Hillsborough City Council
February 14, 2022

The cost breakdown is as follows:

Implementation Services (one-time): $5,660
Annual Service and Support Fees: $25,720
Following implementation, Town staff will provide a presentation of the eSCRIBE features and functionality at a City Council meeting.

FISCAL IMPACT: The agenda management software project is budgeted in the adopted FY 2021- 22 Asset Replacement Fund budget. This project also qualifies for American Rescue Plan Act (ARPA) funding.

ENVIRONMENTAL ISSUES: The proposed action is exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.

ATTACHMENTS:

1. Resolution

2. Agreement
PREPARED BY: Lisa Natusch, City Clerk
RECOMMENDATION: Adopt the resolution approving and authorizing the City Manager to execute an agreement with eScribe for an agenda management software system and implementation services.
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RESOLUTION NO. 22-

RESOLUTION OF THE CITY COUNCIL OF THE TOWN OF HILLSBOROUGH

APPROVING AND AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH ESCRIBE SOFTWARE LTD. FOR AN AGENDA MANAGEMENT

SOFTWARE SYSTEM
WHEREAS, in July 2007, the Town of Hillsborough (“Town”) entered into an agreement with LR Hines Consulting, Inc. for the installation of SIRE Technologies Electronic Document & Agenda Management System (SIRE); and
WHEREAS, SIRE product support will sunset December 31, 2022, and the current version of the agenda management system is out of date and in need of replacement; and
WHEREAS, on September 10, 2021 a Request for Proposals (RFP) was issued, seven proposals were received, and two vendors were interviewed and provided demonstrations to a committee made up of Town staff; and WHEREAS, the eSCRIBE Software LTD. (eSCRIBE) system will provide a commercial-off-the-shelf cloud-based agenda management software system including live broadcast and archived audio/video recording of public meetings, streamlined internal processes for City Council, boards and committees agendas, automated preparation and distribution of agenda materials, and a user-friendly public web portal for meeting materials.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the Town of Hillsborough does hereby approve and authorize the City Manager to execute an agreement with eSCRIBE Software LTD for an agenda management software system.

Mayor of the Town of Hillsborough
Attest: City Clerk
This resolution was adopted by the City Council of the Town of Hillsborough at its regular meeting held on the 14th day of February 2022, by the following vote of the members thereof:

AYES: Councilmembers
NOES: Councilmembers
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ATTACHMENT 1
ABSENT: Councilmembers
ABSTAIN: Councilmembers
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Subscription Agreement
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This Subscription Agreement (the "Agreement") together with any appendices referenced herein and attached hereto, is dated the ______day of ______, 2022 BETWEEN:
eSCRIBE Software Ltd. (“eSCRIBE”)
- and -
Town of Hillsborough (“Customer”)
WHEREAS, eSCRIBE (and/or its affiliates) has developed certain proprietary software applications and platforms for the purpose of meeting and agenda automation which it makes available as services via the internet (the "Services").

NOW THEREFORE, the Customer desires to use the Services in accordance with the terms and conditions of this Agreement.

Definitions
“Customer Data” shall mean electronic data and information uploaded or inputted to the Services or created, generated or produced by the Customer during Use of the Services.
“Data Storage: refers to the online electronic secure storage of Customer Data during the Use of the Services.
“Documentation” includes any and all printed or electronic guides and manuals, including sales, marketing and training materials provided by eSCRIBE for the proper Use of the Services.
“Implementation Services” refers to the configuration and training services, and other services set out in Appendix C.
“Personal Information” means information which relates to an identified or identifiable individual, and includes any information defined from time to time as “personal information” under applicable State or Federal privacy legislation.
“Location” refers to the location of the Customer entities authorized to Use the Services as set out in Appendix D.
“Support Services” shall mean the technical support and product updates for the Services as made available under eSCRIBE's Support Services set out in Appendix B.
“Taxes” refers to all present or future sales tax, consumption tax and similar taxes.
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ATTACHMENT 2
Subscription Agreement
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“Use” shall mean the ability for the Customer to login with username and password and access the Services via the internet.

1. Services
a. eSCRIBE shall provide the Implementation Services, the Services and the Documentation to the Customer subject to the terms of this Agreement.
b. eSCRIBE shall provide the Implementation Services in a professional, timely, and competent manner and in accordance with industry standards. eSCRIBE shall make every effort and take all appropriate steps to carry out the Implementation Services to the reasonable satisfaction of the Customer, in such a manner as is in the best interests of the Customer, and in compliance with all federal and state laws, local by-laws, and policies and procedures of the Customer. c. eSCRIBE shall make the Services available twenty-four (24) hours a day, seven (7) days a week, and will credit the Customer 10% of the equivalent monthly Subscription Fees listed in Appendix A for each three (3) hour period for which the Services are unavailable for Use by the Customer in a monthly period. "Uptime" and "Downtime" is recorded and calculated on a monthly basis and will be applied as a credit towards the annual Subscription Fees listed in Appendix A, for the next year. Downtime does not include scheduled outages for software updates, server or network maintenance (which will generally be scheduled for weekends or after midnight eastern time), notification of which will be provided to the Customer’s designated Support Contacts five (5) days in advance. Unsuitable Customer operating environment, including, but not limited to, inadequate end user computer configuration, Customer-installed third party software, internet connection issues or general internet congestion issues are excluded from any downtime calculations. Account credits of eSCRIBE for any twelve (12) month period is hereby limited to a maximum of twenty percent (20%) of the annual Subscription Fees listed in Appendix A paid by the Customer during the prior twelve (12) month period up to the outage. Downtime is measured from the time that a trouble ticket is registered with Support Services by the Customer for the Services being unavailable for Use or the time that eSCRIBE becomes aware that the Services are unavailable for Use (whichever is earlier), to the time the problem is resolved and the Services are restored. In the event that eSCRIBE becomes aware that the Services are unavailable for Use, eSCRIBE shall notify the Customer immediately.
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Subscription Agreement
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d. The Customer may not make available the Service for Use by any third parties.
e. The Customer may not directly or indirectly through any third parties attempt to reverse-engineer or de-compile the operation of the Services in any manner through current or future available technologies, except that Customer may modify the Customer Data to the extent and in the manner described in the Documentation. f. Customer Data, which shall be hosted in The United States along with all copies and backups, together with all intellectual property rights therein, will belong to the Customer and the Customer remains the sole and exclusive owner of the Customer Data. During the Term of this Agreement, the Customer may retrieve such data from the Services at any time and, within ten (10) days of the Customer’s request, eSCRIBE will make available any Customer Data that is stored in native file format (Word, Excel, PowerPoint, PDF, MP4). eSCRIBE shall not access, use, disclose, sell, rent, transfer or copy the Customer Data for any purpose (or authorize or permit a third party to perform such acts) other than as required to perform eSCRIBE’s obligations pursuant to this Agreement.
g. At the execution of this Agreement and during the Term, eSCRIBE represents and warrants to and in favor of the Customer and acknowledges that the Customer is relying thereon as follows:
i. eSCRIBE has the legal capacity and right to execute this Agreement and carry out and observe the provisions thereof to be performed or observed by eSCRIBE hereunder and to take all actions pursuant hereto and all necessary approvals have been given or obtained to authorize eSCRIBE to execute this Agreement and perform thereunder and to take all actions required pursuant hereto;
ii. eSCRIBE’s execution, delivery, and performance of this Agreement will not constitute a violation of any judgment, order or decree, a default under any agreement by which it or any of its assets are bound or an event that would, with notice or lapse of time, constitute such a default;
iii. eSCRIBE has the full and unencumbered right to grant to the Customer access to and use of the Services as provided in this Agreement, either through ownership or license, including upgrades, updates, improvements, modifications or
enhancements to the Services including any third party
components embedded in the Services, and that the rights -167-
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granted herein will not violate the terms of its agreements with any third parties;
iv. The Implementation Services and the Customer’s access to or use of the Services or of the Documentation do not and will not conflict with, infringe upon or violate and are not alleged by any person to conflict with, infringe upon or violate the intellectual property rights of any other person. In addition, there are no existing or threatened legal proceedings brought against eSCRIBE in respect of the Services, the Documentation or the Implementation Services, or eSCRIBE’s right to grant others the right to access and use the Services or the Documentation.

Should eSCRIBE become aware of any such conflict,
infringement or violation or potential conflict, infringement or violation, eSCRIBE will notify the Customer immediately; v. eSCRIBE’s proprietary software applications and platforms are free of spyware and malware of any kind;
vi. The Services and the Implementation Services provided by eSCRIBE hereunder will comply with the service and functional specifications set out in this Agreement, including the Documentation;
vii. eSCRIBE will provide personnel who have the necessary technical skills, qualifications, experience, and training to provide information and expertise to the Customer in
accordance with this Agreement; and
viii. The Documentation is complete and will allow the Customer to access and use the Services.
h. eSCRIBE shall retain such records in respect of the provision of the Implementation Services or of the Services and the fulfillment of its obligations hereunder as the Customer may from time to time reasonably require and shall make such records available at any time for inspection by the representatives of the Customer.

2. Support Services
a. During the Term of this Agreement, eSCRIBE will provide the Customer the Support Services as described in Appendix B.

3. Fees
a. The first year’s Subscription Fees and the Implementation Fees are due according to the Payment Schedule as described in Appendix C. The -168-
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Subscription Fees are due annually thereafter upon the anniversary of the date of this Agreement, and will increase from the previous year’s Subscription Fees by three percent (3%).
b. Implementation Fees are for remote personnel. Optionally, should the Customer wish to have eSCRIBE provide onsite training, additional travel and living expenses would apply.
c. All fees and other charges set forth in this Agreement are exclusive of any and all applicable Taxes due to eSCRIBE from Customer. Payment of all applicable Taxes shall be the responsibility of the Customer. If any such Taxes has to be withheld under this Agreement, Customer shall increase payment under this Agreement by such amount as to ensure that eSCRIBE has received an amount equal to the payment otherwise required after such withholding or deduction.
d. Legacy Data fees if any, will be added to the annual Subscription Fees as set out in Appendix E.
e. All payments are due thirty (30) days from the date of invoice. a. All references to currency are in US Dollars.

4. Term
a. The term of this Agreement commences on the date of this Agreement for a period of three (3) years (the “Term”), and will automatically renew for an additional Term unless notice of cancellation is received 60 days prior to the expiry of the Term.

5. Termination
a. If either party is adjudged bankrupt, becomes insolvent, makes an assignment for the benefit of creditors, makes any arrangement for the liquidation of its debts or a receiver or a receiver and manager is appointed with respect to all or any part of its assets, or commences winding up proceedings, or bankruptcy or insolvency proceedings are instituted by or against such party, and such proceedings are not removed within sixty (60) days (an “Event of Bankruptcy”), then the party affected by such an Event of Bankruptcy must immediately give notice thereof to the other party, and the other party at its option may terminate this Agreement upon written notice to such affected party. b. If this Agreement is terminated by the Customer before the end of the Term other than for a breach of this Agreement on the part of eSCRIBE, bankruptcy or insolvency or eSCRIBE or pursuant to section 5(f), the Customer will be liable for a termination penalty amounting to -169-
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35% of the remaining Subscription Fees due to the end of the Agreement if terminated in the first year, 25% of the remaining Subscription Fees due to the end of the Agreement if terminated in the second year and 15% of the remaining Subscription Fees due to the end of the Term if terminated in the third year or subsequent year of the Agreement.
c. Either party may terminate this Agreement upon written notice to the other party in the event that one party breaches any term or condition of this Agreement, provided that the non-breaching party gives the other party notice of the breach, and such breach is not remedied to the non-breaching party’s satisfaction within ten (10) days after delivery of such notice.
d. Within thirty (30) days after the termination of this Agreement by Customer pursuant to section 5 (a) or section 5 (c) or section 5(f), eSCRIBE shall refund to the Customer any Subscription Fees paid by the Customer for the period from the date of termination to the end of the Term on a pro-rated monthly basis commencing with the month following the date of termination.
e. Within thirty (30) days after the termination or expiration of this Agreement, eSCRIBE will make available any Customer Data that is stored in native file format (Word, Excel, PowerPoint, PDF, MP4). After the thirty (30) day period, eSCRIBE will delete or destroy all copies of Customer Data in its possession or control, unless legally prohibited and upon request, provide the Customer with a certificate of destruction.
f. Termination for Non-Appropriation. Customer’s payment obligation under this Agreement extends only to funds appropriated annually by Customer’s governing body for the purpose of this Agreement. For each succeeding fiscal period covered by this Agreement, Customer’s applicable department responsible for this Agreement agrees to include in its budget request appropriations sufficient to cover the annual financial obligations under this Agreement.

However, Customer’s governing body has no obligation to make appropriations for the Agreement in lieu of appropriations for new or other contracts. If Customer is appropriated insufficient funds to continue annual payments under this Agreement, Customer may terminate this Agreement by giving eSCRIBE not less than thirty (30) days’ prior written notice. Upon termination under this paragraph, eSCRIBE shall be entitled to compensation for all Services rendered prior to the effective termination date. eSCRIBE’s assumption of risk of -170-
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possible non-appropriation is a part of the consideration for the Agreement. This Section controls against any and all other provisions of the Agreement.

6. Limitation of Liability
a. Liability of eSCRIBE under this Agreement will be limited to the maximum amount of the annual Subscription Fees listed in Appendix A or the value of insurance listed in section 10, whichever is greater.

Neither party will be liable for any special, incidental or consequential damages including, but not limited to, loss of production, loss of profits, loss of revenue, loss of data, or any other business or economic disadvantage suffered by the Customer arising out of the use or failure to use the Service.

7. Indemnity
a. eSCRIBE shall indemnify and hold harmless the Customer (including its elected officials, officers, representatives, agents, employees, volunteers, and affiliates) against any and all claims, demands, losses, suits, damages (including indirect, special, consequential, remote, and economic damages), fees, fines, royalties, liability, and expenses (including reasonable lawyer’s fees) arising out of any suit, claim or action relating to eSCRIBE’s performance or non-performance of its obligations pursuant to this Agreement, including any breach of any representation or warranty, or for actual or alleged direct or contributory infringement of, or inducement to infringe, any intellectual property right relating to the Implementation Services, the Services or the Documentation or for actual or alleged misuse or misappropriation of a trade secret resulting directly or indirectly from eSCRIBE’s action. These obligations of indemnity will survive the termination or expiration of this Agreement however caused. b. eSCRIBE shall have no liability hereunder for any claim of intellectual property infringement based on the combination, operation or use of the Service with software, hardware or other materials not furnished or approved in writing by eSCRIBE if such infringement would have been avoided without such software, hardware or other materials. c. In the event the Service or a component part thereof is held by a court of competent jurisdiction, or is believed by eSCRIBE, to infringe or potentially infringe a third party’s rights, eSCRIBE shall, with prior notice to the Customer, (i) modify, at its expense, the Service to be noninfringing; provided that such modification does not adversely affect -171-
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the Service as set out in this Agreement, or (ii) obtain for Customer the right to continue using the Service in its current state at no additional expense to the Customer, or (iii) if eSCRIBE determines that neither of the foregoing options are reasonably available, eSCRIBE may terminate this Agreement and refund any prepaid Fees to the Customer for which it has not received Services.

8. Confidentiality
a. "Confidential Information" means all information disclosed by one party (the “Disclosing Party”) to the other party (the “Receiving Party”), whether verbal or in writing, that is marked as confidential or that reasonably should be understood to be confidential given the nature of the information. The Customer’s confidential information includes Customer Data, and eSCRIBE’s confidential information includes the Services and Documentation. Confidential information of each party includes, current and future technical specifications, product plans, features and roadmaps, business and marketing plans, customer lists and relationships, costs and pricing strategies, financial and employee information and records, as they may be disclosed by either party during the Term of this Agreement.
b. Confidential information does not include any information that (i) is or becomes publicly available without a breach of the terms of this Agreement, (ii) is received from a third-party without breach of any obligation owed to the Disclosing Party, or (iii) the Receiving Party is entitled to disclose in response to a court order or as otherwise required by law (including but not limited to, the California Public Records Act (Cal. Gov. Code § 6250 et seq., to be re-codified effective January 1, 2023 pursuant to “CPRA Recodification Act of 2021”); provided that the Receiving Party notified the Disclosing Party prior to such disclosure forthwith after receipt of such order or public records request to give the Disclosing Party time to contest such order at the Disclosing Party’s sole cost and expense.
c. All Confidential Information shall remain the sole property of the Disclosing Party.
d. The Receiving Party shall not divulge or disclose any Confidential Information communicated to or acquired by it, or disclosed by the Disclosing Party in the course of carrying out this Agreement. No Confidential Information will be used by the Receiving Party on any other project or for any other purpose without the prior written consent of the Disclosing Party, which consent may be not unreasonably withheld. The Receiving Party shall receive and store the Confidential -172-
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Information with the same degree of care that it uses to protect the confidentiality of its own confidential information from unauthorized use, duplication or disclosure to third parties; provided such standard is no less than a reasonable standard considering the nature of the Confidential Information.
e. Upon termination or expiration of this Agreement, the Receiving Party shall immediately cease to use Confidential Information in any manner whatsoever, shall return to the Disclosing Party or securely destroy all Confidential Information, and shall not retain any copies of the Confidential Information.
f. eSCRIBE agrees and acknowledges that the Customer may be subject to State or Federal privacy legislation that may be in effect during the Term of this Agreement. The provisions of this section 8(f) supplement the terms of section 8 as it pertains to Confidential Information that is “Personal Information”. eSCRIBE acknowledges that in the course of its provision of the Software Services, it will be provided with and have access to Customer Data which includes “Personal Information”, and that such information is confidential. eSCRIBE agrees that such Personal Information will be used solely for the purposes of performing the Software Services and that it will safeguard such Personal Information by appropriate physical and technological means. eSCRIBE will not, other than as required to provide the Software Services, disclose, transfer, sell, assign, publish or otherwise make available the Personal Information for its own use or the use of any other person or entity, except (and provided the Customer is promptly notified so as to permit it an opportunity to object to disclosure before it takes place, if feasible) where disclosure:
(i) may be required to comply with a subpoena, warrant, or court order; (ii) is requested by a government institution that has the lawful authority to obtain the Personal Information; or (iii) is otherwise required by law. In addition, the Customer will be solely responsible for responding to any request by any Customer employee or other individual for access to, or correction of, any Personal Information. eSCRIBE will notify the Customer immediately of any breach of this section 8(f).
g. Data Breach; Loss of Customer Data. “Data Breach” means any access, destruction, loss, theft, use, modification or disclosure of Customer Data by an unauthorized party or that is in violation of the Agreement terms and/or applicable local, state or federal law. “Software Error” means any failure of Services to conform in all material respects to the requirements of this Agreement or eSCRIBE’s published specifications or Documentation. In the event of any Data -173-
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Breach, Software Error, omission, negligence, misconduct, or breach that compromises or is suspected to compromise the security, confidentiality, or integrity of Customer Data or the physical, technical, administrative, or organizational safeguards put in place by eSCRIBE that relate to the protection of the security, confidentiality, or integrity of Customer Data, eSCRIBE shall, as applicable:
i. Notify Customer promptly, and in any event within
seventy-two (72 Hours of any unauthorized use, loss, or disclosure of Customer Data (“Security Breach”);
ii. Keep the Customer informed regularly of the progress of its investigation;
iii. As rapidly as circumstances permit, apply appropriate resources to remedy the breach condition, investigate,
document, restore Customer service(s) as directed by
the Customer, and undertake appropriate response
activities to correct, remediate, or to mitigate potential damage;
iv. In the case of personally identifiable information (PII) or protected health information (PHI), at Customer’s sole
election, (a) notify the affected individuals as soon as practicable but no later than is required to comply with applicable law, or, in the absence of any legally
required notification period, within five (5) calendar
days of the occurrence; or, (b) reimburse Customer for
any costs in notifying the affected individuals. eSCRIBE’s responsibility for the costs of providing such notifications shall not be limited by any disclaimer or limitation of liability in the Agreement;
v. Perform or take any other actions required to comply with applicable law as a result of the occurrence.
h. These obligations of confidentiality will survive the termination or expiration of this Agreement however caused.

9. Non-Solicitation
The Customer agrees that during the term of this Agreement, and for a period of one year following the date of termination of this Agreement, Customer will not to attempt to obtain withdrawal from eSCRIBE of any employee or person retained or engaged by eSCRIBE in any capacity whatsoever.

10.Insurance
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a. eSCRIBE shall obtain and maintain in force during the Term of this Agreement the following policies of insurance (all amounts in USD):
i. General liability insurance insuring eSCRIBE’s obligations and responsibilities with respect to the performance of Services as set out in this Agreement. The policy will be extended to include bodily injury and property damage, products and completed operations, personal and advertising injury, Implementation Services, contingent employer’s liability, and contractual liability to a limit of no less than two million dollars ($2,000,000) per occurrence. The policy will include a cross liability and severability of interest clause and be endorsed to name the Client as an additional insured;
ii. Non-owned automobile insurance to a limit of no less than one million dollars ($1,000,000);
iii. If applicable, automobile insurance (OAP1) for both owned and leased vehicles with inclusive limits of no less than one million dollars ($1,000,000); and
iv. Errors and omissions liability insurance insuring eSCRIBE to a limit of no less than two million dollars ($2,000,000) per claim and five million dollars ($5,000,000) in the aggregate. The coverage under the policy will be maintained continuously during the Term of this Agreement and for an additional two (2) years after the termination or expiration of this Agreement and will cover insurable losses arising out of or in association with an error or omission in the rendering of or failure to complete and provide the services as set out in this Agreement. Coverage under the policy will respond to, but not be limited to the following occurrences:

A. Privacy breach and violations as a result of but not limited to unauthorized access to or wrongful disclosure or
dissemination of private information, failure to properly handle, manage, store, destroy or control personal
information and include the failure to comply with privacy laws and their respective regulations regarding the
collection, access, transmission, use, and
accuracy. Coverage will extend to include the costs
associated with notification of affected parties, regardless if required by statute as well as any fines or penalties or costs imposed as a result of the breach including defense of any regulatory action involving a breach of privacy;
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B. Network security incidents arising from system security failures such as, but not limited to, unauthorized access, theft or destruction of data, electronic security breaches, denial of service, spread of virus within eSCRIBE’s computer network or other third party computer information systems and will further include expenses related to third party computer forensics;
C. Privacy breach expenses including crisis management
related to electronic and non-electronic breaches;
D. Content or media liability including personal and advertising liability, intellectual property infringement coverage
(copyright, trademark, trade name, service mark, trade dress or trade secret) arising out of media content created,
produced or disseminated by eSCRIBE;
E. Coverage for delay in performance of a contract or
agreement resulting from an error or omission; and
F. Coverage for damages resulting from dishonest and criminal acts committed by an employee of eSCRIBE.

If coverage is to be cancelled or non-renewed for any reason, eSCRIBE shall provide the Customer with ninety (90) day notice of said cancellation or non-renewal. The Customer may request an Extended Reporting Endorsement be purchased by eSCRIBE at eSCRIBE’s expense. The term of the Extended Reporting Endorsement will be decided by the Customer and eSCRIBE. b. eSCRIBE shall ensure that all policies of insurance will:
i. be written with an insurer properly licensed to do business; ii. contain an undertaking by the insurers to notify the Customer in writing no less than thirty (30) days prior to any termination or cancellation of coverage unless otherwise required by law; and iii. be non-contributing with and will apply only as primary and not excess to any other insurance or self-insurance available to the Customer.
c. Any deductible amounts will be borne by eSCRIBE.
d. eSCRIBE shall deliver to the Customer certificates of insurance evidencing renewal or replacement of policies required under this Agreement at least fifteen (15) days prior to the expiration or replacement of the current policies without demand by the Customer. -176-
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e. If eSCRIBE fails to maintain in force any insurance required to be maintained by it hereunder, then the Customer, without prejudice to any of its other remedies, may obtain such insurance on behalf of and at the cost of eSCRIBE.
f. eSCRIBE and its agents, volunteers, contractors, subcontractors, employees, and insurer(s) hereby release the Customer from any and all liability or responsibility, including anyone claiming through or under them, by way of subrogation or otherwise for any loss or damage which eSCRIBE may sustain incidental to or in any way related to eSCRIBE’s obligations under this Agreement.

11.Advertising
a. Customer agrees that eSCRIBE may use and disclose Customer’s name in its marketing material with prior written approval of the Customer, which will not be unreasonably withheld.

12. Trademarks
a. Any trademarks and service marks (“Trademarks”) adopted by eSCRIBE to identify the Services, Documentation and other products and services, belong to eSCRIBE. Nothing herein grants, or shall be construed to grant, to Customer any rights to such Trademarks.

13.Development Input
a. Customer shall be entitled to provide eSCRIBE with information and feedback concerning the Service’s functional requirements and product definition which eSCRIBE shall consider when formulating the product development roadmap and plans. This co-operative process between eSCRIBE and the Customer does not create any obligation upon eSCRIBE to adhere to Customer’s feedback, nor does it create any ownership interest in the Services on the part of Customer should eSCRIBE incorporate any of Customer’s suggestions into the development plan or ultimately into the Services.

14.General Provisions
a. Relationship of Parties. In all matters relating to this Agreement Customer and eSCRIBE are independent contractors, and nothing in this Agreement shall be deemed to place the parties in the -177-
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relationship of employer-employee, principal-agent, partners, or joint ventures.
b. Entire Agreement. This Agreement, including all Appendices, is the entire Agreement between the parties and supersedes all prior negotiations, understandings and agreements between the parties concerning the subject matter hereof. No amendment or
modification of this Agreement shall be made except by written agreement of both parties.
c. Ride Along: The terms of this Agreement may be offered for use by other parties, including: associated local governments, school boards and government agencies upon execution of an agreement outlining the associated Services and Fees applicable; provided however, that the Customer named herein shall not be construed as a party to any “ride along” agreement, nor liable for Fees applicable to such thirdparty “ride along” agreements. This term is not intended to circumvent any procurement rules and regulations of the additional party.
d. No Waiver. The failure of either party to exercise any right or the waiver by either party of any breach shall not prevent a subsequent exercise of such right or be deemed a waiver of any subsequent breach of the same or any other term of the Agreement.
e. Partial Invalidity. Should any provision of this Agreement be held to be void, invalid, or inoperative, the remaining provisions of this Agreement shall not be affected and shall continue in effect as though such provisions were deleted.
f. Force Majeure. Neither party shall be deemed in default of this Agreement to the extent that performance of its obligations or attempts to cure any breach are delayed or prevented by reason of any act of God, fire, natural disaster, act of government, or any other similar cause beyond the reasonable control of such party ("Force Majeure”), provided that such party gives the other party written notice thereof promptly and, in any event, within ten (10) days of discovery thereof and uses its reasonable efforts to cure the delay.

Upon receipt of such notice, all obligations under this Agreement shall be immediately suspended. If the period of non-performance exceeds ten (10) days from the receipt of notice of the Force Majeure event, the party whose performance has not been affected may, by giving written notice, immediately terminate this Agreement. -178-
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g. Assignment; Enurement. Neither Party may assign, delegate, or otherwise transfer this Agreement or any of it rights or obligations hereunder, without the prior written consent of the other Party (such consent not to be unreasonably withheld); provided, however, that either Party may assign this Agreement without the other Party’s consent in the event of any successor or assign that has acquired all, or substantially all, of the assigning Party’s business by means of merger, stock purchase, asset purchase, or otherwise. Any assignment or attempted assignment in violation of this Agreement shall be null and void.
h. Injunctive Relief. The parties recognize that a remedy at law for a breach of the provisions of this Agreement relating to either party’s Confidential Information will not be adequate for the non-breaching party’s protection, and accordingly the non-breaching party shall have the right to seek, in addition to other relief and remedies available to it, injunctive relief to enforce the provisions of this Agreement in any court of competent jurisdiction.
i. Governing Law. This Agreement shall be governed and interpreted in accordance with the laws of the State of California, and the federal laws of The United States applicable therein.
j. Calendar Days. All references to a day or days in this Agreement mean a calendar day or calendar days.
k. Time of the Essence. Time is of the essence of this Agreement and of every part hereof and no extension or variation of this Agreement will operate as a waiver of this provision.
l. Survival. All obligations of the parties which expressly or by their nature survive termination or expiration of this Agreement will continue in full force and effect subsequent to and notwithstanding such termination or expiration and until they are satisfied or by their nature expire. m. Headings. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement.

Words in the singular mean and include the plural and vice versa.

Words in the masculine gender include the feminine gender and vice versa. Words in the neuter gender include the masculine gender and the feminine gender and vice versa.
n. Conflicts of Interest.

1. eSCRIBE covenants that it has not employed nor retained any company or person, other than a bona fide employee working -179-
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solely for eSCRIBE, to solicit or secure this Agreement. Further, eSCRIBE warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for eSCRIBE, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement.

2. eSCRIBE shall make all disclosures required by the Customer’s conflict of interest code in accordance with the category designated by the Customer, unless the Customer’s Contract Administrator determines in writing that Customer’s duties are more limited in scope than is warranted by the category designated by the City code and that a narrower disclosure category should apply. eSCRIBE also agrees to make disclosure in compliance with the City conflict of interest code if, at any time after the execution of this Agreement, Customer determines and notifies eSCRIBE in writing that eSCRIBE’s duties under this Agreement warrant greater disclosure by eSCRIBE than was originally contemplated. eSCRIBE shall make disclosures in the time, place and manner set forth in the conflict of interest code and as directed by the Customer.
o. Notice. Any notice required or permitted to be sent hereunder shall be in writing and shall be sent in a manner requiring a signed receipt, such as courier delivery, or if mailed, registered or certified mail, return receipt requested. Notice is effective upon receipt. Notice to both parties shall be to the address and contact set forth below and updated from time to time.
eSCRIBE Software Ltd.
204-60 Centurian Drive
Markham, ON L3R 9R2
Attention: Office of the President
Customer Contact Info for Notices:

Attention: City Clerk
Town of Hillsborough
1600 Floribunda Avenue
Hillsborough, CA 94010
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The undersigned parties hereby enter into this Agreement, eSCRIBE Software Ltd. Town of Hillsborough
Signature Signature
Robert Treumann, President Ann Ritzma, City Manager
Authorizing Officer, Title Authorizing Officer, Title
I have the authority to bind the organization
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Appendix A – Annual Subscription Fees
eSCRIBE Annual Service and Support Fees
Module License Type License Fee Quantity Cost
eSCRIBE Transparency Bundle Annual $ 15,500 1 $ 15,500
eSCRIBE Meeting Manager INCL
eSCRIBE Participant Access INCL
eSCRIBE Internet Publishing INCL
eSCRIBE Report Manager INCL
eSCRIBE Webcasting Plus INCL
eSCRIBE Meetings Pro Application (iOS or Windows) $ 100 5 $ 500 eSCRIBE Live Closed Captioning $ 8,940 1 $ 8,940
eSCRIBE Public Comments $ 780 1 $ 780
Forms Authentication INCL
Total - Annual Software and Support Fees $ 25,720
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Appendix B – Support Services
Subject to the terms and conditions of this Agreement, eSCRIBE shall perform the Support Services as defined.

Definitions:

The definitions used in the Agreement are incorporated herein. In addition, the following terms shall have the following ascribed to them:
“Business Hours” means the hours during which eSCRIBE’s helpdesk is available to take live incoming calls, emails and be available to respond to the Customer’s Support Contacts, namely 8:00 a.m. to 8:00 p.m., Monday through Friday eastern time (excluding statutory holidays). “Extended Hours” means the hours during which eSCRIBE’s helpdesk is available to take urgent calls during 8:00 p.m. to 11:00 p.m. EST, Monday through Friday eastern time (excluding statutory holidays). “Support Contacts” means the Customer designated individuals (to be identified in the attached Problem Reporting Schedule) and any replacements designated in writing to eSCRIBE who will serve as technical liaison between eSCRIBE and Customer and who are to have technical knowledge and experience with the Services used by the Customer. "Updates" shall mean fixes, patches, modifications, improvements to functionality or revisions to the Services and Documentation.

All other capitalized terms shall have the meanings set out in the Agreement.

Support Services:
eSCRIBE will provide the following services to Customer:
a. Technical assistance by telephone or electronic mail. b. Receipt and monitoring of calls during Business and Extended Hours at eSCRIBE’s support desk.
c. Direct access for Customer Support Contacts to eSCRIBE’s team of support technicians.
d. Provision of any available problem solutions related to the Services. e. Make reasonable commercial efforts to provide a response to all reported problems in the manner described in the Problem Reporting Process below.
f. Make available any Updates to the Services and Documentation at no additional charge, subject to Customer’s responsibility for any Implementation Services fees for any new Services.
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Exclusions:
a. Customer’s third-party hardware and software not part of this Agreement.

Problem Reporting Process:

Step 1: Contact eSCRIBE using one of the following methods:

Toll free number 1-855-299-0023
Email: [email protected]
Portal: https://customerportal.escribemeetings.com
Step 2: Provide the following information:

Provide Support Contact’s name, location the Services are in Use, telephone number and E-mail address.

Step 3: Provide a description of the problem.

Provide as much detail, including system error messages and screen printouts, as possible. eSCRIBE assign a Priority Level based on the response matrix below.

Priority Level Initial Response Status Updates
1- Complete Services or business
critical functions unavailable
or impaired
Within 2 hours Every 4 hours
2- Specific Services functions
unavailable or impaired
Within 4 hours Every 8 hours
3- Services operational, isolated
or individual user issues
Next Business Day As required on each
reported incident
eSCRIBE shall assign a ticket number to reference the case in all future communications with Customer regarding the reported incident.

Customer understands that failure to provide accurate and detailed call information as described above may increase the amount of time needed by eSCRIBE to diagnose the problem and develop a possible solution.

Regardless of the priority assignment, Customer’s problem must relate to the Services in order for Support Services to be applied hereunder. Where eSCRIBE is required to perform Support Services outside of the scope of the Agreement, including but not limited to investigations, efforts and -184-
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resolutions pertaining to third party software, hardware, networks or facilities, eSCRIBE shall charge Customer at its daily Implementation Services rate for the services rendered.

Using the Customer Community Portal, customers are able to check the status of their support tickets at any time.

The case will not be closed by eSCRIBE until receipt of written confirmation from the Support Contact that the problem has been resolved. If written confirmation or feedback is not received within ten (10) business days, it will be assumed the problem has been resolved and the case will be closed.

General Support Terms:
a. The Support Contacts will be the only persons authorized to receive the Support Services hereunder and to instruct eSCRIBE in respect of Support Services.
b. The delivery of Support Services hereunder does not extend to: i) Inadequate Customer computer configurations, installed third party software, internet connection issues or general internet congestion issues; ii) Services which have been altered, modified or improperly configured by the Customer, its customers, or any third party without eSCRIBE’s prior written consent; iii) failures related to an accident, disaster or other Force Majeure event; iv) any unauthorized use of the Services; c. eSCRIBE warrants that its Support Services personnel shall deliver services in a professional manner and in accordance with industry standards. d. Response and resolution times provided in the Problem Reporting Process or otherwise whether orally or in writing, are intended as good faith estimates, guidelines or objectives only and are not to be taken as warranties or representations.
-185-
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Appendix C – Implementation Services
Subject to the terms and conditions of this Agreement, eSCRIBE shall perform the Implementation Services as listed below.

Payment Schedule
Milestone Description Amount
Upon Signing Annual Software and Support $25,720
Upon Signing 25% Implementation fees $1,415
Milestone - Completion of Meeting
Manager Training
50% Implementation fees $2,830
Milestone - First meeting live in eSCRIBE
(Agendas and Minutes)
25% Implementation fees $1,415
All Services shall be subject to acceptance testing by Customer to verify, to its reasonable satisfaction, that each deliverable conforms to the requirements of a particular phase or milestone or that it conforms to the Functional Requirements in all material respects and does not contain errors. Customer and eSCRIBE will agree on a reasonable testing methodology for the Services. Acceptance testing will not begin for any deliverable until sufficient data, as reasonably determined by Customer, has been converted and loaded into the Services or component thereof to enable Customer to test the functionality of the Services or any component thereof in a test environment that approximates a live production environment. If Customer determines that any deliverable or Services do not conform with the foregoing requirements, Customer shall promptly deliver to eSCRIBE a notice of non-conformity, and eSCRIBE shall work diligently to correct all nonconformities free of charge to Customer by issuing one or more error corrections or re-performing the defective Services. Each error correction shall be subject to additional acceptance testing by Customer. Notwithstanding the acceptance of any deliverable by Customer, such deliverable shall remain subject to the warranty obligations of eSCRIBE.

Implementation Fees Service Fee Quantity Cost
eSCRIBE Transparency Setup/Training One time $ 3,100 1 $ 3,100 2 Meeting Types, 1 Report Template, 5 Workflows INCL
Closed Captioning Setup One time $ 2,210 1 $ 2,210
Public Comments Setup One time $ 350 1 $ 350
Total - One-time Implementation Fees $ 5,660
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Appendix D – Authorized Customer Locations
Authorized Meeting Types
Meeting Name
Main Meeting Body (Council/Board
of Trustees)
City Council
Standing Committees (Standing
Committees as established by the
Main Meeting Body, and that report
directly to Council the Main Meeting
Body)
Administrative Hearing Panel,
Architecture & Design Review Board,
Citizen Communications Advisory
Committee, Financial Advisory
Committee
Reporting Subcommittees (SubCommittees as established by the Main Meeting Body or Standing
Committee, and that report directly
to an established Standing
Committee)
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Appendix E – Legacy Data Storage Fees
Upon the completion of the initial, or any subsequent Term or Third Party Data Migration, (Appendix F) eSCRIBE will measure the total Customer Data Storage in gigabytes (GB) to calculate any Legacy Data storage fees based on the following schedule:

GB Price / GB / Year
0-50 $ 10.00
51-100 $ 9.50
101-150 $ 9.00
151-200 $ 8.50
201-300 $ 8.00
301+ $ 7.50
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Modification to Services
The Customer wishes to modify the Services as defined below, effective the ______day of _________ 2022, in accordance with the terms and conditions of the Client Subscription Agreement (the “Agreement”), dated ______________ Services Fees:

Module Addition/Deletion Annual Fee Quantity Cost
$ -
$ -
$ -
$ -
$ -
$ -
$ -
Total - Annual Subscription Fees $ -
Implementation Fees:

Service Fee Quantity Cost
$ -
$ -
$ -
Service Fee Quantity Cost
$ -
$ -
$ -
$ -
$ -
Implementation Fees
Total - One-time Implementation Fees
Training Fees
Total Training Fees
-189-
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The first year’s Subscription Fees and the Implementation Fees are due upon the date of this Appendix, and the Subscription Fees are due annually thereafter.

The undersigned parties hereby enter into this Agreement, eSCRIBE Software Ltd. Client
Signature Signature
Robert Treumann, President
Authorizing Officer, Title Authorizing Officer, Title
I have the authority to bind the organization
-190-

TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
15 NEW BUSINESS

CITY COUNCIL MEETING
FEBRUARY 14, 2022

AGENDA STAFF REPORT
ITEM SUBJECT: INTRODUCTION OF AN ORDINANCE AMENDING SECTION 2.04.020 OF THE HILLSBOROUGH MUNICIPAL CODE RELATING TO “STUDY MEETINGS” SUMMARY: Hillsborough Municipal Code Section 2.04.020 - “Study Meetings” states that minutes of study sessions shall not be kept. To ensure an accurate record of all City Council meetings, staff proposes to strike that language from the code. In addition, for clarification, staff proposes to modify the title of the section from “Study meetings” to “Study Sessions” for consistency with the Town’s standard language for these meetings, and to clarify that Study Sessions may be held as part of a regular meeting or as a special meeting. (See redline text is available in Attachment 1.) FISCAL IMPACT: There is no fiscal impact associated with introduction or adoption of the proposed ordinance beyond the routine cost of legal advertising.

ENVIRONMENTAL ISSUES: The proposed action is exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.

ATTACHMENTS:

1. HMC Section 2.04.020 (redline)

2. Ordinance
PREPARED BY: Lisa Natusch, City Clerk
RECOMMENDATION: Introduce and waive further reading of the ordinance entitled, “Ordinance of the City Council of the Town of Hillsborough Amending Section 2.04.020 of the Hillsborough Municipal Code Relating to “Study meetings.”
-191-
Town of Hillsborough Municipal Code
Chapter 2.04

2.04.020 - Study meetingsSessions.

The mayor may call aA study session of the city council may be held from at any time to time as part of a regular or special meeting agenda published in accordance with upon at least twenty-four hours' notice. Any such study session is a special meeting of the council as set forth in the Ralph M. Brown Act (Govt. Code Sections 54950 et seq.) and shall comply with all laws applicable to special meetings. However, no action shall be taken at any study session, and no minutes shall be kept. The purpose of a study session shall be informational only.
-192-
ATTACHMENT 1
ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL OF THE TOWN OF HILLSBOROUGH AMENDING SECTION 2.04.020 OF THE HILLSBOROUGH MUNICIPAL CODE RELATING TO “STUDY MEETINGS”

THE CITY COUNCIL OF THE TOWN OF HILLSBOROUGH HEREBY FINDS AND ORDAINS:

WHEREAS, Section 2.04.020 of the Hillsborough Municipal Code outlines a procedure for the holding of “study meetings;” and
WHEREAS, the City Council desires to amend the title of Section 2.04.020 of the Hillsborough Municipal Code from “study meetings” to “study sessions” to reflect the common name for informational study sessions of the City Council and for consistency with the section text; and
WHEREAS, the City Council desires to amend the Section 2.04.020 of the Hillsborough Municipal Code to strike the language stating that no minutes of study sessions shall be kept.

NOW, THEREFORE, the City Council of the Town of Hillsborough does ordain as follows:

Section 1. The recitals above are each incorporated by reference and adopted as findings by the City Council.

Section 2. Section 2.04.020 of the Hillsborough Municipal Code is hereby amended and restated to read as follows:
“2.04.020 – Study Sessions.

A study session of the city council may be held from time to time as part of a regular or special meeting agenda published in accordance with the Ralph M. Brown Act (Govt. Code Sections 54950 et seq.). However, no action shall be taken at any study session. The purpose of a study session shall be informational only.” Section 3. This ordinance takes effect thirty (30) days after adoption.

Section 4. If any provision of this ordinance or its application to any person or circumstance is held to be invalid, such invalidity has no effect on the other provisions or applications of this ordinance that can be given effect without the invalid provision or application and, to this extent, the provisions of this ordinance are hereby declared to be severable.

Section 5. The proposed action is exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.
-193-
ATTACHMENT 2
______________________________
Mayor of the Town of Hillsborough
___________________________
Attest: City Clerk
ORDINANCE NO. _____ of the Town of Hillsborough introduced on __________, and adopted on ___________, by the following vote of the City Council:

AYES: Councilmembers ________________________
NOES: Councilmembers ________________________
ABSENT: Councilmembers ________________________
ABSTAIN: Councilmembers ________________________
-194-

TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
16 DISCUSSION

CITY COUNCIL MEETING
FEBRUARY 14, 2022

AGENDA STAFF REPORT
ITEM SUBJECT: ANNUAL UPDATE ON TOWN-WIDE RISK ASSESSMENT SUMMARY: A Town-wide Risk Assessment was undertaken in FY 2017-18 to identify key areas of risk and the mitigation measures in place or to be developed for the Town. Town management staff developed the program using best practices. The approach and report were reviewed with the City Council at a Study Session on July 9, 2018. Organizations use risk assessments to help management anticipate and lessen the negative impact of issues that may arise. Having a framework and process to follow makes it easier to identify and manage risk on a continual basis.

The risk assessment process also provides a foundation for communication at all levels of the organization for anticipating, managing and controlling risk.

The objective of the program is to develop a risk assessment document that:
• Identifies the risks to achieving the organization’s objectives of providing services to its residents • Documents mitigation measures that are in place or to be developed • Can be used to communicate and track progress throughout the organization The scope is $100,000 or more financial impact or significant impairment of management’s ability to provide services to residents. The Risk Assessment program will be used in annual goal setting and budget development, and will be communicated annually to track progress and update plans.

The Annual Update presentation will provide key highlights for 2021 accomplishments and 2022 goals/programs. The 2022 items will be incorporated into the 2022 goals for the Town departments.

FISCAL IMPACT: There is no fiscal impact with this agenda item.

ENVIRONMENTAL ISSUES: The proposed action is exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.

ATTACHMENTS:

1. PowerPoint Presentation

2. Detailed Templates
PREPARED BY: Jan Cooke, Finance Director
-195-
Agenda Staff Report - Hillsborough City Council
February 14, 2022

RECOMMENDATION: This item is a discussion item only. City Council may provide any feedback to staff on the information.
-196-

TOWN-WIDE RISK ASSESSMENT
UPDATE

CITY COUNCIL GOAL SETTING SESSION
FEBRUARY 16, 2022
1 -197-
ATTACHMENT 1
Objective: Develop a risk assessment document that:
• Identifies the risks to achieving the organization’s
objectives of providing services to its residents
• Documents mitigation measures that are in place
or to be developed
• Can be used to communicate and track progress
throughout the organization
How it is used: Annual goal setting and budget
development; communication and tracking progress
2 Background
-198-
2021 Selected Highlights
3 Governance Risk
Management and
Personnel
Conducted EOC Training
COVID: Weekly
communication; virtual
meetings; online
platforms
Built personnel strength
Built Legislative Platform
Economic and
Financial
Tracked Revenue
Impacts
Tracked LIBOR Phase
Out
Implementing New
Financial System
Implemented Rate
Studies
Environmental
and Sustainability
Supported Sea Level
Rise
Adopted Food
Service ware
Ordinance and SB
1383
Researched Electric
Vehicles
WUI Inspections
Completed
Reviewed Leaf
Blower policy
Disaster or
Infrastructure
Failure
Conducted safety
training with school
staff and student
drills
Conducted drills with
HNN and
Neighborhood Fest
WUI program
implemented to
mitigate fire impact.

Updated risk and
resiliency plan and
Emergency Response
Plan.

Technology, Data
and
Communication
Transitioned to
Eaton for IT Support
Services
Reviewed Firewalls
and Cyber Security;
Replaced SolarWinds
Fiber connectivity
between servers
Promoted SMC Alert
and Zonehaven
Implemented
comprehensive
weekly
eAnnouncement
-199-
2022 Goals - Selected Highlights
4 Governance, Risk
Management and
Personnel
Continue Response to
Pandemic
City Council and Mgmt.

EOC Training
Update Housing
Element and General
Plan
Leadership Programs
Economic and
Financial
Track
Economy/Revenue
Impacts
Phase 1 Financial
System
Long Term Financing
Rate Studies
Prepare for Single
Audit
Review SBPA Renewal
Process
Environmental
and
Sustainability
Implement SB
1383
Leaf Blower
Policy
Continue WUI
Update Climate
Action Plan
Track Water
Drought
PCE Solar Project
Disaster or
Infrastructure Failure
Develop further
mutual aid for
equipment and
Building/Planning
services
Work with safety
committee with
schools to educate
new members
New generators at all
fire stations
Work with PCE for
alternate backup
power
Technology, Data and
Communication
Continue to Migrate to
Cloud
Develop Disaster
Recovery Plan
Replace Servers to
Cloud; Replace Host
Environment
-200-
Questions and Comments
5 -201-
Team One: Governance/Personnel/Risk Management/Legislative & Regulatory/Economic & Financial/Environmental Leaders: Jan and Ann Team Members: Kristin, Mandy, Lisa, Sarah, Liz R., Nelson

CATEGORY RISK STATEMENT RISK MITIGATION OR ACTION
Materiality &
Likelihood

PRIMARY
ACCOUNTABILITY 2021 ACCOMPL./PROGRESS TO DATE 2022 GOALS STATUS Governance & Personnel & Risk Management
Elected body or designated
positions (City Attorney,
Treasurer, City Clerk, Police Chief)
cannot act

1. Muni Code - City Manager is designated as
Director of Emergency services and designates
Asst Director and order of succession if Director
or staff unavailable H/L CMO
 Conducted City Council and management
staff EOC training in February 2021
 Annually conduct City Council and
management staff EOC training
Unexpected and/or extended
leaves of absence (jury duty,
medical, etc.)

1. Pre-contract for staffing services with a master
contract for all administrative departments (Precontracts for staffing implemented

2. Bench plan with cross training for designated
alternates (via Management Enrichment
Program)

3. Utilize the Management Enrichment Program
(MEP) to train future leaders M/M CMO/Dept. Heads
 HR to explore service agreement with
other cities
 Filled New Positions:

1. Admin. Assistant - CMO (backup for
HR and City Clerk)

2. Bldg./Plng. - Assistant/Associate
Planner
 Completed this year’s San Mateo
Chamber Leadership Program
 New cohort of employees are signed up
to participate in the 2022 San Mateo
County Leadership Program
 Continue involvement in San Mateo
County Leadership Program
 Revive Management Enrichment Plan
Cost of housing and affordability
for employees

1. Consider researching new forms of work models
(such as core hours, flex schedule, etc.) (Flex
hours in process)

2. Research best practices for housing assistance
programs. Explore partnering with other
jurisdictions and/or use Town property to
provide employee housing (in process via 21
Elements)

M/H CMO
 Develop long-term telecommute policy -
final policy will be rolled out in Oct/Nov
 Continue HIP Housing ADU program for
employees
 Baywood Property donation – consider
for workforce housing
 Started the rental assistance program for
employees
 Do first year evaluation on
telecommute policy
 Continue HIP Housing ADU program
for employees
 Baywood Property donation –
consider for workforce housing
Retirements

1. Train future leaders in the Management
Enrichment Program (Same steps as for
unexpected leaves)

2. Identify new ways to attract employees to the
Town. Steps currently being taken include career
development through the Management
Enrichment Program and conducting a
Compensation and Classification study to ensure

M/H CMO
 Review the performance evaluation
system – setting up subcommittee
 CMO – Continue to build bench strength
and train on skills by participating San
Mateo Leadership programs (potential
sponsor change)
 Begin committee work on revamping
performance evaluation system
 CMO – Continue to build bench
strength and train on skills by
participating in Town MEP and San
Mateo Leadership programs
-202-
ATTACHMENT 2

CATEGORY RISK STATEMENT RISK MITIGATION OR ACTION
Materiality &
Likelihood

PRIMARY
ACCOUNTABILITY 2021 ACCOMPL./PROGRESS TO DATE 2022 GOALS STATUS clear job descriptions and competitive
compensation
Violence in the Workplace

1. Training

2. Ensure buildings are secure and install panic
buttons

3. Continue Employee Assistance Benefit H/L PD
 PD- Conduct suspicious person
training for Town Hall and public
works (target May 2021)
 PD - Train staff on panic button
features and procedures
Cyber Security

1. Maintain cyber insurance

2. Develop Cyber Security plan
H/M CMO/Risk Mgr.
 Move to SaaS for new systems: Financial
System, Building/Planning Permitting
Software, Records Management System,
Agenda Management System
 Town maintains cyber insurance
 Cyber evaluation conducted by new IT
service provider (ST and LT plan in place)
 Phishing emails tested with employees
 Cyber grand jury report submitted to CC
and was reviewed by BBK
 Implement SaaS Tyler Munis financial
system for 7/1/2022
Illness or death that impact a
large number of personnel

1. Mutual Aid Agreements

2. Joint EOC

3. Pre-contract for staffing services (Implemented) H/L Dept. Heads  Responded to COVIID-19 pandemic
 Conducted cross training that has
supported changing environment due to
COVID-19
 Hired personnel to support CMO, HR,
CLERK functions
 Continue to respond to COVID-19
pandemic
Town does not deliver on
planning requirements due to
ADRB or staff not being able to
act; Same for Code Enforcement
requirements

1. If due to pandemic or building safety, conduct
virtual meeting.

2. If no Board members can act, delegate to
Director and Council Commissioner (may require
code change)
L/L CA
 Implemented online services for the
public for permitting
 Provided virtual engagement (ZOOM) and
transparency to the community to enable
dialog for community input, meetings,
and information
 Public meetings are recorded and posted
on the website
Completed
-203-

CATEGORY RISK STATEMENT RISK MITIGATION OR ACTION
Materiality &
Likelihood

PRIMARY
ACCOUNTABILITY 2021 ACCOMPL./PROGRESS TO DATE 2022 GOALS STATUS Legislation & Regulation
Fines/litigation resulting from
regulatory non-compliance,
failure to comply with new
legislation, laws, or Town policies

1. Each department tracks legislation (ongoing)

2. Conduct training for new regulations that
impact Town wide processes

3. Each department follows best practices
(ongoing)

4. Train on mandatory policies annually; review
policies regularly

5. Annual review of insurance coverage M/M CMO/Dept.

Heads/CA
 Bldg./Plng: Tracks ADU and housing and
land use legislation and update policy
documents as needed; Housing Element
and General Plan workplan established
 Implementation of SB 1383 under way
 LAFCO Bi-Annual Reporting- was delayed
by LAFCO
 Filled staff position solely dedicated to
regulatory compliance in Public Works
 Continue to participate in the ERMA
program for training and reporting
 Develop Town’s legislative platform
with lobbyist consultants and track
legislation impacting the Town
(housing, wireless, water, other)
 All departments track regulatory
compliance and take action if any
issues arise
Economic & Financial Risk
Loss of revenue caused by any
impact such as recession, sudden
market failure, state takeaway

1. Develop flexible staffing/consulting
opportunities (Implemented)

2. Maintain contingency reserves at policy levels,
at a minimum

3. Annual review of budget by City Council and
Financial Advisory Committee

4. Periodic review of investment portfolio with FAC
investment committee to review diversification

5. Long term planning for facilities, IT, CIP,
equipment, and vehicle replacements

6. Consider the need to develop an alternate
source of revenue for unfunded needs (e.g.
storm drains or other long-term needs)

7. Track legislative impacts to determine impact on
revenues and expenditures
M/M Finance
 Prepared COVID-19 Dashboard and
updates to FAC and City Council
 Pension update and pre-funding
discussion in December 2021 city council
meeting
 Quarterly investment report included in
City Council agendas
 General Fund reserve policy for
facilities and disasters (in connection
with the COOP- most likely 22/23
 Continue to develop funding
strategies for long term unfunded
needs
 Track Excess ERAF and MVLF and
determine any legislative platform
 Continue COVID-19 Dashboard
Refunding of monies caused by
debt or grant non compliance

1. Annual compliance filings and financial audit

2. Maintain enterprise water and sewer rates that
cover expenses (required by debt covenants)

3. Management oversight of grant requirement
compliance

4. Maintain Bond Standby Purchase Agreement
(liquidity facility)
H/L Finance
 Conducted study and implemented plan
for tracking LIBOR phase-out on 2006A
interest rate swaps
 Performed regulatory filings as required
for CARES Act and ARPA.
 Tracked grants in all Departments; no
Single Federal Audit required for 20/21 as
Federal grants > $750k
 Conducted RFP and conducted cost of
service studies for Sewer and Solid Waste;
reviewed 1/1/2022 water rates
 Spring COP Series 2006A - 2022 LIBOR
update to FAC/CC
 Publish dashboard for ARPA project
progress; comply with U.S. Treasury
reporting
 Prepare for Single Audit for 6/30/2022
(ARPA, street grants, B/P grants)
 Review renewal of SBPA expiring
6/30/2023
 Prepare 218 for solid waste rates
effective 1/1/2023; annual review of
water and sewer rates
-204-

CATEGORY RISK STATEMENT RISK MITIGATION OR ACTION
Materiality &
Likelihood

PRIMARY
ACCOUNTABILITY 2021 ACCOMPL./PROGRESS TO DATE 2022 GOALS STATUS Sole dependence on major
service partners-financial or
service interruption (wastewater
treatment plants, SFPUC water,
fire JPA, solid waste franchise,
PG&E, Peninsula Clean Energy)

1. Maintain reserves at policy level

2. Where deemed necessary, financial review of
partner solvency at contract award for material
contracts. Establish backup provider if
applicable. H/L Finance/CMO/Public Works
 Finalizing amended agreement with San
Mateo for Clean Water project
 Council approved solar project and
partnership with PCE for public works
corporation yard.
 Council members serve on these boards
so there is oversight and control
 Track water drought and state
mandates/SFPUC actions; continue
voluntary water conservation
Environmental & Sustainability
Climate change and sea level rise
impact quality of life in the
region

1. Understand long term needs and responsibilities
for climate change and sea level rise

2. Develop long term plan for addressing needs
and responsibilities

M/L CMO
 Develop telecommute policy
 CMO-Evaluated Town vehicle fleet for
electric vehicles in response to Grand Jury
report; PW- Public works vehicles are
reviewed for electric when replaced
 Review leaf blower policy - study session
completed
 Response to sea level rise grand jury
report completed
 Stormwater projected completed
 Continue Leaf Blower discussion with
City Council and community
 Study tree policies and programs
 PCE solar project
 Public works and police Department
electric vehicles
 Implement reach codes
Town stays current with
sustainability best practices and
programs and is compliant with
state AND Town regulations

1. Track County-wide and state programs and
regulations

2. Develop ordinances and policies responsive to
sustainability

M/L CMO
 Investigate feasibility of Reach Codes
 Adopted food service ware ordinance
(San Mateo County and cities)
 Complied with FCC regulations for
wireless
 PW- Implemented new regulations on
stormwater, sewer, and water systems
 WUI ordinance implemented (education,
inspections, fines and penalties)
 Public works completed the 2021
vegetation management plan
 Implement SB 1383
 CMA- Update Climate Action Plan in
2023
 Continue WUI progam
 Public Works to complete the 2022
vegetation management plan
-205-

CATEGORY RISK STATEMENT RISK MITIGATION OR ACTION
Materiality &
Likelihood

PRIMARY
ACCOUNTABILITY 2021 ACCOMPLISHMENTS 2022 GOALS STATUS
Disaster or Infrastructure Failure
Emergency Requiring Mutual Aid

1. Utilize existing formalized Mutual Aid agreements (Existing)

2. To be used for routine calls for service and emergencies

3. Department policies cover responding agency personnel Low Routine and Emergency PD Worked with US Secret Service in preparation for campaign event Reconnect with other PW Agencies and
update PW Mutual Aid equipment list.

Building department to work with other
Building departments in the area to
update their Mutual Aid equipment list.

School Incident

1. Deny Access, Render Safe, Establish Detours, Public
Messaging

2. Investigate Failure, Determine Causal Factors, Prosecution Low Routine and
Emergency PD Worked more closely with our private schools for drills and training Safety Committee with schools to
discuss emergency procedures with new
staff.

Large scale earthquake
restricting access to service areas

1. CERT training for citizens to provide aid in their
neighborhood areas

2. Utilize mutual aid agreements
Low Emergency
Anticipated CCFD and PD
HNN large scale drills and conducted
training at neighborhood fest
Utilize some of the High Line project
study to train our staff in existing
vulnerabilities in our water connections.

Pandemic - System overwhelm
and staffing shortages

1. Develop alternate ways of doing business such as remotely

2. Utilize consultants and consult SMCO OES

3. Develop health protocols Ongoing TH
Additional PPE for staff and prophylactic
treatment protocols. ~90% of staff
returned to work within ~3 months.

Revise staffing and rotating lists to make
sure that levels of service are met
depending on the severity of the
pandemic restrictions.

Fire with Significant Life Loss

1. Initial Emergency Response (Automatic Aid)

2. Utilize Mutual Aid agreements

3. After Action Management Mutual Aid Low Emergency
Anticipated CCFD and PD
The local Auto aid program in conjunction
with the state master mutual aid program
provides for resources in this event. Start
of the successful WUI program. Successful
Firewise program.

The local Auto aid program in
conjunction with the state master
mutual aid program provides for
resources in this event. Continue the
success of the WUI and Firewise
programs.

EOC effectiveness

1. Recurrent and relevant EOC training

2. Develop mini training scenarios

3. Ensure new staff has been trained
Low Emergency
Anticipated CMO
Conduct EOC training/mini exercises New staff should enroll in introductory ICS training workshops. Breakdown EOC
groups.

Water system failure - Inability
for CCFD to use water supply
A complete failure is extremely unlikely due to our many pressure zones.

Low Emergency
Anticipated PW and CCFD
There is a robust auto and mutual aid with
hose tenders and water tenders that can
be requested locally and statewide.

Updated the Risk and Resilience Analysis
and emergency response plan.

Public Message system
Continue to work on the Highline and
other water improvement projects.

Continue to integrate with EOC
protocol.

Power failure

1. Redundancies (e.g. generators)

2. Insure appropriate extra supplies on hand

3. Work with PG&E and PCE Low PG&E, PW, CCFD
Apply for grants, purchase additional
generators, and sign boards
PW installed the hybrid generator.

PW continue to work with PCE. Look
into other sources of power (solar &
battery). New generators at all fire
stations. Maintain and update all
generators at public facilities.

Landslides in public right of way
cutting off access as well as
underground utilities

1. Interrupted Power, Water, Sewer, All Utilities

2. Life Saving Efforts and Evacuation Detours

3. Evacuation centers
Low Emergency
Anticipated CCFD, PD, PW,
B&P
Same as water system failure for CCFD, also
CCFD has heavy rescue capabilities
Working on stormwater projects (A2
projects) which help reduce the risk of
landslides. Permitting support for private
property remedial corrective
infrastructure.

Low likelihood due to current drought
conditions and La Nina year.

Team Two: Disaster or Infrastructure Failure
Leaders: Paul and Bruce Team Members: Doug, Tim, Sara, Natalie, Doug, Mark -206-

CATEGORY RISK STATEMENT RISK MITIGATION OR ACTION
Materiality &
Likelihood

PRIMARY
ACCOUNTABILITY 2021 ACCOMPLISHMENTS 2022 GOALS STATUS
Bridge collapse – we have several
bridges that are 90 to 100 years
old

1. Deny Access, Render Safe, Establish Detours, Evacuation, Public Messaging

1. Investigate Failure, Determine Causal Factors, Prosecution Low PW, CCFD, PD, B&P
CCFD has heavy rescue capabilities
PW can hire a consultant to devise a bridge
replacement plan.

Continue to review the annual bridge
reports from the state and continue to
make maintenance work orders as
needed.

Disaster or Infrastructure Failure
Lift Station collapse – huge
sewage mess and environmental
damage as well as loss of sewer
service until repaired.

2. Deny Access, Render Safe, Establish Detours, Evacuation, Public Messaging

3. Investigate Failure, Determine Causal Factors, Prosecution Low PW Purchase additional pumps and generators.

Brooke Court Sewer lift station was just
completed. Hayne lift station initial
evaluation completed.

Evaluate and or design improvements
for Hayne and Corp Yard lift stations.

Replace PD lift station.

Water Tank collapse – loss of
regular public convenience and
potential fire danger

1. Deny Access, Render Safe, Establish Detours, Evacuation, Public Messaging

2. Investigate Failure, Determine Causal Factors, Prosecution Low Emergency Anticipated PW, CCFD, Police
There is a robust auto and mutual aid with
hose tenders and water tenders that can
be requested locally and state-wide.

Train new staff with understanding system,
valves, alternate pumping, improve
messaging
Complete design on and start
construction of Darrell water tank.

Water Tank attacked by terrorist
trying to poison the public

1. Deny Access, Render Safe, Establish Detours, Evacuation, Public Messaging

2. Investigate Failure, Determine Causal Factors, Prosecution Low Emergency
Anticipated Police and PW TCAT training scenario- based training. Completed the SALTO lock system.

Patrol awareness training. Update the
SCADA system and improve the
intrusion alarms.

Water System compromised
from the regional level – unsafe
to drink and may cause health
issues.

1. Deny Access, Render Safe, Establish Detours, Evacuation, Public Messaging

2. Investigate Failure, Determine Causal Factors, Prosecution Low Emergency
Anticipated

SFPUC, BAWSCA,

SMCO, PW,
Police,
COOP for long term staffing. Updated the
ERP.

Coordinate with SFPUC and BAWSCA. All
new staff working with water should be
on the notification system.

PG&E Gas transmission line
explosion

1. Deny Access, Render Safe, Establish Detours, Evacuation, Public Messaging

2. Investigate Failure, Determine Causal Factors, Prosecution Low Emergency
Anticipated

PGE, TH, CCFD,
PD
PGE staff education
COOP long term facility operation. Added
the PGE transmission lines to internal GIS
system.

Continue to work with PGE on
mitigation.

Gas leak into local sewer system
which ignites and explodes

1. Deny Access, Render Safe, Establish Detours, Evacuation, Public Messaging

2. Investigate Failure, Determine Causal Factors, Prosecution Low Emergency
Anticipated All Camera more sewer main lines to identify possible sources/conflicts Continue to camera sewer lines.

Doran Bridge Hwy 280 collapse

1. Deny Access, Render Safe, Establish Detours, Evacuation, Public Messaging

2. Investigate Failure, Determine Causal Factors, Prosecution Low Emergency
Anticipated
MA for CHP
SMCO COOP long term operational periods
-207-

CATEGORY RISK STATEMENT RISK MITIGATION OR ACTION

PRIMARY

ACCOUNTABILITY

MATERIALITY &

LIKELIHOOD
2021 COMPLETED/IN PROGRESS 2022 GOALS STATUS
Servers, Data and Security
Cyberattacks

Although protections are in place, the
Town is still vulnerable. Hackers are
always trying to circumvent firewalls
and other protections so users must
always be cautious when browsing,
opening emails, and using thumb drives
or other types of data transfer devices.

1. The Town utilizes the latest firewall technology with frequent firmware updates.

2. The antivirus, malware protection and vulnerability detection subscriptions are installed and updated on all workstations.

3. All traffic is logged into the syslog server.

4. Windows updates are being applied to both workstations and servers.

5. Email is passed through Microsoft 365 security checks.

6. The Town continues to have mandatory cybersecurity training.

7. The network environment and systems are monitored 24/7

CMO VERY HIGH AND

CONSTANT
 Completed migration to
Office 365 and bolstered
email quarantine settings
 Completed a cybersecurity
assessment as part of a
response to the Grand Jury
on ransomware
 Bolster multi-factor
authentication
 Continue to conduct
mandatory cybersecurity
training via KnowBe4 in
December
 Develop a comprehensive
Disaster Recovery Plan ONGOING
Server and Digital Data Failure

Server hosts and digital data
environments can also be a target of
frequent cyberattacks that could lead to
data loss or corruption.

1. All environments include VMWare virtual software containing two redundant hosts and a storage area network.

2. The storage is setup in a RAID 5 configuration, which allows for high-end disk redundancy.

3. Each server has a shadow copy of data enabled allowing for fast recovery of data.

4. The backup software is currently automatically setup to backup to disks.

5. The Town recently installed three high-speed tape recovery systems.

CMO
MEDIUM
Backups and
redundancy
reduce risk
 Mapped out timeline with
Eaton for server and
network upgrades
 Replaced SolarWinds with
Eaton’s proprietary
monitoring software
 Upgrade print servers and
decommission old Exchange
server
 Explore segmentation

ONGOING
Server Hardware Failure
The Town has three physical server
environments: PD, TH and PW. The
separation is necessary due to
connectivity issues and DOJ
requirements.

1. The Town replaced all three-server equipment environments (TH, PD & PW) in 2018. This project improved the network system security, performance, reliability, scalability, and increase storage.

2. The Town installed new server environments with VMWare vSAN Hyper-converged software-defined storage platform
containing 3 hosts.

3. Backup to disk using Veeam software is configured for each environment.

4. The system environments have matching technology,
software and hardware components which will eliminate past issues with system compatibility and software support.

5. The server system allows for onsite and offsite 24/7 monitoring and notification of issues or failures. TH and CY critical systems are being backed up to Amazon cloud services for DR purposes.

CMO
MEDIUM
Backups and
redundancy
reduce risk
 Continue to work with IT
provider to identify
potential hardware and
security improvements for
server rooms
 Continue to assess migrating
all data and servers to the
cloud
 Test site-to-site replication
of three environments
 Replace 3 vCenter host
environments ONGOING
Team Three: IT/Communication/Security
Leader: William Team Members: Rich, Gigi, Rob, Sara, Liz -208-

CATEGORY RISK STATEMENT RISK MITIGATION OR ACTION

PRIMARY

ACCOUNTABILITY

MATERIALITY &

LIKELIHOOD
2021 COMPLETED/IN
PROGRESS 2022 GOALS STATUS
Software and Communications
Failure to keep up with technology
Outdated hardware and software expose the
Town to poor performance and potential
security risks if the technology is no longer
supported.

1. The Town is currently in the process of implementing many technology upgrades, including:
- Financial Management and Payroll
- Document and Agenda Management
- Permitting software

CMO MEDIUM
 Completed RFP process
for agenda management
and permitting software
 Completed phone
system and server
upgrades
 Coordinate
implementation and
training for new Finance
software
 Select vendors and begin to
implementation process for
new software
(agenda/document
management, finance,
permitting)
 Complete Council Chamber
upgrades to allow for hybrid
meeting environments
 Explore migrating to a cloudbased phone system
 Explore expanding
eGovernment capabilities
 Explore inventory
management tools that can
maintain accurate hardware
counts
 Continue to work with IT on
Public Works technology
projects

ONGOING
Town Communications with the Public

1. The Town utilizes various ways to communicate with
the public:
- Town newsletters, e-Announcements and website
- Social media (PD and CCFD)
- Banners and electronic signage

CMO LOW
 Updated eAnnouncement
schedule to weekly
 Continued efforts to
promote SMCAlert,
Zonehaven, HNN and
CERT Programs
 Complete Council Chamber
upgrades to allow for hybrid
meeting environments
 Expand communication
efforts by releasing an
additional monthly update

ONGOING
Disruption of 911 service

1. The Police facility has been assessed for structural integrity, ADA compliance and functionality

2. Utilize alternate means of communication HAM, Cell,
direct radio, etc.

3. Partner with Burlingame

4. County SAMCAT Dark Fiber program

PD/CMO LOW
 Utilize the new fiber
connection to improve
connectivity between
facilities and other
jurisdictions
 Next Generation 911 (NG911),
state mandated upgrading of
911 system (due by Q3 2022)

ONGOING WITH

AT&T AND
COUNTY
Radio System Failure 1. Utilize common County radio back up frequencies PD/PW LOW  Continue to explore
infrastructure
improvements that can
increase performance
 R.S. Security, secure radio
communication via encryption
(due by end of 2022)

ONGOING

MONITORING &

MAINTENANCE
Emergency Residential Notification System 1. SMC Alert

2. HNN and CERT trainings PD/CM MEDIUM
 Evaluate 2021 training
programs that follow
existing Health Orders

CONTINUE

COLLAB WITH
COUNTY
-209-
Tech Continuation of Town Payables/Payroll

1. Town staff (after tech upgrades) would be able to (1) access cloud-based payroll software and continue to
pay personnel outside of the office. Even if timesheets were unable to be submitted, staff could go off MOU,
previous payroll and existing statistics in EE set up. (2) for payables, access financial software from backups
and do online check payments through existing
banking relations

FIN/CMO MEDIUM
 Work with Tyler to
implement new
software and train Town
staff
 Completed Phase one
Chart of Account
conversion and Vendor
AP conversion into the
system.
 July 2022 - Go live with Phase
one of the Financial Software
Project (Core Financials)
 January 2022 - Begin Phase 2
conversion and
implementation (Utility
Billing)

ONGOING
-210-

TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
17 DISCUSSION

CITY COUNCIL MEETING
FEBRUARY 14, 2022

AGENDA STAFF REPORT
ITEM SUBJECT: PENSION UPDATE
SUMMARY: This agenda item is to provide an update on the status of the Town’s pension plans.

In November 2021, the CalPERS Board completed its Asset Liability Management (ALM) review process to determine changes to the actuarial assumptions, policies, and funding for the CalPERS public pension plans. This is a discussion item only and no action is required.

Update on CalPERS Asset Liability Management Review
At the conclusion of the 2021 Asset Liability Management (ALM) process, the board voted to keep the discount rate at 6.8% and selected a new asset allocation for the fund’s investment portfolio for the next four years. Additionally, new economic and demographic actuarial assumptions were adopted by the board. These new assumptions will impact employer contribution rates for public agency employers in FY 2023-24. The adopted changes to the actuarial assumptions are expected to increase slightly near-term employer contributions rate requirements. However, when the expected investment gain for FY 2020-21 of 21.3% is factored in, many plans will see the required employer rates comparable to or slightly lower than previously determined rates. Each plan is unique, and contribution impacts will vary across plans.

Update on Section 115 Pension Trust
The Town established a section 115 pension trust and funded it in 2019 with the purpose of having reserves to mitigate future budget volatility from annual contribution changes. Monies are placed in a separate restricted trust account that can only be used to pay for pension costs. The reserves will be available to smooth out budget increases coming from a steep climb in annual required pension contributions. As of December 31, 2021, the trust balance is $6.2 million, and the reserve balance equates to approximately 2 years of annual pension contribution costs. The trust portfolio has achieved the expected annual rate of return since inception even with the market volatility caused by the economic uncertainty from the pandemic.

Additional Information
The Town has proactively managed its pension obligation, including paying down-side fund liabilities, creating a second pension formula for miscellaneous employees, partnering with employees to pay a portion of the employer contribution, and more recently, funding the pension 115 trust to maintain reserves for future impacts. In addition, the ALM changes adopted by the CalPERS Board are expected to improve the funded status of the plans. The Town’s pension plans -211-
Agenda Staff Report - Hillsborough City Council
February 14, 2022

are at approximately 70% funded status as of June 30, 2020 valuations. Any pre-funding for FY 2022-23 could be reviewed as part of the annual budget review cycle.

FISCAL IMPACT: There is no fiscal impact associated with this discussion item.

ENVIRONMENTAL ISSUES: This discussion item is exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.

ATTACHMENTS: PowerPoint Presentation
PREPARED BY: Jan Cooke, Finance Director
RECOMMENDATION: No action is required. This item is for discussion only. -212-
© 2022 GovInvest Inc.

Pension Update
Town of Hillsborough
February 14, 2022
-213-
© 2022 GovInvest Inc.

Understanding Pension Funding
2 Pension Basics Changes Since the
Last Valuation
Impact of Changes
How is your agency
doing relative to other
agencies?
-214-
© 2022 GovInvest Inc.

Pension Basics
3 -215-
© 2022 GovInvest Inc.

City has Two Safety Benefit Structures
Safety PEPRA Safety
Hire Date On or before
12/31/12
On or after
1/1/13
Formula 3.0% @ 50 2.7% @ 57
Final Pay Period 12 months 36 months
COLA 2% per year 2% per year
Employee
Contributions 9% of pay 13.75% of pay
(50% of Normal Cost)
4 -216-
© 2022 GovInvest Inc.

City has Three Miscellaneous Benefit Structures
Miscellaneous Miscellaneous
Tier 2
PEPRA
Miscellaneous
Hire Date On or before
12/31/11
Between 1/1/12
and 12/31/12
On or after
1/1/13
Formula 3.0% @ 60 2.0% @ 60 2% @ 62
Final Pay
Period 12 months 36 months 36 months
COLA 2% per year 2% per year 2% per year
Employee
Contributions 8% of pay 7% of pay

7.25% of pay
(50% of Normal
Cost)
5 -217-
© 2022 GovInvest Inc.

Projected Classic vs PEPRA Payroll
6 31.3%

53.2%

72.1%

84.2%

93.1%

97.9% 99.7%
0%
20%
40%
60%
80%
100%
120%
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
20202021202220232024202520262027202820292030203120322033203420352036203720382039204020412042204320442045204620472048 Classic PEPRA % PEPRA
-218-
© 2022 GovInvest Inc.

Assumptions Set Future Cost & Funding Expectations
7 Economic
• Inflation
• Investment Return
• Salary Growth
Demographic
• Retirement
• Disability
• Death
• Termination
Major Driver of
Plan Cost
-219-
© 2022 GovInvest Inc.

How is Hillsborough doing
Relative to Other Agencies?
8 -220-
© 2022 GovInvest Inc.

Comparison Metrics
• Funded Percentage
• Plan assets divided by Plan liabilities
• Calculated as of June 30, 2020
• Total Contribution Percentage
• Required Contribution divided by Projected Pensionable Compensation 9 -221-
© 2022 GovInvest Inc.

Comparison Group
• City results are being compared against the results for all CalPERS agencies in the Risk Pool
• Comparisons are made to similar classifications:
• Classic Miscellaneous Plan against all Classic Miscellaneous Plans • PEPRA Miscellaneous Plan against all PEPRA Miscellaneous Plans • Classic Safety Plan against all Classic Safety Plans
• PEPRA Safety Plan against all PEPRA Safety Plans
10 -222-
© 2022 GovInvest Inc.

Miscellaneous Plan
– Funded Percentage as of June 30, 2020 (71.5%)
11 Hillsborough
Hillsborough
Tier 2
-223-
© 2022 GovInvest Inc.

Miscellaneous Plan
– Total Contribution Percentage as of June 30, 2020 (61.6%) 12 Hillsborough
Hillsborough
Tier 2
-224-
© 2022 GovInvest Inc.

Hillsborough
PEPRA Miscellaneous Plan
– Funded Percentage as of June 30, 2020 (90.3%)
13 -225-
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PEPRA Miscellaneous Plan
– Total Contribution Percentage as of June 30, 2020 (8.6%) 14 Hillsborough
-226-
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Safety Plan
– Funded Percentage as of June 30, 2020 (70.3%)
15 Hillsborough
-227-
© 2022 GovInvest Inc.

Safety Plan
– Total Contribution Percentage as of June 30, 2020 (72.6%) 16 Hillsborough
-228-
© 2022 GovInvest Inc.

PEPRA Safety Plan
– Funded Percentage as of June 30, 2020 (92.3%)
17 Hillsborough
-229-
© 2022 GovInvest Inc.

PEPRA Safety Plan
– Total Contribution Percentage as of June 30, 2020 (13.9%) 18 Hillsborough
-230-
© 2022 GovInvest Inc.

Changes Since Prior Valuation
19 -231-
© 2022 GovInvest Inc.

CalPERS Investment Return:

21.3%
Strong Investment Return Triggers Lower Discount Rate
Provision of Funding Risk Mitigation Policy
20 -232-
© 2022 GovInvest Inc.

CalPERS Historic Investment Returns
21 -3.1%

35.4%

24.6%

13.8%

3.9%

15.7%

9.7%

6.5%

12.5%

14.5%

2.0%

16.3%

15.3%

20.1%

19.5%

12.5%

10.5%
-7.2% -6.1%

3.7%

16.6%

12.3%

11.8%

19.1%
-5.1%
-24.0%

13.3%

21.7%

0.1%

13.2%

18.4%

2.4%

0.6%

11.2%

8.6%

6.7%

4.7%

21.30%
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%
19841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015201620172018201920202021 Plan Year Ending June 30
Actual Discount Rate 5 per. Mov. Avg. (Actual)
Dot Com Crash
Great Recession
-233-
© 2022 GovInvest Inc.

More Money from Investment Return means
Less Money Required from Contributions
22 Contributions
-234-
© 2022 GovInvest Inc.

Funding Risk Mitigation Policy
- Less Investment Risk means Lower Expected Investment
Return
23 -235-
© 2022 GovInvest Inc.

Lower Discount Rate Means Less Money is Expected
from Future Investments
24 Discount Rate
-236-
© 2022 GovInvest Inc.

Major Assumption Changes
• Discount Rate – Reduced from 7.0% to 6.8%
• Inflation – Reduced from 2.5% to 2.3%
• Wage Growth – Increased from 2.75% to 2.8%
• Demographic Assumptions – Minor Changes to Mortality, Retirement, Termination and Disability Rates
25 -237-
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What is the Impact of those
Changes?
26 -238-
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Funded Status Comparison
27 -239-
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Funded Status
28 -240-
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Total Required Employer Contributions
29 -241-
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Stabilizing Cost Using a
Section 115 Pension Trust
30 -242-
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Hillsborough has Implemented a
Section 115 Pension Trust
• Administered by Keenan
• Approximately $6.2 million as of December 31, 2021
31 -243-
© 2022 GovInvest Inc.

Contingency Reserve Account 115 Trust
Fixed income investing only Fixed Income or diversified investing available
Investments not tailored for long term use Can be tailored for short- or long-term use Revocable Irrevocable (for non-pension expenses)
Can be accessed for other uses Dedicated solely for pension costs Unprotected from creditors Exclusive benefit/protected from creditors Reserves Are the Cornerstone of
Financial Flexibility
17 -244-
© 2022 GovInvest Inc.

Potential Uses of a Section 115 Trust
33 • Rate Stabilization - Trust assets can be theoretically accessed to pay CalPERS at anytime to reduce volatility and offset unexpected rate increases.
• Diversification - Provides access to a broader universe of investments that the City can undertake on its own, including stocks and longer-term bonds.
• Control - Allows the City to maintain control and investment oversight of assets.
• Rainy Day Fund - Emergency source of funds when Employer revenues are impaired based on economic or other conditions. -245-
© 2022 GovInvest Inc.

Issues to Review
• What is the Primary Goal for the Section 115 Pension Trust? • Stabilize City Contribution Rates
• Improve Plan Funded Percentage
• Other
34 -246-
© 2022 GovInvest Inc.

Issues to Review
• When should the City use some (or all) of the money in the Section 115 Pension Trust?
• Rising Rates
• Revenue Shortfall
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© 2022 GovInvest Inc.

Issues to Review
• Should the City put More Money into the Section 115 Pension Trust? • What should be the funding target?
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© 2022 GovInvest Inc.

Should the City adjust the
Asset Allocation in the Trust?
37 Asset Allocation as of December 31, 2021
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© 2022 GovInvest Inc.

Questions?
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TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
18 INFORMATIONAL

CITY COUNCIL MEETING
FEBRUARY 14, 2022

AGENDA STAFF REPORT
ITEM SUBJECT: FY 2021-22 MID-YEAR FINANCIAL UPDATE
SUMMARY: This agenda item is to provide a FY 2021-22 mid-year budget update.

The year-to-date financial results and updated projection of the Town’s General Fund shows the Town will meet or exceed its budget. This improved forecast is primarily due to improved revenue in permitting, property tax revenues and MVLF. There are no significant amendments to the expenditure budget. In addition, the Town received $1.3 million in American Rescue Plan Act monies that will be used for City Council approved ARPA projects.

FISCAL IMPACT: There is no fiscal impact associated with this item.

ENVIRONMENTAL ISSUES: This item is exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.

ATTACHMENTS: FY 2021-22 Q2 Quarterly Financial Report
PREPARED BY: Jan Cooke, Finance Director
RECOMMENDATION: No action is required. This item is informational only. -251-
Town of Hillsborough
2021-22 Quarterly Financial Report (Unaudited)
Second Quarter Ending December 31, 2021
1 EXECUTIVE SUMMARY
This financial report summarizes the activities of the Town’s General Fund and its Enterprise Funds for the fiscal year-to-date ended July 1, 2021 to December 31, 2021. The General Fund is the primary fund of the Town and accounts for most operating activities. The Enterprise Funds account for the sewer and water operations and funding is primarily through user charges.

The second quarter FY 2021-22 General Fund results are in line with budget. Key changes in Q2 include:
• Property Tax Revenue for FY 2021-22 - The Town’s property tax assessment roll was certified by the County Assessor for FY 2021-22 with a 4.34% increase in assessed value, which is in line with the adopted budget. Total property taxes through the second quarter are 51% of budget and 4% higher when compared to the same period last year.
• In-Lieu Motor Vehicle License Fees (MVLF) – The FY 2021-22 MVLF allocation will be lower than the County’s original estimate, however the budget was conservative, and this revenue source is on track with budget.

MVLF is at 70% of budget at Q2.
• American Rescue Plan Act (ARPA) – The Town received $1.36 million of American Rescue Plan funding. For accounting purposes, unspent funds are classified as deferred and are recognized as revenue when spent.

The Q2 report reflects $1.0 million in deferred for future spending. Total spending year to date in FY 2021-22 is $277k.
• CalPERS Asset Liability Management Review Cycle - The CalPERS Board completed the review of the comprehensive Asset Liability Management Review, which occurs on a four-year cycle. The Board confirmed a 6.8% discount rate and is adjusting the investment asset allocation to improve return.

GENERAL FUND
General Fund revenues for the first half of fiscal year are 54% of budget and are 4% higher when compared to the same period last fiscal year. The increase over the prior year is primarily driven by increased property tax revenue, one-time Excess ERAF revenue, offset somewhat by lower investment income.

Prior year investment income had a large market correction for the 115-pension trust following the downturn in late fiscal year 2019-20 from the COVID-19 pandemic. The year over year decrease is primarily associated with this impact, along with a lower LAIF performance and negative market value adjustments from both the LAIF account and the Section 115 pension trust account. Quarter 2 has slightly improved the General Fund investment income, currently at $60k year-to-date.

General Fund expenditures are in line with budget at the end of second quarter and 13% higher as compared to the same period last year. Most departmental expenditures are in line with the adopted budget. City Attorney department is at 80% of budget primary driven by litigation cost.

The General Fund shows a net excess (revenue exceeding expenditures) of $0.95 million for the quarter. Results are in line with the adopted budget.
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Town of Hillsborough
2021-22 Quarterly Financial Report (Unaudited)
Second Quarter Ending December 31, 2021
2 GENERAL FUND (CONTINUED)
General Fund ending fund balance on December 31, 2021 is $29.8 million of which $15.0 million is reserved for contingencies by policy and $5.3 million is restricted in the Section 115 pension trust. The remaining funds ($9.5 million) are held for capital projects and future contingencies.

WATER FUND
Water operating revenue in the second quarter is 14% below when compared to the same period last fiscal year.

Water unit sales decreased by 19% and water purchase costs decreased by 13% primarily driven by a decrease in purchased units. There is no SFPUC wholesale water rate increase for fiscal year 2021-22. The SFPUC will be evaluating the rates at its February meeting and could adjust the rates for 2021-22 considering the potential drought.

Investment income for the Water Fund was also affected by the prior year market correction for the 115-pension trust following the downturn in late fiscal year 2019-20 from the COVID-19 pandemic. The year over year decrease is primarily associated with this impact, along with a lower LAIF performance and negative market value adjustments from both the LAIF account and the Section 115 pension trust account. Quarter 2 has slightly improved the Water Fund with investment income of $10.7k, offset by a negative market adjustment value of - $2.7k.

The Water Fund shows a net excess (revenue greater than expense) of $1.2 million for the quarter. The net excess is higher than the budgeted net excess primarily due to timing of capital project spending. The net excess adds to reserves that are restricted for use in the Water Fund.

SEWER FUND
The sewer revenue is charged annually on the property tax bill for residential customers and on the water bill for non-residential customers. The first installment of the tax roll is received in the second quarter of each year. A 4% increase in sewer rates was adopted and effective on July 1, 2021. Total operating expense is 22% as compared to budget and 1% lower when compared to the same period last year.

Investment income for the Sewer Fund was also affected by the prior year market correction for the 115-pension trust following the downturn in late fiscal year 2019-20 from the COVID-19 pandemic. The year over year decrease is primarily associated with this impact, along with a lower LAIF performance and negative market value adjustments from both the LAIF account and the Section 115 pension trust account. Quarter 2 has slightly improved the Sewer Fund with investment income of $11.3k, offset by a negative market adjustment value of - $3.5k.

The Sewer Fund has net excess of (revenue greater than expenditure) of $2.2 million for the quarter. -253-
Town of Hillsborough
2021-22 Quarterly Financial Report (Unaudited)
Second Quarter Ending December 31, 2021
3 GENERAL FUND - FUND BALANCE
The General Fund accounts for direct services provided to the citizens of Town of Hillsborough. The first allocation of property taxes is received in quarter two of each year.

GENERAL FUND REVENUES
Total revenue is at 54% of the annual budget, primarily driven by the property tax growth and excess ERAF. • Property tax revenue is in line with budget.
• Excess ERAF is higher than prior year due to the reserve release of $0.3 million, which was withheld last year. This is a one-time increase.

FISCAL YEAR 2020-2021
YTD Actual YTD Actual $ Variance YTD Var
Budget to 12/31/2021 YTD % to 12/31/2020 YTD % YTD vs. PY over PY Revenue $30,741,856 $16,508,013 54% $15,891,127 54% $616,886 4% Expenditures 31,152,435 15,403,725 49% 13,553,939 46% 1,849,786 14% Transfer 310,000 155,000 50% 189,100 50% (34,100) -18%
EXCESS(DEFICIT) (720,579) 949,287 -132% 2,148,088 -523% (1,198,800) -56% Beginning Fund Balance $28,835,543 $28,835,543 $26,298,658 Ending Fund Balance $28,114,964 $29,784,830 $28,446,746

GENERAL FUND
FISCAL YEAR 2021-2022
FISCAL YEAR 2020-2021
YTD Actual YTD Actual $ Variance YTD Var
Budget to 12/31/2021 YTD % to 12/31/2020 YTD % YTD vs. PY over PY Property Taxes $19,578,941 $10,057,415 51% $9,637,822 51% $419,594 4% Excess ERAF 2,200,000 1,669,882 76% 1,069,962 49% 599,920 56% Public Safety Special Tax 2,234,611 1,120,429 50% 1,120,027 50% 402 0% Permits 1,572,900 811,403 52% 938,561 72% (127,159) -14% Service Charges 1,163,524 772,059 66% 664,120 62% 107,939 16% Motor Vehicle License Fees 835,000 580,839 70% 502,694 45% 78,145 16% Business License 600,000 538,239 90% 526,844 78% 11,395 2% Franchise Tax 790,723 206,062 26% 190,236 25% 15,826 8% Investment Income 750,000 59,817 8% 733,858 147% (674,041) -92% American Rescue Plan Act (ARPA) - 1,362,006
American Rescue Plan Act (Deferred) - (1,084,437)
All Others 1,016,157 414,298 41% 507,002 50% (92,704) -18% TOTAL $30,741,856 $16,508,013 54% $15,891,127 54% $616,886 4%

GENERAL FUND REVENUE
FISCAL YEAR 2021-2022
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Town of Hillsborough
2021-22 Quarterly Financial Report (Unaudited)
Second Quarter Ending December 31, 2021
4 • Permitting revenue is lower than prior year but in line with budget. The prior year had a rebound in the first quarter due to the construction moratorium in the prior year from the pandemic. • MVLF is at 70% of budget and 16% higher when compared to same period last year primarily attributed to the State release of withheld revenues.
• Business License revenue is earned primarily in Q1 due to annual renewals due July1. • Investment income is low due to a lower LAIF performance and negative market value adjustments from both the LAIF account and the Section 115 pension trust account.

GENERAL FUND EXPENDITURES
Total General Fund budget expenditures are in line with budget. • Fire department is 56% of budget is due to the lump sum payment (timing) of the annual CalPERS unfunded actuarial liability contribution. Paying the UAAL as a lump sum rather than in equal monthly installments saves the Town $35k in interest costs, and $125k overall in savings amongst the cities serviced by Central County Fire Department.
• The Police Department expenditures increase as compared to prior year are attributable to CalPERS annual required contribution increase as well as an increase in overtime for continued mandatory training requirements and significant case investigations.
• The Street Department increase as compared to the prior year is attributable to increased costs to CalPERS and retiree health benefits, as well as timing of tree work and fire mitigation expenses. • City Attorney department is at 80% of budget primary driven by litigation cost.

FISCAL YEAR 2020-2021
YTD Actual YTD Actual $ Variance YTD Var
Budget to 12/31/2021 YTD % to 12/31/2020 YTD % YTD vs. PY over PY City Council $54,395 $19,971 37% $19,595 38% $376 2%
City Manager 903,334 423,305 47% 462,924 47% (39,619) -9% Finance 546,788 275,858 50% 254,788 48% 21,071 8%
General Government 2,580,668 1,193,639 46% 1,096,374 49% 97,265 9% City Attorney 173,174 137,695 80% 142,037 95% (4,342) -3% Police 11,384,158 6,158,164 54% 5,400,023 52% 758,141 14% Fire 8,569,245 4,794,431 56% 4,108,140 49% 686,291 17%
Building 1,827,924 856,741 47% 869,790 51% (13,049) -2% Planning 891,632 458,804 51% 397,742 51% 61,062 15%
Streets 2,731,117 1,240,118 45% 991,626 37% 248,492 25% Storm Drain Capital 1,800,000 - 0% - 0% -
TOTAL $31,462,435 $15,558,725 49% $13,743,038 46% $1,815,687 13% Expenditures by Department
FISCAL YEAR 2021-2022
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Town of Hillsborough
2021-22 Quarterly Financial Report (Unaudited)
Second Quarter Ending December 31, 2021
5 ENTERPRISE FUNDS –BUDGETARY BASIS
The Enterprise Funds operate the sewer and water functions, and customer rates and other special revenues fund the operations and capital costs.

WATER FUND
• Operating revenue is 14% lower than the same period last year due to 19% decrease in water unit sales. • Investment income allocated in the second quarter was $10.7k, offset by a negative market adjustment value of -2.7k. The first quarter lower LAIF performance, as well as negative market value adjustments from both the LAIF account and the Section 115 pension trust account have still impacted the overall year-todate total. • Water purchases are 13% lower as compared to the prior year due to decrease in water units sold. There is no SFPUC wholesale water rate increase in fiscal year 2021-22. • Principal debt service is paid in the fourth quarter. • The actual capital project expenditure is lower compared to budget due to the timing of spending.

FISCAL YEAR 2020-2021
YTD Actual YTD Actual $ Variance YTD Var
Budget to 12/31/2021 YTD % to 12/31/2020 YTD vs. PY over PY Operating Revenue $15,222,228 $7,890,813 52% $9,176,286 ($1,285,473) -14% Investment Income 50,000 (366) -1% 7,543 (7,909) -105%
Total Revenue 15,272,228 7,890,447 52% 9,183,830 (1,293,382) -14% Operating Expenses
(includes overhead alloc.) 5,789,184 2,699,301 47% 2,397,928 301,372 13% Water Purchases 5,538,390 3,203,472 58% 3,692,518 (489,047) -13% Debt Service 1,885,072 190,840 10% 231,579 (40,739) -18% Transfer to Reserves Fund 165,000 82,500 50% 30,000 52,500 175% Total Operating Expense 13,377,646 6,176,113 46% 6,352,026 (175,913) -3% Net Revenue before Capital 1,894,582 1,714,335 90% 2,831,804 (1,117,469) -39% Capital Project 3,866,190 473,805 12% 835,113 (361,308) -43% EXCESS(DEFICIT) - Budgetary Basis ($1,971,608) $1,240,530 -63% $1,996,691 ($756,161) -38%

WATER FUND
FISCAL YEAR 2021-2022
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Town of Hillsborough
2021-22 Quarterly Financial Report (Unaudited)
Second Quarter Ending December 31, 2021
6 SEWER FUND
• Sewer revenue is billed on the property tax bill for residential customers and the first installment is received in the second quarter.
• Investment income allocated in the second quarter was $11.3k, offset by a negative market adjustment value of -3.5k. The first quarter lower LAIF performance, as well as negative market value adjustments from both the LAIF account and the Section 115 pension trust account have still impacted the overall year-todate total. • Principal debt service is paid in the fourth quarter for certificates of participation and in the first quarter for the State Revolving Fund loan.
• The actual capital project expenditure is at 154% due to timing of spending for the Priority Basin I/I Rehab project (already reserved for in prior year).

FISCAL YEAR 2020-2021
YTD Actual YTD Actual $ Variance YTD Var
Budget to 12/31/2021 YTD % to 12/31/2020 YTD vs. PY over PY Operating Revenue $14,679,023 $7,306,290 50% $7,067,316 $238,973 3% Investment Income 50,000 (3,271) -7% 7,384 (10,655) -144% Transfers (Storm Drains) 1,800,000 - 0% - -
Total Revenue 16,529,023 7,303,019 44% 7,074,700 228,319 3% Operating Expenses
(includes overhead alloc.) 9,388,217 2,037,137 22% 2,067,252 (30,115) -1% Debt Service 2,512,079 223,086 9% 552,635 (329,549) -60% Transfer to Reserves Fund 70,000 35,000 50% 30,000 5,000 17% Total Operating Expense 11,970,296 2,295,223 19% 2,649,887 (354,663) -13% Net Revenue before capital and contrib. 4,558,727 5,007,795 110% 4,424,813 582,982 13% Capital Projects/Contributions 1,795,000 2,760,039 154% 533,682 2,226,356 417% EXCESS(DEFICIT) - Budgetary Basis $2,763,727 $2,247,757 81% $3,891,131 ($1,643,374) -42%

SEWER FUND
FISCAL YEAR 2021-2022
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Town of Hillsborough
2021-22 Quarterly Financial Report (Unaudited)
Second Quarter Ending December 31, 2021
7 The following table summarizes the General Fund revenue by department.

FISCAL YEAR 2020-2021 YTD
YTD Actual YTD Actual (Growth/Reduction)
Budget 12/31/2021 YTD % Budget 12/31/2020 YTD % over PY Finance
BL Fines/Other Penalties 44.451.000 $1,000 $0 0% $1,000 $0 0% $0 Bus Lic Application 47.509.000 186,000 168,490 91% 186,000 160,710 86% 7,780 Bus. Lic. Tax-R/E Current 41.412.001 - 151,425 - 121,626 29,800 Business License Tax 41.412.002 600,000 386,814 64% 675,000 405,219 60% (18,405) Home Business Permits 43.430.000 14,000 6,750 48% 8,250 7,375 89% (625) Finance Service Fees 47.518.010 56,000 28,000 50% 56,000 28,000 50% - Total $857,000 $741,479 87% $926,250 $722,929 78% $18,550 Police
Alarm Fines 44.455.002 - - - 800 (800)
Alarm Monitoring Fees 47.517.001 169,824 82,200 48% 150,000 84,912 57% (2,712) Alarm Permits 43.456.000 140,000 3,000 2% 140,000 3,300 2% (300) Domestic Violence Restr Reimb 45.468.000 - - - 21 (21)
Other Fines & Forfeitures 44.453.000 3,000 1,830 61% 3,000 1,657 55% 174 Peace Officers Training 45.463.000 6,400 - 0% 6,400 - 0% - Police Services 47.517.000 13,200 3,018 23% 13,200 800 6% 2,218 Public Safety Sales Tax - 100% 41.411.000 132,909 68,877 52% 131,592 61,648 47% 7,230 Fire & Police Safety Spec Tax - 50% 49.002.000 1,117,306 560,215 50% 1,117,306 560,013 50% 201 Total 1,582,639 719,140 45% 1,561,498 713,150 46% 5,990 Fire
Fire Fees 47.513.000 10,000 9,603 96% 10,000 4,112 41% 5,491 Fire & Police Safety Spec Tax - 50% 49.002.000 1,117,306 560,215 50% 1,117,306 560,013 50% 201 Total 1,127,306 569,818 51% 1,127,306 564,126 50% 5,691.94 Building
Building Permit Penalty 44.455.003 - - - - -
Building Permits 43.431.000 590,000 306,379 52% 590,000 378,214 64% (71,835) Building Plan Checking 47.503.000 350,000 225,804 65% 350,000 194,047 55% 31,757 Electrical Permits 43.433.000 125,000 82,131 66% 86,515 73,926 85% 8,205 Community Serv Fees 47.523.000 625 356 57% 625 188 30% 168 Mechanical Permits 43.437.000 75,000 30,379 41% 47,469 35,320 74% (4,941) Penalties 44.455.000 - (3,108) - (4,804) 1,696
Plumbing Permits 43.435.000 175,000 101,591 58% 120,000 98,177 82% 3,414 Total 1,315,625 743,532 57% 1,194,609 775,069 65% (31,537) Planning
Planning Applications 47.501.000 225,000 148,504 66% 184,983 128,431 69% 20,073 ADU Fee 47.510.000 20,000 9,750 1,500 9,250 500
Total 245,000 158,254 65% 186,483 137,681 74% 20,573
FISCAL YEAR 2021-2022

GENERAL FUND REVENUE
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Town of Hillsborough
2021-22 Quarterly Financial Report (Unaudited)
Second Quarter Ending December 31, 2021
8 FISCAL YEAR 2020-2021
YTD Actual YTD Actual YTD Var
Budget 12/31/2021 YTD % Budget 12/31/2020 YTD % over PY Public Works Administration
Code Enforcement Fees 44.550.010 $0 $0 $0 $1,994 (1,994) Encroachment Application Fee 43.507.002 - 3,149 - 15,916 (12,767) Encroachment Inspection 43.507.006 - 15,831 - 35,317 (19,486) Encroachment Permits 43.507.000 225,000 132,214 59% 136,055 122,911 90% 9,303 Subdiv. Fees&Lot Adj. 47.505.000 15,000 1,921 - - 1,921 Engineering Misc. 43.441.007 - - - 956 (956)
Erosion Control Fees 43.441.005 - 74,370 - 87,028 (12,658) Grading Application Fee 43.441.002 - 2,608 - 1,700 908
Grading Permits 43.441.000 225,000 49,778 22% 167,000 76,315 46% (26,537) Grading Plan Check 43.441.001 - 2,573 - 2,007 566
Inspections 43.441.003 - 50 - 100 (50)
PW- Outside Charges 47.519.000 2,275 - 0% 2,275 - 0% -
Stop work penalty 44.455.004 - 8,783 - 38,432 (29,650)
Total 467,275 291,276 62% 305,330 382,675 136% (91,399) Street
Measure "A" 49.001.000 250,000 125,000 50% 250,000 125,000 50% - Encroachment 47.507.000 - 7,000 - -
Total 250,000 132,000 53% 250,000 125,000 50% 7,000
General Revenues (supports all City operations)
ERAF III shift 40.410.000
Excess ERAF 40.409.000 2,200,000 1,669,882 76% 2,200,000 1,069,962 49% 599,920 Property Taxes 19,578,941 10,057,415 51% 18,795,925 9,637,822 51% 419,594 Franchise Tax 790,723 206,062 26% 761,129 190,236 25% 15,826 Motor Vehicle License Fee 45.465.000 835,000 580,839 70% 1,125,592 502,673 45% 78,166 Miscellaneous Service Charges 115,600 87,414 76% 115,600 53,670 46% 33,744 Interest 46.475.000 750,000 59,817 8% 500,000 733,858 147% (674,041) All Others 626,748 213,516 34% 628,739 282,276 45% (68,760) American Rescue Plan Act (ARPA) 45.471.005 - 1,362,006 - - 1,362,006 American Rescue Plan Act (Deferred) - (1,084,437) - - (1,084,437) Total 24,897,012 13,152,515 53% 24,126,985 12,470,498 52% 682,017 Total General Fund Revenue $ 30,741,856 $16,508,013 54% $ 29,678,460 $ 15,891,127 54% 4% FISCAL YEAR 2021-2022

GENERAL FUND REVENUE
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Town of Hillsborough
2021-22 Quarterly Financial Report (Unaudited)
Second Quarter Ending December 31, 2021
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TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
19 INFORMATIONAL

CITY COUNCIL MEETING
FEBRUARY 14, 2022

AGENDA STAFF REPORT
ITEM SUBJECT: FY 2022-23 BUDGET PLANNING
SUMMARY: This agenda item is to provide an overview of the FY 2022-23 Annual Budget Process and a preliminary projection that can aid in planning and prioritizing next year’s budget. The information may be helpful during goal setting and the detailed budget development process.

The fundamental purpose of the Town’s budget is to link what the City Council wants to accomplish for the community with the resources necessary to do so. The budget process does this by setting the Town’s goals and objectives, establishing reasonable timeframes and organizational responsibility for achieving them, and allocating resources for programs and projects. To this end, the budget document serves as 1) a Policy Document – sets forth goals and objectives to be accomplished and the fundamental principles upon which the budget is prepared; 2) a Fiscal Plan – Identifies and appropriates resources necessary to accomplish objectives and deliver services and ensures the Town’s fiscal health is maintained; 3) an Operations Guide – describes the basic organizational units and activities of the Town; and 4) a Communications Tool – Provides the public with a blueprint of how public resources are being used and how these allocations were made.

Budget Process/Calendar
Budget development is led by the City Manager and the Finance Director together with the Town’s Department Heads. In the Management Workshop and City Council Goal Setting public meetings, departments present their goals, and the City Manager works with the City Council to set and prioritize the Town’s goals for the coming year. Thereafter, staff prepares the budget projection and budget document, and it is reviewed in a series of public meetings both with the Financial Advisory Committee and the City Council, leading to a public hearing and City Council adoption of the budget by June 30 of any given year. The FY 2022-23 Budget Calendar (Attachment 1) outlines the key dates for the budget review process.

FY 2022-23 Preliminary Financial Context
Preliminary assessment of national and local economic conditions and the Town’s budget indicate that there will be strong property tax revenue growth, permitting activity will continue to thrive, and other revenue sources will be relatively stable, with some volatility in investment income and MVLF. In addition, the Town received $1.35 million of the American Rescue Plan Act allocation in July 2021 and will receive the final allocation of $1.35 million in July 2022. These monies will be held in reserve until spending occurs on the City Council approved ARPA program projects. The detailed budget development will build the proposed spending plan necessary to fund programs -261-
Agenda Staff Report - Hillsborough City Council
February 14, 2022

and services to meet the City Council’s FY 2022-23 goals and will reflect the salary and benefits based on current MOU and contractual obligations and the capital improvements necessary to maintain the Town’s infrastructure. The FY 2022-23 Preliminary Budget Projection (Attachment 2) is intended to provide a directional estimate of revenue growth and expenditures. It does not fully reflect the program expenditures necessary to accomplish the FY 2022-23 goals which will be developed in the detailed budget process in the spring.

FISCAL IMPACT: There is no fiscal impact associated with this item.

ENVIRONMENTAL ISSUES: This informational item is exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.

ATTACHMENTS:

1. FY 2022-23 Budget Calendar

2. FY 2022-23 Preliminary Budget Projection
PREPARED BY: Jan Cooke, Finance Director
RECOMMENDATION: No action is required. This item is informational only. -262-
ATTACHMENT 1
BUDGET CALENDAR – FISCAL YEAR 2022-23
Date Description
January 19
8:30 a.m. to
1:00 p.m.

MANAGEMENT WORKSHOP
• Department Updates and 2022-23 Department Goals
February 16
8:30 a.m. to
2:00 p.m.

CITY COUNCIL GOAL SETTING MEETING
• City Council review and prioritize Town-wide 2022-23 Goals and Priorities April 26
8:00 a.m.

FINANCIAL ADVISORY COMMITTEE MEETING
• Review and Recommend the Proposed FY 2022-23 Budget and Master Fee Schedule
May 9
TBD

CITY COUNCIL STUDY SESSION
• Detailed review of the Proposed FY 2022-23 Budget and Master Fee Schedule June 13
6:00 p.m.

CITY COUNCIL MEETING – Public Hearing and Adoption
• Resolution to adopt FY 2022-23 Budget
• Resolution to adopt FY 2022-23 Sewer Charges
• Resolution to adopt FY 2022-23 Fees and Charges
• Resolution to adopt FY 2022-23 Appropriations limit
June Budget document published
July 1 Adopted fees and charges take effect
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ATTACHMENT 1
Town of Hillsborough
FY 2022-23 Preliminary Budget Projection
1 EXECUTIVE SUMMARY
This financial report summarizes the preliminary assessment of the Town of Hillsborough’s FY 2022-23 General Fund Budget. The national and local conditions and the Town’s FY 2021-22 budget performance to date indicate that there will be strong property tax revenue growth, permitting activity will continue to remain steady, and other revenue sources will be relatively stable, with some volatility in investment income and motor vehicle in-lieu fees (MVLF).

The projection is intended to provide a directional estimate of revenue growth and expenditures to aid in goal setting and budget development. The projection reflects the results prior to any new budget requests or funding of any new City Council priorities/goals.

FY 2021/22 Mid-Year Forecast
• Revenue is projected to be higher than budget in Excess ERAF and MVLF due to one-time release of the reserves that were held back by the State.
• Expenditures are projected to be higher than budget due to increased litigation costs. • In FY 2021/22, the American Plan Rescue Act (ARPA) funding goes toward General Fund related items (storm drain capital improvements, Agenda Management and Records Management Software, and the improvements for public access to meetings and buildings).

FY 2022-23 Preliminary Projection
• Overall General Fund revenue growth of 2.2% is attributable to 6.2% property tax growth, somewhat offset by the reduction for the one-time revenue in FY 2021/22. • Property Tax Revenue - The Town’s preliminary property tax assessment roll for FY 2022-23 is estimated in the County roll tracker at 6.2% growth as of January 2022. Property tax is the largest source of revenue for the Town’s General Fund.
• Permitting/Planning Fees – Preliminary projection for FY 2022-23 reflects the anticipation that interest rates may rise which may impact new projects. The Town’s projection reflects a flat growth rate for FY 2022-23.
• American Rescue Plan Act (ARPA) – The Town received $1.36 million of American Rescue Plan funding in FY 2021-22 and the remaining funding will be received in FY 2022-23.. For accounting purposes, unspent funds are classified as deferred and are recognized as revenue when spent. In FY 2022/23 ARPA funding is applied primarily toward the Water Fund CIP and remaining General Fund related projects of $162k are accounted for in the 2022/23 budget. • Overall General Fund Expenditure growth of 6% reflects the salary cost of living and step increases, CalPERS’ pension and other contractual obligations, and CPI or contractual increases in supplies and services. -264-
ATTACHMENT 2
Town of Hillsborough
FY 2022-23 Preliminary Budget Projection
2 GENERAL FUND PROJECTION
FY 2021-22 Adopted FY 2021-22 Mid-Year FY 2022-23 Projected Revenue $ 30,741,855 $ 32,010,295 $ 32,706,758

2.2%
Operating Expenditures 28,640,442 28,845,433 30,510,382 6%
Net Excess (Shortfall) from Operations 2,101,413 3,164,862 2,196,376 Storm Drain 1,800,000 1,800,000 1,800,000
Facilities 1,021,000 1,021,000 550,000
Total Capital Transfers 2,821,000 2,821,000 2,350,000
American Recue Plan Act (ARPA) Funding* $ - $ 1,362,000 $ 162,000 Excess(Shortfall) $ (719,587) $ 1,705,862 $ 8,376
Ending Reserve $ 29,258,132 $ 30,321,581 $ 30,167,957
*ARPA
General Fund - Storm Drain CIP, Software $ 1,362,000 $ 162,000 Water Fund - High Line CIP Project $ 1,200,000
General Fund Reserve Reserve
Restricted 115 Pension Trust $ 5,400,000
Assigned For Capital - Sewer, Storm Drain, Tree Replacement 5,863,000 Contingency Per Policy Minimum (30% Op. Ex.) 9,499,930
Contingency Per Policy Goal (50% op. Ex.) 6,930,261
Unassigned Reserves for Future Use (Capital, Debt Reduction or Projects) 2,474,766 Total $ 30,167,957
-265-

TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
20 INFORMATIONAL

CITY COUNCIL MEETING
FEBRUARY 14, 2022

AGENDA STAFF REPORT
ITEM SUBJECT: CITY MANAGER'S UPDATE
SUMMARY: The City Manager will provide an informational update related to Town projects, events and activities of interest to the community.

FISCAL IMPACT: There is no fiscal impact associated with this agenda item.

ENVIRONMENTAL ISSUES: This informational item is exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.

ATTACHMENTS: None
PREPARED BY: Ann Ritzma, City Manager
RECOMMENDATION: For information only; no action required. -267-