financial Statements.
284
City of East Palo Alto
Measure C Fund
Notes to Financial Statements
For the Year Ended June 30, 2024
6 Notes to Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
All transactions of the Measure C Special Revenue Fund (Measure C Fund) of the City of East Palo Alto, California (City), are included as a separate special revenue fund in the basic financial statements of the City. The Measure C Fund accounts for the City’s share of revenues earned and expenditures incurred under the City’s Measure C parcel tax. The accompanying financial statements are for the Measure C Fund only and are not intended to fairly present the financial position or results of operations of the City.

B. Basis of Accounting and Measurement Focus
The accompanying financial statements are prepared on the modified accrual basis of accounting.

Revenues are generally recorded when measurable and available, and expenditures are recorded when the related liabilities are incurred.

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus, wherein only current assets and current liabilities generally are included on the balance sheet. Operating statements of governmental funds present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.

C. Fund Accounting
The operations of the Measure C Fund are accounted for in a separate special revenue fund. The fund is a separate accounting entity with a set of self-balancing accounts which comprise the assets, liabilities, fund equity, revenues, and expenses.

D. 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. 285
City of East Palo Alto
Measure C Fund
Notes to Financial Statements
For the Year Ended June 30, 2024
7 2. CASH AND INVESTMENTS
Measure C monies are pooled with the City’s cash, cash equivalents, and investments. The City pools cash resources from all funds to facilitate the management of cash. Cash and cash equivalents are considered amounts on hand, in demand deposits, and short-term investments with a maturity date within three months of the date acquired by the City and are presented as "Cash and Investments". The City invests in two external investment pools, the State of California Local Agency Investment Fund (LAIF) and the San Mateo County Investment Fund (County Pool).

All pooled cash and investments held by the City are considered cash and cash equivalents because LAIF and the County Pool are used essentially as demand deposits from the standpoint of the City. Information about the City's Cash and Investments is disclosed in the City's Comprehensive Annual Financial Report.

As of June 30, 2024, the Measure C Fund has the following cash and investment activity:

Cash and investments $ 18,940
Investments are stated at fair value using the aggregate method, resulting in the following investment income allocated to the Measure C Fund:

Interest income $ 1,199
Unrealized gain on change in fair value of investments - $ 1,199

3. MEASURE C FUNDS
In November 2006, the Voters approved Measure C, a special parcel tax to fight crime through community prevention and law enforcements programs. The proceeds of the parcel tax are to be used for enhancing services and programs to prevent violence and crime in East Palo Alto. The tax was enacted for a ten-year period ending June 30, 2017.

Tax proceeds may only be used as part of the following integrated programs of violence prevention and public safety intervention, in accordance with the following specific purposes:
(1) Community and neighborhood policing, training, crime suppression and investigations. (2) Violence Prevention services with an emphasis on youth and families. Such services include preventive social services provided by the City of East Palo Alto or by adding capacity to community-based nonprofit programs with a focus on youth, ex-felons, domestic violence, and support for senior citizens. (3) Not less than 1% or more than 3% of funds appropriated to each police service or social service program shall be set aside for the purpose of independent evaluation of the program, including the number of people served and the rate of crime or violence reduction achieved. 286
City of East Palo Alto
Measure C Fund
Notes to Financial Statements
For the Year Ended June 30, 2024
8 3. MEASURE C FUNDS, Continued
(4) Mandated apportionment of funds: Of the total proceeds spent on programs enumerated in this section 3, Paragraphs 1 and 2, not less than 50% of such proceeds shall be directed at violence prevention programs with emphasis on youth, ex-felons, and senior protection.

The City Council approved that 50% of Measure C funding is designated to the Police Department for Public Safety and the remaining 50% of funding is used for Crime Prevention Programs.

C. Measure C Grant Commitments
The City awards Measure C program funds through a grant process, and commits funds to various agencies. As of June 30, 2024, the City has expended all funds, and there is no unexpended commitment. 287
9 Independent Auditor’s 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
To the honorable members of the City Council
of the City of East Palo Alto, California
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the Measure C Special Revenue Fund (Fund) of City of East Palo Alto, California (City), as of and for the year ended June 30, 2024, and the related notes to the financial statements, and have issued our report thereon dated December 23, 2024.

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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 288 10 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

Menlo Park, California
December 23, 2024
289
City of East Palo Alto
Measure HH Fund
Financial Statements
For the year ended June 30, 2022
Table of Contents
Measure HH Fund
East Palo Alto, California
Financial Statements and
Independent Auditor’s Reports
For the year ended June 30, 2024
290
City of East Palo Alto
Measure HH Fund
Financial Statements
For the Year Ended June 30, 2024
Table of Contents
Table of Contents
Independent Accountants’ Report ..............................................................................................................................1 Balance Sheet .................................................................................................................................................................. 4 Statement of Revenues, Expenditures and Changes in Fund Balances ................................................................. 5 Notes to Financial Statements ...................................................................................................................................... 6 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on Audit of Financial Statements Performed in Accordance with Government Auditing Standards...........................................................................................................................................................................9 291
1 Independent Auditor’s Report
To the honorable members of the City Council
of the City of East Palo Alto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of Measure HH Special Revenue Fund (Fund), a nonmajor special revenue fund of the City of East Palo alto (City) as of and for the year ended June 30, 2024, and the related notes to the financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects the financial position of the Fund of the City, as of June 30, 2024, and the changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter
The financial statements present only the Fund, and do not purport to, and do not, present fairly the financial position of the City, as of June 30, 2024, the changes in its financial position, or, where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 292 2 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 opinions. 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.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 23, 2024 on our consideration of the Fund 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 Fund 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 Fund of the City’s internal control over financial reporting and compliance.

Menlo Park, California
December 23, 2024
294
City of East Palo Alto
Measure HH Fund
Balance Sheet
June 30, 2024
4 Balance Sheet
Measure HH
Special Revenue
Fund
ASSETS:

Cash and Investments $ 6,085,231
Accounts Receivable $ 23,306
Accrued interest 45,949
Total assets $ 6,154,486
LIABILITIES AND FUND BALANCES:

Accounts payable and accrued liabilities 37,952
Total liabilities 37,952.00
Fund Balances:

Restricted 6,116,534
Total fund balances 6,116,534
Total liabilities and fund balances $ 6,154,486
See accompanying notes to the financial Statements.
295
City of East Palo Alto
Measure HH Fund
Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2024
5 Statement of Revenues, Expenditures and Changes in Fund Balances Measure HH
Special Revenue
Fund
REVENUES:

Parcel Tax - Measure HH $ 1,677,265
Interest income 324,789
Total revenues 2,002,054
EXPENDITURES:

Administration:

General government 148
Commuity development 209,353
Program expenditures:

Job Train and First Source Hiring 646,339
965 Weeks affordable housing -
Total expenditures 855,840
REVENUES OVER (UNDER) EXPENDITURES: 1,146,214
FUND BALANCES:

Beginning of year 4,970,320
End of year $ 6,116,534
See accompanying notes to the financial Statements.
296
City of East Palo Alto
Measure HH Fund
Notes to Financial Statements
For the Year Ended June 30, 2024
6 Notes to Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
All transactions of the Measure HH Special Revenue Fund (Measure HH Fund) of the City of East Palo Alto, California (City), are included as a separate special revenue fund in the basic financial statements of the City. The Measure HH Fund accounts for the City’s share of revenues earned and expenditures incurred under the City’s Measure HH parcel tax. The accompanying financial statements are for the Measure HH Fund only and are not intended to fairly present the financial position or results of operations of the City.

B. Basis of Accounting and Measurement Focus
The accompanying financial statements are prepared on the modified accrual basis of accounting.

Revenues are generally recorded when measurable and available, and expenditures are recorded when the related liabilities are incurred.

C. Fund Accounting
The operations of the Measure HH Fund are accounted for in a separate special revenue fund. The fund is a separate accounting entity with a set of self-balancing accounts which comprise the assets, liabilities, fund equity, revenues, and expenses.

D. 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. 297
City of East Palo Alto
Measure HH Fund
Notes to Financial Statements
For the Year Ended June 30, 2024
7 2. CASH AND INVESTMENTS
Measure HH monies are pooled with the City's cash, cash equivalents, and investments. The City pools cash resources from all funds to facilitate the management of cash. Cash and cash equivalents are considered amounts on hand, in demand deposits, and short-term investments with a maturity date within three months of the date acquired by the City and are presented as "Cash and Investments". The City invests in two external investment pools, the State of California Local Agency Investment Fund (LAIF) and the San Mateo County Investment Fund (County Pool).

All pooled cash and investments held by the City are considered cash and cash equivalents because LAIF and the County Pool are used essentially as demand deposits from the standpoint of the City.

Information about the City's Cash and Investments is disclosed in the City's Comprehensive Annual Financial Report.

As of June 30, 2022, the Measure HH Fund had the following cash and investment activity:

Cash and investments $ 6,085,231
Investments are stated at fair value using the aggregate method, resulting in the following investment income allocated to the Measure HH Fund:

Interest income $ 217,485
Unrealized gain on change in fair value of investments 107,304 $ 324,789

3. MEASURE HH FUNDS
In November 2018, the voters approved Measure HH, a special parcel tax to combat community displacement through affordable housing programs and assets, and provide programs for facilitating community access to job opportunities. The proceeds of the parcel tax are to be used for affordable and supportive housing programs, programs that facilitate access to job opportunities in the S.T.E.M. sectors, and building trades and strengthen First Source Hiring.

Revenue generated from this special tax can be used only for the following purposes:
• to create and maintain affordable and supportive housing programs, with an emphasis on the creation of net new housing;
• to create and maintain programs that facilitate access to job opportunities for East Palo Alto residents in the science, technology, engineering, and mathematics (STEM) sectors, building trades, and to strengthen the City's First Source Hiring Program, and; • to pay for City staff and overhead costs to administer the ordinance and provide an annual report.

Revenue generated from this special tax must be used in the following manner:
• a minimum of 35% of the revenue must be used exclusively for the construction of new, affordable housing stock.
298
City of East Palo Alto
Measure HH Fund
Notes to Financial Statements
For the Year Ended June 30, 2024
8 3. MEASURE HH FUNDS, CONTINUED
• a maximum of 15% of the revenue may be used for City staff and overhead costs to administer the ordinance and to provide an annual report. • the remaining proceeds may be used for any of the other purposes specified in the ordinance at the discretion of the City Council
The tax revenue cannot be used for any other purpose.

The authority to levy the tax imposed by Chapter 3.70 shall not expire unless ended by the voters of East Palo Alto. Measure HH authorizes the City Council to amend the parcel tax without subsequent voter approval, provided such amendment does not increase the amount of tax paid by any taxpayer in excess of the rate set forth in the Measure or change the allowed uses for the tax revenues.

A. Measure HH Expenditures
During fiscal year 2024, the City incurred $209,501 and $646,339 in administrative activities and program activities, respectively.
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9 Independent Auditor’s 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
To the honorable members of the City Council
of the City of East Palo Alto, California
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of Measure HH Special Revenue Fund (Fund) of City of East Palo Alto, California (City), as of and for the year ended June 30, 2024, and the related notes to the financial statements and have issued our report thereon dated December 23, 2024.

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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 300 10 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

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December 23, 2024
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302
303
304
305
306
Independent Accountant’s Report on Applying Agreed-Upon Procedures Related To The Article XIII-B Appropriations Limit Calculation For the Fiscal Year Ended June 30, 2025
307
City of East Palo Alto
Appropriations Limit Schedule
For the Year Ended June 30, 2025
Table of Contents
Independent Accountant’s Report ........................................................................................................................ 1 Appropriations Limit Schedule ............................................................................................................................. 3 Notes to Appropriations Limit Schedule.............................................................................................................. 4 308
1 Independent Accountant’s Report
To the Honorable Mayor and
City Council of the City of East Palo Alto
East Palo Alto, California
We have performed the procedures enumerated below, on the Appropriations Limit Calculation of the City of East Palo Alto, California (City) (the specified party), prepared in accordance with Article XIII-B of the California Constitution for the fiscal year ended June 30, 2025. The City’s management is responsible for the Appropriate Limit Calculation.

The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting the City in evaluating its Appropriations Limit Calculation and we will report on findings based on the procedures performed. Additionally, the City agreed to and acknowledged that the procedures performed are appropriate to meet their purposes. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and the associated findings are as follows:

1. We obtained the completed worksheets setting forth the calculations necessary to establish the City’s appropriations limit and compared the 2024-25 limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City’s City Council. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote of the City’s City Council.

Finding: No exceptions were found as a result of this procedure.

2. We added last year's limit to the annual adjustment amount and compared the resulting amount to the 2024-25 appropriations limit.

Finding: No exceptions were found as a result of this procedure.

3. We compared the current year information to the worksheets described in No. 1 above and to information provided by the California State Department of Finance.

Finding: No exceptions were found as a result of this procedure.

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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 309 2 We agreed the prior year appropriations limit to the prior year appropriations limit adopted by the City’s City Council.

Finding: No exceptions were found as a result of this procedure.

We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on the City’s Appropriation Limit Calculation. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by Article XIII-B of the California Constitution.

This report is intended solely for the information and use of the City Council, and management of the City and is not intended to be and should not be used by anyone other than these specified parties.

Menlo Park, California
December 23, 2024
310
City of East Palo Alto
Appropriations Limit Schedule
For the Year Ended June 30, 2025
3 Source
A. Appropriations limit for the FY 2023-24 $ 39,354,338 Prior year schedule B. Calculation Factors:

1. Population increase % 0.9950 State Department of Finance

2. Inflation increase % 1.0362 State Department of Finance

3. Total adjustment factor % 1.0310 B1 x B2
C. Annual adjustment Decrease 1,220,732 [(B3-1)A)]
D. Other Adjustments:

Loss responsibility (-) - N/A
Transfers to private (-) - N/A
Transfers to fees (-) - N/A
Assumed responsibility (+) - N/A
E. Total Adjustments 1,220,732 (C+D)
F. Appropriations limit for FY 2024-25 $ 40,575,070 (A+E) 311
City of East Palo Alto
Notes to Appropriations Limit Schedule
For the Year Ended June 30, 2025
4 1. PURPOSE OF LIMITED PROCEDURES REVIEW
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to this agreed upon procedures engagement.

2. METHOD OF CALCULATION
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-1987, adjusted for the inflation and population factors discussed in Notes 3 and 4 below.

3. INFLATION FACTORS
A California governmental agency may use as its inflation factor either the annual percentage change in the 4th quarter per capita personal income (which percentage is supplied by the State Department of Finance), or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City of East Palo Alto for the fiscal year 2024-2025 represents the percentage change per capita personal income.

4. POPULATION FACTORS
A California governmental agency may use as its population factor either the annual percentage change of the jurisdiction’s own population, or the annual percentage change in population in the County where the jurisdiction is located. The factor adopted by the City of East Palo Alto for fiscal year 2024-2025 represents the population change in San Mateo County.

5. OTHER ADJUSTMENTS
A California government agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. There were no adjustments made for the fiscal year ending June 30, 2025.
312
1 December 23, 2024
To the honorable members of the City Council
of the City of East Palo Alto, California
We have audited the financial statements of City of East Palo Alto, California (City) as of and for the year ended June 30, 2024, and have issued our report thereon dated December 23, 2024. Professional standards require that we advise you of the following matters relating to our audit.

Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards and our Compliance Audit under the Uniform Guidance As communicated in our letter dated May 21, 2024 our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America and to express an opinion on whether the City complied with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City major federal programs. Our audit of the financial statements and major program compliance does not relieve you or management of its respective responsibilities.

Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

Accordingly, as part of our audit, we considered the internal control of the City solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

Our responsibility, as prescribed by professional standards as it relates to the audit of the City major federal program compliance, is to express an opinion on the compliance for each of the City major federal programs based on our audit of the types of compliance requirements referred to above. An audit of major program compliance includes consideration of internal control over compliance with the types of compliance requirements referred to above as a basis for designing audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, as a part of our major program compliance audit, we considered internal control over compliance for these purposes and not to provide any assurance on the effectiveness of the City’s internal control over compliance.

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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 313 2 We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process.

However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

We have provided our comments regarding internal controls during our audit in our Independent Auditor’s 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 dated December 23, 2024. We have also provided our comments regarding compliance with the types of compliance requirements referred to above and internal controls over compliance during our audit in our Independent Auditor’s Report on Compliance with Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance dated December 23, 2024.

Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you.

Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence.

Significant Risks Identified
As stated in our auditor’s report, professional standards require us to design our audit to provide reasonable assurance that the financial statements are free of material misstatement whether caused by fraud or error.

In designing our audit procedures, professional standards require us to evaluate the financial statements and assess the risk that a material misstatement could occur. Areas that are potentially more susceptible to misstatements, and thereby require special audit considerations, are designated as “significant risks.” • Estimates – Generally Accepted Auditing Standards require a presumed risk of management bias when assumptions are used to calculate significant account balances, which for the City applies to pension and claims.
• Our audit standards require that we perform audit procedures relating to management override of internal controls and therefore we performed certain audit procedures in response to that risk. • We performed audit procedures relating to revenue recognition and therefore we selected grant revenues and sales tax revenue as the revenues streams that we will perform audit procedures in the current fiscal year.

Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City is included in Note 1 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during year. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
314
3 Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments.

The most sensitive accounting estimates affecting the financial statements are related to the City’s pension liabilities. We evaluated the key factors and assumptions used to develop these estimates and determined that it is reasonable in relation to the basic financial statements taken as a whole.

Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the City’s financial statements relate to the discount rate used by the City to estimate its pension liabilities. A disclosure has been made about the sensitivity of those pension liabilities where an increase or decrease of 1% will have significant impact on this estimate.

Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the audit.

Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. Uncorrected misstatements or matters underlying those uncorrected misstatements could potentially cause futureperiod financial statements to be materially misstated, even though the uncorrected misstatements are immaterial to the financial statements currently under audit. There were no uncorrected or corrected missstatements identified as a result of our audit procedures.

Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the financial statements or the auditor’s report. No such disagreements arose during the course of the audit.

Circumstances that Affect the Form and Content of the Auditor’s Report For purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditor’s report. We did not identify any circumstances that affect the form and content of the auditor’s report.
315
4 Representations Requested from Management
We have requested certain written representations from management which are included in the management representation letter dated December 23, 2024.

Management’s Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.

Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating conditions affecting the entity, and operating plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City’s auditors.

Other Information Included in Annual Reports
Pursuant to professional standards, our responsibility as auditors for other information, whether financial or nonfinancial, included in the City’s annual reports, does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information.

Additionally, in accordance with such standards, we have read the information and considered whether such information, or the manner of its presentation, was materially inconsistent with its presentation in the financial statements.

Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements.

Group Audits
The financial statements include the financial statements of City and the City of East Palo Alto Public Financing Authority (Authority). For the purposes of our audit, we consider the City to be a significant component of the consolidated financial statements; however we do not consider the Authority to be a significant component of the financial statements. Consistent with the audit of the financial statements as a whole, our audit included obtaining an understanding of the Authority and their environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements of the Authority and completion of further audit procedures.
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5 This report is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.

Menlo Park, California
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POLICY AND ACTION ITEM 13.2

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Amy Chen, Community Development Director
Tim Davis, Director, Housing Consulting Services, HEART of SMC SUBJECT: Implementation of 2020 Local Preference Policy Recommendation
Adopt a resolution:

1. Adopting an updated Local Preference Policy that applies to City subsidized affordable housing units, density bonus units, and units produced through the City’s Inclusionary Housing Ordinance;

3. Updating the Local Preference Policy to be non-durational and applied only to the extent that other funding sources for the project permit such preferences.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority: Promote Housing, Economic and Workforce Development In addition, this recommendation is aligned with the following goal of the 2024-2028 Affordable Housing Strategy: Goal 4: Prevent displacement of East Palo Alto Residents, Policy 4:13 Implement an Effective and Fair Housing Compliant Local Preference Policy. 318
POLICY AND ACTION ITEM 13.2
Executive Summary
In 2020, the City adopted a Local Preference Policy (Policy) that, in determining eligibility for occupancy of City subsidized affordable housing units, density bonus units, and development projects subject to the City’s Inclusionary Housing Ordinance, prioritizes people who live or work in East Palo Alto, or who were displaced from a residence in East Palo Alto. As part of the effort to implement that policy, staff recommend updating the Policy to include a non-durational, tierbased system, applied only to the extent that other funding sources for the project permit such preferences. In addition to adopting a new resolution updating the Policy, staff are also seeking approval to direct the City Manager to adopt guidelines to administer the Policy. This update to the Policy is especially timely with the construction of the 965 Weeks: Colibri Commons project, where leasing is expected to be complete by the end of 2025.

Background
The City’s 2019-2023 Affordable Housing Strategy included a goal to establish a Local Preference policy to prevent displacement and improve access to affordable housing in East Palo Alto. To draft this policy, during 2018 and 2019, staff convened a Local Preference Working Group comprising housing experts, community-based organizations and affordable housing developers. After multiple stakeholder, community, and city council meetings1, a draft Policy was presented to the City Council on March 17, 2020. While the framework was agreed upon, no vote was taken.

On April 7, 2020, the City Council adopted Resolution 52-2020, approving the Policy with no durational requirement (for a person to live in East Palo Alto for a period of time) for the residency preference for City supported affordable housing developments, and a 90-day durational requirement for the resident preference for Inclusionary units. The Policy also established a cumulative points system prioritizing individuals meeting multiple criteria.

On February 6, 2024, the City Council reaffirmed its commitment to the Local Preference Policy when it adopted the 2024-2028 Affordable Housing Strategy. City staff, HEART, EPACANDO, and Street Level Advisors reconvened working group meetings which took place in late 2024 to update the Policy for Council consideration.

The update is timely, as it would apply to the Colibri Commons affordable housing development at 965 Weeks Street, set to be leased in late 2025.

Analysis
Fair Housing Considerations
When considering the establishment of a Local Preference policy, the following laws must be taken into consideration:
1 December 4, 2018, and December 18, 2018 ,City Council Meetings 319
POLICY AND ACTION ITEM 13.2
Examples of Local Preference Policies
While many cities in California and across the country have local preference policies, there is significant variation based on the local context. Table 1 in Attachment 3 provides an overview of local preference policies in other California cities for comparison.

Summary of the Community Process
As noted above, the City embarked on a comprehensive community process to draft recommendations presented in the 2020 staff report. Each meeting consisted of discussion of the goals of the policy and several policy alternatives. Alternatives addressed different categories, i.e., live, work, and involuntary displacement; the amount of weight assigned to each category; the percentage of units the policy applies to; and the means of applying the preference.

Key feedback from the outreach process:
 Support for Local Preference: Strong community support for City-established local Table 1: Fair Housing Laws
Laws to Consider Details
Federal
 14th Amendment
 Fair Housing act
 Section 504
 Right to Travel
 Prohibits Housing discrimination based on:
o Race, Color, Religion, Sex, Familial
Status, National Origin, Disability
 Prohibits discrimination against persons
with disabilities in federally funded housing
(Section 504)
 Prohibits the use of durational
requirements for local preferences
 Applies to All Housing/Housing Activities
State
 Fair
Employment/Housing
Act
 Unruh Act
 Govt Code 11139.3
 Similar to Federal Fair Housing Act
 Additional protected classes:
o Ancestry
o Citizenship
o Immigration Status
o Primary Language
o Sexual orientation
o Gender Identify
o Gender Expression
o Genetic Information
o Marital status
o Source of income
o Military or Veteran Status
o Age
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POLICY AND ACTION ITEM 13.2
preference to address affordable housing needs and prevent resident displacement.  Displacement Impacts: Numerous examples highlighted how displacement has affected families in East Palo Alto.
 Fair Housing Concerns: General acknowledgement of legitimate Fair Housing concerns related to local preference policies.
 Priority for Current Residents: Emphasis on prioritizing current residents and addressing their immediate need for affordable housing.

Recommended Local Preference Policy Updates
Based on input from the 2024 Working Group, staff believe that certain updates to the Local Preference Policy are necessary to accomplish its goals. The following are key recommendations.

Applicability and Administration
Staff recommends that the City’s Policy apply to 1) any City-assisted affordable unit, 2) density bonus units, and 3) inclusionary housing units created under the City’s Inclusionary Housing Ordinance. The Policy would cover both for-sale and rental units, applying at initial lease-up and upon each subsequent resale or new tenancy.

For City-assisted affordable units, Staff recommend the Policy default to apply to 50% of the affordable units unless a disparity study, authorized by the City Manager, suggests a different percentage for a specific project. For inclusionary units, the Policy would apply to all affordable units. The Policy would be applied at initial lease-up or resale on an ongoing basis through the use of a lottery selection and wait list process.

The 2020 Proposal: A Point System
As is evident in Appendix 3 Table 1, there are different approaches to preferences, including set asides for particular groups, through a point system, or through a two-tiered approach where you either received a preference, or you do not.

In both the March 20, 2020, and April 7, 2020, Staff Reports2, staff recommended a point system. In such a system, applicants would receive points for the categories outlined in Table

2. Points would be cumulative and used to determine their priority within a lottery.

Table 2: 2020 Proposed Points System
Preference Category Points
All applicants 1
Work in East Palo Alto 1
2 In both 2020 staff reports, it was not clear how the involuntary displacement preference worked, but staff reviewed the recording of the March 17.2020 meeting and it became clear that this preference was an extra point and that the intent of the system was cumulative points. 321
POLICY AND ACTION ITEM 13.2
Involuntarily displaced from a residence in
East Palo Alto 1
Reside in East Palo Alto 2
As the points are cumulative, the following combinations would have been possible:

Table 3: Potential Outcomes of Point System
Applicant: Total Points
Has no additional preferences 1
Works in East Palo Alto 2
Involuntarily displaced from East Palo Alto and lives and works outside East Palo Alto 2
Resides in East Palo Alto 3
Works in East Palo Alto and involuntarily displaced from a residence in East Palo Alto 3
Resides in East Palo Alto and was involuntarily displaced from a residence in East Palo Alto 4
Works and resides in East Palo Alto 4
Works and resides in East Palo Alto, and was
involuntarily displaced from a residence in East Palo Alto 5 In such a system, those with 5 points would get the first opportunities to have their eligibility certified and access a unit, followed by those with 4 points, then those with 3 points, and so on.

This would continue until the units that were set aside for preferences were filled, and then all remaining applicants would be eligible for the units with no preferences.

The 2025 Proposal: Simple Tiered System
In alignment with the outcomes of the 2019-2020 process, the 2024 working group began with the 2020 Resolution and Policy as a foundation. The group sought to ensure that preferences for living in, working in, or being displaced from East Palo Alto remained central while evaluating the proposal for fair housing compliance and ease of implementation.

Key Findings:

1. Complexity and Implementation Challenges:
a. The 2020 proposal’s point system was found to be overly complex for developers/owners and applicants.
b. Documenting multiple preferences requires significant time and effort, complicating the application process and potentially confusing the applicant, causing distrust.
c. Self-certification and post-lottery verification could reduce complexity but still risk 322
POLICY AND ACTION ITEM 13.2
confusion and distrust among applicants due to changes in preference rankings. d. Experiences from San Francisco and Berkeley highlighted the operational challenges of complex systems, which add time and work during the leasing process.

2. Integration with the Doorway System:
a. A simpler system aligns better with the regional Doorway platform, which streamlines affordable housing access and is expanding to handle application processing and lotteries.

3. Fair Housing Concerns:
a. The 90-day residency requirement for inclusionary units and the higher weighting for residential preference raised potential fair housing issues. b. A more inclusive approach drawing from a broader applicant pool could mitigate these concerns.

Recommended Simplified Tiered System:

To address the above issues, staff propose a straightforward tiered system where applicants claim and document one preference, even if they are eligible for more than one preference.

Applicants who meet any of the below criteria would have the priority for the units with a preference
 Currently lives in East Palo Alto
 Currently works in East Palo Alto
 Has been displaced from East Palo Alto
Applicants would not need to document multiple preferences, reducing paperwork and administrative burden. This system would also alleviate concerns about applicants being reassigned to different preference categories, enhancing clarity and fairness.

Process Overview:
 All applicants receive a lottery number
 Applicants are sorted first by preference status, then by lottery number.  Units subject to preferences are offered to applicants with a preference first.  Any remaining units are then made available to applicants without a preference.

This simplified approach honors the 2020 preferences, reduces program complexity, addresses fair housing concerns, and ensures a more efficient and transparent process. 323
POLICY AND ACTION ITEM 13.2
Compliance with Fair Housing Laws
All jurisdictions that adopt local preference policies must consider the Fair Housing implications of the policy, including the potential to cause a disparate impact on a protected class — that is, if the policy places individuals at a disadvantage in obtaining housing based on “protected characteristics,” such as race, sex, age, or family status. Federal Fair Housing laws, State Fair Housing laws, and affordable housing funding sources such as HUD or the California Tax Credit Allocation Committee (CTCAC) all must be taken into consideration when contemplating a local preference.

Staff is recommending a Policy that considers the demographic characteristics of East Palo Alto and the surrounding area and aims to benefit a broad population while still achieving the goals of anti-displacement, providing housing opportunities near job sites to reduce commuting and its associated environmental impacts, and to provide housing opportunities for residents who may be experiencing over-crowding or potential displacement. Applying the Policy to only a portion of the units in 100% affordable developments and including those who work in East Palo Alto are important ways that the Policy is specifically designed to minimize fair housing concerns.

One additional feature of the policy intended to reduce the risk of creating a fair housing concern is that no duration requirement would be included as part of the preference criteria.

HUD does not allow durational requirements for units they fund, and the legal literature on the topic makes it clear that such a requirement raises the possibility of legal challenges.

In total, Staff feel that the proposed policy will help to minimize the potential for disparate impact and is a legally defensible approach to achieving the City's stated goals. A preference policy does not guarantee that fulfilling the requirements will result in a housing unit or that certain households will “skip to the front of the line,” but it does ensure that roughly half of the units in 100% affordable developments will be offered first to those who work or reside in East Palo Alto, or those displaced from East Palo Alto.

It should be noted that since the City adopted the preference policy in 2020, SB 649 was passed which allows local government to adopt local preference programs to address the impacts of displacement. Government Code Section 7061 authorizes the use of local preferences in developments funded with low income tax credits or tax exempt bonds. The City is required to post the local preference program on its website within 90 days of adoption that includes the ordinance or resolution adopting the policy and any supporting materials. The City is also required to provide HCD with a link to the website as part of its annual report.

Compatibility with Other Preferences/Set-Asides
The City’s local preference policy must be compatible with other preferences and set asides.

For example, if a developer is seeking funding from the County of San Mateo to fund an affordable housing project, the developer and that project would be subject to the County’s setaside requirements. As these units do not have a local preference, these units would be a part of the percentage of units to which the local preference does not apply. 324
POLICY AND ACTION ITEM 13.2
Units with accessibility features intended to help those with mobility needs, visual impairment, and/or a hearing impairment must be made available to a household with a household member with a documented need for the specific features included in the available accessible unit. If no applicant has a documented need for an accessible unit, the units will be offered to other eligible applicants according to the same lottery preference ranking used for other City Supported and Inclusionary Housing units.

Codification of the Policy
Staff recommends the Policy be articulated as a resolution. As with the Inclusionary Housing Ordinance, staff are developing supplemental guidelines to provide greater detail on requirements such as the selection process, waitlist management, marketing plan, compliance monitoring, and data collection.

Next Steps
If City Council approves the proposed Resolution and direct staff to develop guidelines, staff will finalize the guidelines for approval by the City Manager.

Fiscal Impact
There is no fiscal impact associated with adoption of the Policy.

Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.

Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.

Government Code § 84308
Applicability of Levine Act: No, as the proposed action does not involve an entitlement.

Analysis of Levine Act Compliance: Not applicable.

Attachments

1. Resolution, Exhibit A – Local Preference Policy

2. Local Preference Policy Guidelines

3. Comparison of Other Jurisdictions

4. Resolution 52-2020
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RESOLUTION NO. __________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO

ADOPTING A LOCAL PREFERENCE POLICY FOR AFFORDABLE UNITS DEVELOPED WITH CITY

SUBSIDY AND THROUGH THE INCLUSONARY HOUSING PROGRAM
WHEREAS, the City of East Palo Alto (“City”) provides funding to support affordable housing development in the City through its Affordable Housing Fund; and WHEREAS, Ordinance No. 425 requires that 20% of all units in new market-rate residential developments be affordable to extremely low-income, very low-income, low-income, and moderateincome households; and WHEREAS, on October 16, 2018, the City Council adopted a five-year Affordable Housing Strategy, which includes a goal of anti-displacement and a Workplan to establish a local preference for affordable housing units in the City; and
WHEREAS, from January to May 2019, the City held five community meetings with stakeholder groups, where a draft local preference framework was developed; and WHEREAS, on April 7, 2020, the City Council adopted resolution 52-2020 – Adopting a local preference policy for affordable units developed with city subsidy and through the inclusionary housing program; and
WHEREAS, on February 6, 2024, the City Council adopted the 2024-2028 Affordable Housing Strategy recommitting to the implementation of an effective and fair housing compliant Local Preference Policy.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY FINDS AND DECLARES THE FOLLOWING:

A. There is a shortage of affordable housing in the Bay Area and in the City of East Palo Alto, where the median family income, at $101,526, is less than 58% of the median family income for San Mateo County, 58% of East Palo Alto renter households are rent-burdened, and 18% of East Palo Alto households are considered to be overcrowded (American Community Survey, 2018-2022 5-year estimates);
B. According to the U.S. Census. East Palo Alto’s Black/African American population has declined from 61% of the population in 1980 to 13% in 2020, evidence that many families have left East Palo Alto due to the excessive cost of living and lack of affordable housing opportunities, breaking strong, intergenerational community and neighborhood ties; C. Individuals who work in East Palo Alto often must travel long commute distances to their jobs from outside the city, leading to higher greenhouse gas emissions, traffic, and lower quality of life;
D. According to the American Community Survey, home values in East Palo Alto increased 188% between 2012 and 2022, compared to 96% for San Mateo County, making homeownership out of reach for East Palo Alto residents;
E. The high cost of housing is cited in the East Palo Alto Affordable Housing Strategy as a key reason for the need for the plan and the anti-displacement efforts measure therein, including the need for a local preference in affordable housing;
326
F. Applying a preference for individuals who live or work in East Palo Alto and residents involuntarily displaced from East Palo Alto is within the City’s authority to protect the public health, safety, and welfare; and
G. Applying such a preference will create affordable housing opportunities that will allow those individuals to remain part of the community in East Palo Alto.

BE IT FURTHER RESOLVED THAT, BASED ON THE ABOVE FINDINGS, THE CITY COUNCIL HEREBY:

1. Adopts a Local Preference Policy, as set forth in Attachment 1 to this Resolution and incorporated by this reference, that applies to City subsidized affordable housing units, Density Bonus Units, and through the City’s Inclusionary Housing Ordinance;

2. Directs the City Manager to adopt guidelines to administer the Local Preference Policy and take any other action with respect to the policy consistent with this resolution and its purpose; and

3. Establishes that this Local Preference Policy applies only to the extent that other funding sources for the project permit such preferences.

PASSED AND ADOPTED this __ day of January 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
___________________________
Martha Barragan, Mayor
ATTEST: APPROVED AS TO FORM:
________________________ _____________________________
James Colin, City Clerk John D. Lē, City Attorney
327
Exhibit A
City of East Palo Alto Affordable Housing Local Preference Policy The purpose of establishing a local preference policy (“Policy”) for affordable housing is to prevent and mitigate displacement impacts to vulnerable households living or working in East Palo Alto, or to address past displacement from East Palo Alto, thereby encouraging family health, neighborhood stability, and preserving existing residents’ continued ties to local institutions, services, schools, community business centers, and health care providers, and thereby enhance the public welfare by further implementing the goals and objectives of the Housing Element to prevent or mitigate displacement of low-income residents and affirmatively further fair housing goals.

I. Definitions
The definitions set forth in this Section shall govern the application and interpretation of this Policy. Words and phrases not defined in this Section shall be interpreted so as to give this Policy its most reasonable application.

A. “Affordable Housing” or “Affordable Unit” shall mean restricted residential property where the rent or sales price is limited by a deed restriction and/or regulatory agreement.

B. “Area Median Income” or “AMI” “means the median family income of a geographic area of the state.

C. “City Supported Affordable Housing” shall mean Affordable Housing that receives financing, land, or ground lease property interest from the City of East Palo Alto for new construction, rehabilitation, or for acquisition and rehabilitation.

D. “Inclusionary Housing” shall mean Affordable Units restricted by the City as a result of the City of East Palo Alto’s Inclusionary Zoning requirements.

E. “Local Preference Guidelines” shall mean the requirements for implementation and administration of this Policy adopted by the City Manager pursuant to Section VIII of this Policy.

F. “Owner” shall mean any person or entity having a legal right of ownership or rights under a ground lease in real property, or their agents responsible for the management and leasing of the property to residential tenants.

G. “Qualifying Documents” shall mean documentation establishing an applicant’s first and last name and current address where they reside, as further defined in the Local Preference Guidelines.

H. “100% Affordable Housing Projects” are those projects where all units are income restricted, except for a manger unit or units.

II. Local Preferences
328

A. The preference policy shall apply to contracts entered into by the City on or after the effective date of the resolution establishing each preference, including contracts materially amended on or after the effective date.

B. Applicants only need to qualify for one of the preference criteria to receive the Local Preference. To qualify for the Local Preference, an applicant must:
(i) Reside in East Palo Alto: At least one member of the applicant household’s principal place of residence is within the City of East Palo Alto as of the date of application for housing; or
(ii) Work in East Palo Alto: At least one member of the applicant household currently works or has received an offer to work within the City of East Palo Alto for at least 20 hours per week; or (iii) Be involuntarily displaced from a residence in East Palo Alto: The applicant household must include at least one adult member whose principal place of residence was a housing unit within the City of East Palo Alto until they were displaced from that unit because of any of the following:
• Natural Disaster declared by the Governor;
• Domestic Violence;
• City Code Enforcement Activities;
• A “No Fault” Eviction from a rental unit in East Palo Alto, if the eviction occurred within a year of the application for housing; or
• A 10% or higher increase in rent in the last 12 months.

The eligibility requirements for each preference criteria is outlined in section IV below.

C. For 100% Affordable Housing Projects, these preferences shall apply to 50% of the affordable units. However, at the discretion of the City Manager, a disparity study may be undertaken to adjust this percentage on a particular project. The preference shall be applied to the initial lease-up or sale of the residential development and continuing thereafter throughout the term of the affordability restriction.

D. For Inclusionary Housing and Density Bonus units, these preferences shall apply to all units at initial lease-up or sale of the residential development and continuing thereafter throughout the term of the affordability restriction.

III. Implementation
A. The Owner of a City Supported Affordable Housing or Inclusionary Housing shall be responsible for including information about local preferences in their marketing materials, including the documentation needed to qualify applicants and determine eligibility for the local preference.

B. The requirements of this Policy shall be included as a term in the regulatory 329
agreement, affordability agreement, or other agreement between the City and/or other governmental entity and the Owner of a City Affordable Housing Property or Inclusionary Units.

C. The Marketing Plan for the property shall include the local preference and outline procedures for implementing them.

D. Applicants shall self-certify their eligibility for preferences with their initial application, and the owner or their designee shall confirm the eligibility after the lottery and before leasing or selling the affordable units.

IV. Proof of Eligibility for Preferences
The Owner shall use the following evidence to determine eligibility for local preferences, which may be further detailed in the Local Preference Guidelines.

A. Resides in East Palo Alto: Applicant may submit documentation from an appropriate source stating the applicant resides in East Palo Alto as of the date of the application for housing.

B. Works in East Palo Alto: Applicant must provide employment verification from employer, or another appropriate source, stating the applicant is employed there as of the date of the application for housing. A written offer of employment may suffice as evidence of employment in the City.

C. Involuntary Displacement: Displacement shall be evaluated based in the following:
(i) Disaster: Applicants shall provide certification from a unit of government concerning displacement due to a disaster prior to the submittal of the application for housing.
(ii) Domestic Violence: Applicants shall provide certification from local police, social service agency, court, clergy, physician, public or private shelter, or counseling facility concerning displacement due to domestic violence, fear of reprisal, or hate crime.
(iii) Housing Code Enforcement Activity: Applicants shall provide documentation from the City and/or landlord. Displacement due to code enforcement activities includes situations in which a tenant vacates a unit in response to a notice to vacate, notice to abate a lifethreatening condition, or declaration of substandard condition issued by the City or a court.
(iv) “No Fault” Eviction: Applicants shall provide a copy of an eviction notice or a copy of a court order or judgment in the unlawful detainer proceeding or other official records documenting the eviction (v) 10% or Greater Rent Increases: Applicants who are displaced due to a rental increase of over 10% shall provide a copy of a rent increase notice and evidence of a subsequent change of residence.

Applicants who were evicted due to cause, such as nonpayment of rent or breach of 330
the rental agreement, shall not be eligible for this preference.

Upon determining eligibility, the Owner shall notify the applicant of their eligibility for the local preference. Any disagreement over the eligibility of the applicant for the local preference shall be reviewed and determined by the Director of Community Development as defined in the Local Preference Guidelines.

V. Limitations & Exclusions
A. Owners are not required to approve applicants who are otherwise not qualified for renting or purchasing the unit.

B. Unless otherwise expressed herein, preferences shall be non-durational, i.e., there shall be no minimum time period for residency or employment to qualify for the preference.

C. This Policy or any successor Policy shall be applied only if other funding sources for the project do not prohibit the preference. This preference program shall be applied only if it does not violate federal and state fair housing law.

VI. Periodic Review
The City shall conduct a review of its local preference program for consistency with its affirmatively furthering fair housing goals under state and federal law and provide a report and possible recommendations to City Council every three years following the effective date of this resolution.

VII. Guidelines
The City Manager or designee is hereby authorized to adopt and, from time to time, amend Guidelines for the administration and implementation of the local preference as provided by this policy.
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East Palo Alto Local Preference Policy Administrative Guidelines Table of Contents
Introduction........................................................................................................................................................... 1 Definitions ............................................................................................................................................................. 1 Overview of the Local Preference ......................................................................................................................... 2 Applicability of Preference to Affordable Units .................................................................................................... 3 Application and Lottery Process............................................................................................................................ 3 Documentation Required...................................................................................................................................... 4 Interaction with Disability Preferences ................................................................................................................. 5 Marketing .............................................................................................................................................................. 5 Turn Overs and Waitlists ....................................................................................................................................... 5 Monitoring and Reporting Requirements ............................................................................................................. 5 Regulatory Documents.......................................................................................................................................... 6 332
1 Introduction
The Affordable Housing Local Preference Policy (LPP) establishes a local preference to assist people who live or work in East Palo Alto, or who were displaced from a residence in East Palo Alto, to receive a preference for affordable housing units.

The LPP applies to units created under the City of East Palo Alto’s Inclusionary Zoning Ordinance or Density Bonus requirements or supported by the City of East Palo Alto through funding, land, or other financial support. Developments that are leasing up on or after January 1, 2025, are required to implement preferences, in initial lease-up, waitlists, and resales. Developments that are reopening waitlists after January 1, 2025, and had initial lease up prior to January 1, 2025, will be encouraged, but not required, to participate.

Resolution ___ established the following criteria for qualifying for the local preference:
 Lives in East Palo Alto
 Works in East Palo Alto
 Displaced from a residence in East Palo Alto
Definitions
A. Affordable Housing” or “Affordable Unit” shall mean restricted residential property where the rent or sales price is limited by a deed restriction and/or regulatory agreement.

B. “Area Median Income” or “AMI” “means the median family income of a geographic area of the state.

C. “City” shall mean the City of East Palo Alto.

D. “City Supported Affordable Housing” shall mean Affordable Housing that receives financing, land, or ground lease property interest from the City of East Palo Alto for new construction, rehabilitation, or for acquisition and rehabilitation.

E. “Household” shall mean any person or persons residing or intending to reside in the same Unit, whether related or not.

F. “Inclusionary Housing” shall mean Affordable Units restricted by the City because of the City of East Palo Alto’s Inclusionary Zoning requirements.

G. “Local Preference Guidelines” shall mean these guidelines adopted by the City Manager pursuant to Section VIII of this Policy.

H. “Lower-Income Household” shall have the definition given in California Health & Safety Code section 50079.5 and generally understood to be less than 80 percent of area median income.
333
2 I. “Owner” shall mean any person or entity having a legal right of ownership or rights under a ground lease in real property, or their agents responsible for the management and leasing of the property to residential tenants.

J. “Preference Units: shall mean those affordable units to which the Local Preference is applied.

K. “Qualifying Documents” shall mean documentation establishing an applicant’s first and last name and current address where they reside, as further defined in these Local Preference Guidelines.

L. “Set Aside Units” shall mean affordable units that are filled through case management, for example by referral from a homelessness services provider.

M. “Unit” shall mean a portion of a building designed for, or intended for the exclusive use of, persons living as one household.

N. “Unit Type” shall mean an affordable unit, by both income maximum and number of bedrooms.

O. “100% Affordable Housing Projects” are those projects where all units are income restricted, except for a manger unit or units.

Overview of the Local Preference
Applicants only need to qualify for one of the preference criteria to receive the Local Preference. To qualify for the local preference, an applicant must:
 Reside in East Palo Alto: At least one member of the applicant household’s principal place of residence is within the City of East Palo Alto as of the date of application for housing; or
 Work in East Palo Alto: At least one member of the applicant household currently works or has received an offer to work within the City of East Palo Alto for at least 20 hours per week; or
 Be involuntarily displaced from a residence in East Palo Alto: The applicant household must include at least one adult member whose principal place of residence was a housing unit within the City of East Palo Alto until they were displaced from that unit within the five years prior to application because of any of the following:
o Natural Disaster declared by Governor;
o Domestic Violence;
o City Code Enforcement Activities;
o A “No Fault” Eviction from a rental unit in East Palo Alto, if the eviction occurred within 12 months of the application for housing; or
o A 10% or higher increase in rent in the last 12 months. 334
3 Applicability of Preference to Affordable Units
The LPP shall be applied only to the extent allowed by Fair Housing law and other government agency funding sources.

For Inclusionary Housing units, the local preference shall apply to all units at initial lease-up or sale of the residential development and continuing thereafter throughout the term of the affordability restriction.

For 100% Affordable Housing Projects, the local preference shall apply to 50% of the Affordable Units at initial lease-up or sale of the residential development and continuing thereafter throughout the term of the affordability restriction. With the permission of the City Manager, this percentage may be adjusted for a specific project, through the completion of a disparate impact analysis. Such an analysis shall adhere to the general standards established for such analyses by the U.S. Department of Housing and Urban Development and the U.S.

Department of Justice Civil Rights Division. The Local Preference Policy applies to all affordable units, regardless of any set aside. For example:

Number of Affordable Units: 100 units
Units with a set aside: 15 units
Units with no set aside: 85 units
Units with the local preference (50% of all units): 50 units Percent of units with no aside to which local
preference applies: 50/85 = 59%
Application and Lottery Process
Step 1: Applicant completes an on-line or paper application and selects the preference qualifications they believe they are eligible for.

Step 2: A lottery is conducted by the leasing/marketing agent, and a random number generator is used to assign all applicants, regardless of preference, a number.

Step 3: For the units with the local preference, the leasing/marketing agent sorts the lottery list based first on the income eligibility (AMI) and the bedroom type (the “Unit Type”), then local preference eligibility and finally by the lottery number (lower to higher). Applicants eligible for more than one Unit Type may appear in more than one list.

Step 4: The leasing/marketing agent begins the process of confirming both the eligibility and preference for each applicant, starting in order of the above sort. The applicant shall provide sufficient documentation to establish both eligibility for the Unit Type and the local preference. Applicants deemed ineligible for a specific Unit Type are removed from the list for that Unit/Unit Type. Applicants who are not able to establish the local preference, but who are otherwise eligible for the unit, are resorted accordingly.

Step 5: The leasing/marketing agent continues the process outlined in Step 4 until all the preference units have been filled. All remaining applicants are then eligible for any available Unit, including preference Units if such Units are not filled by applications having a preference, and are sorted by their eligibility for a Unit Type and their lottery number, with no consideration of their local preference eligibility, 335
4 Documentation Required
Preference Criteria Documentation Required
Reside in East Palo
Alto
Applicant must provide at least two of the following:
 Lease agreement
 Telephone bill
 Electric Bill
 Cable or Internet Bill
 Other Utility Bills (water, trash, etc.)
 Voter Registration
Unhoused residents of East Palo Alto may receive this
preference with written evidence from a government agency or social service provider that the resident received
homelessness services in East Palo Alto or had had an East Palo Alto home as their previous address. .

Work in East Palo Alto Applicant must provide at least one of the following:
 Employment verification from an employer
 Three most recent months of paystubs, including the
number of hours worked and address of the
employment location
 A written offer of employment including the address of the employment location
Involuntarily displaced
from a residence in
East Palo Alto
Applicant must provide one of the following:

Natural Disaster: Certification from a unit of government, such as FEMA.

Domestic Violence: Certification from local police, social service agency, court, clergy, physician, public or private shelter, or counseling facility concerning displacement due to domestic violence, fear of reprisal, or hate crime,
Housing Code Enforcement Activity: Documentation from the City and/or landlord. Displacement due to code enforcement activities includes situations in which a tenant vacates a unit in response to a notice to vacate, notice to abate a lifethreatening condition, or declaration of substandard condition issued by the City or a court.
“No Fault” Eviction: Copy of an eviction notice or a copy of a court order or judgment in the unlawful detainer proceeding or other official records documenting the reason for the eviction. 336
5 10% or Greater Rent Increases: Copy of a rent increase notice and evidence of a subsequent change of residence.

Interaction with Disability Preferences
Where units are created with features that meet the needs of those with a particular disability (mobility, vision, or hearing) (“Accessible Units”), those who would benefit from the accessibility features of the unit shall receive a preference for those units, regardless of their eligibility for the local preference.

Marketing
All marketing materials shall clearly outline the preferences available for the Affordable Units, including the following:
 Criteria for qualifying for the local preference
 A clear statement that the documentation will be required after the lottery and before the rental or purchase
 A statement that the local preference is a preference, not a requirement, and anyone who believes they are otherwise qualified for the Affordable Units should apply.

To support the City’s fair housing goals and expand access, rental housing developers are required to post their developments on Doorway, the regional affordable housing listing service. At the time of this writing, Doorway only advertises rental properties, but as the website’s capacity expands, developers may be required to complete their lotteries through Doorway, and homeownership projects also would be required to market via Doorway. As a result, some of the steps in the application and lottery process may be handled by Doorway, rather than the developer.

Turn Overs and Waitlists
For affordable rental units, a waitlist will be created at the initial lottery, which shall expire one year after the initial rent up of the units is complete. Upon expiration or exhaustion of this list, whichever comes first, a new lottery will be held for units upon turnover. As with the initial lease up, each lottery list expires after one year. If a waitlist was created because of advertising for one specific type of unit, by either AMI or bedroom type, that waitlist may only be used to fill another unit of the same AMI and bedroom type.

Monitoring and Reporting Requirements
Leasing and sales agents will be required to share demographic and preference data with the City through a lease-up/sales summary when the Affordable Units are initially occupied, in a form approved by the City. For rental projects, properties are also 337
6 responsible for providing tenant preference data on their Annual Compliance Report.

This information will be used by the City to generate annual reports on the LPP with aggregate data. No personal information will be collected or published.

Regulatory Documents
The LPP requirements will be integrated into each development’s affordable housing and regulatory agreements and spelled out in the Fair Housing Marketing Plan and, for rentals, the Tenant Selection Plan.
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Attachment 3
Table 1. Comparison of Local Preference Policies in Other Jurisdictions Santa Monica San Francisco Oakland Pasadena Berkeley
Type of
housing
Inclusionary units
Affordable units
with City subsidy
Inclusionary units
Affordable units with
City subsidy
Affordable units (if
over 5) with City
subsidy
Inclusionary units.

Affordable units with
City subsidy
Inclusionary units
Affordable units with
City subsidy
Preference
categories
(Ranked)

1. Displacement

2. Live/work

3. All other
applicants
(Ranked, with max
set asides)

1. Displacement from
urban renewal

2. Displacement
(general)

3. Neighborhood
Preference:
 Live/work
 All other
applicants
(Ranked)

1. Displacement

2. Neighborhood
preference:
 Live/work
 All other
applicants
(Ranked)

1. Live/work

2. Live only

3. Work only

4. Displacement

5. All other
applicants

1. BART
displacement,

2. One point each for:
 Foreclosure
 Eviction
 Families w/ children
 Homeless or at risk
of homelessness
 Ties to redlined
area
 Historical ties to
redlined area
When applied Initial lease-up and
ongoing
Initial lease-up and
ongoing (with
exceptions)
Initial lease-up and
ongoing (with
exceptions)
Initial lease-up and
ongoing
Initial lease-up and
ongoing
Selection
process
City maintains
eligibility list

1. Inclusionary:

City selects from
list; developer
verifies

2. 100%
Affordable:

Developer selects
from list and
verifies
Main lottery using
DAHLIA (universal
application) system,
then further sorting
into the 4 individual
preference
categories
New lottery for each
inclusionary unit
vacancy
City responsible for
selection/ verification
for all units
Lottery conducted
by affordable
developer for each
development for
each of the
preference groups,
with city oversight
Conducted by
affordable
developer with city
approval and
oversight of
process

1. directly from
priority list;

2. from a lottery of
households at top
of priority list; or

3. selecting from
city’s Section
8/Supportive
Housing/Homeowner waitlist
Lottery conducted by
affordable developer
for each development,
with City providing
certificate for
BART/Foreclosure
preferences
Waitlist
Management

1. City maintained
list for
inclusionary units

2. Affordable
developers
maintain list for
their own
affordable units

1. City uses
DAHLIA system
(universal
application) for all
units – no waitlist

2. Developer
maintains waitlist
once established by
DAHLIA
Affordable
developers
maintain list
Affordable
developers
maintain a priority
list after initial
certificate of
occupancy issue;
developer must
update it on yearly
basis
Affordable developers
are required to use the
Doorway portal
(BAHFA) for list
management
Ordinance
No- in guidelines
for “Affordable
Housing Program”
Yes Yes No- in guidelines Policy approved by
Council
339
RESOLUTION NO. 52 — 2020

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

ADOPTING A LOCAL PREFERENCE POLICY FOR AFFORDABLE UNITS DEVELOPED WITH

CITY SUBSIDY AND THROUGH THE INCLUSONARY HOUSING PROGRAM WHEREAS, the City of East Palo Alto (" City") provides funding to support affordable housing development in the City through its Affordable Housing Fund; and WHEREAS, Ordinance No. 425 requires that 20% of all units in new market -rate residential developments be affordable to extremely low- income, very low- income, low- income, and moderate -- income households; and
WHEREAS, on October 16, 2018, the City of East Palo Alto City Council (" City. Council") adopted a five- year Affordable Housing Strategy, which includes a goal of anti -displacement and workplan to establish a local preference for affordable housing units in the City; and WHEREAS, from January to May 2019, the City held five community meetings with stakeholder groups, where a draft local preference framework was developed.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY finds and declares the following:

A. There is a shortage of affordable housing in the Bay Area and in the City of East Palo Alto, where the median income at $58,783, which is less than half of San Mateo County, and the rate of rent - burdened households is 63%; and
B. Many families have left the City due to the high cost of living and lack of affordable housing opportunities, breaking strong, intergenerational community and neighborhood ties; and C. Individuals who work in the City often must travel long commute distances to their jobs from outside the city, leading to higher greenhouse gas emissions, traffic, and lower quality of life; and
D. The Existing Conditions Report for the 2014 General Plan Update showed that over half of all households in the City have four or more persons, far above the County average of 2. 75 persons per household, suggesting overcrowded conditions; and E. Anti -displacement is one of the overarching principles of the Affordable Housing Strategy, adopted by the City Council in 2018, and one of the top priorities of the community as expressed during the outreach for the Strategy; and
F. Applying a preference for individuals who live or work in the City, and residents involuntarily displaced from the City of East Palo Alto is within the City' s authority to protect the public health, safety, and welfare; and
G. Applying such a preference will create affordable housing opportunities that will allow those individuals to remain part of the community in the City of East Palo Alto. 1 of 2
340
BE 1T FURTHER RESOLVED THAT, BASED ON THE ABOVE FINDINGS, THE CITY OF EAST PALO ALTO CITY COUNCIL HEREBY:

1. Adopts a Local Preference Policy, as set forth in Attachment 1 to this Resolution and incorporated by this reference, that applies to City subsidized affordable housing units and through the City's Inclusionary Housing Ordinance; and

2. Directs the City Manager to adopt guidelines to administer the Local Preference Policy and take any other action with respect to the policy consistent with this resolution and its purpose; and

3. Establishes that this Local Preference Policy shall be applied only to the extent that other funding sources for the project permit such preferences.

PASSED AND ADOPTED this 7th day of April 2020, by the following vote:

AYES: Abrica, Gauthier, Moody, Romero, and Wallace -Jones NOES:

ABSENT:

ABSTAIN:

ATTEST:
ihid Wallace - Jones, M
APPROVELLAS TO FORM:

Rafael E. Aja arado Jr. City Attorney
2of2
341
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POLICY AND ACTION 13.3

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: January 21, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Maurice Baker, Community Services Manager
SUBJECT: 2025 Summer Park Activation Recommendations
Recommendation
Adopt a resolution authorizing the City Manager to award, negotiate and execute contracts with the following eleven (11) organizations listed alphabetically to provide programming for the 2025 Summer Park Activation series, in a form approved by the City Attorney, for various amounts, for a total not-to-exceed amount of $178,000:

1. Bay Area Urban Eagles (up to $16,000)

2. Camp Doza (up to $16,000)

3. East Palo Alto Boxing Club (up to $16,000)

4. East Palo Alto Razorbacks (up to $18,000)

5. East Palo Alto T-Ball & Pitching Machine (up to $18,000)

6. East Palo Alto Tennis & Tutoring (up to $18,000)

7. Lewis & Joan Platt East Palo Alto YMCA (up to $16,000)

8. Silverscape Ventures formerly Sign Gypsies (up to $12,000)

9. Step It Up Dance (up to $12,000)

10.Streetcode Academy (up to $18,000)

11.Youth Community Services (up to $18,000)
344
POLICY AND ACTION 13.3
Alignment with City Council Strategic Plan
Priority: Enhance Community Services and Parks for Residents Background
Starting in 2019, City Council directed the Community Services and Recreation Division of the City Manager’s Office to activate parks and facilities in our City to provide free activities for our residents and to deter other non-productive activities. Previously, this was accomplished through the summer disbursement of our Transient Occupancy Tax (TOT) program. Council sought to provide additional opportunities of activating our parks. This has become a foundational service for the Division and allowed us to partner with local organizations to expand the efforts of their great work. The series has steadily grown in attendance over the years as we started out serving 382 participants and last year reached over 1000. Programs have ranged from STEM based technology pop-ups in the park to curated field trips for the older adult community. The goal of finding diverse programming for all has been accomplished through a number of methods. To hold the providers accountable, payments have been tied to things like participation in the City’s 40th Anniversary and its Family Day movie nights. Below is how the Summer Park Activation results have been over the years.

Table 1
Park Activation Results
Year (FY) City Investment # of Providers # of Participants 2019-2020 $65,000 5 382
2020-2021 $80,000 7 108
2021-2022 $110,000 14 320
2022-2023 $154,000 17 815
2023-2024 $180,000 10 1841**
**may include duplicate participants
In previous years, the Summer Park Activation program ran into delays that did not allow marketing to begin until late spring, which may have impacted the success of the programming. To improve upon this timeline, staff began the process of seeking proposals in November this year. Below are some of the key dates for the RFP that was released.

Request for Proposals (RFP) Issued: October 28
Proposals Due: November 22
Proposal Review: December 9
Interviews with Proposed Providers: December 18-19
Fourteen proposals were received and staff sought to narrow that down to ten providers as seen from the previous year success. Following the review, it was determined that 11 providers would allow for a full range of programing that was diverse. Of the 14 proposals that were received, two were catering to the Older Adult population and one was Performing Arts based. Staff then made the decision to recommend one of the organizations serving Older Adults and Performing 345
POLICY AND ACTION 13.3
Arts. The organization with the next lowest score is being advised to apply for other funding opportunities that they are eligible for. Following this recommendation, the final number of vendors that staff is proposing exceeded the original goal of 10 by one.

Analysis
As the Summer Park Activation has continued to evolve, staff has sought to make improvements to the how it selects and evaluates providers. Proposals were previously graded on factors like program uniqueness, past participation, and projected goals. This provided a limiting effect on the opportunity for new providers. This year, the review panel was comprised of the following staff who represented a range of departments/divisions:

East Palo Alto City CouncilJanuary 21, 2025

East Palo Alto City Council
January 21, 2025