Agenda — Hillsborough City Council, December 9, 2024 (part 1 of 2)

TOWN OF HILLSBOROUGH
San Mateo County
Christine Krolik, Mayor 1600 Floribunda Avenue
Sophie Cole, Vice Mayor Hillsborough, CA 94010
Marie Chuang, Councilmember www.hillsborough.net
Leslie Marden Ragsdale, Councilmember Phone 650-375-7400 Alvin L. Royse, Councilmember

A G E N D A
MONDAY, DECEMBER 9, 2024
5:00 PM CLOSED SESSION
6:00 PM CITY COUNCIL MEETING
Hillsborough Town Hall
Meetings of the City Council are held in-person in Council Chambers. As a courtesy and technology permitting, the meeting will also be held virtually via Zoom Video Conference. However, the Town cannot guarantee that the public’s access to the Zoom virtual platform will be uninterrupted, and technical difficulties may occur from time to time. In those instances, so long as the public may still attend the meeting in person, the meeting will continue.

In the event a Councilmember is participating remotely under the requirements of Government Code Section 54953 with regard to “just cause” or an “emergency” situation as those terms are defined in the Brown Act, the Town will stop the meeting if there is any technology disruption until such time that the public is reconnected to the live in person meeting and able to provide comment.

To attend the meeting in person:
1600 Floribunda Avenue, Hillsborough, CA 94010.

To provide Public Comment in person:

Members of the public wishing to speak on the agenda item are requested to complete a yellow speaker card and submit it to the City Clerk.

To participate in the meeting via Zoom Video Conference:
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To provide Public Comment via Zoom Video Conference:

Live verbal public comments may be made by requesting to speak using the “raise hand” feature in Zoom or, if calling in by phone, by pressing *9 on the telephone keypad prior to the close of the public comment period for the item. In response, the Town will unmute the speaker and allow them to speak up to three minutes.

CLOSED SESSION (5:00 pm)
Agenda – Hillsborough City Council
Monday, December 9, 2024

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CALL TO ORDER

ROLL CALL

PUBLIC COMMENT
Members of the public may provide public comments on any item on the Closed Session agenda. Members of the public participating in person are requested to complete a yellow speaker card and submit it to the City Clerk before addressing the City Council. Members of the public participating via the Zoom platform may use the “raise hand” feature or, if calling in by phone, press *9 on the telephone keypad. Speakers are limited to one comment per Closed Session item.

ANNOUNCEMENT OF CONFLICT OF INTEREST
This portion of the agenda is for Councilmembers to disclose any conflict of interest related to any item on the Closed Session agenda.

Any Councilmember who has confirmed a conflict of interest or has reason to believe they have a conflict of interest should disclose the conflict for the record and abide by the disqualification requirements contained in FPPC regulations.

San Mateo County Superior Court, Case No. 18CIV05650

ADJOURN CLOSED SESSION
REGULAR CITY COUNCIL MEETING (6:00 pm)
I. CALL TO ORDER
II. ROLL CALL
III. PLEDGE OF ALLEGIANCE
IV. REPORT FROM CLOSED SESSION
V. PUBLIC COMMENT I
This portion of the meeting is reserved for persons wishing to address the City Council on any matter not on the agenda.

Members of the public participating in person are requested to complete a yellow speaker card and submit it to the City Clerk before addressing the City Council. Members of the public may provide comments via the Zoom platform by using the “raise hand” feature or, if calling in by phone, by pressing *9 on the telephone keypad. In response, the Town will unmute the speaker and allow them to speak on any topic for up to three minutes. If there appears to be a large number of speakers, speaking time may be reduced to no less than 2 minutes, at the discretion of the Mayor. Members of the public are limited to one comment at this time. State law prohibits the Council from discussing or acting on non-agenda items, and generally limits the ability of the Council to respond to any public comments made regarding non-agenda items.

Agenda – Hillsborough City Council
Monday, December 9, 2024

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VI. ANNOUNCEMENT OF CONFLICT OF INTEREST
This portion of the agenda is for Councilmembers to disclose any conflict of interest related to any item on the agenda. Any Councilmember who has confirmed a conflict of interest or has reason to believe they have a conflict of interest should disclose the conflict for the record and abide by the disqualification requirements contained in FPPC regulations.

VII. CONSENT CALENDAR
This portion of the agenda is for Councilmembers to disclose any conflict of interest related to any item on the agenda. Any Councilmember who has confirmed a conflict of interest or has reason to believe they have a conflict of interest should disclose the conflict for the record and abide by the disqualification requirements contained in FPPC regulations.

1. APPROVAL OF CITY COUNCIL MEETING MINUTES OF OCTOBER 14, 2024

2. MONTHLY CLAIMS: NOVEMBER 1 THROUGH NOVEMBER 30, 2024

3. ACCEPTANCE OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) TOGETHER WITH THE INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING FOR THE YEAR ENDED JUNE 30, 2024

4. RESOLUTION AMENDING THE FY 2024-25 BUDGET APPROPRIATING $363,608.00

FOR CONTRIBUTION TO THE CENTRAL COUNTY FIRE DEPARTMENT JOINT

POWERS AUTHORITY

5. RESOLUTION DECLARING THE RESULTS OF THE GENERAL MUNICIPAL ELECTION HELD ON NOVEMBER 5, 2024

6. RESOLUTION ESTABLISHING THE LOCAL APPOINTMENTS LIST FOR CALENDAR YEAR 2025

7. ORDINANCE AMENDING HILLSBOROUGH MUNICIPAL CODE SECTION 2.12.010 TO

REDUCE THE APPOINTMENT REQUIREMENTS FOR THE ARCHITECTURE AND

DESIGN REVIEW BOARD - ADOPTION
VIII. MAYOR’S STATE OF THE TOWN
IX. RECOGNITION: Councilmember Alvin L. Royse
X. ADMINISTRATION OF OATH OF OFFICE:

Councilmember-Elect Laurie Davies Adams
Councilmember-Elect Sophie Cole
Councilmember-Elect Christine Krolik
XI. OUTGOING MAYOR’S COMMENTS
XII. SELECTION OF MAYOR
XIII. ADMINISTRATION OF OATH OF OFFICE: Mayor
XIV. INCOMING MAYOR’S COMMENTS
Agenda – Hillsborough City Council
Monday, December 9, 2024

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XV. SELECTION OF VICE MAYOR
XVI. ADMINISTRATION OF OATH OF OFFICE: Vice Mayor
XVII. PUBLIC HEARING

8. CONSIDERATION OF AN URGENCY ORDINANCE AMENDING CHAPTER 17.52 OF

THE HILLSBOROUGH MUNICIPAL CODE REGARDING ACCESSORY DWELLING

UNITS AND JUNIOR ACCESSORY DWELLING UNITS TO COMPLY WITH RECENT

CHANGES IN STATE LAW AND FINDING THE ACTION TO BE STATUTORILY EXEMPT FROM CEQA UNDER SECTION 21080.17 OF THE PUBLIC RESOURCES CODE
XVIII. PUBLIC COMMENT II
This portion of the meeting is reserved for persons wishing to address the City Council on any matter not on the agenda.

XIX. TOWN UPDATE
XX. CITY COUNCIL ITEMS
This section of the agenda provides the City Council an opportunity to report their participation in activities related to any intergovernmental committee assignments.

XXI. ADJOURNMENT
SPECIAL ACCOMMODATIONS:

If you need a disability-related modification or accommodation, including auxiliary aids or services, to participate in the City Council meeting, or if you need an agenda in an alternate form, please contact the City Clerk’s Office at 650-375-7421 at least 24 hours before the scheduled City Council meeting.

ADDRESSING THE CITY COUNCIL:

Members of the public may provide written comments to the City Council regarding any item on the agenda up to two hours before the meeting to [email protected] or by mail/in person at 1600 Floribunda Avenue, Hillsborough, CA 94010. Any writings or documents provided to a majority of the City Council regarding any item on this agenda prior to the deadline, except as exempt from public disclosure under applicable law, will be available for public inspection on the Town website, and in the City Clerk’s Office at 1600 Floribunda Avenue, Hillsborough, CA 94010, during regular business hours. All oral comments made at public meetings, including a speaker’s name, are recorded and included as part of the public record in the meeting minutes. Meeting minutes are publicly accessible via the Town website and via various internet search engines. Written comments, including a commenter’s name, are a public record and subject to disclosure on the Town website and/or upon request pursuant to the California Public Records Act (with personal contact information including personal email addresses and personal phone numbers redacted).

AUDIO / VISUAL ADVISORY:

Those persons who wish to use PowerPoint or other mediums when presenting to the City Council will be required to submit media items to the City Clerk by 12:00 p.m. on the day of the meeting. Media items can be emailed to [email protected].

AUDIO OR VIDEO RECORDINGS:

Please be advised that under the Brown Act, any person has the right to record the City Council meeting, including the audience in attendance, using an audio or video recording device subject to certain exceptions. Please be aware that by attending a City Council meeting, you may be audio or video recorded.

TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
1 CONSENT CALENDAR

CITY COUNCIL MEETING
DECEMBER 9, 2024

AGENDA STAFF REPORT
ITEM SUBJECT: APPROVAL OF CITY COUNCIL MEETING MINUTES OF OCTOBER 14, 2024 -1-

UNAPPROVED MINUTES
MONDAY, OCTOBER 14, 2024
4:00 PM CLOSED SESSION
6:00 PM CITY COUNCIL MEETING
Hillsborough Town Hall
Meetings of the City Council are held in-person. As a courtesy, and in compliance with applicable state law, staff and members of the public participated in the meeting in person at Town Hall or virtually via Zoom Video Conference.

CLOSED SESSION

CALL TO ORDER
Mayor Krolik called the meeting to order at 4:02 p.m.

ROLL CALL

Present: Chuang, Ragsdale, Royse, Cole, Krolik

PUBLIC COMMENT
There were no speakers.

ANNOUNCEMENT OF CONFLICT OF INTEREST
There were no announcements of conflict of interest.

CLOSED SESSION ITEMS
A. CONFERENCE WITH LABOR NEGOTIATOR
Pursuant to Government Code Section 54957.6
Agency Negotiator: Glenn Berkheimer
Employee Organization: Teamsters Local 856 - Public Works and Clerical Employee Organization: Teamsters Local 350 - Public Works Supervisors B. CONFERENCE WITH LEGAL COUNSEL – INITIATION OF LITIGATION Pursuant to Government Code Section 54956.9(d)(4)
Town as Plaintiff – One Potential Case
C. CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION
Pursuant to Government Code Section 54956.9(d)(1)
Mahmood Panjwani vs. County of San Mateo, San Mateo County Health, Public Health, Policy and Planning; Peninsula Humane Society & SPCA ("PHS/SPCA"); Town of Hillsborough; Program Manager of Animal Control and Licensing
San Mateo Superior Court Case No. 23CIV04568

ADJOURN CLOSED SESSION
The Closed Session adjourned at 5:48 p.m.

REGULAR CITY COUNCIL MEETING
I. CALL TO ORDER
Mayor Krolik called the meeting to order at 6:02 p.m.

II. ROLL CALL
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Present: Chuang, Ragsdale, Royse, Cole, Krolik
III. PLEDGE OF ALLEGIANCE
Mayor Krolik led the Pledge of Allegiance.

IV. REPORT FROM CLOSED SESSION
City Attorney Christopher Diaz that the City Council under Item B formed a subcommittee comprised of Mayor Krolik and Councilmember Royse to study an issue on the initiation of litigation.

V. PROCLAMATIONS
• UNITED AGAINST HATE WEEK
Councilmembers participated in the reading of the proclamation in recognition of United Against Hate Week.

Vice Mayor Cole provided comments regarding Indigenous Peoples’ Day. • DOMESTIC VIOLENCE AWARENESS MONTH
Mayor Krolik read a proclamation in recognition of Domestic Violence Awareness Month.

VI. PRESENTATION
• MAYOR'S APPLAUSE
Mayor Krolik recognized the Finance Department for their receipt of Government Finance Officers Association (GFOA) awards for the June 30, 2023 Annual Comprehensive Financial Report and the Fiscal Year 2023-24 Annual Budget document.

Councilmember/Finance and Administrative Services Commissioner Marie Chuang provided additional information.

VII. PUBLIC COMMENT I
There were no speakers.

VIII. ANNOUNCEMENT OF CONFLICT OF INTEREST
There were no announcements of conflict of interest.

IX. CONSENT CALENDAR
There were no requests to remove an item from the Consent Calendar.

On motion by Councilmember Chuang, seconded by Vice Mayor Cole and unanimous on voice vote, the Consent Calendar was approved.

1. MONTHLY CLAIMS: SEPTEMBER 1 THROUGH SEPTEMBER 30, 2024 The monthly claims for September 2024 were approved as submitted.

2. QUARTERLY TREASURER'S REPORT FOR THE QUARTER ENDING SEPTEMBER 30, 2024
The Treasurer's Report for the quarter ending September 30, 2024 was approved.

3. RESOLUTION IMPLEMENTING PREVIOUSLY APPROVED INCREASES TO SOLID WASTE RATES EFFECTIVE JANUARY 2025 PURSUANT TO CEQA GUIDELINES 15378 AND 15273
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The resolution implementing previously approved increases to solid waste rates effective January 2025 pursuant to CEQA Guidelines 15378 and 15273 was adopted.

4. RESOLUTION APPROVING AND ADOPTING AN AMENDED CONFLICT OF INTEREST CODE PURSUANT TO THE POLITICAL REFORM ACT OF 1974 The resolution approving and adopting an amended Conflict of Interest Code pursuant to the Political Reform Act of 1974 was adopted.

5. RESOLUTION ACCEPTING AS COMPLETE THE CONTRACT WITH CASEY CONSTRUCTION INC. FOR THE 1450 SOUTHDOWN ROAD STORM DRAIN REPLACEMENT PROJECT IN THE AMOUNT OF $185,000.00 PURSUANT TO CEQA GUIDELINE 15301
The resolution accepting as complete the contract with Casey Construction Inc. for the 1450 Southdown Road Storm Drain Replacement Project in the amount of $185,000.00 and authorizing staff to file a Notice of Completion for the Project and release withheld retention in accordance with State prompt payment laws was adopted.

6. RESOLUTION ACCEPTING AS COMPLETE THE CONTRACT WITH CASEY CONSTRUCTION INC. FOR THE A2 PRIORITY PROJECTS – PHASE 2 DRAINAGE IMPROVEMENT PROJECT IN THE AMOUNT OF $2,021,765.80 PURSUANT TO CEQA GUIDELINE 15301
The resolution accepting as complete the contract with Casey Construction Inc. for the A2 Priority Projects – Phase 2 Drainage Improvement project in the amount of $2,021,765.80 and authorizing staff to file a Notice of Completion for the Project and release withheld retention in accordance with State prompt payment laws was adopted.

7. RESOLUTION APPROVING THE PURCHASE OF ONE PUBLIC WORKS STREET

SWEEPER FROM MUNICIPAL MAINTENANCE EQUIPMENT IN THE AMOUNT OF $283,750.03 WITH A 10% CONTINGENCY OF $28,375.01 FOR A TOTAL NOT TO EXCEED AMOUNT OF $312,125.04 PURSUANT TO CEQA GUIDELINE 15378 Adopt the resolution approving the purchase of one new 2024 Schwarze Model A4 Storm Sweeper, Street Sweeper from Municipal Maintenance Equipment in the amount of $283,750.03 with a 10% contingency amount of $28,375.01 not to exceed total amount of $312,125.04 from allocated funds from the Public Works Vehicle Capital Replacement Fund was adopted.

8. RESOLUTION APPROVING THE PURCHASE OF ONE PUBLIC WORKS 2024 FORD F-550 FROM TOWNE FORD IN THE AMOUNT OF $72,951.89 AND ONE CRANE

TRUCK FABRICATION FROM KNAPHEIDE TRUCK EQUIPMENT CENTER IN THE AMOUNT OF $126,934.76 WITH A 10% CONTINGENCY OF $19,988.67 FOR A TOTAL NOT TO EXCEED AMOUNT OF $219,875.32 PURSUANT TO CEQA GUIDELINE 15378
The resolution approving the purchase of one new 2024 FORD F-550 from Towne Ford in the amount of $72,951.89 and one crane body from Knapheide Truck Equipment in the amount of $126,934.76 with a 10% contingency amount of $19,988.67 for a total cost not to exceed $219,875.32 from allocated funds from the Public Works Vehicle Capital Replacement Fund was adopted.

9. RESOLUTION APPROVING AND AUTHORIZING THE CITY MANAGER TO EXECUTE

A COST SHARING AGREEMENT WITH THE CITIES OF BURLINGAME AND

MILLBRAE FOR THE HIGHLINE WATER PIPELINE PROJECT TO A PREVIOUSLY

ADOPTED MITIGATED NEGATIVE DECLARATION
The resolution approving and authorizing the City Manager to execute a Cost Sharing Agreement with the Cities of Burlingame and Millbrae for the Highline Water Pipeline Project was adopted.
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Monday, October 14, 2024

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10. RESOLUTION ACCEPTING THE SUMMARY VACATION AND DEDICATION OF A TWENTY-FOOT-WIDE STORM DRAIN EASEMENT AT 85 SANDRA ROAD PURSUANT TO CEQA GUIDELINE 15301
The resolution accepting the summary vacation of an existing twenty-foot-wide storm drain easement and dedication of a new twenty-foot-wide storm drain easement at 85 Sandra Road pursuant to a previously adopted Mitigated Negative Declaration was adopted.

11. RESOLUTION ADOPTING THE COUNTYWIDE AND TOWN OF HILLSBOROUGH

LOCAL ROADWAY SAFETY PLAN AND ACCOMPANYING VISION ZERO GOAL PURSUANT TO CEQA GUIDELINE 15306
The resolution adopting the Countywide and Town of Hillsborough Local Roadway Safety Plan and accompanying Vision Zero Goal was adopted.

X. NEW BUSINESS

12. RESOLUTION IMPLEMENTING PREVIOUSLY APPROVED INCREASES TO WATER SERVICE CHARGES AND VOLUME CHARGES EFFECTIVE JANUARY 2025 PURSUANT TO CEQA GUIDELINE 15378
Finance Director Jan Cooke and Rick Simonson, Vice President, HF&H, presented the item.

Mayor Krolik opened public comment. There were no speakers. Mayor Krolik closed public comment.

On motion by Councilmember Chuang, seconded by Councilmember Royse and unanimous on voice vote, the resolution implementing previously approved increases to water service charges and volume charges effective January 2025 pursuant to CEQA Guideline 15378 was adopted.

13. CONSIDERATION OF ALTERNATIVES FOR PROGRAM DEVELOPMENT AND

MASTER PLANNING ASSOCIATED WITH THE REDEVELOPMENT OF THE TOWN

HALL COMPLEX, INCLUDING A RESOLUTION APPROVING AND AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH EHDD|RED DOT

STUDIO FOR PROFESSIONAL DESIGN AND MASTER PLANNING SERVICES IN THE AMOUNT OF $442,700.00, AND APPROVING A FY 2024-25 BUDGET AMENDMENT, PURSUANT TO CEQA GUIDELINE 15306
Assistant Director of Building & Planning Liz Ruess provided the staff report. Karen Curtis, EHDD|Red Dot Studio, provided additional information.

Mayor Krolik opened public comment. There were no speakers. Mayor Krolik closed public comment.

On motion by Councilmember Royse, seconded by Councilmember Chuang and unanimous on voice vote, the resolution approving and authorizing the City Manager to execute an agreement with EHDD|Red Dot Studio for professional design and master planning services in the amount of $442,700.00, and approving a FY 24-25 budget amendment was adopted.

XI. PUBLIC COMMENT II
There were no speakers.

XII. TOWN UPDATE
City Manager Doug Davis provided an informational update regarding the Town’s ADU Dashboard and events and activities in the town.

XIII. CITY COUNCIL ITEMS
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Councilmember Chuang expressed appreciation to the City Manager’s Office, Police Department, Public Works Department, Central County Fire Department, and Hillsborough Neighborhood Network team for their support of Neighborfest. Councilmember Chuang reported her attendance at a meeting of the League of California Cities Peninsula Division in which climate change and sea level rise were discussed; her attendance at a meeting of OneShoreline in which the Board adopted a resolution in support of Proposition 4; and her attendance at a meeting of the Samtrans Board in which the purchase of hydrogen refuelers to support hydrogen buses was approved.

Councilmember Royse expressed appreciation to Councilmember Chuang for her work on Neighborfest. Councilmember Royse reported his attendance at a meeting of the SFO/Airport Community Roundtable in which the history of noise legislation was presented.

Councilmember Royse announced the retirement of Roundtable Coordinator Kathleen Wentworth and announced new Coordinator Vanessa Lee, reported the roundtable wrote a letter to the FAA and DOT urging more aggressive involvement of community representation on the National Airplane Noise Commission, and announced the upcoming meeting date.

Councilmember Royse reported his attendance at a meeting of the SBWMA Board of Directors in which an increase in rates was approved and reported the opening of the new office in San Carlos.

Vice Mayor Cole reported the Firewise Board meeting had no quorum and was cancelled. Vice Mayor Cole reported Central County Fire Department received the Staffing for Adequate Fire and Emergency Response Grants (SAFER) grant.

Councilmember Ragsdale reported her attendance at Neighborfest and expressed appreciation to Councilmember Chuang and Mike Chuang for their work. Councilmember Ragsdale reported her attendance at a presentation regarding homelessness by the County of San Mateo and provided comments regarding Caltrain train horns. Councilmember Ragsdale reported her attendance at the Police Department Badge Pinning, a Hillsborough City School District coffee and walk to school day, a Loneliness to Light event with the Center for AgeFriendly Excellence (CAFE). Councilmember Ragsdale provided comments in support of the PG&E Home Energy Audit. Councilmember Ragsdale announced new BAWSCA CEO/General Manager Tom Smegal.

Mayor Krolik expressed appreciation to Senior Management Analyst William Li for his work on the Town’s Weekly Bulletin. Mayor Krolik reported her attendance at Hillsborough City School District coffee and walk to school day, the Police Department Badge Pinning and Promotion Ceremony, Community Visioning Workshop #2, the Bicycle and Pedestrian Master Plan Workshop, and at a meeting of C/CAG in which a quorum could not be achieved. Mayor Krolik announced an upcoming Cybercrime Town Hall and her attendance at a meeting of the SFO/Airport Community Roundtable. Mayor Krolik announced the upcoming Community Roundtable and an upcoming San Mateo County Council of Cities meeting hosted by the Town. Mayor Krolik reported a visit with North School third graders and a visit with South School kindergarteners and expressed appreciation to the Police Department for the gift bags provided for the students.

XIV. ADJOURNMENT
At 7:55 p.m., Mayor Krolik adjourned the meeting in honor of the memory of Kathryn Crosby and in honor of the memory of Christopher Pascoe.
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TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
2 CONSENT CALENDAR

CITY COUNCIL MEETING
DECEMBER 9, 2024

AGENDA STAFF REPORT
ITEM SUBJECT: MONTHLY CLAIMS: NOVEMBER 1 THROUGH NOVEMBER 30, 2024 SUMMARY: The monthly claims for the month of November 2024 in the amount of $5,165,300.25 are submitted for approval.

FISCAL IMPACT: Claims have been expended pursuant to the approved budget.

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: Monthly Claims Listing
PREPARED BY: Richard Santiago, Assistant Finance Director RECOMMENDATION: Approve the monthly claims for November 2024 as submitted. -7-

TOWN OF HILLSBOROUGH

REPORT OF GOODS & SERVICES PURCHASED
DURING THE MONTH OF NOVEMBER 2024
PREPARED BY:

Alan Singh
Docusign Envelope ID: F36CD6BD-8B10-488F-89C7-06E06CC981BB -8-
GOODS & SERVICES PURCHASED $1,815,424.66
NET SALARIES & TAXES PAID 1,312,249.87
HEALTH BENEFIT PREMIUMS 196,661.44
BOND PAYMENTS 437,750.00
CCFD FUNDING 743,775.00
SAN FRANCISCO WATER PAYMENTS 659,439.28
TOTAL COST OF GOODS & SERVICES TO BE APPROVED $5,165,300.25

ASSISTANT FINANCE DIRECTOR DATE

CITY MANAGER DATE
DURING THE MONTH OF NOVEMBER 2024

SUMMARY OF PURCHASES

TOWN OF HILLSBOROUGH
Docusign Envelope ID: F36CD6BD-8B10-488F-89C7-06E06CC981BB 12/3/2024
12/4/2024
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COMPARATIVE SUMMARY
For the Month of November 2024
Nov-24 Nov-23 Nov-22
Goods & Services Purchased:

Operations 1,255,203.45 1,034,428.00 1,292,796.70
Capital 560,221.21 790,108.42 663,089.96
Net Salaries & Taxes Paid 1,312,249.87 1,028,101.40 903,591.49 Health Benefit Premiums 196,661.44 169,727.99 154,778.58 Bond Payments 437,750.00 462,534.70 168,784.91
CCFD Funding 743,775.00 703,368.00 654,879.00
San Francisco Water Payments 659,439.28 525,334.34 436,896.80 Total $5,165,300.25 $4,713,602.85 $4,274,817.44
NOTES:

Operations -
expenditures to the City of Burlingame for sewer and library services.

Capital -
Net Salaries & FY 24/25 payroll is consistent with the prior year, and the increase is primarily attributable Taxes Paid - to a payout, timing of filling open positions, and cost of living increase effective January 1, 2024.

Debt Service
outstanding Certificates of Participation and to terminate the related interest rate swaps.

Interest on the new bonds is now paid twice a year, and principal one time per year.

CCFD -
Water -
FY 24/25 spending is consistent with FY 23/24 spending except timing of reoccurring Capital project spending in November 2024 is primarily for Highline Water Project, Priority Basin Project, and the Parkside Ave Culvert Replacement Project.

In June 2023, the Revenue Refunding Bond Series 2023 was issued to refinance the Town's FY 24/25 contribution is based on budget/contract.

There was an SFPUC wholesale water rate increase on July 1, 2024 to $5.67 (from $5.21, a 8.8 % increase). The increase in FY 24/25 as compared to FY 23/24 is attributed to the SFPUC rate increase and higher units purchased.

Docusign Envelope ID: F36CD6BD-8B10-488F-89C7-06E06CC981BB -10-

TOWN OF HILLSBOROUGH
PURCHASES MADE DURING NOVEMBER 2024
CK # VENDOR DESCRIPTION AMOUNT
15959 SHUKLA LAW, P.C CLAIMS EXPENSE 11/5/24 48,200.00
15960 ADP, LLC OCT '24 MASTERTAX SOFTWARE SUPPORT FN 86.29 15961 AGUILAR & SONS REPAIR - INSTALL ASHPALT MULTIPLE SITES PW 14,950.50 15962 AIXTEK AUG '24 IT MANAGEMENT SERVICE/SQL SERVER LIC IT 30,815.00 15963 AKEL ENGINEERING GROUP, INC. HYDRAULIC ANALYSIS SKYFARM 3 PUMP STATION PW 666.50 15964 ALTA PLANNING DESIGN, INC BICYCLE/PEDESTRIAN MASTER PLAN - PHASE 1 PW 27,298.75 15965 ANNA LAURA JONES HISTORICAL DESIGN REVIEW MULTIPLE SITES BP 2,400.00 15966 AT&T 9/10/24-10/9/24 1,761.38
15967 AT&T 9/17/24-10/16/24 PD 62.75
15968 AT&T 9/20/24-10/19/24 PD 65.68
15969 AT&T 9/7/24 PD 538.67
15970 AT&T 10/7/24 PD 538.67
15971 AUTO PRIDE CAR WASH, INC SEP '24 CAR WASHES PD 393.89 15972 AXON ENTERPRISE, INC SOFTWARE - OFFICER SAFETY PLAN/LICENSE BUNDLE 64,386.21 15973 BAY PRO NOV '24 LANDSCAPE MAINT VARIOUS SITES HBF 3,316.00 15974 BOSCO OIL COMPANY GAS/DIESEL PW/PD 8,367.98
15975 MARY BRIDGET MALEY-CANNON HISTORICAL DESIGN REVIEW MULTIPLE SITES BP 12,453.60 15976 BURNETT LANDSCAPE DEVELOPMENT INC MAINT - NOV '24 HBF LANDSCAPE VARIOUS SITES 5,256.00 15977 CALIFORNIA PUBLIC POLICY GROUP, INC LEGAL RETAINER OCT '24 CM 4,000.00 15978 CALIFORNIA BUILDING STANDARDS COMMISSION Q3 '20-Q4 '24 BLDG STANDARD FEES BP 9,074.16 15979 CATALYST ENVIRONMENTAL, INC HAZARDOUS/ELECTRONIC WASTE DISPOSAL PW 804.19 15980 CENTRAL COUNTY FIRE DEPARTMENT NOV '24 FISCAL CONTRIBUTION 743,775.00 15981 CINTAS CORPORATION NO 3 UNIFORM CLEANING SERVICE PW 1,039.18 15982 CINTAS CORPORATION NO 3 SUPPLIES - FIRST AID KIT ANNEX/TH/PD/FN PW 31.32 15983 CITY OF BURLINGAME OCT '24 LIBRARY SERVICES CM 63,722.00 15984 CITY OF MILLBRAE COUNCIL OF CITIES MEETING 10/25/24 RAGSDALE 60.00 15985 CITY OF SAN MATEO JUL '24 LIBRARY SERVICES CM 24,786.88 15986 CLARK PEST CONTROL PEST CONTROL - 1640 RENTAL/TOWN HALL/PD PW 776.00 15987 CLEANSWEEP SERVICES, INC. STREET SWEEPING SERVICE PW 7,680.00 15988 COUNTY OF SAN MATEO INFORMATION SERVICES DEPT. SEP'24 MICRO CHANNEL LINES PD 164.51 15989 COMCAST SEP '24 CALNET NONCGEN LINE IT 4,879.45
15990 CORE & MAIN LP PARTS - VARIOUS ITEMS PW 1,099.77
15991 CSG CONSULTANTS, INC. 2025 STREET RESURFACE& VARIOUS PRJ 7/27/24-8/30/24 125,030.50 15992 DAN OKANO EQUIP - TRIMMER HEAD/MISC PW 273.23
15993 DANIEL RICHARD CHARLES MAINT - MAIN BREAKER SYSTEM CHECK PW 380.00 15994 DEGREE HVAC, INC REPAIR - HVAC PD PW 511.25
15995 DEPARTMENT OF CONSERVATION Q3'24 STRONG MOTION & SEISMIC HAZARD MAPPING BP 2,090.88 15996 DEPARTMENT OF JUSTICE SEP'24 FINGERPRINT SERVICE PD 64.00 15997 DU-ALL SAFETY, LLC SEP '24 SAFETY CONSULT PW 813.75 15998 FERGUSON US HOLDINGS, INC PARTS - COUPLERS PW 1,472.63 15999 FLOWATER EQUIP - SEP'24 WATER STATION CM/BP 311.72 16000 FRANK AND GROSSMAN LANDSCAPE CONTRACTORS OCT '24 JANITORIAL SERVICES PW 8,796.05 16001 FREDCO MARKETING PRINT/MAIL - ASSET COLLECTION NOTICE PW 1,849.08 16002 FREYER & LAURETA, INC HIGH LINE WATER PRJ DESIGN PW 191,679.78 16003 FROST BROWN TODD LLP LEGAL SERVICES - JAN '24/MAY' CM 11,406.50 16004 GRAINGER UNIFORM - RAIN GEAR/GLOVE/RAIN JACKETS PW 3,219.22 16005 HALEY & ALDRICH, INC INSPECT - RETAINING WALL RALSTON PW 770.00 16006 JAMES WILLIAM NESS 2024 BACK FLOW DEVICE TESTING PW 125.00 16007 JEFFREY SCHOENSTEIN PRINT - STAR LOGO PATROL VEHICLE DOOR PD 461.11 16008 MIDWEST MOTOR SUPPLY CO, INC SUPPLIES - VARIOUS ITEMS PW 954.29 16009 LITTLER, MENDELSON, P.C. LEGAL SERVICES SEP '24 CM 17,897.50 16010 NAPA AUTO PARTS - BURLINGAME PARTS - HITCHES PW 578.80 16011 NORCAL RENTAL GROUP LLC SUPPLIES - PROPANE PW 16.31 16012 BRIAN STOLER & ELIZABETH JARDINA REFUND - EIR DEPOSIT BALANCE BP 200.00 16013 JAMES A McCALL REFUND - EIR DEPOSIT BALANCE BP 200.00 16014 MNF PROPERTIES LLC REFUND - BUILD DEPOSIT BP 33,360.00 16015 MNF PROPERTIES LLC REFUND - GRADE DEPOSIT BP 22,500.00 16016 NATHAN FISHER & MINA K FISHER REFUND - GRADE DEPOSIT BP 15,000.00 16017 NURBOL SULTAN REFUND - BUILD DEPOSIT BP 4,200.00
16018 NURBOL SULTAN REFUND - GRADE DEPOSIT BP 5,000.00
16019 JOEY WILLIAMSON REIMB - TRAVEL EXP RIMS CONF 10/6-11/24 PD 581.36 16020 JOEY WILLIAMSON REIMB - TRAVEL EXP APCO CONF 9/30-10/4/24 PD 846.36 16021 KARI PECHETTI REIMB - TRAVEL EXP RIMS CONF 10/6-11/24 PD 595.36 16022 MARCOS RODRIGUEZ REIMB-TRAVEL EXP CAININE CLASS 9/16/24-10/11/24 PD 1,129.16 Docusign Envelope ID: F36CD6BD-8B10-488F-89C7-06E06CC981BB -11-

TOWN OF HILLSBOROUGH
PURCHASES MADE DURING NOVEMBER 2024
16023 RENE AGUILAR MENDOZA REIMB - FINGERPRINT SERVICE FEE HR 45.00 16024 WILSON YEH REIMB - FINGERPRINT SERVICE FEE HR 40.00 16025 MARK SPEIZER REFUND - EASMENT DEPOSIT BALANCE PW 1,297.00 16026 PAKPOUR CONSULTING GROUP,INC 23/24 WATER & SEWER REPLACE PRJ DESIGN PW 11,582.50 16027 PENINSULA TRUCK REPAIR INC MAINT - TRUCK #593/#302 PW 5,343.55 16028 PENINSULA UNIFORMS & EQUIPMENT, INC UNIFORMS - VARIOUS ITEMS STAFF PD 1,487.02 16029 PETERSON POWER SYSTEMS, INC. MAINT - SKID STEER #E12 PW 690.55 16030 PRIORITY 1 MAINT - MULTIPLE VEHICLES PD 8,192.78
16031 QUENCH USA, INC EQUIP - WATER STATION 10/28/24-11/27/24 PD 177.61 16032 ROBERT HALF INTERNATIONAL INC TEMP SERVICE - W/E 10/18-25/24 CM/FN 12,429.07 16033 SAN MATEO COUNTY FORENSIC LAB SEP'24 CRIME LAB SERVICES PD 630.00 16034 SAN MATEO LUMBER CO., INC SUPPLIES - ADHESIVE/MISC PD BATHROOM PW 64.79 16035 SFPUC FINANCIAL SERVICES JUL '24/AUG '24 - WATER QUALITY ANALYSIS PW 3,030.00 16036 SPOTLIGHT IMPRESSIONS, INC PRINT - EMPLOYEE NAME PLATE AD 47.47 16037 STANDARD INSURANCE COMPANY SEP '24 GROUP LIFE/ADD/LTD ASSESSMENT 3,104.23 16038 STAPLES ADVANTAGE OFFICE SUPPLIES - ALL DEPARTMENTS 404.55 16039 TELECOMMUNICATIONS ENGINEERING ASSOCIATES OCT'24 COMMUNICATIONS CENTER/BASE PD 2,345.50 16040 TETRA TECH INC MAINT - SCADA SUPPORT SERVICES PW 18,571.29 16041 THE PERMANENTE MEDICAL GROUP, INC EMPLOYEE PHYSICAL PD 1,108.00 16043 TOOLAND TOOLS - DISTANCE METER & VARIOUS ITEMS PW 687.71 16044 UNITED LABORATORIES SUPPLIES - SEWER LIFT-ZYME PW 6,199.06 16045 UNITED SITE SERVICES, INC. PORT-POTTY RENTAL - WORK FURLOUGH 9/1/24-9/30/24 470.16 16046 UTILITY TELECOM, INC. OCT '24 ETHERNET & CIRCUITS IT 408.71 16047 VERIZON CONNECT NWF INC INSTALL - GPS TRUCK #580 PW 150.00 16048 VERIZON WIRELESS 9/7/24-10/6/24 PD/PW 6,120.84
16049 VOX NETWORK SOLUTIONS MAINT - VOICEMAIL ISSUES IT 230.00 16050 WITMER-TYSON IMPORTS, INC. SEP'24 K-9 TRAINING PD 2,259.38 16051 ACCO ENGINEERED SYSTEMS, INC. REPAIR - HVAC TOWN HALL/PD/CORP YARD PW 4,486.00 16052 AIXTEK OCT '24 IT MANAGE SERVICE/MICROSOFT LIC OCT '24 IT 34,195.00 16053 ALLIANT INSURANCE INSURANCE -VOLUNTEER EVENT/COUNCIL MEETING CO 464.00 16054 AMAZON WEB SERVICES, INC OCT '24 - BACKUP STORAGE IT 13,566.95 16055 ANN STAR FORMAN FEE - NOTARY SERVICES OCT '24 BP 330.00 16056 AT&T 9/19/24-10/18/24 155.55
16057 AT&T 9/19/24-10/18/24 264.06
16058 AT&T 9/20/24-10/19/24 155.55
16059 AT&T 9/20/24-10/19/24 729.38
16060 AT&T 9/24/24-10/23/24 536.78
16061 AT&T 10/7/24 PD 538.67
16062 BAY AREA TREE CO. INC. MAINT - VEGETATION MANAGE VARIOUS SIGHTS PW 50,250.00 16063 BAY PRO MAINT - AUG '24-NOV '24 EUCALYPTUS PATH PW 3,090.00 16064 BAYSIDE BUILDING MATERIALS INC MATERIALS - SAND/STRAW WADDLE PW 1,534.75 16065 BESS TESTLAB, INC 23/24 WATER/SEWER REPLACE PRJ - POTHOLING PW 11,000.00 16066 BEST BEST & KRIEGER LLP FEE - SEP '24 LEGAL SERVICE 20,248.31 16067 BETTER SOURCE LIQUIDATORS FURNITURE - VARIOUS ITEMS LITTLE HOUSE CM 7,503.98 16068 BOSCO OIL COMPANY GAS/DIESEL PW 1,257.78
16069 BUILDCHECK AI, INC CONSULT - ADRB APPLICATIONS OCT '24/NOV '24 BP 1,490.00 16070 CHRIS ROGERS MAINT - OPEN SPACE/SEWER VEGETATION MANAGE 3,191.25 16071 CITY MANAGE MANAGEMENT ADVISORS LLC DEPUTY CITY CLERK RECRUITMENT SERVICES CM 8,833.34 16072 CITY OF BURLINGAME AUG '24 SEWER BILLING PW 141,280.92 16073 CLEANSWEEP SERVICES, INC. STREET SWEEPING SERVICE PW 6,144.00 16074 CORE & MAIN LP PARTS - PIPES PW 666.83
16075 CSG CONSULTANTS, INC. 2025 STREET RESURFACE& VARIOUS PRJ 8/31/24-9/27/24 140,983.23 16076 CUSTOM TOPS INC EQUIP - TOOL BOX/RACK #580 PW 2,083.47 16077 DEBORAH YACOBELLIS CONSULT - SYMBIUM/SOLAR OCT '24 BP 900.00 16078 DU-ALL SAFETY, LLC OCT 24' RESPIRATORY/HEARING TESTS PW 2,104.20 16079 EMPLOYMENT DEVELOPMENT DEPT. JUL-SEP'24 UNEMPLOYMENT INSURANCE FEE 2,249.00 16080 EPRINTS & DOCUMENT SERVICES PRINT - BUSINESS CARDS STAFF HR 400.13 16081 EPS, INC. REPAIR - PIPE CHATEAU PW 2,300.00
16082 ERLER & KALINOWSKI, INC SANITARY SEWER DESIGN 23A PRJ PW 23,830.00 16083 FLOCK GROUP INC SOFTWARE - DATA RETENTION 11/1/24-10/31/25 PD 6,300.00 16084 FLOWATER EQUIP - OCT '24 WATER STATION FN 164.06
16085 FRANK AND GROSSMAN LANDSCAPE CONTRACTORS NOV '24 JANITORIAL SERVICES PW 8,796.05 16086 FREDCO MARKETING PRINT - WATER SERVICE LINE INSPECT TAGS PW 260.71 16087 GLENN BERKHEIMER NOV '24 LABOR RELATIONS HR 1,700.00 16088 GOOD CITY COMPANY CONSULT - GENERAL PLAN/HOUSING ELEMENT OCT' 24 6,340.00 16089 GRAINGER TOOL - SAND BLASTER & VARIOUS ITEMS PW 3,837.97 16090 GRANITE ROCK COMPANY MATERIALS - ASPHALT PW 323.34 Docusign Envelope ID: F36CD6BD-8B10-488F-89C7-06E06CC981BB -12-

TOWN OF HILLSBOROUGH
PURCHASES MADE DURING NOVEMBER 2024
16091 GRAY'S PAINT & WALLPAPER OF THE PENINSULA, INC SUPPLIES - PAINT/VARIOUS ITEMS PW 734.79 16092 HAZEN AND SAWYER, DPC LEAD SERVICE LINE INVENTORY PRJ PW 8,510.00 16093 HF&H CONSULTANTS, LLC SEP '24/OCT '24 2025 WATER RATE ANALYSIS FN 15,813.75 16094 HOME DEPOT CREDIT SERVICES JUL '24/AUG '24 VARIOUS PARTS & SUPPLIES PW 10,682.26 16095 INFOSEND, INC. AUG'24/SEPT-OCT '24 UTILITY BILLING FN 3,918.30 16096 INTERWEST CONSULTING GROUP AUG'24 UTILITY BILLING FN 2,000.00 16097 KARIN SIDWELL HISTORICAL DESIGN REVIEW BP 5,200.00 16098 MARK D HUDAK LEGAL SERVICES - OCT 2024 CM 11,650.00 16099 MAYNE TREE EXPERT CO., INC. MAINT - TREE CARE VARIOUS SITES PW 7,465.00 16100 METROPOLITAN PLANNING GROUP INC CONSULT - OCT '24 PLANNER SERVICES BP 11,900.00 16101 NAPA AUTO PARTS - BURLINGAME PARTS - WASH BRUSH PW 35.97 16102 NORGO ENGINEERING SKYFARM STORM DRAIN REPLACE PRJ PW 9,668.75 16103 BENJAMIN YANG & TSUI MIN HUNG REFUND - EIR DEPOSIT BALANCE BP 173.20 16104 HANDY PLUMBING MAN INC REFUND - PERMIT FEE VOID BP 281.85 16105 MAYA CHOKSI EICHLER REFUND - BUILD DEPOSIT BP 3,500.00 16106 MICHELLE YAU & JOHN CHEN REFUND - GRADE DEPOSIT BP 7,500.00 16107 JIE LING HUANG REIMB - FINGERPRINT SERVICE FEE HR 49.00 16108 JOSHUA WANG REIMB - TRAVEL EXP FIRST AID CLASS 9/30-10/4/24 PD 130.00 16109 KAITLYN SCRIBNER REIMB - FINGERPRINT SERVICE FEE HR 45.00 16110 NATHAN YOUNG REIMB - TRAVEL EXP FIRST AID CLASS 9/30-10/4/24 PD 451.60 16111 OWEN EQUIPMENT COMPANY SUPPLIES - HARD HATS PW 2,013.61 16112 PETERSON STRUCTURAL ENGINEERS, INC DARRELL TANK OVERFLOW ANALYSIS PW 2,529.60 16113 PLAN JPA OCT '24 DEDUCTIBLE CLAIMS VARIOUS ITEMS 12,229.50 16114 ROBERT HALF INTERNATIONAL INC TEMP SERVICE - W/E 11/1-8/24 CM/FN 7,588.62 16115 ROMEL 400 LLC RENT - NOV'24 RADIO BASE STATION RECEIVER PD 330.00 16116 SAN MATEO LOCK WORKS, INC. KEYS PW 15.35
16117 SCHAAF & WHEELER CONSULTING 2024 SANITARY SEWER LIFT STATION UPGRADE 24A PW 2,092.50 16118 SHAWN KIRBY OCT '24 POOL SERVICE PW 1640 RENTAL 200.00 16119 SAN MATEO COUNTY POLICE CHIEFS AND 2024 EXECUTIVE SEMINAR 12/4/24 PD 200.00 16120 STANDARD INSURANCE COMPANY OCT '24 GROUP LIFE/ADD/LTD ASSESSMENT 3,071.03 16121 STAPLES ADVANTAGE OFFICE SUPPLIES – BP 87.61
16122 STATE WATER RESOURCES CONTROL BOARD - DWOCP FEE - WATER OPERATOR CERT D2 STAFF PW 80.00 16123 STEPHEN CIARI PLUMBING AND HEATING, INC INSTALL - WATER HEATER TOWN HALL/DRAIN PD 2,463.53 16124 THE ADAM-HILL COMPANY PARTS - PIPE HUNTER TRUCK #580 PW 102.24 16125 THOMSON WEST OCT'24 INVESTIGATIVE WEBSITE PD 1,045.45 16126 TOOLAND TOOLS - SOCKET RATCHET EXTENSION BAR PD 27.32 16127 TOWNE FORD SALES PURCHASE - 2024 FORD F-550 PW 72,951.89 16128 U-ROCK UTILITY EQUIPMENT INC REPAIR - PUSH CAMERA PW 1,619.30 16129 U.S. POSTMASTER 1ST CLASS PRESORT/ STANDARD MAIL PERMIT 24/25 700.00 16130 ULINE, INC. SUPPLIES - CONTAINER/LID/CLEANER PW 1,704.06 16131 UNLIMITED TOOL & EQUIPMENT REP REPAIR - CONCRETE SAW PW 368.11 16132 VIKING SHRED LLC OCT'24 DESTRUCTION SERVICES PD 92.99 16133 INTERNATIONAL CITY COUNTY MANAGEMENT ASSOC. 2025 MEMBERSHIP RENEWAL STAFF FN 4,739.37 16134 DOUG DAVIS REIMB - TRAVEL EXP CA FIRE CHIEF CONF 10/15-17/24 150.50 16135 DOUG DAVIS REIMB-TRAVEL EXP LEAGUE CA CITY CONF 10/17-18/24 64.50 16136 DOUG DAVIS REIMB-TRAVEL EXP INTL CHIEF ASSOC CONF 10/18-23/24 368.00 TOTAL GOODS & SERVICES FOR THE MONTH PAID BY CHECK $2,353,910.75 CALPERS RETIREMENT CONTRIBUTIONS 120,932.66
RETIREE HEALTH REIMBURSEMENTS 84,356.25
TOTAL GOODS & SERVICES FOR THE MONTH $ 2,559,199.66
-13-

TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
3 CONSENT CALENDAR

CITY COUNCIL MEETING
DECEMBER 9, 2024

AGENDA STAFF REPORT
ITEM SUBJECT: ACCEPTANCE OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) TOGETHER WITH THE INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING FOR THE YEAR ENDED JUNE 30, 2024 SUMMARY: Local ordinances and state statutes require that the Town publish a complete set of financial statements at the close of each fiscal year presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards (GAAS) by a firm of licensed, certified public accountants. Pursuant to that requirement, the Town’s ACFR, audited by Eide Bailly, is hereby submitted.

Audit and Annual Comprehensive Financial Report
The Town has received an unmodified opinion on the financial statements for the fiscal year ending June 30, 2024, from its auditor, Eide Bailly. The audit firm conducts its audit in accordance with generally accepted auditing standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The standards require that the auditors plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The auditors’ unmodified opinion is presented in the Annual Comprehensive Financial Report.

The Town participates in the Certificate of Achievement in Financial Reporting award program administered by the Government Finance Officers of America. It has successfully obtained the award for the past 22 years. Staff believes the June 30, 2024 report will qualify for the award.

Summary of Financial Results
The General Fund has a net excess revenue of $1.4 million for the fiscal year ending June 30, 2024, which adds to reserves. General Fund revenues were $2.8 million (8%) higher than the budget primarily due to improved investment income due to economic and market conditions.

General Fund expenditures exceed budget by $1.0 million due to the repairs to the police building and other infrastructure caused by the winter storm (partially reimbursable), higher legal costs, and information technology expenditures. Transfers from the General Fund of $2.4 million are for storm drain and governmental facility capital improvements.

The Water Fund's operating revenues increased $1.8 million compared to the prior year, primarily due to higher water unit sales and rate increases effective July 2023 and January 2024. The Sewer Fund's operating revenues increased $0.6 million compared to the prior year, primarily due to a rate increase effective July 2023. The combined net position of the Sewer and Water Enterprise Funds increased by $6.2 million in fiscal year 2023-24. Total net position of $87.1 -15-
Agenda Staff Report - Hillsborough City Council
December 9, 2024

Page 2 ends

million on June 30, 2024 shows $27.5 million unrestricted, $59.2 million invested in net capital assets, and $0.4 million restricted for debt service.

The Town's net pension liability increased $2.9 million over the prior year, for a total liability of $38.7 million, primarily due to changes in CalPERS’ investment returns.

Results by Fund
The financial highlights are summarized in the Management’s Discussion and Analysis (MD&A), which can be found on pages 5 through 19 of the financial report.

General Fund
The General Fund is the Town's primary operating fund. The fiscal year-end results showed a net excess revenue of $1.4 million in the General Fund that adds to reserves. The General Fund ending fund balance on June 30, 2024, is $32.9 million, of which $16.6 million is reserved for contingencies by policy and $5.9 million is restricted in the Section 115 pension trust. The remaining funds are assigned and held for capital projects and future contingencies. The General Fund contingency reserve policy calls for a minimum of 30% of operating expenditures with a goal of 50%. This reserve is held for contingencies such as disaster, economic downturn, or other financial impacts.

General Fund revenues for the fiscal year 2023-24 are $37.4 million. They are $2.9 million (8%) higher than budget primarily due to improved investment returns, receipt of one-time settlement, and higher than budgeted excess ERAF (Educational Revenue Augmentation Fund) revenue due to the release of the reserve.

General Fund expenditures for the fiscal year 2023-24 are $36.0 million and exceed budget by $1.0 million (3%), primarily driven by higher legal costs, repairs from winter storm, and information technology software costs. The expenditures are $1.4 million (4%) higher compared to the prior fiscal year, primarily driven by increases in salaries and benefits, the contribution to the Central County Fire Department JPA (which primarily increased labor-related costs), and an increase in materials and services. The increased materials and services are attributable to increased legal costs, winter storm repairs (reimbursable), and information technology software.

Proprietary Funds – Water and Sewer Enterprise
Proprietary funds are used to account for activities funded by service charges. Enterprise Funds account for the external activities of the water and sewer utilities, while the Internal Service Fund accounts for internal (interdepartmental) activities for replacing vehicles and equipment.

The Town’s water and sewer enterprise funds should be self-supporting; the sale of water and the service charges to sewer customers generate the revenue needed to support these utilities' operations, debt service, and capital needs.

Water Enterprise Fund
The Water Enterprise Fund's operating revenue is generated from charges to water customers.

Total Water Enterprise Fund’s revenue is $15.8 million, $2.1 million above the prior year. The variance is attributable to higher investment income, an increase in water unit sales of 5.6% above -16-
Agenda Staff Report - Hillsborough City Council
December 9, 2024

Page 3 ends

last fiscal year, and water rate increases, offset by receipt of one-time revenue (ARPA, other) in the prior year.

Total operating expenses are $14.6 million, $1.0 million above the prior year. Water unit purchases were 5.6% above the previous fiscal year. On July 1, 2023, the SFPUC adopted a wholesale water rate increase to $5.21 per ccf (9.6% increase).

The Water Fund capital infrastructure outlay is $6.0 million. Water projects in FY 2023-24 included water main replacement, Highline water connection, Darrell tank site improvement, water tank improvements, and Scada system improvements. Projects are encumbered for three years.

The Water Enterprise's net position of $37.3 million on June 30, 2024, increased $0.9 million over the prior year. The net position comprises a net investment of $30.8 million in capital assets and $6.5 million in unrestricted net position. Reserves are restricted for use solely in the Water Enterprise Fund.

Sewer Enterprise Fund
The sewer charge is placed annually on the property tax bill for residential customers and the water bill for non-residential customers. Total Sewer Enterprise Fund’s revenue is $18.5 million, $1.1 million above the prior year. A 4% increase in sewer rates was adopted on July 1, 2023. The transfer revenue of $1.8 million is for storm drain capital improvements.

Total expenses are $13.2 million, $0.6 million below the prior year. This is primarily due to a nonrecurring bond-related charge for the previous year, offset somewhat by an increase in salary and other services.

Debt service includes principal and interest on the State Revolving Fund loan, the long-term funding agreement with the City of San Mateo for the Town’s contribution to the Clean Water (treatment plant) program, and the 2023 Revenue Refunding Bonds. The prior year included a one-time initial principal payment of $2.4 million to the City of San Mateo on the Clean Water agreement.

The Sewer Fund’s capital infrastructure outlay is $6.3 million for smoke testing and video inspection, priority basin I/II rehabilitation program, flow metering/modeling, Sandra/Hayne storm drain, and high-priority storm drain improvements.

The Sewer Enterprise Fund's net position of $49.8 million on June 30, 2024, increased $5.3 million over the prior year. Net position consists of $28.4 million in net capital investment, $0.4 million restricted for debt service, and $21.0 million in unrestricted net position. Reserves are restricted for use solely in the Sewer Enterprise Fund.

Capital
The Town spent $19.3 million on capital purchases and infrastructure, with $1.9 million on governmental-type activities for vehicles, IT equipment, and building improvements and $17.4 million on business-type activities for improvements to the Darrell water tank, water mains, pump stations, sewer priority basins, flow metering, sewer main video inspection, storm drain improvements, and the addition of the treatment plant capacity rights. The Town’s intangible -17-
Agenda Staff Report - Hillsborough City Council
December 9, 2024

Page 4 ends

capital asset for sewer treatment plant capacity rights for the Town’s share of the City of San Mateo’s Clean Water treatment plant increased due to an increase in the percentage of completion on the project. The Town contracts for sewer treatment with the City of San Mateo for sewer flow from the southern wastewater treatment on the south half of the Town. The current construction includes wastewater treatment capacity for the southern portion of the Hillsborough sewer collection system. The asset reflects the percentage completion of the project (88%). See the Long-Term liabilities explanation below.

Debt and Long-Term Liabilities
On June 30, 2024, government-wide long-term liabilities totaled $113.7 million, comprised of debt, funding agreement with the City of San Mateo, compensated absences, pension, and other postemployment benefits (OPEB). There is a net increase of $4.6 million over the prior year, primarily due to the increase in the percentage completion increase on the San Mateo Clean Water loan agreement. The Long-Term Debt footnote to the financial statements outlines each source of debt and the key terms and payment schedule.

The Town received an AAA-A1 rating on the Revenue Refunding Bonds Series 2023.

Government-Wide Net Position
The Town’s financial condition is presented in the Statement of Net Position on page 20 of the report. This statement is prepared using a full accrual accounting method, reflecting capital assets and liabilities in the net position.

The Government-wide net position is $115.1 million on June 30, 2024. The Town's net position increased by $4.9 million (4.4%). Net position comprises $25.6 million in governmental activities and $89.4 million in business-type activities. The governmental activities decrease of $1.5 million is attributable to an increase in expenditures, primarily for the bi-annual street resurfacing project, one-time costs for repairs to the police building and other governmental infrastructure caused by the winter storm, and annual increases attributable to the cost-of-living salary increases, CalPERS pension contributions, and other contractual increases. The increase in business-type activities of $6.4 million is attributable to revenues exceeding expenses by $4.5 million and a transfer of $1.8 million for capital improvement projects.

Governmental Activities Net Position, which includes the General Fund and the other governmental funds, was $25.6 million on June 30, 2024. It comprises $13.3 million in unrestricted, $10.3 million in net investment in capital assets, and $2.0 million restricted for capital projects.

Business-Type Activities Net Position is $89.4 million on June 30, 2024, and comprises $29.8 million in unrestricted, $59.2 million in net investment in capital assets, and $0.4 million restricted for debt service.

Other
The Town continues to monitor results in critical areas:

1. Water Fund reserve levels and water sales are monitored to ensure adequate funds are available to withstand conservation caused by drought or wet winters. -18-
Agenda Staff Report - Hillsborough City Council
December 9, 2024

Page 5 ends

2. Excess ERAF and Property Taxes In-Lieu of Motor Vehicle License Fees (MVLF) - There has been an MVLF shortfall in the last few years. The process requires the County to file a claim with the State Department of Finance to place the shortfall in the State budget for the following year.

Although the state has paid the shortfall each year, it is not guaranteed to be included in the State budget—the Town partners with the County and cities to work on a long-term solution.

3. CalPERS’s changes in the discount rate or other policy changes will increase the Town’s annual contribution, which puts pressure on the budget.

4. The Town has an agreement with the City of San Mateo to share in the costs of the new San Mateo Clean Water treatment plant. As of June 30, 2024, the project is 88% complete, and the town continues to monitor the project costs.

5. The Highline water project funding includes a Federal Building Resilient Infrastructure and Communities (BRIC) grant (in the process of finalizing the grant) and city contributions from the Town of Hillsborough, Millbrae, and Burlingame.

The Financial Advisory Committee reviewed the audit results and ACFR at its regularly scheduled meeting on December 3, 2024, and recommended accepting the report.

FISCAL IMPACT: There is no fiscal impact with the acceptance of the report.

ATTACHMENTS: Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2024
PREPARED BY: Jan Cooke, Finance Director
RECOMMENDATION: Accept and file the Annual Comprehensive Financial Report together with the Independent Auditors’ Report on Internal Control over Financial Reporting for the fiscal year ended June 30, 2024.
-19-
Cover image should be inserted towards the end
All charts are not live linked to Excel and
Therefore, if an update impacts the tables, they must be relinked I would not live link any charts because it causes the
automatic years to show 1899
Keep these instructions but paste cover page on top
to preserve them for next year
-20-
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-21-
Town of Hillsborough, California
Hillsborough, California
Annual Comprehensive Financial Report
Fiscal year Ended June 30, 2024
Prepared by the Finance Department
-22-
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-23-

TOWN OF HILLSBOROUGH

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

TABLE OF CONTENTS
Page

INTRODUCTORY SECTION
Letter of Transmittal i
GFOA Certificate of Achievement ix
Organization Chart and Principal Officials x

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

Government-wide Financial Statements:

Statement of Net Position 20
Statement of Activities 22
Fund Financial Statements:

Balance Sheet - Governmental Funds 23
Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 24
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to
the Statement of Activities 25
Statement of Fund Net Position - Proprietary Funds 26
Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds 28
Statement of Cash Flows - Proprietary Funds 29
Notes to the Financial Statements 30
Required Supplementary Information:

Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual - General Fund 67
Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual - Police and Fire Special Tax Fund 68 Schedule of Proportionate Share of the Net Pension Liability 69 Schedule of Contributions 70
Schedule of Changes in the Net OPEB Liability and Related Ratios 71 Schedule of OPEB Contributions 72
Notes to the Required Supplementary Information 73
-24-

TOWN OF HILLSBOROUGH

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

TABLE OF CONTENTS (CONTINUED)
Supplementary Information:

Combining Statements and Individual Fund Schedules:

Nonmajor Governmental Funds:

Combining Balance Sheet 75
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 76
Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual
Gas Tax Fund 77
Measure "A" Fund 78
Measure "W" Fund 79
Police Grants Fund 80
Capital Assets Used in the Operation of Governmental Funds:

Comparative Schedules by Source 81
Schedule by Function and Activity 82
Schedule of Changes by Function and Activity 83

STATISTICAL SECTION
Net Position by Component 85
Changes in Net Position 86
Governmental Activities Tax Revenues by Source 88
Fund Balances of Governmental Funds 89
Changes in Fund Balances 90
Property Tax Dollar Breakdown 91
Net Taxable Assessed Value History 92
Direct and Overlapping Property Tax Rates 93
Principal Property Taxpayers 94
Property Tax Levies and Collections 95
Ratio of Outstanding Debt by Type 96
Computation of Direct and Overlapping Debt 97
Legal Debt Margin Information 98
Schedule of Enterprise Funds Bond Coverage 99
Water and Sewer Rates 100
Demographic and Economic Statistics 101
County of San Mateo and Neighboring Cities 102
Full-Time Equivalent City Government Employees by Function 103 Operating Indicators by Function 104
Capital Assets Statistics by Function 105
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INTRODUCTORY SECTION
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i
December 1, 2024
Honorable Mayor and Members of the City Council,
Members of the Financial Advisory Committee,
And Citizens of the Town of Hillsborough
Town of Hillsborough, California

ANNUAL COMPREHENSIVE FINANCIAL REPORT
The Annual Comprehensive Financial Report of the Town of Hillsborough for the fiscal year ended June 30, 2024, is hereby submitted. The financial report contains a complete set of audited financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) as promulgated by the Governmental Accounting Standards Board (GASB).

The Finance Department prepared the report, which is responsible for both the accuracy of the presented data and the completeness and fairness of the presentation of this report, including all disclosures.

Information contained in this report is based upon a comprehensive framework of internal controls that has been established for this purpose. The objective of internal controls is to provide reasonable, rather than absolute, assurance that the Annual Comprehensive Financial Report information is accurate in all material aspects. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

The Town prepared the Annual Comprehensive Financial Report using the financial reporting requirements prescribed by generally accepted accounting principles. This GASB Statement requires management to provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of management’s discussion and analysis (MD&A). This letter of transmittal is designed to complete the management’s discussion and analysis and should be read in conjunction with it. The management’s discussion and analysis can be found immediately following the independent auditor's report.

The Annual Comprehensive Financial Report is organized into three sections:
• The Introductory Section includes the transmittal letter, the Town’s organization charge, and a list of principal officials. This section is intended to familiarize the reader with the organizational structure of the Town, the nature and scope of the services it provides, and the specifics of its legal operating environment.
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• The Financial Section includes the management’s discussion and analysis, the basic financial statements, notes, and other required supplementary information. The basic financial statements include the government-wide financial statements that present an overview of the Town’s entire financial operations and the fund financial statements that present the financial information for each of the Town’s major funds and non-major governmental and other funds. Also included in this section is the independent auditor’s report on the financial statements and schedules. • The Statistical Section contains comprehensive statistical data on the Town’s financial, physical, economic, and demographic characteristics.

The Town’s Annual Comprehensive Financial Report presents the government and its component units, entities for which the government is considered financially accountable. Blended component units, although legally separate entities are, in substance, part of the government’s operations. For financial reporting purposes, the Town’s basic financial statements include all funds controlled by or dependent upon the Town City Council. The Hillsborough Public Improvement Corporation (HPIC) operations were established to assist in financing the acquisition of public improvements on behalf of the Town. These financial statements combine HPIC with the Town’s Water and Sewer funds. The City Council is its Board of Directors and has full accountability for its operations. The HPIC does not issue a separate financial report.

INDEPENDENT AUDIT
Eide Bailly, a firm of licensed certified public accountants, has audited the Town of Hillsborough’s financial statements. The goal of the independent audit is to provide reasonable assurance that the financial statements of the Town of Hillsborough for the fiscal year ended June 30, 2024, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. Based upon the audit, the independent auditor concluded that there was a reasonable basis for rendering an unmodified opinion that the Town of Hillsborough’s financial statements for the fiscal year ended June 30, 2024, are fairly presented in conformity with GAAP.

PROFILE OF THE GOVERNMENT
The Town of Hillsborough is a residential community in San Mateo County, California, incorporated on May 5, 1910. The Town initially included a series of large estates, some of which, over time, were divided into the now-existing mix of large estate parcels, acreage, and minimum one-half acre lots. The Town is located west of Highway 101 and El Camino Real and east of Highway 280 within a short commute to San Francisco and minutes from San Francisco International Airport. The community location offers excellent weather and a geographic advantage to its residents. Greenbelt canyons are located throughout the community’s hilly topography. The community is well known for its trees and rural nature.

The community’s residents provide commendable support to the municipal government through advisory bodies, a community beautification foundation, a neighborhood network for emergency and other purposes, and communication through a quarterly newsletter and weekly bulletin. The Town has excellent, awardwinning schools. Public institutions include three distinguished elementary schools and a middle school.

Three private schools are located in the community.
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The Town has a land area of approximately 6.23 square miles and a population of approximately 11,000. It is empowered to levy a property tax on real and personal property within its boundaries. The Town residents approved a special tax designated for public safety operations and capital expenditures, including paramedic and fire automatic aid response programs.

The Town operates under the council-manager form of government. Policy-making and legislative authority are vested in the governing city council, which consists of a mayor, a vice-mayor and three city council members. City Council members are elected to overlapping four-year terms in even-numbered years. The City Council members select the Mayor and Vice-Mayor every year. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing commission and board members, and hiring the City Manager and the City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the governing city council, overseeing the day-to-day operations of the Town, and appointing department heads.

The Town of Hillsborough provides a full range of services, including police and fire protection, building permitting and inspection, land use management, and maintenance of streets, public facilities, water, sewer, and storm drain infrastructure. The Town contracts for recreation and library services. The Town is a Central County Fire Department Joint Powers Authority member for fire services with the City of Burlingame. The JPA provides fire services to the City of Millbrae on a contractual basis.

ACCOUNTING AND BUDGETING SYSTEMS
A general introduction to our accounting and budgeting systems helps to understand the Town's financial picture better. These systems provide the means for allocating available resources and properly controlling and recording revenues and expenditures.

Accounting System and Fund Accounting: All governmental funds use the modified accrual basis of accounting. Revenues are recorded when measurable and available rather than when received, and expenditures are recorded when the liability is incurred rather than when paid. Conversely, the accrual basis of accounting is used for proprietary funds. All governmental funds are accounted for on a spending (or funds flow) measurement focus.

Internal Controls: Town management is responsible for establishing and maintaining adequate internal controls to ensure that Town assets are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements that conform to generally accepted accounting principles. Internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits to be derived, and that cost-benefit analysis requires prudent estimates and judgments by management.

The Finance Department establishes internal accounting controls to provide management with reasonable assurance regarding the safeguarding of assets and the reliability of financial records for preparing financial statements and maintaining asset accountability. The Town’s finance staff and the independent auditor consider the internal controls over financial reporting in planning and performing the annual audit. The independent auditors test the Town’s internal controls and inquire into the staff’s knowledge of fraud or the occurrence of fraud.
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Cash Management: The Town pools cash from all operating sources to manage cash flow and invest idle funds. The Finance Director serves as the Town’s Treasurer and manages the portfolio of funds in accordance with the City Council’s adopted Investment Policy and the California Government Code Sections 53601 and 56535. The Finance Director submits a quarterly investment report to the City Council.

Debt Administration: The Town has a AAA general credit rating, and the Town’s Enterprise Fund longterm bond ratings are AAA/AA-1 by S&P Global Ratings with a stable outlook. The Town also has a State Water Resources Control Board loan for its improvements to the sewer system, a California Resources Conservation and Development Commission loan for its energy savings projects, and a loan with the City of Mateo for Capacity Rights at the new wastewater treatment plant. The Town annually evaluates each outstanding debt obligation subject to arbitrage rebate requirements and determined that there was no arbitrage rebate liability as of June 30. 2024. Additional information about the Town’s outstanding longterm debt can be found under Long-Term Debt in the Notes to the Basic Financial Statements and in the Statistical Section under Legal Debt Margin.

Budget Process and Control: The annual budget is the foundation for the Town of Hillsborough’s financial planning and control. The Town’s departments must submit requests for appropriation to the city manager, who will use these requests as the starting point for developing a proposed budget. Before June 30 of each year, the City Manager submits a proposed operating and capital budget for review to the City Council.

The City Council holds public hearings, and a final budget is adopted on or before June 30.

The appropriated budget is prepared by fund, function, and department. The department heads may make transfers of appropriations within a department. The City Manager may transfer budgeted amounts within any fund. The City Council must approve any revisions that alter the total expenditures of any fund. The fund level is the legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations).

Budget-to-actual comparisons are provided in the Annual Comprehensive Financial Report for each governmental fund for which an appropriated annual budget has been adopted. For the general fund and other major governmental fund(s), this comparison is presented as part of the required supplementary information in this report. For governmental funds other than the major funds, with appropriated annual budgets, this comparison is presented in the governmental fund subsection of this report.

LOCAL ECONOMY
The Town is a purely residential community except for its schools and private clubs. The Town’s major revenues are from property taxes and various property value-based revenues.

Property taxes, based on assessed values, are one of the Town’s most significant sources of revenue, accounting for approximately 65% of Town’s General Fund revenues. The fiscal year 2023-24 property tax revenues were $21.7 million, up 5% from the prior year. According to San Mateo County Assessor data, the Town had a total assessed value of $13.3 billion for the fiscal year 2023-24, an increase of $0.8 billion, or 6.2% from the prior year.

The Town operates a water and sewer enterprise that provides water and sewer services. The cost of operations, debt service, and capital improvements are primarily funded through user charges. The Town tracks revenue requirements to ensure adequate revenues to cover expenses and to determine the need for rate adjustments.
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The biennial street repaving program continues to improve street quality. Streets are funded from several sources, including general and special revenues such as Gas Tax, Measure A, Measure W, Measure M, and Road Maintenance Rehabilitation Act (RMRA).

RELEVANT FINANCIAL POLICIES
One of the Town’s key financial policies is the General Fund Reserve Policy. The policy requires a minimum of 30% of operating expenditures, with a goal of 50%. The reserve policy serves as a contingency reserve to mitigate revenue volatility, an economic downturn, a natural disaster, or other financial impact.

The Town has Policy No. 409 - Budget and Fiscal Policies to maintain sound fiscal practices. The policy outlines budget and fiscal policies that range from financial objectives, financial reporting, and budget administration; user fee cost recovery goals, Enterprise Fund fees and rates, investments, appropriations limitations, fund balance designations and reserves, capital improvement management and financing, debt management and other key areas to promote sound fiscal practices.

LONG-TERM FINANCIAL PLAN
The Town provides an extended financial projection as part of the budget process, allowing the Town to proactively seek short-term and long-term budget solutions. The projection considers various financial and economic factors received from multiple sources and includes information such as property value trends, consumer price indices, state budgets, and other qualitative trends.

The 2024-25 Adopted Budget projects a General Fund Reserve balance of $30.6 million with $17.9 million reserved per policy, $5 million restricted for Section 115 pension trust, and the remainder reserved for future uses such as projects, capital, or other items approved by the City Council. To balance the financial picture, the Town also has $49 million in long-term pension and OPEB liabilities at June 30, 2024.

The Town’s water, sewer, and storm drain infrastructure requires rehabilitation. The five-year capital improvement program is $18 million for water, $22.3 million for sewer, and $12.1 million for storm drains and projects, which are prioritized in the master plan. The Town also pays its proportionate share of capital improvements to the San Francisco Hetch Hetchy water system and its water source.

The Town pays for treatment plant services in Burlingame and San Mateo under the disposal contracts, and the San Mateo treatment plant is undergoing major improvements with the Clean Water Program. The Town and the City of San Mateo finalized an amended agreement for the Town’s participation in the program, costing $47.6 million (excluding interest) over thirty years. -32-
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CalPERS’ pension policies continue to impact the Town’s long-term projections. Annual required contributions will increase significantly (more than 50%) over the next ten years and then will start to trend downward. The Town proactively manages pension cost, including paying down its side fund liabilities, collaborating with employees to pay a share of the employer contribution, implementing an additional pension formula tier for miscellaneous plan employees, and funding nearly $5 million into a Section 115 pension trust that will be used to smooth the budget impact of increasing required pension contributions.

The Notes to the Financial Statements include further disclosures on the pension liability.

Educational Revenue Augmentation Fund (ERAF) revenue is difficult to anticipate due to complicated State school funding formulas, which impacts the Town’s property taxes in lieu of motor vehicle license fees (MVLF) and Excess ERAF annual revenue. In the 1990s, the State shifted property taxes from cities, counties, and special districts to school districts to supplant funding that the State provided to school districts. The County Controller places funds that shifted from local government agencies to the ERAF Fund. The Controller then disburses these funds to school districts based on the formula prescribed by State law. Any funds remaining in ERAF are returned to the cities, counties, and special districts in proportion to the amount they contributed. Excess ERAF revenue to the Town was $3.2 million or nearly 9% of revenue in FY 2023-24. Similarly, MVLF is paid from the property tax pool, and as the number of school districts shifts to Basic Aid, the amount in the pool to pay MVLF is reduced. Any shortfall in MVLF must be applied to the state budget and is subject to approval in the state budget process. Although the State has provided for these shortfalls in prior years, future funding is unpredictable. The Town and cities are partnering with the County of San Mateo to identify permanent fixes.

MAJOR INITIATIVES
The major initiatives outlined in the FY 2024-25 Adopted Budget are:

Community and Customer Service
• Improve transparency and communication by updating the Town’s communication methods and implementing new systems to provide access and ease of use for document access and conducting business with the Town (Agenda Management system, Records Retention system, Permitting Tracking Software, and Website refresh).
• Implement requirements related to the 2024 City Council election. • Develop the High Line Water project to provide disaster resiliency and cost savings by starting the water supply at a higher elevation at the Harry Tracy Water Treatment Plant. FY 2024-25 includes developing the partner city agreements, securing funding, and completing design and environmental reviews.
• Develop the Safety Element of the Town’s General Plan, which sets forth the Town’s goals and policies intended to minimize risk to people and property associated with natural and man-made hazards.
• Develop a Bike/Pedestrian Master Plan.
• Monitor and implement legislative and regulatory requirements, including wireless, stormwater, water conservation, flood inundation regulations, gas-powered landscape equipment, and water drought. • Host a homeowners’ insurance seminar with information on homeowners’ insurance in high fire severity zones.
• Conduct an analysis of existing wireless policy and code compared to similar jurisdictions to identify potential changes.
• Review policies and processes to improve resident access to backup power supply during power outages.
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Financial Stability
• Conduct a study session on long-term financing needs, including rate, revenue, and debt options, such as storm drain capital improvements.

Land Use Planning
• Implement the policies and programs of the Housing Element, including an ADU monitoring program and pre-approved ADU plan, improve housing-related communication and resources, and establish a Housing Choice Fund.
• Discuss the Tobin Clark multi-family housing site with the College of San Mateo. • Conduct outreach and engagement on community-driven conceptual plans.

Community Partnerships
• Continue supporting and providing community events, including the Memorial Day parade, Shred-It event, Concours d’Elegance, Veteran’s Day event, and Light Up the Town. • Review and revise fundraising permit requirements.
• Continue collaborating with community groups, including Hillsborough City School District, Hillsborough Beautification Foundation, Hillsborough Neighborhood Network, Firewise, Concours d’Elegance, Carolands, Hillsborough Recreation, and other private groups serving the Town. • Provide additional funding and designated staff support to Hillsborough Neighborhood Network (HNN) to support programming.

Regional Partnerships
• Conduct studies and develop partnerships for the new High Line Water Project. • Continue participation/representation in Peninsula Clean Energy JPA, BAWSCA, 21 Elements, RICAPS, NPDES, Airport Community Roundtable, Council of Cities, PLAN, and SBWMA. • Work with the task force to determine resources needed to develop an Age-Friendly City Action Plan. • Work with the Town’s lobbyist to implement the Council’s Legislative Platform. -34-
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AWARDS AND ACKNOWLEDGEMENTS
Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Hillsborough for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023. This was the twenty-first consecutive year that the government has achieved this prestigious award. In order to be awarded a certificate of A\achievement, a government must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.

We thank all the departments who contributed financial information to the report.

We would also like to thank the members of the City Council and the Financial Advisory Committee for their interest and support in planning and conducting the town's financial operations in a responsible and progressive manner.

Respectfully submitted,
Doug Davis Jan Cooke
City Manager Finance Director
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ORGANIZATIONAL CHART AND PRINCIPAL OFFICIALS
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FINANCIAL SECTION
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1 Independent Auditor’s Report
To the Honorable Mayor and Members of the City Council
of the Town of Hillsborough
Hillsborough, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Hillsborough, California (Town), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Town’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Hillsborough, California, as of June 30, 2024, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

What inspires you, inspires us. | eidebailly.com
4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE What inspires you, inspires us. | eidebailly.com
4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 -40- | T 650.522.3400 | F 650.645.7393 | EOE 2 Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

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

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

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
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3 Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of revenues, expenditures and changes in fund balances – budget and actual for the general fund, schedule of revenues, expenditures and changes in fund balances – budget and actual for the police and fire special tax fund, schedule of proportionate share of the net pension liability, schedule of contributions, schedule of changes in the net OPEB liability and related ratios and the schedule of OPEB contributions be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements. The individual and combining nonmajor fund information and schedules, schedules of revenues, expenditures and changes in fund balances – budget and actual for the gas tax fund, Measure “A” fund, Measure “W” Fund, police grants fund, and the capital assets used in the operation of governmental funds are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the individual and combining nonmajor fund information and schedules, schedules of revenues, expenditures, and changes in fund balances – budget and actual for the gas tax fund, Measure “A” fund, Measure “W” fund, police grants fund, and the capital assets used in the operation of governmental funds are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. -42-
4 In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 9, 2024 on our consideration of the Town’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters.

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

Eide Bailly Signature
Menlo Park, California
December 9, 2024
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TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
5 The Town of Hillsborough (Town) offers readers of the Town’s financial statements this narrative overview and analysis of the financial activities of the Town for the fiscal year ended June 30, 2024. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i to viii of this report.

Financial Highlights
 The Town’s net position increased $4.9 million (4.4%) in fiscal year 2023-24. On June 30, 2024, net position totaled $115.1 million, comprised of $25.6 million for governmental activities and $89.4 million for business-type activities. Of the $115.1 million net position, $43.1 million is unrestricted and can be used to meet the Town’s ongoing obligations to citizens and creditors.  The net position in governmental activities decreased by $1.5 million (5.5%), and the net position in business-type activities increased by $6.4 million (7.7%). o The decrease in Government activities is attributable to an increase in expenditures, primarily for the bi-annual street resurfacing project, one-time costs for repairs to the police building and other governmental infrastructure caused by the winter storm, and annual increases attributable to the cost of living salary increases, CalPERS pension contributions, and other contractual increases. o The increase in Business-type activities is attributable to revenues exceeding expenses by $4.5 million and a transfer of $1.8 million for capital improvement projects.  General Fund revenues and transfers of $37.4 million were $3.0 million (8.8%) above the prior year.

Property tax revenue of $21.7 million, the Town’s largest General Fund revenue source, increased by $1.0 million (5%) compared to the prior year due to continued strong property assessed valuations in the Town and Bay Area region. Also contributing to the growth over the prior year was improved investment income, increased Excess ERAF (Educational Revenue Augmentation Fund) revenue due to the release of the preceding year's reserve, one-time penalty revenue, and a FEMA grant reimbursement for the winter storm repairs.
 General Fund expenditures, including transfers out, of $36.0 million exceeded the adopted budget by $1.0 million (3.1%) and are attributable to higher legal costs, winter storm repairs (reimbursable), and information technology software.
 General Fund net excess revenues (revenues greater than expenditures) totaled $1.3 million, with an additional amount for net transfer expenditures of $0.1 million, resulting in a net change in fund balance of $1.4 million that adds to the Town’s reserves. The prior year’s net change in fund balance reported in the General Fund was ($0.3) million. The improvement is attributable to the drivers outlined above, including higher revenues, and lower capital transfers, offset somewhat by higher expenditures for onetime and cost of living and contractual increases.  The General Fund’s fund balance is $32.9 million on June 30, 2024. The Town’s General Fund reserve policy is 30% to 50% of budgeted operating expenditures and is maintained for contingencies. The fund balance includes $16.6 million for this reserve requirement (included in the unassigned category on the financial statements), $5.9 million assigned for capital and other projects, $5.2 million restricted in a pension trust for future pension liabilities, and $5.2 million in unassigned reserves. When considering the complete financial picture, this reserve balance must be weighed with the long-term debt, pension, and OPEB liabilities.
 The Town funded the annual required contribution of $1.4 million for the Other Post-Employment Benefits (OPEB) liability.
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TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
6  The Sewer Fund's operating revenues increased $0.6 million compared to the prior year, primarily due to a rate increase effective July 2023.
 The Water Fund's operating revenues increased $1.8 million compared to the prior year, primarily due to higher water unit sales and rate increases effective July 2023 and January 2024.  The combined net position of the Sewer and Water Enterprise Funds increased by $6.2 million in fiscal year 2023-24. Total net position of $87.1 million on June 30, 2024 shows $27.5 million unrestricted, $59.2 million invested in net capital assets, and $0.4 million restricted for debt service.  The Town spent $19.3 million on capital purchases and infrastructure, comprised of $1.9 million in governmental activities for vehicles, IT equipment, and building improvements, and $17.4 million on systems and transmissions in the water and sewer enterprise funds. Improvements were made to water mains, tanks, sewer priority basins, flow metering, video inspection of sewer mains, and storm drains. o Included in the business-type activities acquisitions, the Town increased the intangible capital asset by $5.1 million for sewer treatment plant capacity rights for the Town’s share of the San Mateo Clean Water treatment plant. The Town contracts for sewer treatment with the City of San Mateo for sewage flows from the southern half of the Town. The current construction includes wastewater treatment capacity for the south portion of the Hillsborough sewer collection system. The asset reflects the project completion percentage (88%). See the Long-term liabilities explanation below. o In addition, the intangible asset for subscription-based information technology arrangements (SBITA) decreased $13,342 from the prior year. The net assets reflect the discounted cash flow of the remaining contract, offset by annual amortization.
 Government-wide long-term liabilities total $114 million on June 30, 2024, and are comprised of debt, the funding agreement with the City of San Mateo, compensated absences, pension and other postemployment benefits (OPEB), and subscription payable. -45-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
7 Overview of the Financial Statements
This discussion and analysis are intended to introduce the Town’s basic financial statements, made up of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains supplementary information besides the basic financial statements, such as the discussion and analysis of this management.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the town’s finances, similar to those of a private-sector business.

The statement of net position presents information on all the Town’s assets plus deferred outflows of resources and liabilities plus deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the town's financial position is improving or deteriorating.

The statement of activities presents information showing how the Town’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows.

Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation leave).

These government-wide financial statements distinguish functions of the Town that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions intended to recover all or a significant portion of their costs through user fees (business-type activities). The governmental activities of the Town include general government, public safety, community services, and streets. The business-type activities of the Town include the water and sewer operations.

The Government-Wide Financial Statements can be found on pages 20 through 22 of this report. -46-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
8 Overview of the Financial Statements (Continued)
Fund financial statements. A fund is a grouping of related accounts used to control resources that have been segregated for specific activities or objectives. Like other state and local governments, the Town, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the Town can be divided into two categories: governmental funds and proprietary funds.

Governmental funds. Governmental funds account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, and on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, comparing the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements is helpful. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. The governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The Town maintains seven individual governmental funds. Information is presented separately in the governmental fund balance sheet, and the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the police and fire special tax fund, and the capital projects fund, and all are considered major funds. Data from the other four governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report.

The Town adopts an annual appropriated budget for its general fund. To demonstrate compliance with this budget, a budgetary comparison statement has been provided for the general fund.

The basic financial statements can be found on pages 23 and 25 of this report. -47-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
9 Overview of the Financial Statements (Continued)
Proprietary funds. The Town maintains two different types of proprietary funds. Enterprise funds report the same functions as business-type activities in government-wide financial statements. The Town uses enterprise funds to account for the water and sewer operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the Town’s various functions. The Town uses an internal service fund to account for replacing the fleet and other equipment and accumulating funds to pay unfunded liabilities from pension and other post-employment benefits. Because this service predominantly benefits governmental rather than businesstype functions, it has been included within governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The financial statements for proprietary funds provide separate information for the internal service fund and the water and sewer operations, with the latter being considered major funds.

The basic proprietary fund financial statements can be found on page 26 through 29 of this report.

Notes to the financial statements. The notes provide additional information essential to fully understanding the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on page 30 of this report.

Other information. In addition to the basic financial statements and accompanying notes, this report presents certain required supplementary information concerning the Town’s funding for OPEB, information on the pension liability and contributions, and a summary of major fund budgetary schedules. Required supplementary information can be found on page 67 of this report.

The combining statements for non-major governmental funds are presented immediately following the required supplementary information. Combining statements and individual fund schedules can be found on page 74 of this report.
-48-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
10 Government-wide Financial Analysis
The following table provides a condensed Statement of Net Position as of June 30, 2024. 2024 2023 2024 2023 2024 2023
Assets:

Current and other assets $ 56,891,979 $ 56,702,752 $ 38,410,360 $ 41,959,851 $ 95,302,339 $ 98,662,603 Capital assets 10,986,876 10,622,901 124,624,667 112,916,781 135,611,543 123,539,682 Total assets 67,878,855 67,325,653 163,035,027 154,876,632 230,913,882 222,202,285 Deferred outflows of resources 16,637,855 16,103,511 3,430,608 3,470,666 20,068,463 19,574,177 Liabilities:

Long-term liabilities 44,774,367 41,761,949 68,917,690 67,357,037 113,692,057 109,118,986 Other liabilities 10,849,305 9,906,956 7,786,874 7,411,150 18,636,179 17,318,106 Total liabilities 55,623,672 51,668,905 76,704,564 74,768,187 132,328,236 126,437,092 Deferred inflows of resources 3,276,157 4,662,652 319,764 516,439 3,595,921 5,179,091 Net position
Net investment in capital assets 10,347,727 10,622,901 59,204,019 48,305,856 69,551,746 58,928,757 Restricted 1,982,659 2,556,388 431,801 431,801 2,414,460 2,988,189 Unrestricted 13,286,495 13,918,318 29,805,487 34,325,015 43,091,982 48,243,333 Total net position $ 25,616,881 $ 27,097,607 $ 89,441,307 $ 83,062,672 $ 115,058,188 $ 110,160,279 Governmental
Activities Total
Business-type
Activities
The net position, over time, may serve as a useful indicator of the Town’s financial position. The Town’s assets and deferred outflows of resources for refunding charges, pensions, and other post-employment benefits exceeded liabilities and deferred inflows of resources for leases, pensions, and other post-employment benefits by $115.1 million on June 30, 2024. The change in Government-wide net position was an increase of $4.9 million (4.4%) for the year. The decrease in governmental activities' net position of $1.5 million (5.5%) is due to fluctuations in pension and OPEB-related liabilities, compensated absences, and subscription liability. The increase in business-type activities' net position of $6.4 million (7.7%) is primarily due to increased capital assets, offset somewhat by higher long-term liabilities. The significant increase in capital assets and long-term liabilities is for the Town’s share of the City of San Mateo’s Clean Water wastewater treatment plant.

On June 30, 2024, the Town reported positive balances in all three categories of net position for the government as a whole and its separate governmental and business-type activities.

The Town’s net investment in capital assets (e.g., land, buildings, machinery, equipment, and infrastructure), less any related debt used to acquire those assets, represents 60.4% of the net position. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Town’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities.
-49-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
11 Government-wide Financial Analysis (Continued)
The Town’s restricted net position of $2.4 includes $0.4 million in resources that are subject to external restrictions on how they may be used—specifically, the reserve requirement relating to the State Revolving Fund loan for business-type activities, and $2.0 million is restricted for capital projects of governmental activities. In addition, the Section 115 pension trust monies of $5.2 million are included in the unrestricted Governmental Activities but are restricted in the Governmental Fund Balance Sheet for future pension obligations.

The unrestricted net position of $43.1 million may be used to meet the Town’s ongoing obligations to citizens and creditors.

The following table provides a Condensed Statement of Activities for the fiscal year ended June 30, 2024. Analysis for governmental activities and business-type activities is outlined separately below. 2024 2023 2024 2023 2024 2023
REVENUES:

Program revenues:

Charges for service $ 3,772,425 $ 4,004,548 $ 31,086,951 $ 28,651,401 $ 34,859,376 $ 32,655,949 Operating grants, transfers and functional taxes 2,966,712 2,135,945 - 2,966,712 - 2,135,945 General revenues:

Property taxes 21,685,506 20,647,291 - 21,685,506 - 20,647,291 Other taxes 9,286,228 9,197,896 - 9,286,228 - 9,197,896 Investment earnings 2,784,772 924,314 1,445,387 791,383 4,230,159 1,715,697 All others 1,157,379 743,271 - 1,157,379 - 743,271
Total revenues 41,653,022 37,653,265 32,532,338 29,442,784 74,185,360 67,096,049 EXPENSES:

General government 2,635,187 1,727,443 - 2,635,187 - 1,727,443 Public safety 23,879,234 18,685,885 - 23,879,234 - 18,685,885 Community services 5,968,725 3,723,761 - 5,968,725 - 3,723,761 Streets 8,788,267 3,518,522 - 8,788,267 - 3,518,522
Interest expense 32,335 14,666 - 32,335 - 14,666
Water - 14,959,677 - 13,749,371 14,959,677 13,749,371
Sewer - 13,024,026 - 12,517,293 13,024,026 12,517,293
Total expenses 41,303,748 27,670,277 27,983,703 26,266,664 69,287,451 53,936,941

EXCESS (DEFICIENCY) OF REVENUES
OVER(UNDER) EXPENSES 349,274 9,982,988 4,548,635 3,176,120 4,897,909 13,159,108

TRANSFERS
Transfers in - 1,830,000 - 2,920,000 1,830,000 2,920,000 Transfers out (1,830,000) (2,920,000) - (1,830,000) - (2,920,000) Total transfers (1,830,000) (2,920,000) 1,830,000 2,920,000 - - Increase in net position (1,480,726) 7,062,988 6,378,635 6,096,120 4,897,909 13,159,108 Net position - beginning 27,097,607 20,034,619 83,062,672 76,966,552 110,160,279 97,001,171 Net position - ending $ 25,616,881 $ 27,097,607 $ 89,441,307 $ 83,062,672 $ 115,058,188 $ 110,160,279 Governmental Activities Business-type Activities Total
Governmental Activities. Governmental activities decreased the Town’s net position by $1.5 million (5.5%), with a total net position of $25.6 million at the end of the fiscal year. The decrease was attributable to increased expenditures compared to the prior fiscal year. Public safety increased in allocation charges and the contribution to the Central County Fire Department. Streets had an increase primarily due to the bi-annual street resurfacing project.

There also were higher expenses for filling open positions, increased required annual pension contributions, and one-time winter storm repairs to police buildings and other governmental facilities. -50-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
12 Government-wide Financial Analysis (Continued)
Governmental Activities – Expenses and Program Revenues The following graph reflects functional program revenues and expenses for governmental activities. Public safety costs are 57.9% of expenses and are comprised of police and fire services. Public Safety program revenues primarily comprise of alarm permitting and public safety sales tax. The remainder of public safety costs are funded by general revenues (general revenues not included in the chart below).

Governmental Activities – Revenues by Source
The following chart breaks down governmental activities' general revenues by source. The major general revenue sources are property taxes (52%), Excess ERAF (8%), user charges, and public safety special taxes. -51-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
13 Business-type Activities. The net position for business-type activities increased by $6.4 million (7.7%) for a total net position of $89.4 million on June 30, 2024. The increase results from excess revenues over expenses of $4.5 million and transfers of $1.8 million from the General Fund for storm drain capital projects.

Business-type Activities revenue increased $3.1 million (10.5%) over the prior year primarily due to a rate increase in sewer charges effective July 1, 2023, and water rate increases on July 1, 2023, and January 1, 2024.

Business-type Activities expenses increased $1.7 million (6.1%) over the prior year due to increased personnel costs associated with labor agreements, filling open positions, and water purchases.

Financial Analysis of the Governmental Funds
The Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Below is an outline of the results of the governmental funds.

Governmental Funds. The focus of the Town’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information helps assess the Town’s financial requirements. Unassigned fund balance may be a valuable measure of the Town’s net resources available for spending at the end of a fiscal year.

As of June 30, 2024, the Town’s governmental funds reported combined ending fund balances of $39.5 million – up $0.2 million (0.6%) from the prior year, primarily from excess revenues over expenditures in the General Fund of $1.4 million due to increased revenues, lower capital transfers, offset somewhat by increased costs. Capital Projects Fund and other non-major fund revenues are accumulated to support the timing of capital projects, with spending on the major street resurfacing program every other year. Of the $39.5 million fund balance on June 30, 2024, $21.8 million is classified as unassigned, and the remainder is classified as restricted, committed, and nonspendable for various purposes. Of the $21.8 million unassigned, $16.6 million is held for contingencies per policy. -52-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
14 Financial Analysis of the Governmental Funds (Continued) General Fund
General Fund Revenues
General Fund revenues grew $3.0 million (9%) compared to the prior year. The table below outlines the details of the revenue sources. The property tax increase of $1.0 million is attributable to increased assessed real estate values in the region. MVLF decreased by $0.2 million due to a shift in basic aid districts. Investment earnings increased due to a recovery of the market. The All-Others revenue category increased $0.6 million, primarily due to receiving a one-time settlement.

REVENUES AND OTHER
FINANCING SOURCES 2024 2023
Increase
(Decrease)
Percent
Change
Property taxes $ 21,685,506 $ 20,647,291 $ 1,038,215 5% Public safety special tax transfer 2,191,876 2,237,795 (45,919) -2% Excess ERAF 3,233,269 2,900,861 332,408 11%
Permits 1,471,141 1,590,490 (119,349) -8%
Service charges 1,116,657 1,264,934 (148,277) -12%
In lieu of MVLF 1,666,666 1,818,496 (151,830) -8%
Franchise taxes 900,682 872,162 28,520 3%
Business license tax 728,547 785,666 (57,119) -7%
Property transfer tax 334,558 404,621 (70,063) -17%
Rental income 453,718 441,449 12,269 3%
Sales and use tax 120,051 112,343 7,708 7%
Public safety sales tax 174,086 172,991 1,095 1%
Federal, State and local grants 127,168 26,338 100,830 383% Transfer from Measure A 250,000 250,000 0% -
Investment earnings 2,113,319 604,887 1,508,432 249%
All others 855,493 281,113 574,380 204%
Total $ 37,422,737 $ 34,411,437 $ 3,011,300 9%
-53-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
15 Financial Analysis of the Governmental Funds (Continued) General Fund Expenditures
General Fund expenditures increased by $1.4 million (4%) as compared to the prior year. Total personnel costs increased $1.1 million (6%) due to the filling of new and open positions, cost of living, and contractual CalPERS pension contribution increases. The contractual contribution to fire operations increased by $0.6 million (6%) for the annual contribution paid to Central County Fire Department JPA for fire services. Materials and services increased by $3.3 million (42%), primarily for winter storm repairs (reimbursable) and increases in information technology software for contractual increases and software replacements. Transfers include capital improvement funding for storm drains and facility improvements. The prior year transfer included a final American Rescue Plan (ARPA) one-time transfer.

EXPENDITURES AND OTHER
FINANCING USES 2024 2023
Increase
(Decrease)
Percent
Change
Salaries $ 10,802,139 $ 10,141,173 $ 660,966 7%
Overtime 765,554 835,903 (70,349) -8%
Temporary 69,875 60,126 9,749 16%
Medicare/FICA 571,139 506,017 65,122 13%
Retirement 3,900,755 3,723,087 177,668 5%
Insurances 1,780,802 1,560,839 219,963 14%
Retirees' health insurance 1,472,201 1,392,929 79,272 6% Workers' compensation 160,409 176,514 (16,105) -9%
All others 125,295 113,486 11,809 10%
Total personnel costs 19,648,169 18,510,074 1,138,095 6% Contribution for fire operations 9,581,385 9,023,098 558,287 6% Materials and services 11,056,193 7,787,256 3,268,937 42% Reimbursement for other programs (7,020,104) (5,285,460) (1,734,644) 33% Transfers (including internal service) 2,779,834 4,656,000 (1,876,166) -40% Total $ 36,045,477 $ 34,690,968 $ 1,354,509 4%
-54-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
16 Financial Analysis of the Governmental Funds (Continued) General Fund Budgetary Highlights
The table below summarizes the fiscal year 2023-24 budget variances:

Original Revised
Budget Budget Actual Variance %

REVENUES
Service charges $ 1,368,247 $ 1,368,247 $ 1,116,657 $ (251,590) -18% Franchise taxes 863,974 863,974 900,682 36,708 4%
Business license 700,000 700,000 728,547 28,547 4%
Property taxes 21,563,750 21,563,750 21,685,506 121,756 1% Permits 1,672,900 1,672,900 1,471,141 (201,759) -12%
Intergovernmental 1,463,723 1,463,723 1,865,807 402,084 27% Investment earnings 100,000 100,000 2,113,319 2,013,319 2013% Excess ERAF 2,900,000 2,900,000 3,233,269 333,269 11%
All others 3,893,494 3,893,494 4,307,809 414,315 11%
Total 34,526,088 34,526,088 37,422,737 2,896,649 8%

EXPENDITURES
Police 12,478,651 12,478,651 12,945,036 (466,385) -4%
Fire 9,806,385 9,806,385 9,812,728 (6,343) 0%
Community services 5,164,465 5,164,465 5,604,707 (440,242) -9% Streets 3,294,159 3,294,159 3,105,714 188,445 6%
All others 4,272,512 4,272,512 4,577,292 (304,780) -7%
Total 35,016,172 35,016,172 36,045,477 (1,029,305) -3%
NET CHANGE $ (490,084) $ (490,084) $ 1,377,260 $ 1,867,344 381% Revenues exceeded budget by $2.9 million (8%) due to improved investment returns, higher excess ERAF due to release of reserve, and one-time settlement and grant revenue. Expenditures were higher than budget by $1.0 million (3%) primarily due to winter storm repairs (reimbursable) and timing of information technology software replacement and contractual increases.

Financial Analysis of Proprietary Funds
Proprietary Funds. The Town’s proprietary funds provide the same information found in the government-wide financial statements for business-type activities but with more details.

The Water Fund's net position increased $0.9 million (2.4%) in the fiscal year 2023-24. On June 30, 2024 the net position was $37.3 million, with $30.8 million invested in net capital assets and $6.5 million unrestricted. Net investment in capital assets increased by $6.0 million, and the unrestricted net position decreased by $5.1 million.

The increase in net position is attributable to higher operating revenue generated by an increase in user rates and unit sales.
-55-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
17 Financial Analysis of the Proprietary Funds (Continued) The Sewer Fund's net position increased by $5.3 million (12%) in the fiscal year 2023-24. On June 30, 2024, the net position was $49.8 million, with $28.4 million invested in net capital assets, $0.4 million restricted for debt service, and $21.0 million unrestricted. Net investment in capital assets increased by $4.9 million, and the unrestricted net position increased by $0.5 million, resulting from increased revenue from rate increases.

Water and sewer operating revenues increased by $2.4 million (8.4%), primarily due to sewer and water rate increases.

Capital Asset and Debt Administration
Capital Assets. The Town’s investment in capital assets for its governmental and business-type activities as of June 30, 2024, amounted to $135.6 million (net of accumulated depreciation). This investment in capital assets includes land, buildings and systems, improvements, machinery and equipment, streets, intangible assets under construction, and subscription assets (intangible). The intangible asset under construction totaling $44.0 million is the Town’s capacity rights to the City of San Mateo’s Clean Water wastewater treatment plant, calculated on a percentage completion basis using 88%. The City of San Mateo provides sewer treatment to the town, and the asset reflects the town’s share on a percentage completion basis of the project. The $12.1 million increase in BusinessType Activities capital assets (being depreciated) is attributable to sewer and water infrastructure project spending.

Additional information on the Town’s capital assets can be found in Note 4 to the financial statements. -56-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
18 Capital Asset and Debt Administration (Continued)
2024 2023 2024 2023 2024 2023
Intangible Asset Under Construction $ - $ 43,157,836 - $ $ 38,034,536 $ 43,157,836 $ 38,034,536 Land 1,456,560 1,456,560 - 1,456,560 - 1,456,560
Land improvements 482,179 620,123 - 482,179 - 620,123
Buildings 2,360,559 2,426,100 - 2,360,559 - 2,426,100
Machinery and equipment 3,064,133 2,028,798 68,356 3,132,489 - 2,028,798 Infrastructure 2,942,738 3,202,759 - 2,942,738 - 3,202,759 Water and sewer lines - 80,577,510 - 74,882,245 80,577,510 74,882,245 Construction in Progress - - 820,965 - 820,965 -
Subscriptions 680,707 888,561 - 680,707 - 888,561
Total $ 10,986,876 $ 10,622,901 $ 124,624,667 $ 112,916,781 $ 135,611,543 $ 123,539,682 Governmental Activities Business-type Activities Total
Long-term Debt. On June 30, 2024, the Town had long-term debt outstanding of $67.1 million (excludes longterm liabilities for compensated absences, claims, pension, OPEB, and subscriptions). The increase over the prior year is for the Town’s share of the City of San Mateo’s new Clean Water wastewater treatment plant, which reflects an 88% completion basis. A summary of the Town’s most significant debt is as follows:
2024 2023
Governmental Activities
Subscription liabilities $ 639,149 $ 852,183
Business-Type Activities
Refunding bonds, including premiums 19,196,468 21,289,875 Loan Payable - California Energy Program 193,520 256,746 Loan Payable - State Revolving Fund Loan 8,254,526 8,549,535 Funding Agreement with City of San Mateo 38,797,301 34,514,769 Total Government-Wide $ 67,080,964 $ 65,463,108
The total principal paid during the year was $2.9 million, comprised of $0.8 million on the San Mateo loan, $0.3 million on the State Revolving Fund Loan, $0.1 million on the California Energy loan, and $1.7 million on the 2023 Refunding Bonds.

Town maintains ratings of AAA -A1 from Standard and Poor’s on the 2023 Revenue Refunding Bonds.

Additional information on the Town’s long-term debt can be found in Notes 8 on page 46 of this report. -57-

TOWN OF HILLSBOROUGH
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2024
19 Current Factors and Conditions Affecting Future Financial Position The Town’s real estate conditions remain solid in Hillsborough and the Bay Area. Property tax is a significant source of revenue for the Town’s General Fund, which is real-estate driven and is a key metric for the financial health of the Town’s revenues. The Town will continue to monitor and respond to any changing economic conditions. In addition, the Town is monitoring the MVLF revenue. The State backfills any funds from the nonbasic aid school districts used for this purpose. San Mateo County submits a reimbursement claim for the County and cities. Historically, the State appropriates funds to cover the shortfall amount in its subsequent budget and makes the County and cities whole around 14 months after the year in which the MVLF shortfall occurs. The reimbursement from the State is not automatic. The Town works with the County and other avenues to ensure the shortfall continues to be included in the State’s future budgets.

The Town’s annual required pension contributions are estimated to nearly double over the next ten to fifteen years due to changes in actuarial assumptions and policies implemented by the California Public Employees Retirement System (CalPERS). To address the increasing costs, the City Council funded a Section 115 pension trust to mitigate the future budget impact of rising pension contributions to CalPERS. The Town has taken steps to mitigate pension costs, such as adding a new tier pension formula for miscellaneous plan employees, paying off the pension side fund ($10 million), and partnering with employees to pay a portion of the employer costs. Detailed information on the pension liability can be found in the Notes to the Basic Financial Statements under Note 14 on page 60 to 66.

Storm drain capital improvements are currently being funded by the General Fund for $1.2 million annually. The only current dedicated funding source is the annual storm drain assessment of $7.34 per parcel (annual revenues of approximately $30,000). The Storm Drain master plan outlines $55 million in capital improvements over the next 30 years. Should the General Fund excess revenues no longer be available, a dedicated source of funding will be required to ensure continuity of the storm drain program.

City Council continues to monitor conditions to ensure that water and sewer rates are sufficient to cover the cost of the water and sewer enterprise. The Town is finalizing the federal Building Resilient Infrastructure & Communities (BRIC) grant to fund 70% of the High Line Water project, an alternative source of water that will build a new pump station at the SFPUC Harry Tracy Plant and will provide a reliable source of water for all three communities (Hillsborough, Burlingame, and Millbrae). A cost-sharing agreement with the cities of Burlingame and Millbrae is in place, and the Town’s share of the project is approximately $6.7 million, funded with a General Fund contribution, long-term financing, and water rates. As the lead agency on the project, the Town will incur the project costs, apply the Federal grant and city contributions, and use a short-term line of credit for cash flow timing differences. The Town entered into an agreement with the City of San Mateo to pay its share of capacity costs for the San Mateo Clean Water wastewater treatment plant. The agreement is a 30-year commitment totaling $47.6 million (excluding interest).

Requests for Information
This financial report is designed to provide a general overview of the Town’s finances for those interested in the Town’s finances. Questions concerning any information provided in this report or requests for additional financial information should be addressed to the Finance Director, Town of Hillsborough, 1600 Floribunda Avenue, Hillsborough, CA 94010.
-58-

BASIC FINANCIAL STATEMENTS
-59-

GOVERNMENT-WIDE FINANCIAL STATEMENTS
-60-

TOWN OF HILLSBOROUGH

STATEMENT OF NET POSITION
JUNE 30, 2024
The notes to the financial statements are an integral part of this statement. 20 Governmental Business-Type
Activities Activities Total
ASSETS:

Cash and investments $ 51,011,216 $ 31,611,649 $ 82,622,865 Restricted cash and investments 5,156,520 699,083 5,855,603 Receivables, net of an estimated allowance 439,264 3,621,504 4,060,768 Interest receivable 667,265 667,265 -
Taxes receivable 957,779 957,779 -
Internal balances (2,350,322) 2,350,322 -
Prepaid items 10,044 - 10,044
Supplies 127,802 - 127,802
Leases receivable 1,000,213 1,000,213 -
Capital assets, net of accumulated depreciation and amortization Land 1,456,560 1,456,560 -
Intangible and other asset under construction 43,978,801 - 43,978,801 Land improvements 482,179 482,179 -
Buildings 2,360,559 2,360,559 -
Machinery and equipment 3,064,133 68,356 3,132,489
Infrastructure 2,942,738 2,942,738 -
Water and sewer lines 80,577,510 - 80,577,510
Right-to-use subscription asset 680,707 680,707 -
Total assets 67,878,855 163,035,027 230,913,882
DEFERRED OUTFLOWS OF RESOURCES:

Refunding charges 1,021,167 - 1,021,167
Deferred outflows related to other postemployment benefits 2,972,304 367,463 3,339,767 Deferred outflows related to pensions 13,665,551 2,041,978 15,707,529 Total deferred outflows of resources 16,637,855 3,430,608 20,068,463 LIABILITIES:

Accounts payable and other current liabilities 2,147,770 2,505,645 4,653,415 Accrued payroll liabilities 695,841 695,841 -
Unearned revenues 114,651 114,651 -
Deposits 6,802,221 1,037,007 7,839,228
Accrued interest payable 26,107 378,287 404,394
Noncurrent liabilities:

Due within one year:

Claims liability 325,000 27,150 352,150
Compensated absences - due next year 550,350 56,721 607,071 Subscription liability - due next year 187,365 187,365 - Loans payable 1,697,560 - 1,697,560
Refunding bonds - due next year 2,084,504 - 2,084,504
Due in more than one year:

Compensated absences 1,142,606 50,426 1,193,032
Subscription liability 451,784 451,784 -
Loans payable 45,547,787 - 45,547,787
Refunding bonds 17,111,964 - 17,111,964
Net OPEB liability 9,511,183 1,176,544 10,687,727
Net pension liability 33,668,794 5,030,969 38,699,763
Total liabilities 55,623,672 76,704,564 132,328,236
-61-

TOWN OF HILLSBOROUGH
STATEMENT OF NET POSITION (Continued)
JUNE 30, 2024
The notes to the financial statements are an integral part of this statement. 21 Governmental Business-Type
Activities Activities Total
DEFERRED INFLOWS OF RESOURCES:

Deferred inflows related to leases 958,726 958,726 -
Deferred inflows related to other postemployment benefits 1,027,121 126,960 1,154,081 Deferred inflows related to pensions 1,290,310 192,804 1,483,114 Total deferred inflows of resources 3,276,157 319,764 3,595,921 NET POSITION:

Net investment in capital assets 10,347,727 59,204,019 69,551,746 Restricted for:

Street projects 564,329 564,329 -
Police projects 1,418,330 1,418,330 -
Debt service 431,801 - 431,801
Unrestricted 13,286,495 29,805,487 43,091,982
Total net position $ 25,616,881 $ 89,441,307 $ 115,058,188 -62-

TOWN OF HILLSBOROUGH

STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
The notes to the financial statements are an integral part of this statement. 22 Operating Business
Charges for Grants and Governmental -Type
Functions/Programs Expenses Services Contributions Activities Activities Total Governmental activities:

General government $ 2,635,187 $ 497,493 $ (2,137,694) - $ $ (2,137,694) - $ Public safety 23,879,234 481,753 (23,211,322) 186,159 (23,211,322) - Community services 5,968,725 1,954,617 (4,014,108) - (4,014,108) - Streets 8,788,267 838,562 2,780,553 (5,169,152) (5,169,152) - Interest expense 32,335 - (32,335) - (32,335) -
Total governmental
activities 41,303,748 3,772,425 2,966,712 (34,564,611) (34,564,611) - Business-type activities:

Water 14,959,677 15,266,249 - 306,572 - 306,572
Sewer 13,024,026 15,820,702 - 2,796,676 - 2,796,676
Total business-type
activities 27,983,703 31,086,951 - 3,103,248 - 3,103,248 Total $ 69,287,451 $ 34,859,376 $ 2,966,712 (34,564,611) 3,103,248 (31,461,363) General Revenues:

Property tax 21,685,506 21,685,506 -
Public safety tax 2,247,481 2,247,481 -
Property transfer tax 334,558 334,558 -
Franchise tax 900,682 900,682 -
Sales tax 120,051 120,051 -
Motor vehicle license tax 1,666,666 1,666,666 -
Business license tax 728,547 728,547 -
ERAF refund 3,233,269 3,233,269 -
HOPTR 54,974 54,974 -
All others 1,157,379 1,157,379 -
Net investment income 2,784,772 1,445,387 4,230,159
Transfers (1,830,000) 1,830,000 -
Total general revenues and transfers 33,083,885 3,275,387 36,359,272 Change in net position (1,480,726) 6,378,635 4,897,909
Net position - beginning 27,097,607 83,062,672 110,160,279 Net position - ending $ 25,616,881 $ 89,441,307 $ 115,058,188 Net (Expense) Revenues and
Program Revenues Changes in Net Position
-63-

TOWN OF HILLSBOROUGH

BALANCE SHEET

GOVERNMENTAL FUNDS
JUNE 30, 2024
The notes to the financial statements are an integral part of this statement. 23 Police and Fire Capital Total Total
General Special Tax Projects Nonmajor Governmental
Fund Fund Fund Funds Funds
ASSETS:

Cash and investments $ 35,191,823 $ 4,901,492$ - $ 1,795,581 $ 41,888,896 Restricted cash and investments 5,156,520 - - 5,156,520 - Receivables 209,190 46,388 42,996 140,690 439,264
Interest receivable 667,265 - - 667,265 -
Taxes receivable 957,779 - - 957,779 -
Prepaid items 10,044 - - 10,044 -
Leases receivable 1,000,213 - - 1,000,213 -
Total assets $ 43,192,834 $ 4,944,488$ 46,388 $ 1,936,271 $ 50,119,981 LIABILITIES:

Accounts payable and other current liabilities 1,702,254 $ $ 336,840$ - $ 2,039,094 - $ Accrued payroll 695,841 - - 695,841 -
Unearned revenues 114,651 - - 114,651 -
Deposits payable 6,802,221 - - 6,802,221 -
Total liabilities 9,314,967 336,840 - 9,651,807 -
DEFERRED INFLOWS OF RESOURCES:

Lease related 958,726 - - 958,726 -
FUND BALANCES:

Nonspendable 51,531 - - 51,531 -
Restricted:

Streets projects - - - 564,329 564,329
Police projects - 46,388 - 1,371,942 1,418,330
Retiree benefits 5,156,520 - - 5,156,520 -
Assigned 5,863,000 4,607,648 - 10,470,648 -
Unassigned 21,848,090 - - 21,848,090 -
Total fund balances 32,919,141 4,607,648 46,388 1,936,271 39,509,448 Total liabilities, deferred inflows of resources,
and fund balances $ 43,192,834 $ 46,388 $ 4,944,488 $ 1,936,271 $ 50,119,981 Reconciliation of the balance sheet of governmental funds to the statement of net position:

Amounts reported for governmental activities in the statement of net position are different because:
$ 7,965,189
9,685,009
(21,293,553)
(7,566,000)
(325,000)
(1,692,956)
(665,256)
Net position of governmental activities $ 25,616,881
Subscription liabilities, and related accrued interest, are not due and payable in the current period and therefore are not reported in the governmental funds.

The internal service fund is used by the Town to charge the costs of fleet and other equipment management and the management information systems to individual funds. The assets and liabilities of the internal service fund are included in the governmental activities in the statement of net position.

Pension liabilities and related deferrals are not due and payable in the current period and therefore are not reported on the governmental funds.

Other postemployment liabilities and related deferrals are not due and payable in the current period and therefore are not reported on the governmental funds.

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.

Compensated absences are not due and payable in the current period and therefore are not reported in the governmental funds.

Claims liability are not due and payable in the current period and therefore are not reported in the governmental funds.
-64-

TOWN OF HILLSBOROUGH

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
The notes to the financial statements are an integral part of this statement. 24 Police and Fire Capital Total Total
General Special Tax Projects Nonmajor Governmental
Fund Fund Fund Funds Funds
REVENUES:

Property taxes $ 21,685,506 $ - $ - $ 21,685,506 - $
Public safety special taxes 2,247,481 - - 2,247,481 -
Franchise taxes 900,682 - - 900,682 -
Business license taxes 728,547 - - 728,547 -
All others taxes 3,861,964 - - 3,861,964 -
Permits 1,471,141 51,333 - 1,522,474 -
Intergovernmental 1,865,807 861,833 - 1,926,378 4,654,018 Service charges 1,116,657 - - 1,116,657 -
Other fees and charges - 763,848 - 763,848 -
Fines and forfeitures 14,222 - - 14,222 -
Investment earnings 2,113,319 132,908 - 143,639 2,389,866 Miscellaneous 1,223,016 87,848 - 1,310,864 -
Total revenues 34,980,861 2,247,481 1,897,770 2,070,017 41,196,129 EXPENDITURES:

Current:

General government 1,965,593 - - 1,965,593 -
Public safety 22,757,764 9,217 - 22,766,981 -
Community services 5,604,707 - - 5,604,707 -
Streets 3,105,714 5,240,415 - 29,987 8,376,116
Debt service
Principal 213,034 - - 213,034 -
Interest 20,895 - - 20,895 -
Capital outlay - 71,470 - 109,375 180,845
Total expenditures 33,667,707 9,217 5,311,885 139,362 39,128,171 Excess (deficiency) of
revenues over expenditures 1,313,154 2,238,264 (3,414,115) 1,930,655 2,067,958

OTHER FINANCING
SOURCES (USES):

Transfers in 2,441,876 2,848,542 - 5,290,418 -
Transfers out (2,377,770) (2,191,876) (2,550,772) - (7,120,418) Total Other Financing
Sources (Uses) 64,106 (2,191,876) 2,848,542 (2,550,772) (1,830,000) Net change in fund balances 1,377,260 46,388 (565,573) (620,117) 237,958 Fund balances - beginning 31,541,881 5,173,221 - 2,556,388 39,271,490 Fund balances - ending $ 32,919,141 $ 46,388 $ 4,607,648 $ 1,936,271 $ 39,509,448 -65-

TOWN OF HILLSBOROUGH

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO

THE STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
The notes to the financial statements are an integral part of this statement. 25 Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances - total governmental funds $ 237,958 Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over the estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period. (690,657)
Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds.

Compensated absences (264,117)
Claims liability (225,000)
Subscription liabilities 213,034
Accrual of interest related to subscription liabilities (11,440) Pension expense (1,711,505)
Other postemployment benefits 648,463
The internal service fund is used by the Town to charge the costs of fleet and other equipment management and management information systems to individual funds and to accumulate funds to service the Town's unfunded liabilities. 322,538 Change in net position of governmental activities $ (1,480,726) -66-

TOWN OF HILLSBOROUGH

STATEMENT OF FUND NET POSITION

PROPRIETARY FUNDS
JUNE 30, 2024
The notes to the financial statements are an integral part of this statement. 26 Governmental
Activities
Water Sewer Total Internal Service
Fund Fund Enterprise Funds Fund
ASSETS:

Current assets:

Cash and investments $ 6,953,000 $ 24,658,649 $ 31,611,649 $ 9,122,320 Restricted cash and investments 361,299 337,784 699,083 - Receivables, net 3,283,229 338,275 3,621,504 -
Supplies and other current assets 113,547 14,255 127,802 - Total current assets 10,711,075 25,348,963 36,060,038 9,122,320 Noncurrent assets:

Capital assets:

Assets under construction 820,965 43,157,836 43,978,801 - Machinery and equipment 703,481 227,984 931,465 7,397,322 Water and sewer lines 87,635,884 97,645,262 185,281,146 - Less accumulated depreciation (50,001,304) (55,565,441) (105,566,745) (4,375,635) Total noncurrent assets 39,159,026 85,465,641 124,624,667 3,021,687 Total assets 49,870,101 110,814,604 160,684,705 12,144,007 DEFERRED OUTFLOWS OF RESOURCES:

Refunding charges 459,525 561,642 1,021,167 -
Deferred outflows related to pension 1,099,526 942,452 2,041,978 - Deferred outflows related to other
postemployment benefits 198,587 168,876 367,463 -
Total deferred outflows of resources 1,757,638 1,672,970 3,430,608 - LIABILITIES:

Current liabilities:

Accounts payable 890,425 1,615,220 2,505,645 108,676
Deposits 1,037,007 1,037,007 - -
Claims liability 12,450 14,700 27,150 -
Accrued interest payable 32,382 345,905 378,287 -
Funding Agreement - Loans Payable 63,865 1,633,695 1,697,560 - Refunding bonds - due next year 938,027 1,146,477 2,084,504 - Compensated absences - due next year 28,068 28,653 56,721 - Total current liabilities 3,002,224 4,784,650 7,786,874 108,676 Noncurrent liabilities:

Compensated absences 23,458 26,968 50,426 -
Funding Agreement - Loans Payable 129,750 45,418,037 45,547,787 - Refunding bonds 7,700,384 9,411,580 17,111,964 -
Net other postemployment liability 623,052 553,492 1,176,544 - Net pension liability 2,708,983 2,321,986 5,030,969 -
Total noncurrent liabilities 11,185,627 57,732,063 68,917,690 - Total liabilities 14,187,851 62,516,713 76,704,564 108,676 Business-Type Activities
-67-

TOWN OF HILLSBOROUGH

STATEMENT OF FUND NET POSITION
PROPRIETARY FUNDS (Continued)
JUNE 30, 2024
The notes to the financial statements are an integral part of this statement. 27 Governmental
Activities
Water Sewer Total Internal Service
Fund Fund Enterprise Funds Fund
DEFERRED INFLOWS OF RESOURCES:

Deferred inflows related to other
postemployment benefits 69,036 57,924 126,960 -
Deferred inflows related to pensions 103,817 88,987 192,804 - Total deferred outflows of resources 172,853 146,911 319,764 - NET POSITION:

Net investment in capital assets 30,786,525 28,417,494 59,204,019 3,021,687 Restricted for debt service 431,801 - 431,801 -
Unrestricted 6,480,510 20,974,655 27,455,165 9,013,644
Total net position $ 37,267,035 $ 49,823,950 $ 87,090,985 $ 12,035,331 2,350,322
Net position of business-type activities $ 89,441,307
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds
Business-Type Activities
-68-

TOWN OF HILLSBOROUGH

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION

PROPRIETARY FUNDS
FPR THE FISCAL YEAR ENDED JUNE 30, 2024
The notes to the financial statements are an integral part of this statement. 28 Governmental
Activities
Water Sewer Total Internal Service
Fund Fund Enterprise Funds Fund
OPERATING REVENUES:

Sale of water $ 10,306,078 $ 10,306,078 - $ $ -
Water meter charges 4,953,121 4,953,121 - -
Sewer service charges 15,752,387 - 15,752,387 -
Other services - - - 847,733
Miscellaneous revenue 7,050 68,315 75,365 28,755
Total operating revenues 15,266,249 15,820,702 31,086,951 876,488 OPERATING EXPENSES:

Water purchases, utilities and pumping 6,826,822 6,826,822 - - Sewage treatment services and utilities 2,549,609 - 2,549,609 - Personnel, overhead and facilities 4,286,738 3,996,021 8,282,759 - Materials, supplies and other 2,024,441 1,083,555 3,107,996 157,508 Depreciation and amortization 1,442,037 4,290,362 5,732,399 623,525 Total operating expenses 14,580,038 11,919,547 26,499,585 781,033 Operating income (loss) 686,211 3,901,155 4,587,366 95,455

NONOPERATING
REVENUES (EXPENSES):

Investment earnings 504,373 941,014 1,445,387 394,905
Interest expense (316,645) (1,335,295) (1,651,940) -
Total nonoperating revenue (expenses) 187,728 (394,281) (206,553) 394,905 Income before transfers 873,939 3,506,874 4,380,813 490,360 Transfers in 1,830,000 - 1,830,000 -
Change in net position 873,939 5,336,874 6,210,813 490,360 Net position - beginning 36,393,096 44,487,076 80,880,172 11,544,971 Net position - ending $ 37,267,035 $ 49,823,950 $ 87,090,985 $ 12,035,331 167,822
Change in net position of business-type activities $ 6,378,635 Business-Type Activities
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds
-69-

TOWN OF HILLSBOROUGH

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
The notes to the financial statements are an integral part of this statement. 29 Governmental
Activities
Water Sewer Total Internal Service
Fund Fund Enterprise Funds Fund

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users $ 14,819,706 $15,482,427 $ 30,302,133 $ - Receipts from interfund services provided - - - 758,534 Payment to suppliers (9,239,973) (3,753,526) (12,993,499) - Payment to employees (4,237,703) (3,928,517) (8,166,220) - Net cash provided by operating activities 1,342,030 7,800,384 9,142,414 758,534

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Transfers from other funds 1,830,000 - 1,830,000 -
Net cash provided by
noncapital financing activities 1,830,000 - 1,830,000 -

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition and construction of capital assets (5,984,034) (6,332,951) (12,316,985) (1,678,156) Loan principal paid (63,225) (1,135,778) (1,199,003) -
Principal paid on debt (942,033) (1,100,316) (2,042,349) - Interest paid on debt (268,087) (1,128,987) (1,397,074) - Net cash used in capital and related
financing activities (7,257,379) (9,698,032) (16,955,411) (1,678,156)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment gain 504,373 941,014 1,445,387 394,905
Net cash provided by investing activities 504,373 941,014 1,445,387 394,905 Net increase (decrease) in cash and cash equivalents (5,410,976) 873,366 (4,537,610) (524,717) Cash and cash equivalents - beginning 12,725,275 24,123,067 36,848,342 9,647,037 Cash and cash equivalents - ending $ 7,314,299 $24,996,433 $ 32,310,732 $ 9,122,320 Reconciliation of operating income to net cash
provided by operating activities:

Operating income (loss) $ 686,211 $ 3,901,155 $ 4,587,366 $ 95,455 Adjustments to reconcile operating income to net
cash provided (used) by operating activities:

Depreciation and amortization expense 1,442,037 4,290,362 5,732,399 623,525 Increase (decrease) in pension
and OPEB related amounts 93,990 81,604 175,594 -
Effect of Changes in:
(Increase) decrease in accounts receivable (479,343) (338,275) (817,618) - (Increase) decrease in inventories and prepaids (2,841) 162 (2,679) - Increase (decrease) in deposits 32,800 - 32,800 -
Increase (decrease) in accounts payable (385,869) (120,524) (506,393) 39,554 Increase (decrease) in compensated absences (44,955) (14,100) (59,055) - Total adjustments 655,819 3,899,229 4,555,048 663,079
Net cash provided (used) by operating activities $ 1,342,030 $ 7,800,384 $ 9,142,414 $ 758,534

NONCASH CAPITAL, INVESTING, AND FINANCIAL ACTIVITIES
Schedule of non-cash capital and related financing activities: Wastewater treatment funding agreement, $5,123,300.

Business-Type Activities
-70-

NOTES TO THE FINANCIAL STATEMENTS
-71-
The page is intentionally left blank.
-72-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
30 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Town’s accounting policies:

A. Reporting Entity
The Town of Hillsborough (the Town) is a municipal corporation governed by a five-member council. The accompanying financial statements present the Town and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government’s operations.

Blended Component Unit - The operations of the Hillsborough Public Improvement Corporation (HPIC) was established to assist in the financing of the acquisition of public improvements on behalf of the Town. HPIC is combined with that of the Town’s Water and Sewer funds in these financial statements. The City Council sits as its Board of Directors and has full accountability for its operations. The Corporation does not issue a separate financial report.

B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the Town and its component unit. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment, are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported as general revenues.

Separate financial statements are provided for the governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

The Town does not have any fiduciary funds or fiduciary-type component units.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. -73-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
31 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the Town.

The Town reports the following major governmental funds:

The General Fund is the Town’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Police and Fire Special Tax Fund is used to account for revenues apportioned under a Town voter-approved special tax which proceeds are restricted for public safety operations and capital expenditures.

The Capital Projects Fund is used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds.

The Town reports the following major proprietary funds:

The Water Fund accounts for the activities associated with the distribution and transmission of potable water to the Town’s residents.

The Sewer Fund accounts for activities associated with the treatment and transmission of sewage.

Additionally, the Town reports an Internal Service Fund that accounts for fleet management and the replacement of other equipment provided to other departments on a cost reimbursement basis.

The Town does not have any fiduciary fund and fiduciary-type component unit; hence, no such statements are included in this financial report.

Generally, the effect of interfund activity has been eliminated from the government-wide financial statements.

Exceptions to this general rule are charges between the government’s water and sewer and various other functions of the Town. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.
-74-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
32 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the water and sewer funds’ principal ongoing operations. The principal operating revenues of the water and sewer funds, and of the Town’s internal service fund, are charges to customers for sales and services. The Town also recognizes as operating revenues the portion of connection fees intended to recover the cost of connecting new customers to the system. Operating expenses for the enterprise and the internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the Town’s policy to use restricted resources first, then unrestricted resources as they are needed.

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

D. Assets, Deferred Outflows, Liabilities, Deferred Inflows, and Net Position

1. Deposits and Investments
The Town’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition.

The Town’s investment policy and the California Government Code allow the Town to invest in the US Government, time certificates of deposits placed with commercial banks, negotiable certificates of deposit, banker’s acceptances, commercial paper, money market funds, repurchase agreements, the County of San Mateo Pooled Fund, and the California Local Agency Investment Fund (LAIF) pool. The California Government Code Section 16429 under the oversight of the State Treasurer regulates LAIF. The Town reports its investment in LAIF at the fair value amount LAIF provided. The Town’s position in the pool is approximately the same as the value of the pool shares. LAIF is not registered with the SEC and is unrated. Cash and investments with the Trustee, if any, are invested pursuant to governing bond covenants or trust endowments.

2. Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements, outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”
Receivables are shown net of an allowance for uncollectible where applicable. Unbilled services revenues in the Enterprise Funds are accrued at year-end.
-75-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
33 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

3. Leases and Subscription Based Information Technology Arrangements (SBITA) As lessor: The Town is a lessor for noncancellable leases of Town property for wireless communications facilities.

The Town recognizes a lease receivable and a deferred inflow of resources in the government‐wide and governmental fund financial statements. At the commencement of a lease, the Town initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.

As lessee/subscriber: At the commencement of a lease/subscription based information technology arrangement (SBITA), the Town initially measures the lease/subscription liability at the present value of payments expected to be made during the lease/subscription term. Subsequently, the lease liability is reduced by the principal portion of lease/subscription payments made. The lease/subscription asset is initially measured as the initial amount of the lease/subscription liability, adjusted for lease/subscription payments made at or before the lease/subscription commencement date, plus certain initial direct costs. Subsequently, the lease/subscription asset is amortized on a straight‐line basis over its useful life.

Key estimates and judgments include how the Town determines (1) the discount rate it uses to discount the expected lease/subscription receipts/payments to present value, (2) lease/subscription term, and (3) lease receipts. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee. The Town monitors changes in circumstances that would require a remeasurement of its lease/subscription and will remeasure the lease/subscription if certain changes occur that are expected to significantly affect the amount of the lease/subscription.

Lease/subscription assets are reported with other capital assets and lease/subscription liabilities are reported with long-term debt on the statement of net position.

4. Property Taxes
Property taxes become an enforceable lien on property as of January 1, levied on July 1; secured taxes are payable in two installments on November 1 and February 1 and delinquent on December 10 and April 10. Unsecured taxes are due on July 1 and delinquent on August 31. The County bills and collects the property taxes and remits them to the City.
“Unsecured” refers to taxes on personal property other than land and buildings. -76-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
34 The County is permitted by State Law (Proposition 13) to levy taxes at 1% of the full market value of the property (at time of purchase) and can increase the assessed property valuation by no more than 2% per year. This tax levy is distributed to the different governmental agencies under the State-mandated alternate method of apportioning taxes (commonly referred to as the “Teeter Plan”). All local agencies with historical tax delinquency rates less than 3%, receive from the County 100% of their respective shares of the amount of ad valorem taxes levied, without regard to the actual collection of taxes levied. The County handles all delinquencies, retaining interest and penalties.

5. Inventories and Prepaid Items
All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the financial statements. Prepaid items in governmental funds are recorded as expenditures when consumed.

6. Restricted Assets
Certain bond and loan proceeds of the Town’s Enterprise Fund are classified as restricted assets on the statement of net position because their use is limited by the applicable bond covenant. In addition, the Section 115 pension trust assets are classified as restricted assets on the statement of net position because their use is limited by the pension trust.

7. Capital Assets
Capital assets, which include property, plant, equipment, infrastructure (e.g., roads, sidewalks, and similar items), and water and sewer systems, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The government defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) is included regardless of their acquisition date or amount. The Town estimated the historical cost for the initial reporting of these assets through back trending (i.e., estimating the current replacement cost of the infrastructure to be capitalized and using a pricelevel index to deflate the cost to the acquisition or estimated acquisition year). As the Town constructs or acquires additional capital assets each period, including infrastructure assets, they are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or extend its useful life beyond the original estimate. The Town values donations of capital assets at the acquisition value of the item at the date of its donation. -77-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
35 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property, plant, and equipment are depreciated using the straight-line method over the following estimated useful lives:

Assets Years
Buildings 40 years
Land Improvements 30 years
Machinery and Equipment 3 - 15 years
Infrastructure 30 - 50 years
Water and Sewer Lines (Transmission and distribution systems) 40 years Sewer Treatment Plant Capacity Rights 30 years
Subscription-Based Information Technology – Intangible Asset 1 - 7 years Intangible Assets – Sewer Capacity Right
The Town entered into the Interim Agreement for Payment of Capital Costs of Clean Water Program Projects with the City of San Mateo. Costs are capitalized in the Sewer Fund and once placed in service, these costs are amortized using the straight-line method of amortization.

8. Compensated Absences
It is the Town’s policy to permit employees to accumulate earned but unused vacation up to a certain amount. Sick leave credit vests in varying amounts depending on bargaining units and groups. Both are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, because of employee resignations and retirements.

Compensated absences due within one year represent an estimate of the compensated absences that will be utilized within the next year. All compensated absences for governmental activities are paid out of the General Fund.

9. Long-Term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, businesstype activities, or proprietary fund type statement of net position.

10. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period and will not be recognized as an outflow of resources (expense) until then.

The Town reports deferred outflows related to pensions, other postemployment benefits, and refunding charges. -78-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
36 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In addition to liabilities, the statement of net position and the governmental funds will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period and will not be recognized as an inflow of resource (revenue) until that time. The Town reports deferred inflows related to leases, pensions and other postemployment benefits.

11. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Town’s Public Employees Retirement System (CalPERS) plans and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

12. Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Town’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

13. Effects of New Pronouncements
As of July 1, 2023, the Town implemented the following GASB Statement:

GASB Statement No. 100 – July 1, 2023, the District adopted GASB Statement No. 100, Accounting Changes and Error Corrections. The implementation of this standard requires additional presentation and disclosure requirements for accounting changes and error corrections. The financial statements have been updated to conform to the presentation requirements related to the accounting change in the financial statements for the year ended June 30, 2024. The implementation of the standard did not have a material impact on the financial statements as of June 30, 2024.
-79-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
37 NOTE 2 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net position.

The governmental fund balance sheet includes reconciliation between fund balance – total governmental funds and net position – governmental activities as reported in the government-wide statement of net position. Long-term liabilities are not due and payable in the current period and are therefore not reported in the governmental funds. In addition, capital assets are not financial resources and are therefore not reported in the governmental funds. This year’s difference in the amount of $7,965,189 relates to capital asset, ($1,692,956) relates to compensated absences, ($21,293,553) relates to pension liabilities and related deferrals, ($7,566,000) relates to OPEB liabilities and related deferrals, ($665,256) relates to subscription liabilities, ($9,685,009) relates to the incorporation of the internal service fund into the governmental activities and ($325,000) relates to uninsured claims incurred but not paid.

B. Explanation of certain differences between the governmental fund statement of revenues, expenditures and changes in fund balances and the government-wide statement of activities.

The governmental fund statement of revenues, expenditures and changes in fund balances includes reconciliation between net changes in fund balances – total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One significant element of that reconciliation explains “governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over the estimated useful lives and reported as depreciation expense.” The details of this ($690,657) difference are as follows:

Capital outlay $ 180,845
Depreciation and amortization (871,502)
Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $ (690,657) Another element of that reconciliation states, “some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds.” ($264,117) relates to increases in compensated absences from sick leave vesting on certain employees, $213,034 relates to subscription liability principal payment, accrued interest on subscriptions liability ($11,440), ($225,000) claims liability and ($1,711,505) relates to pension and $648,463 relates to an OPEB credit. Another element of the reconciliation includes the incorporation of the net revenue of the internal service fund for $322,538. -80-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
38 NOTE 3 – CASH AND INVESTMENTS
The Town’s deposits and investments are invested pursuant to its investment policy guidelines. The objectives of the policy are, in order of priority, preservation of capital, liquidity and yield. The policy addresses the soundness of financial institutions in which the Town will deposit funds, types of investment instruments as permitted by the California Government Code, and the percentage of the portfolio that may be invested in certain instruments with longer terms to maturity. Total Town cash and investments at fair value on June 30, 2024, are as follows:

Cash and investments, including restricted cash, as of June 30, 2024, consist of the following. Restricted cash of $5,855,697 is included in the investment balance and is a restricted Internal Revenue Service (IRS) Section 115 pension trust. The trust is funded to mitigate rising cost of pensions. The trust was adopted in fiscal year 2018-19.

Cash on hand $ 8,300
Deposits with financial institutions 19,594,181
Total cash and bank deposits 19,602,481
Investments 10,340,459
Participation in LAIF pool 58,535,528
Total investments 68,875,987
Total cash and investments $ 88,478,468
Investments Authorized by the California Government Code and the Town’s Investment Policy The table below identifies the investment types that are allowed by the California Government Code and are authorized by the Town’s more restrictive investment policy. The second part of the table relates to investments of debt proceeds held by bond trustees and governed by the provisions of the Town’s debt agreements. The table addresses interest rate risk, credit risk, and concentration of credit risk. Investments held in trust accounts, such as a Section 115 pension trust, are governed by the trust documents. In fiscal year 2023-24, the mutual fund investment type is held in the Section 115 pension trust.
-81-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
39 NOTE 3 – CASH AND INVESTMENTS (Continued)
Maximum Maximum
Maximum Percentage Investment in
Authorized Investment Type Maturity of Portfolio One Issuer Authorized for the Town:

U.S. Treasury Obligations 2 years
2 - 5 years
50%
50% None
Banker's Acceptances 180 days 20% Lower of $1M or 10%
Time Certificate of Deposit 2 years None $500,000
Commercial Paper 180 days 10% $1M up to 3 months
$500,000 up to 6
Local Agency Investment Fund (LAIF) N/A None N/A
Repurchase Agreements 30 days 20% 20%
Negotiable Certificates of Deposit 5 years 30% None
County Pooled Investment Funds N/A 10% N/A
Money Market Mutual Funds (Custodial Accounts Only) N/A None None Authorized By Debt Agreements:

U.S. Treasury Obligations None None None
U.S. Agency Securities None None None
Certificates of Deposits/Bankers Acceptances 360 days None None Commercial Paper 270 days None None
Money Market Funds N/A None None
Local Agency Bonds None None None
Investment Contracts None None None
Repurchase Agreements N/A None None
Local Agency Investment Funds (LAIF) N/A None $65M
-82-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
40 NOTE 3 – CASH AND INVESTMENTS (Continued)
Interest Rate Risk
Changes in market interest rates will affect the fair value of an investment. Generally, investments with longer maturities are more sensitive to changes in market interest rates. The Town manages its exposure to interest rate risk by purchasing a combination of shorter and longer-term investments and by timing cash flows from maturities, so that investments mature evenly over time as necessary to provide the cash flow and liquidity needed for operations. The Town also manages its interest rate risk by holding most investments to maturity, thus reversing unrealized gains and losses. The mutual funds are investments held in the Section 115 pension trust and are restricted in their use. The following table shows the distribution of the Town’s investments by maturity:
12 Months 13-24 25-60
Investment Type Amount or Less Months Months Total
LAIF $ 58,535,528 $ 58,535,528 $ - $ 58,535,528 - $
Mutual Funds 5,869,390 5,869,390 - 5,869,390 -
Negotiable Certificates of Deposit 197,418 197,418 - 197,418 - U.S. Treasury Notes 4,273,651 990,064 1,161,566 2,122,021 4,273,651 Totals $ 68,875,987 $ 65,592,400 $ 1,161,566 $ 2,122,021 $ 68,875,987 Credit Risk
Credit risk, when an issuer of an investment does not fulfill its obligation to the holder of an investment, is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of year-end for each investment type:

Exempt
From Not
Investment Type Amount Disclosure Rated
LAIF $ 58,535,528 $ 58,535,528 - $
Mutual Funds 5,869,390 5,869,390 -
Negotiable Certificates of Deposit 197,418 197,418 -
U.S. Treasury Notes 4,273,651 4,273,651 -
Totals $ 68,875,987 $ 4,273,651 $ 64,602,336
-83-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
41 NOTE 3 – CASH AND INVESTMENTS (Continued)
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. Custodial credit risk for investments is the risk, that, in the event of the failure of the counterparty (e.g., broker-dealer used by the Town to buy the securities), the government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the Town’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments with the exception of the following provision. A financial institution is required to secure deposits in excess of $250,000 made by state and local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law secured by US government securities at a constant margin ratio of 110% for government securities.

Investment in the State Investment Pool
As of year-end, the Town had $58,535,528 participation in the Local Agency Investment Fund (LAIF) regulated by the California Government Code under the oversight of the Treasurer of the State of California.

Interest and Investment Income
Interest and investment income consists of the following on June 30, 2024:

Interest earned $ 3,469,264
Change in fair value 760,895
Net investment income $ 4,230,159
Fair Value Measurements
The Town categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy has three levels used to measure an asset's fair value. The following provides a summary of the hierarchy used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets that the Town has the ability to access at the measurement date. Level One assets may include debt and equity securities that are traded in an active exchange market and that are highly liquid and are actively traded in over-the-counter markets.

Level 2 - Observable inputs other than Level One prices such as quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, or other inputs that are observable, such as interest rates and curves observable at commonly quoted intervals, implied volatilities, and credit spreads. For financial reporting purposes, if an asset has a specified term, a Level two input is required to be observable for substantially the full term of the asset. The Town uses matrix pricing to value its level II investments. -84-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
42 NOTE 3 – CASH AND INVESTMENTS (Continued)
Level 3 - Unobservable inputs should be developed using the best information available under the circumstances, which might include the Town’s own data. The Town should adjust that data if reasonable available information indicates that other market participants would use different data or certain circumstances specific to the city are not available to other market participants.

Uncategorized - Investments in the Local Agency Investment Funds/State Investment Pool and mutual funds are not measured using the input levels above because the Town’s transactions are based on a stable net asset value per share.

All contributions and redemptions are transacted at $1.00 net asset value per share.

The LAIF and Mutual Funds investment types are classified as Uncategorized for the Fair Value Measurement based on generally accepted accounting principles. LAIF investments on June 30, 2024 were generally comprised of U.S. Treasury bills and notes, Federal agencies, certificates of deposits, bank notes, commercial paper, time deposits, and AB 55 and GF Loans. As stated in Note 3, LAIF is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The Mutual Funds are investments in the Section 115 pension trust and are comprised of various mutual funds in the categories of domestic equities, fixed income, international equities, and real estate. As stated in Note 3 the Section 115 pension trust is governed by the trust documents.

The Town valued its investment in LAIF as of June 30, 2024 by multiplying its account balance with LAIF of $58,751,968 times a fair value factor of 0.996316042 computed by LAIF. This fair value factor was determined by dividing all LAIF participants aggregated amortized costs by a total aggregate fair value. Accordingly, as of June 30, 2024, the Town’s investment in LAIF stated at fair value equaled $58,535,528.

Level 1 Level 2 Level 3
Investment Type Inputs Inputs Inputs Uncategorized
LAIF $ - $ - $ - $ 58,535,528
Mutual Funds - - - 5,869,390
Negotiable Certificates of Deposit - 197,418 - -
U.S. Treasury Notes 4,273,651 - - -
Total Investment Portfolio $ 4,273,651 $ 197,418 $ 64,404,918 - $ Fair Value Measurement Using
-85-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
43 NOTE 4 – CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2024 was as follows. The increase in fiscal year 2023-24 of $5.1 million for Treatment Plant Capacity Rights is the Town’s share of cost for the City of San Mateo’s Clean Water wastewater treatment plant. The Town contracts for sewer treatment with the City of San Mateo for sewage from the southern half of the Town. The Right-to-use subscription (intangible) asset reflects the discounted cash flow of future payments on the information technology agreements and is amortized over each agreement period.

Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:

Land - not being depreciated $ 1,456,560 $ - -$ 1,456,560 $ Capital assets, being depreciated
Land improvements 3,579,317 - - 3,579,317
Buildings 5,799,962 180,845 (104,888) 5,875,919
Machinery and equipment 6,556,410 1,678,156 (389,647) 7,844,919 Infrastructure 15,247,443 - - 15,247,443
Total capital assets being depreciated 31,183,132 1,859,001 (494,535) 32,547,598 Less accumulated depreciation for:

Land improvements (2,959,194) (137,944) - (3,097,138)
Buildings (3,373,862) (246,386) 104,888 (3,515,360)
Machinery and equipment (4,527,612) (642,821) 389,647 (4,780,786) Infrastructure (12,044,684) (260,021) - (12,304,705)
Total accumulated depreciation (22,905,352) (1,287,172) 494,535 (23,697,989) Total capital assets, being depreciated, net 8,277,780 571,829 - 8,849,609 Intangible assets, being amortized:

Right-to-use subscription assets 1,077,761 (13,342) - 1,064,419 Total intangible assets being amortized 1,077,761 (13,342) - 1,064,419 Accumulated amortization:

Right-to-use subscription assets (189,200) (207,854) 13,342 (383,712) Total intangible assets, being amortized, net 888,561 (207,854) - 680,707 Governmental activities capital assets, net $ 10,622,901 $ 363,975 -$ 10,986,876 $ -86-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
44 NOTE 4 – CAPITAL ASSETS (Continued) The Buildings category below are fully depreciated and are immaterial to the financial statements.

Beginning Ending
Balance Increases Decreases Balance
Business-type Activities:

Capital assets, not being depreciated
Treatment plant capacity rights $ 38,034,536 $ 5,123,300 -$ 43,157,836 $ Construction in progress 633,273 187,692 - 820,965
Total capital assets, not being depreciated 38,667,809 5,310,992 - 43,978,801 Capital assets, being depreciated
Machinery and equipment 852,108 79,357 - 931,465
Systems and transmissions 174,188,260 12,049,936 (957,050) 185,281,146 Total capital assets being depreciated 175,040,368 12,129,293 (957,050) 186,212,611 Less accumulated depreciation for:

Machinery and equipment (852,108) (11,001) - ( 863,109) Systems and transmissions (99,939,288) (5,721,398) 957,050 (104,703,636) Total accumulated depreciation (100,791,396) (5,732,399) 957,050 (105,566,745) Total capital assets, being depreciated, net 74,248,972 6,396,894 - 80,645,866 Business-type activities capital assets, net $ 112,916,781 $ 11,707,886 -$ 124,624,667 $ Depreciation and amortization expense by functions/program is as follows:

Governmental Activities:

General government $ 209,419
Public safety 113,126
Community services 207,855
Public works 341,102
Subtotal 871,502
Capital assets held by the Town's internal service funds are charged to the various functions based on their usage of the assets. 623,525 Total depreciation expense - governmental activities $ 1,495,027 Business-type Activities:

Water $ 1,442,037
Sewer 4,290,362
Total depreciation expense - business-type activities $ 5,732,399 NOTE 5 – LEASES
Leases receivable – In the current year, the Town renewed a lease on Town property for wireless communications facilities. The Town has six such contracts. The leases expire through fiscal year 2036. The discount rates range from 1.69% to 3.25%. As of June 30, 2024 Town’s receivable for lease payments was $1,000,212 and the related deferred inflow of resources which will be recognized as lease revenue over the lease term was $958,726. -87-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
45 NOTE 6 – SUBSCRIPTION-BASED TECHNOLOGY ARRANGEMENTS
A subscription-based information technology arrangement (SBITA) is a contractual agreement that conveys control of the right-to-use another entity’s information technology asset, alone, or in conjunction with a tangible capital asset, for a minimum contractual period of greater than one year, in an exchange or exchange-like transaction. The Town entered into seven multi-year software licensing agreements through fiscal year 2029. As the licensee, the Town recognizes a subscription liability and an associated intangible subscription.

The Town’s schedule of future payments included in the measurement of subscription payable is as follows:

Year Ending
June 30 Principal Interest Total
2025 $ 187,365 $ 15,877 $ 203,242
2026 108,779 11,346 120,125
2027 111,511 8,614 120,125
2028 114,311 5,814 120,125
2029 117,183 2,943 120,126
Total $ 639,149 $ 44,594 $ 683,743
Government Activities
NOTE 7 – INTERFUND TRANSACTIONS
The following is a summary of the interfund transactions for the year ended June 30, 2024:

Business-Type
Activities
General Capital Projects Sewer
Transfer Out Fund Fund Fund Total
General Fund $ 547,770 - $ $ 1,830,000 2,377,770$
Police and Fire Special Tax Fund 2,191,876 - 2,191,876 - Nonmajor Governmental Funds 250,000 2,300,772 2,550,772 - Total $ 2,441,876 $ 2,848,542 $ 1,830,000 7,120,418$
Transfer In
Governmental Activities
Activities
The transfers into the General Fund included a $2,191,876 transfer from the Police and Fire Special Tax Fund to help cover costs of police and fire service. A transfer of $250,000 from the Measure A Fund to the General Fund was to cover for street-related costs incurred in the General Fund. The transfers into the Sewer Fund was for capital improvements to the storm drain/sewer. The transfers into the Capital Projects Fund from the General Fund were primarily for the Eucalyptus Pathway project and other Governmental infrastructure. -88-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
46 NOTE 8 – LONG-TERM LIABILITIES
Long-term liability activity, excluding pension and other post-employment benefits (OPEB) liabilities, for the year ended June 30, 2024, was as follows:

Beginning Ending Due within
Balance Additions Reductions Balance One Year
Governmental activities:

Compensated absences $ 1,428,839 $ 1,232,055 $ 967,938 $ 1,692,956 550,350$ Subscriptions payable 852,183 213,034 - 639,149 187,365 Total governmental activity longterm liabilities $ 2,281,022 $ 1,232,055 $ 1,180,972 $ 2,332,105 737,715$ Business-type activities:

Compensated absences $ 166,202 $ 79,034 $ 138,089 $ 107,147 56,721$ Funding Agreement - wastewater treatment 34,514,769 5,123,300 840,768 38,797,301 1,333,968 State Clean Water loan - Direct Borrowing 8,549,535 295,009 - 8,254,526 299,729 ECE-ARRA loan - Direct Borrowing 256,746 63,226 - 193,520 63,865 Refunding bonds 19,250,000 1,740,000 - 17,510,000 1,745,000 Premiums 2,039,875 353,407 - 1,686,468 339,504
Total business-type activity longterm liabilities $ 64,777,127 $ 5,202,334 $ 3,430,499 $ 66,548,962 3,838,787$ California Energy Resources Conservation and Development Commission Loan – Original Principal $908,700.

In 2010, the Town entered into an agreement with the California Energy Resources Conservation and Development Commission (the “Commission”) to receive financial assistance for energy savings projects consisting of premium efficiency pumps and the Supervisory Control and Data Acquisition (SCADA) system software with control sensors for its water system. The loan is due in semi-annual installment payments at an interest of 1 percent starting December 2012 and will be fully amortized in June 2027. The annual payments are to come from annual energy savings. The Town is required to maintain compliance with all provisions of the loan. The remaining debt service requirements for the loan on June 30, 2024 are summarized in the following table:

Year Ending
June 30 Principal Interest Total
2025 $ 63,865 $ 1,776 $ 65,641
2026 64,505 1,136 65,641
2027 65,150 489 65,639
Total $ 193,520 $ 3,401 $ 196,921
Business-Type Activities
-89-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
47 NOTE 8 – LONG-TERM DEBT (Continued)
Revenue Refunding Bonds Series 2023.

The certificates of participation (“COPs”) Series 2000A, 2000B, 2003A, and 2006A were refunded in fiscal year 2022-23. The certificates of participation are recorded in the Enterprise Funds and were issued by the Public Improvement Corporation. Two issues on June 1, 2000, comprised of $4,900,000 Series A, proceeds of which were used to advance refund the 1997 COPs that were called on June 1, 2007, and $9,700,000 Series B that were used to refund and retire the 1995 COPs and to finance the acquisition, construction, and installation of certain improvements to the Town’s water and sewer systems. The Town issued $15,000,000 of 2003 Series A variable rate certificates of participation (water and sewer system projects) in August 2003 to finance various water and wastewater projects. An additional $12,000,000 of variable rate certificates of participation (water and sewer system projects) 2006 Series A were issued to finance various water and wastewater projects consistent with the enterprise’s ten-year capital improvement plan. Contracts associated with the COPs, including the bond standby purchase agreement, interest rate swap (hedging instrument), and other services were terminated in connection with the refunding transaction.

In June of 2023, the Town issued $19.25 million in Revenue Refunding Bonds Series 2023 (“the bonds”) with an interest rate of five percent to advance refund $19.96 million of 2000 Series A and B, 2003 Series A and 2006 Series A. The net proceeds of $20.2 million were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the refunded certificates of participation. At June 30, 2024, $0 of defeased bonds remain outstanding.

The Town’s rating for the Series 2023 Refunding Bonds is AAA-A1 from Standard and Poor’s.

As of June 30, 2024, the debt service requirements of the refunding bonds are summarized in the following table.

Year Ending
June 30 Principal Interest Total
2025 $ 1,745,000 $ 875,500 $ 2,620,500
2026 1,785,000 788,250 2,573,250
2027 1,915,000 699,000 2,614,000
2028 2,055,000 603,250 2,658,250
2029 2,095,000 500,500 2,595,500
2030-2034 7,215,000 1,108,500 8,323,500
2035 700,000 35,000 735,000
Total $ 17,510,000 $ 4,610,000 $ 22,120,000
Business-Type Activities
-90-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
48 NOTE 8 – LONG-TERM DEBT (Continued)
State Clean Water Loan
On March 23, 2015, the Town entered into an Installment Sale Agreement with the Clean Water State Revolving Fund for construction financing on its sewer system, referred to as the State Revolving Fund loan (SRF loan). The loan provides for up to $12 million and debt service commenced in September 2017 and is a 30-year loan. The debt bears interest at 1.6% per annum. The debt is secured by a pledge of net revenues of the Sewer Fund. There are limitations and covenants contained in the agreement. The Town complies with all restrictive limitations and covenants on June 30, 2024. The debt service requirements for the loan on June 30, 2024 are summarized in the following table:

Year Ending
June 30 Principal Interest Total
2025 $ 299,729 $ 132,072 $ 431,801
2026 304,525 127,277 431,802
2027 309,397 122,404 431,801
2028 314,347 117,454 431,801
2029 319,377 112,424 431,801
2030-2034 1,675,191 483,817 2,159,008
2035-2039 1,813,563 345,444 2,159,007
2040-2044 1,963,366 195,641 2,159,007
2045-2047 1,255,031 40,373 1,295,404
Total $ 8,254,526 $ 1,676,906 $ 9,931,432
Business-type Activities
The Town’s refunding bonds and State loan outstanding are secured by the pledging of the certain revenues. Debt service payments as a ratio of the pledged gross revenue, less certain expenses as required by the debt agreement, for the year ended June 30, 2024, are indicated in the following table:

Description of
Pledged Revenue
Annual
Amount of
Net Pledged
Revenue
Annual
Debt
Service
Payments
Pledged
Revenue
Coverage
Water revenue $ 2,509,170 $ 1,214,486 207%
Sewer revenue 8,888,554 1,912,436 465%
Funding Agreement with City of San Mateo
In June 2022, the Town entered into an agreement with the City of San Mateo for the Town’s share of cost of City of San Mateo’s new Clean Water wastewater treatment plant. The Clean Water Program capital improvement projects are necessary for capacity assurance and reliability, and to meet regulatory compliance requirements contained in the Cease-and-Desist Order and NPDES permits. The Town contracts for sewer treatment with the City of San Mateo for sewage flows from the southern half of the Town and the current construction includes wastewater treatment capacity for the southern portion of the Hillsborough sewer collection system. -91-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
49 NOTE 8 – LONG-TERM DEBT (Continued)
In the interim agreement, the City of San Mateo recognizes the work that the Town of Hillsborough is doing to reduce inflow and infiltration and the need for additional capacity at the San Mateo facility. For the first five years of the cost share agreement, the Town will make payments based on the Town’s share of flow data and projections from the initial study. At five years, there will be a “true up” or “look back” based on the actual flow. The true up criteria are outlined in the agreement. The agreement provides an incentive for Hillsborough to reduce infiltration and inflow and thereby reduce capacity requirements and pay a lower share of the capital costs.

The new wastewater treatment plant will significantly increase treatment capacity. The effective treatment capacity of the current plan is 40 million gallons per day (MGD). The new plant is designed to treat wet weather flows up to 78 MGD. Also, a new upstream retention system will create additional effective capacity, along for a total of 86.2 MGD of sewer to be treated daily, more than double the current capacity, which reduces accidental discharges and overflows. For purposes of calculating the Town’s share of payments under the agreement for the first five years, the Town’s the percentage share will be 7.6% of wastewater treatment plant project costs, 8.2% of Dale Avenue Pump Station projects, 8.2% of Underground Flow Equalization System projects and 5.7% of Program Management Office cost. If during the first five years Town’s meter flows for any two-hour period never exceed 4.5 MGD, the Town’s share of project costs is reduced to the true-up amounts.

As of June 30, 2024, the Town’s share was $50,347,837 including principal payments of $4,464,744 since fiscal year 2021-22. In fiscal year 2023-24, principal paid was $840,767.

As of June 30, 2024, the City of San Mateo completed 88% of the construction and therefore, the Town’s share of the liability was $38,797,301. The future payments on this obligation to date are as follows:

Year Ending
June 30 Principal Interest Total
2025 $ 1,333,968 $ 929,882 $ 2,263,850
2026 1,071,252 707,907 1,779,159
2027 1,091,859 687,299 1,779,158
2028 1,112,864 666,295 1,779,159
2029 1,134,272 644,887 1,779,159
2030-2034 6,007,183 2,888,611 8,895,794
2035-2039 6,607,653 2,288,141 8,895,794
2040-2044 7,268,146 1,627,648 8,895,794
2045-2049 7,994,662 901,133 8,895,795
2050-2052 5,175,442 162,036 5,337,478
Total $ 38,797,301 $ 11,503,839 $ 50,301,140
Business-type Activities
-92-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
50 NOTE 9 – RISK MANAGEMENT
The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the Town carries commercial insurance. The Town has established a limited risk management program of these types of risks.

The Town participates in a public-entity risk pool (The Cities Group – a Joint Power Authority) that operates a Workers’ Compensation self-insured program. The pool indemnifies the membership for their Workers’ Compensation losses and recovers those costs from the members through a retrospective, loss experience-based contribution-rating plan. The pool’s self-insured retention is $1 million per occurrence for miscellaneous employees and $1.5 million for safety employees. Claims in excess of these amounts are insured up to $12.2 million. The Town has no deductible for these claims. Financial statements for the pool may be obtained from The Cities Group, P O Box 111, Burlingame, CA 94011.

The Town participates in the Pooled Liability Assurance Network (PLAN) Joint Powers Authority. The PLAN provides $30,000,000 coverage for general and automobile liability in excess of the Town’s $50,000 deductible.

The Town also participates in PLAN pool for the commercial property including boiler and machinery coverage, with $5,000 per incident deductible and certain specified limits. The Town also participates in PLAN Cyber Liability Insurance ($1 million with excess at $2 million).

Liabilities are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are reevaluated periodically to consider these factors, estimated recoveries from salvage or subrogation, and other economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. The amount recorded as liability for known claims is based on the recommendation of the thirdparty administrator. The Town’s remaining exposure for claims filed under this program is minimal.

The Town is self-insured for all other insurable risk, except for excess insurance coverage provided by commercial insurance companies that are limited to the following: Employment Practices Liability in excess of $100,000 each claim but limited to a maximum of $2,000,000.

There is no significant change in insurance coverage from that of the prior year and there were no settlements that exceeded coverage for each of the past three years. Below is a reconciliation of changes in the claims liability for fiscal years ending June 30, 2024 and 2023.
2024 2023
Beginning balance $ 127,150 $ 27,150
Claims incurred and changes in estimates for prior year claims 471,111 344,879 Claims paid (246,111) (244,879)
Ending balance $ 352,150 $ 127,150
-93-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
51 NOTE 10 – JOINT POWERS AGREEMENT
The Town participates in the City/County Association of Governments of San Mateo County (C/CAG), which is governed by a board consisting of a representative from each member. The board controls the operations of C/CAG, including selection of management and approval of operating budget. The association was established under a 1990 Joint Exercise of Powers Agreement between the Town, San Mateo County, and a majority of cities within the County to develop State-mandated plans such as an integrated waste management plan. The Town makes annual nonrefundable contributions to C/CAG used along with other member contributions, to finance C/CAG operations.

The Town’s contribution during the year totaled $34,509. Financial information related to the association may be obtained from the City of San Carlos, 600 Elm Street, San Carlos, CA 94070. The Town’s share of year-end assets, liabilities or fund equity has not been calculated by C/CAG.

The Town is one of eleven members of the South Bayside Waste Management Authority (SBWMA), a joint powers authority formed for the purpose of joint ownership, financial and administration of waste management. The JPA also includes a transfer station and a recycling center as well as the planning, administration management, review, monitoring, enforcement and reporting of solid waste and recyclable material collection within Authority’s service area. The Authority’s financial statements are available from the SBWMA, c/of City of San Carlos, 600 Elm Street, San Carlos, CA 94070.

Effective July 1, 2010, the Town is a member of the Central County Fire Department (CCFD) a Joint Powers Authority (JPA) that provides fire, emergency medical, and disaster preparedness services to the Town and the City of Burlingame, and by contract to the City of Millbrae. CCFD’s audited financial statements are available on the CCFD website. CCFD is a stand-alone employer recognized by the California Public Employees’ Retirement System (CalPERS). The Town paid $9.6 million for fire services for the year ended June 30, 2024 some of which represents pension contributions made by CCFD to CalPERS. AB 1912, which became effective on January 1, 2019, requires participating members of a joint powers authority (“JPA”) that contracts with CalPERS for pension benefits to allocate the pension liabilities of the JPA only in the event that the JPA decides to terminate its pension contract with CalPERS. There is no indication that CCFD will terminate its CalPERS contract. As such, under current generally accounting standards, the pension liability is not reported on the member agency financial statements and instead only the contributions are reported when they are made.

NOTE 11 – FUND BALANCES
Governmental funds report fund balance in classifications based primarily on the extent to which the Town is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. As of June 30, 2024, fund balances for governmental funds are comprised of the following:
• Nonspendable Fund Balance – includes amounts that are (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example: inventories, prepaid amounts, and leases receivable. -94-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
52 NOTE 11 – FUND BALANCES (Continued)
• Restricted Fund Balance – includes amounts that can be spent only for the specific purposes stipulated by external resource providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers. • Committed Fund Balance – includes amounts that can only be used for the specific purposes determined by a council resolution of the City Council. Commitments may be changed or lifted only by the Council taking the same formal action that imposed the constraint originally. • Assigned Fund Balance – represents amounts that are intended to be used by the Town of Hillsborough for specific purposes but do not meet the criteria to be classified as committed. The Council has by resolution assigned fund balance. The Council may also assign fund balance, as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget.

Unlike commitments, assignments generally only exit temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. • Unassigned Fund Balance – is the residual classification for the General Fund and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. The general fund is the only fund that reports a positive unassigned fund balance. Additionally, any deficit fund balance within the other governmental fund types is reported as unassigned.

In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is depleted in the order of restricted, committed, assigned, and unassigned. -95-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
53 NOTE 11 – FUND BALANCES (Continued)
Fund balances for all the major and nonmajor governmental funds as of June 30, 2024, are as follows:

Police and Fire
General Special Tax Capital Projects Nonmajor
Fund Fund Fund Funds Total
Nonspendable:

Prepaid items $ 10,044 $ - $ - $ 10,044 - $
Related to leases 41,487 - - 41,487 -
Sub-total: 51,531 - - 51,531 -
Restricted:

Retiree benefits 5,156,520 - - 5,156,520 -
Streets - - 564,329 - 564,329
Public Safety - Police 46,388 - 1,371,942 - 1,418,330
Sub-total: 5,156,520 46,388 1,936,271 - 7,139,179
Assigned
Capital projects - 4,607,648 - 4,607,648 -
Tree replacement 263,000 - - 263,000 -
Sewer capital 2,000,000 - - 2,000,000 -
Storm drain capital 3,600,000 - - 3,600,000 -
Sub-total: 5,863,000 4,607,648 - 10,470,648 -
Unassigned 21,848,090 - - 21,848,090 -
Total $ 32,919,141 $ 46,388 $ 4,607,648 $ 1,936,271 $ 39,509,448 The Town’s Policy No. 409 – Budget and Fiscal Policies – includes guidelines for fund balance reporting and minimum amounts to maintain in each category. The Town will strive to maintain unassigned funds of at least 30% of operating expenditures in the General Fund – the minimum level necessary to maintain the City’s creditworthiness and to adequately provide for 1) economic uncertainties, local disasters, and other financial hardships or downturns in the local or national economy; 2) contingencies for unseen operating or capital needs and 3) cash flow requirements.

NOTE 12 – COMMITMENTS AND CONTINGENT LIABILITIES
The Town is obligated through cost sharing agreements with other municipalities to pay its pro-rata share of operating expenses, capital expenses and debt service for the operation of wastewater treatment plants. The Town is billed its portion of expenses pursuant to agreements it entered into with the municipalities. The costs incurred by the Town under these agreements amounted to $1,934,430 and $2,001,789 as of June 30, 2024 and 2023 respectively. In June 2022, the Town entered into a funding agreement with the City of San Mateo for the Town’s share of the San Mateo’s Clean Water wastewater treatment plant. See Note 8- Long-Term Debt. -96-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
54 NOTE 12 – COMMITMENTS AND CONTINGENT LIABILITIES (Continued) The Town is also obligated to pay a portion of the cost of operations of the local libraries, which are operated, by the Cities of Burlingame and San Mateo. The portion of these costs paid by the Town amounted $1,027,634 and $1,017,693 for years ended June 30, 2024 and 2023 respectively.

At June 30, 2024, the Town has outstanding construction contracts and commitments for capital projects of $3,419,519 primarily for street resurfacing, water tank, and storm drain capital improvements.

The Town is obligated to pay annual required contributions to CalPERS for pension obligations. In order to maintain the sustainability of the plan, the CalPERS Board periodically adjusts actuarial assumptions, amortization and funding policies and discount rates based on actual experience. Adjustments typically result in the member agencies paying an increased annual required contribution. The CalPERS Board conducted their Asset Liability Management Review cycle in 2021. Details of the pension liability are included in Notes to the Financial Statements – Note 14 on pages 60. On page 66, a Sensitivity of the Net Pension Liability to Changes in Discount Rate is outlined for a 1% increase or 1% decrease as compared to the current rate.

The Town is subject to litigation arising in the normal course of business. In the opinion of the Town’s management, there is no pending litigation, which is likely to have a material adverse effect on the financial position of the Town. -97-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
55 NOTE 13 – POSTEMPLOYMENT HEALTHCARE PLAN
Plan Description – The Town’s retiree healthcare plan (Plan) is provided through California Employers’ Retirement Benefit Trust (CERBT), an agent multiple-employer defined benefit healthcare program administered by CalPERS. The Town provides postretirement health benefits to certain eligible retirees pursuant to various Town Employee Associations’ Memoranda of Understanding. CalPERS issues a publicly available entity-wide financial report that includes financial statements and required supplementary information pertaining to CERBT. This report is on the CalPERS website at: http://www.calpers.ca.gov. The Town offers medical benefits to retired employees and employee and spouses/domestic partners for life and dependent children until age 26 unless otherwise meeting the requirements of the Social Security Administration as a continued dependent. The Plan does not offer dental, vision or life benefits to the Town’s retirees. Benefits provided are dependent on the hire date. All retired employees of the Town receive a contribution amount equal to the CalPERS Public Employee Medical and Hospital Care Act (PEMHCA) at a minimum and depending on the hire date and retirement date, retired employees may receive an additional reimbursement from the Town for their medical plan election. Employees hired prior to March 1, 2002 in the Police Unit, or January 1, 2002 for all other employees will receive reimbursement equal to the maximum health contribution given to active employees, as of the date of their retirement.

As of the June 30, 2023 measurement date, the following current and former employees were covered by the benefit terms under the healthcare plan:

Active plan members 87
Inactive employees or beneficiaries currently receiving benefit payments 100 Inactive employees entitled to but not yet receiving benefit payments 10 Total 197
Contributions – The contribution requirement of plan members and the Town are established under a funding policy approved by the City Council and may be amended by the Town from time to time. The Plan is currently fully funded by employer contributions with no requirement for matching or employee contributions for eligible employees. Concurrently with the implementation of GASB Statement No. 75, the Town also adopted to prefund the actuarial liability. The funding policy is to contribute contributions sufficient to pay the current year’s retiree premium and plan expenses, with an additional amount to pre-fund benefits as determined by the Town’s actuary on a biennial basis.
-98-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
56 NOTE 13 – POSTEMPLOYMENT HEALTHCARE PLAN (Continued) Significant Assumptions – The Town’s net OPEB liability was measured as of June 30, 2023 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2023, based on the following actuarial methods and assumptions:

Actuarial Assumption June 30, 2023 Measurement Date
Actuarial Valuation Date June 30, 2023
Contribution Policy Pre-funded full ADC through CERBT asset allocation Strategy 1.

Discount Rate 6.25%
Expected Long-Term Rate of Return on
Investments
Same as discount rate. Plan assets projected to be sufficient to pay all benefits from trust.

General Inflation 2.50% per annum
Mortality, Retirement, Disability,
Termination CalPERS 2000-2019 experience study.

Mortality Improvement Mortality projected fully generational with Scale MP-2021.

Medical Trend Non-Medicare - 8.50% for 2025, decreasing to an ultimate rate of

3.45% in 2076 and later years.

Medicare (Non-Kaiser) - 7.50% for 2025, decreasing to an ultimate rate of 3.45% in 2076 and later years.

Medicare (Kaiser) - 6.25% for 2025, decreasing to an ultimate rate of

3.45% in 2076
The long-term expected rate of return on OPEB plan investments was determined using a building block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class 1
Target
Allocation
Long-Term
Expected Real
Rate of Return 2
Global Equity 49.00% 4.56%
Fixed Income 23.00% 1.56%
Treasury Inflation Protection Securities 5.00% -0.08%
Real Estate Investment Trusts 20.00% 4.06%
Commodities 3.00% 1.22%
Total 100.00%
1 An expected net rate of return of 6.25%
2 An expected inflation of 2.50%
-99-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
57 NOTE 13 – POSTEMPLOYMENT HEALTHCARE PLAN (Continued) Discount Rate – The discount rate used to measure the total OPEB liability was 6.25 percent. The projection of cash flows used to determine the discount rate assumed that Town contributions would be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Changes in the OPEB Liability – The changes in the net OPEB liability for the Health Care Plan are as follows:

Total OPEB
Liability
Plan
Fiduciary Net
Position
Net OPEB
Liability
Balance at June 30, 2023 $ 19,143,392 $ 9,233,584 $ 9,909,808 Changes recognized for year:

Service cost 256,635 256,635 -
Interest 1,170,327 1,170,327 -
Changes of benefit terms - - -
Difference between expected and actual experience (320,244) (320,244) - Changes of assumptions 1,611,041 1,611,041 -
Employer Contributions 1 1,353,646 - (1,353,646)
Net investment income 592,924 - (592,924)
Administrative expenses - - -
Benefit payments (1,349,598) (1,349,598) -
Administrative expenses (6,730) - 6,730
Net changes 1,368,161 590,242 777,919
Balance at June 30, 2024 $ 20,511,553 $ 9,823,826 $ 10,687,727 1 Includes $4,048 of administrative expenses paid outside of trust.

Increase (Decrease)
-100-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
58 NOTE 13 – POSTEMPLOYMENT HEALTHCARE PLAN (Continued) Sensitivity of the Net OPEB Liability to Changes in the Discount Rate and to Changes in the Health Care Cost Trend Rates – The following presents the net OPEB liability of the Town if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for year ended June 30, 2024:

Discount Rate - 1%
(5.25%)
Current Discount
Rate (6.25%)
Discount Rate + 1%
(7.25%)
$ 12,980,648 $ 10,687,727 $ 8,772,111
Plan's Net OPEB Liability
The following presents the net OPEB liability of the Town if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for the year ended June 30, 2024:

Trend Rate - 1%
Healthcare Cost
Trend Rates Trend Rate + 1%
$ 8,734,515 $ 10,687,727 $ 13,011,530
Plan's Net OPEB Liability
-101-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
59 NOTE 13 – POSTEMPLOYMENT HEALTHCARE PLAN (Continued) Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time.

Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense.

The recognition period differs depending on the source of the gain or loss:

Net difference between projected and actual earnings
on OPEB plan investments
All other amounts Expected average remaining service lifetime (EARSL) (5.6 Years at June 30, 2023)
5 years
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB – For the fiscal year ended June 30, 2024, the Town recognized OPEB expense of $663,860. As of fiscal year ended June 30, 2024, the Town reported deferred outflows of resources related to OPEB from the following sources:

Deferred Outflows of
Resources
Deferred Inflows of
Resources
OPEB contributions subsequent to measurement date $ 1,392,471 $ - Changes in assumptions 1,347,403 -
Net difference between projected and actual earnings 599,893 - Difference between expected and actual experience - (1,154,079) $ 3,339,767 $ (1,154,079)
The amount of $1,392,471 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the next fiscal year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:

Fiscal Year Ended
June 30:

Deferred
Outflows/(Inflows)
of Resources
2025 $ (111,818)
2026 (67,493)
2027 659,100
2028 240,366
2029 73,062
$ 793,217
-102-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
60 NOTE 14 – EMPLOYEE RETIREMENT SYSTEMS
The CalPERS Plan (Plan) consists of a miscellaneous pool and a safety pool (referred to as "risk pools"), which are comprised of individual employer miscellaneous and safety rate plans, respectively. The risk pools are included within the Public Employees’ Retirement Fund C (PERF C).

Plan Descriptions – All qualified permanent and probationary employees are eligible to participate in the Town's separate Safety (police) and Miscellaneous (all other) Employee Pension Plan, cost sharing multiple employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS).

Benefit provisions under the Plan are established by State statute and Town resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information can be found on the CalPERS website at: http://www.calpers.ca.gov.

Benefits Provided – CalPERS provides retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with full benefits for plans prior to January 1, 2013 and age 52 for Miscellaneous Plan and age 55 for Safety Plan on or after January 1, 2013. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Special Death Benefit, the 1959 Survivor Benefit (Level 4), or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

On January 1, 2013, the Public Employees’ Pension Reform Act of 2013 (PEPRA) took effect. In additional to creating new retirement formulas for newly hired members, PEPRA also effectively closed all existing active risk pools to new employees.
-103-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
61 NOTE 14 – EMPLOYEE RETIREMENT SYSTEMS (Continued)
The Plans’ provisions and benefits in effect on June 30, 2024, are as follows:

Prior to
January 1, 2013
On or after
January 1, 2013
Tier 1 / Tier 2 Plan
Formula 3% at 60 / 2% at 60 2% at 62
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Earliest retirement age 50 52
Required employee contribution rates 7.81% / 6.93% 8.25% Required employer contribution rates 18.24% / 10.87% 8.00% Required employer dollar UAL payment (annual) $1,159,122/ $0 $0 Prior to
January 1, 2013
On or after
January 1, 2013
Formula 3% at 50 2.7% at 57
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Earliest retirement age 50 50
Required employee contribution rates 8.99% 14.500%
Required employer contribution rates 29.1% 14.500%
Required employer dollar UAL payment (annual) $1,333,514 $0 Miscellaneous
Safety - Police
Contributions – Section 20814(c) of the California Public Employees’ Retirement law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The Town is required to contribute the difference between the actuarially determined rate and the contribution rates of employees.
-104-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
62 NOTE 14 – EMPLOYEE RETIREMENT SYSTEMS (Continued)
For the year ended June 30, 2024, the contributions to the Plan were as follows:

Miscellaneous Safety Total
Contributions - employer $ 2,095,158 $ 2,280,206 $ 4,375,364 Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2024, the Town’s reported net pension liabilities for its proportionate share of the pension liability of each Plan as follows:

Miscellaneous Safety Total
Net pension liability $ 17,997,467 $ 20,702,296 $ 38,699,763 The Town adopted and funded a Section 115 pension trust in fiscal year 2018-19 to help mitigate against the rising cost of pension contributions. On June 30, 2024 the Town’s Section 115 trust is reflected in the restricted cash balance of $5,855,697. See Note 3 for further discussion.

The Town’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of each Plan is measured as of June 30, 2023 and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2022 with a roll forward to calculate the beginning net pension liability. The Town’s proportion of the net pension liability was based on a projection of the Town’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The Town’s proportionate share of the net pension liability for each Plan as of June 30, 2024 is as follows:

Miscellaneous Safety Total
Proportion - June 30, 2023 0.36036% 0.27979% 0.64015%
Proportion - June 30, 2024 0.35992% 0.27696% 0.63688%
Change - Increase (decrease) -0.00044% -0.00283% -0.00327% -105-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
63 NOTE 14 – EMPLOYEE RETIREMENT SYSTEMS (Continued)
At the year ended June 30, 2024, the Town recognized pension expense of $6,342,612. On June 30, 2024, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Pension contributions subsequent to measurement date $ 2,095,158 $ - 2,280,206 $ $ - Changes in assumptions 1,086,588 - 1,208,214 -
Net difference between projected and actual earnings 2,913,952 - 2,833,104 - Change in proportion 24,538 (201,101) 621,892 (21,410)
Difference between expected and actual experiences 919,408 (142,622) 1,519,930 (130,122) Difference between actual and projected contribution 21,607 (310,164) 182,934 (677,697) $ 7,061,251 $ (653,887) $ 8,646,280 $ (829,229)
Miscellaneous Safety - Police
The amount of $4,375,364 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the next fiscal year.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ended June 30, Year Ended June 30,
2025 $ 1,185,826 2025 $ 1,840,972
2026 829,849 2026 1,290,908
2027 2,212,918 2027 2,325,887
2028 83,613 2028 79,077
$ 4,312,206 $ 5,536,844
Miscellaneous Safety - Police
-106-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
64 NOTE 14 – EMPLOYEE RETIREMENT SYSTEMS (Continued)
Actuarial Assumptions – The total pension liabilities in the June 30, 2022 actuarial valuations were determined using the following actuarial assumptions.

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

Discount Rate 6.90%
Inflation 2.30%
Payroll Growth 2.80%
Projected Salary Increase Varies by Entry Age and Service Investment Rate of Return 6.90% Net of Pension Plan Investment Expenses, includes Inflation Mortality Rate Table1 Derived using CalPERS membership data for all funds Post Retirement Benefit Increase Contract COLA up to 2.3% until Purchasing Power Protection Allowance2 Floor on Purchasing Power applies, 2.3% thereafter
2 Purchasing Power Protection Allowance (PPPA) is a benefit designed to restore the original purchasing power of CalPERS retirees to a predetermined limit. 1 The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing morality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2022 valuation was based on the results of a December 2017 actuarial experience study for the period of 1997 to 2015. Further details of the Experience Study are on the CalPERS website at: http://www.calpers.ca.gov.

Discount Rate – To determine whether the municipal bond rate should be used in the calculation of a discount rate for the plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing of the plans, the tests revealed the assets would not run out. Therefore, the current 6.9 percent discount rate is appropriate, and the use of the municipal bond rate calculation is not deemed necessary. The long-term expected discount rate of 6.9 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB 68 section.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimated ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. -107-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
65 NOTE 14 – EMPLOYEE RETIREMENT SYSTEMS (Continued)
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the shortterm (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

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

Asset Class
Strategic
Allocation
Real Return
Years [1] [2]
Global Equity - Cap-weighted 30.0% 4.54%
Global Equity - Non-Cap-weighted 12.0% 3.84%
Private Equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed Securities 5.0% 0.50%
Investment Grade Corporates 10.0% 1.56%
High Yield 5.0% 2.27%
Emerging Market Debt 5.0% 2.48%
Private Debt 5.0% 3.57%
Real Assets 15.0% 3.21%
Leverage -5.0% -0.59%
Total 100.0%
[1] An expected inflation of 2.30% used for this period. [2] Figures are based on the 2021-2022 Asset Liability Management study. -108-

TOWN OF HILLSBOROUGH

NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2024
66 NOTE 14 – EMPLOYEE RETIREMENT SYSTEMS (Continued)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of the Town for the Plan, calculated using the discount rate for the Plan, as well as what the Town’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Miscellaneous Safety
1% Decrease 5.90% 5.90%
Net Pension Liability $ 26,734,177 $ 30,177,127
Current Discount Rate 6.90% 6.90%
Net Pension Liability $ 17,997,466 $ 20,702,296
1% Increase 7.90% 7.90%
Net Pension Liability $ 10,806,403 $ 12,955,947
Pension Plan Fiduciary Net Position – Detailed information about the pension plans’ fiduciary net position is available in the separately issued CalPERS financial reports. -109-

REQUIRED SUPPLEMENTARY INFORMATION
-110-

TOWN OF HILLSBOROUGH

GENERAL FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN

FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
67 Variance with
Final Budget -
Original Final Positive
Budget Budget Actual (Negative)
REVENUES:

Property taxes $ 21,563,750 $ 21,563,750 $ 21,685,506 121,756$ Franchise taxes 863,974 863,974 900,682 36,708
Business license taxes 700,000 700,000 728,547 28,547
All others taxes 955,233 955,233 628,695 (326,538)
Permits 1,672,900 1,672,900 1,471,141 (201,759)
Intergovernmental 1,463,723 1,463,723 1,865,807 402,084 Service charges 1,368,247 1,368,247 1,116,657 (251,590) Fines and forfeitures 4,000 4,000 14,222 10,222
Investment earnings 100,000 100,000 2,113,319 2,013,319 Excess ERAF 2,900,000 2,900,000 3,233,269 333,269
Miscellaneous 445,426 445,426 1,223,016 777,590
Total Revenues 32,037,253 32,037,253 34,980,861 2,943,608 EXPENDITURES:

Current:

General government 1,894,742 1,894,742 1,965,593 (70,851) Public safety 22,285,036 22,285,036 22,757,764 (472,728) Community services 5,164,465 5,164,465 5,604,707 (440,242) Streets 3,294,159 3,294,159 3,105,714 188,445
Debt Service
Principal - 213,034 - (213,034)
Interest - 20,895 - (20,895)
Total Expenditures 32,638,402 32,638,402 33,667,707 (1,029,305) Excess (deficiency of revenues
over (under) expenditures) (601,149) (601,149) 1,313,154 1,914,303 OTHER FINANCING SOURCES (USES):

Transfers in 2,488,835 2,488,835 2,441,876 (46,959)
Transfers out (2,377,770) (2,377,770) (2,377,770) -
Total Other Financing Sources (Uses) 111,065 111,065 64,106 (46,959) Net change in fund balances (490,084) (490,084) 1,377,260 1,867,344 Fund balances - beginning 31,541,881 31,541,881 31,541,881 - Fund balances - ending $ 31,051,797 $ 31,051,797 $ 32,919,141 1,867,344$ -111-

TOWN OF HILLSBOROUGH

POLICE AND FIRE SPECIAL TAX FUND

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN

FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
68 Variance with
Final Budget -
Original Final Positive
Budget Budget Actual (Negative)
REVENUES:

Police and Fire Special Tax $ 2,246,910 $ 2,246,910 $ 2,247,481 $ 571 Total Revenues 2,246,910 2,246,910 2,247,481 571
EXPENDITURES:

Current:

Public Safety 8,075 8,075 9,217 (1,142)
Total Expenditures 8,075 8,075 9,217 (1,142)
Excess of Revenues Over Expenditures 2,238,835 2,238,835 2,238,264 (571) OTHER FINANCING USES:

Transfers Out (2,238,835) (2,238,835) (2,191,876) 46,959 Net change in fund balances - 46,388 - 46,388
Fund balances - beginning - - - -
Fund balances - ending $ - $ 46,388 - $ $ 46,388
-112-

TOWN OF HILLSBOROUGH

SCHEDULE OF PROPORTIONATE SHARE OF THE NET

PENSION LIABILITY
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
69 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Plan's proportion of the net pension liability 0.35992% 0.36036% 0.43967% 0.33844% 0.32820% 0.31889% 0.31113% 0.30336% 0.29385% 0.28185% $ 17,997,467 $ 16,862,194 $ 8,348,406 $ 14,275,476 $ 13,142,862 $ 12,017,999 $ 12,264,964 $ 10,538,348 8,061,622$ 6,965,900$ Plan's covered payroll $ 7,830,416 $ 6,943,540 $ 6,308,969 $ 5,976,685 $ 5,827,215 $ 5,757,169 $ 5,276,692 $ 4,997,179 4,883,273$ 5,328,728$ 229.84% 242.85% 132.33% 226.27% 219.90% 206.24% 213.04% 199.72% 161.32% 130.72% Plan's fiduciary net position
as a percentage of the plan's
total pension liability 77.48% 78.19% 90.49% 77.71% 77.73% 77.69% 75.39% 75.87% 79.89% 81.15% 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015*
Plan's proportion of the net pension liability 0.27696% 0.27979% 0.29015% 0.24710% 0.24027% 0.23573% 0.22838% 0.22878% 0.22146% 0.20805% $ 20,702,296 $ 19,226,235 $ 10,182,645 $ 16,462,675 $ 14,999,065 $ 13,831,502 $ 13,646,123 $ 1,848,792 9,125,242$ 7,803,992$ Plan's covered payroll $ 4,871,224 $ 4,067,727 $ 3,946,245 $ 3,617,868 $ 3,613,676 $ 3,375,853 $ 2,985,147 $ 2,893,042 3,036,912$ 5,328,728$ 424.99% 472.65% 258.03% 417.17% 414.58% 382.75% 404.23% 61.93% 315.42% 146.45% Plan's fiduciary net position
as a percentage of the plan's
total pension liability 77.97% 76.52% 86.61% 73.12% 73.37% 73.39% 71.74% 72.69% 77.27% 78.83% Notes to Schedule:

Significant changes in assumptions: The discount rate was changed from 7.65% to 7.15% in fiscal year 2017 and to 6.9% in 2023.

Plan's proportionate share of
the net pension liability
Net pension liability as a percentage
of covered payroll
Plan's proportionate share of
the net pension liability
Net pension liability as a percentage
of covered payroll
Miscellaneous
Safety
-113-

TOWN OF HILLSBOROUGH

SCHEDULE OF CONTRIBUTIONS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
70 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contributions 2,095,158$ 1,966,621$ 1,817,419$ 1,621,338$ 1,450,935$ 1,299,618$ 1,149,750$ 1,043,360$ 928,895$ 779,265$ Contributions in relation to the
actuarially determined contribution (2,095,158) (1,966,621) (1,817,419) (1,621,338) (1,450,935) (1,299,618) (1,149,750) (1,043,360) (928,895) (779,265) Contribution deficiency (excess) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Covered payroll 8,374,888$ 7,830,416$ 6,943,540$ 6,308,969$ 5,976,685$ 5,827,215$ 5,757,169$ 5,276,692$ 4,997,179$ 4,883,273$ Contributions as a percentage
of covered payroll 25.02% 25.12% 26.17% 25.70% 24.28% 22.30% 19.97% 19.77% 18.59% 15.96% 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contributions 2,280,206$ 2,175,615$ 2,031,035$ 1,861,252$ 1,635,957$ 1,429,239$ 1,262,347$ 1,114,629$ 964,025$ 825,461$ Contributions in relation to the
actuarially determined contribution (2,280,206) (2,175,615) (2,031,035) (1,861,252) (1,635,957) (1,429,239) (1,262,347) (1,114,629) (964,025) (825,461) Contribution deficiency (excess) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Covered payroll 5,010,632$ 4,871,224$ 4,067,727$ 3,946,245$ 3,617,868$ 3,613,676$ 3,375,853$ 2,985,147$ 2,893,042$ 3,036,912$ Contributions as a percentage
of covered payroll 45.51% 44.66% 49.93% 47.17% 45.22% 39.55% 37.39% 37.34% 33.32% 27.18% Miscellaneous
Safety
-114-

TOWN OF HILLSBOROUGH

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS FOR THE FISCAL YEAR ENDED JUNE 30, 2024
71 2024 2023 2022 2021 2020 2019 2018*
Changes in Total OPEB Liability
Service cost $ 256,635 $ 249,766 $ 308,513 $ 313,340 $ 325,000 $ 331,000 $ 321,000 Interest 1,170,327 1,165,560 1,391,869 1,364,096 1,382,000 1,339,000 1,298,000 Changes of benefit terms - - - - - - -
Difference between expected and actual experience (320,244) (2,384,685) - (350,000) - - - Changes of assumptions 1,611,041 107,550 - (490,000) - - - Benefit payments, including refunds of employee contributions (1,349,598) (1,342,273) (1,329,344) (1,193,000) (1,043,000) (1,030,000) (982,000) Changes of benefit terms - - - - - - -
Net changes 1,368,161 73,053 (1,906,097) 484,436 (176,000) 640,000 637,000 Total OPEB Liability (beginning) at June 30 19,143,392 19,070,339 20,976,436 20,492,000 20,668,000 20,028,000 19,391,000 Total OPEB Liability (ending) at June 30 $ 20,511,553 $ 19,143,392 $ 19,070,339 $ 20,976,436 $ 20,492,000 $ 20,668,000 $ 20,028,000 Changes in Plan Fiduciary Net Position
Contributions - employer $ 1,353,646 $ 1,345,253 $ 1,332,255 $ 1,368,000 $ 1,346,000 $ 1,351,000 $ 1,321,000 Contributions - employee - - - - - - -
Net investment income 592,924 (1,427,290) 2,299,995 281,614 445,000 506,000 576,000 Benefit payments, including refunds of employee contributions (1,349,598) (1,342,273) (1,329,344) (1,193,000) (1,043,000) (1,030,000) (982,000) Administrative expenses (6,730) (5,681) (6,077) (6,868) (4,000) (12,000) (5,000) Changes of assumptions - - - - - - -
Net changes 590,242 (1,429,991) 2,296,829 449,746 744,000 815,000 910,000 Total OPEB Fiduciary Net Position (beginning) at June 30 9,233,584 10,663,575 8,366,746 7,917,000 7,173,000 6,358,000 5,448,000 Total OPEB Fiduciary Net Position (ending) at June 30 $ 9,823,826 $ 9,233,584 $ 10,663,575 $ 8,366,746 $ 7,917,000 $ 7,173,000 $ 6,358,000 Net OPEB liability $ 10,687,727 $ 9,909,808 $ 8,406,764 $ 12,609,690 $ 12,575,000 $ 13,495,000 $ 13,670,000 Plan fiduciary net position as a percentage of the total OPEB liability 47.9% 48.2% 55.9% 39.9% 38.6% 34.7% 31.7% Covered employee payroll $ 12,733,620 $ 12,319,766 $ 11,709,815 $ 11,127,000 $ 11,065,894 $ 10,578,649 $ 10,232,831 Net OPEB Liability as a percentage of covered employee payroll 83.9% 80.4% 68.2% 107.7% 113.0% 122.0% 133.6% * Fiscal year 2018 was the first year of implementation of the OPEB standards. -115-

TOWN OF HILLSBOROUGH

SCHEDULE OF OPEB CONTRIBUTIONS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
72 2024 2023 2022 2021 2020 2019 2018*
Actuarially Determined Contribution (ADC) $ 1,011,000 $ 1,016,000 $ 1,319,000 $ 1,292,000 $ 1,366,000 $ 1,344,000 $ 1,351,000 Contributions in relation to the actuarially determined contribution (1,392,471) (1,353,646) (1,345,253) (1,332,255) (1,368,000) (1,346,000) (1,351,000) Contribution deficiency/(excess) $ (381,471) $ (337,646) $ (26,253) $ (40,255) $ (2,000) $ (2,000) $ - Covered employee payroll for the period ended June 30 $ 13,385,521 $ 12,733,620 $ 12,319,766 $ 11,709,815 $ 11,127,000 $ 11,065,894 $ 10,578,649 Contributions as a percentage of covered employee payroll 10.4% 10.6% 10.9% 11.4% 12.3% 12.2% 12.8% * Fiscal year 2018 was the first year of implementation of the OPEB standards. -116-

TOWN OF HILLSBOROUGH

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2024
73 Budgetary Information
The Town adopts annual budgets on a basis consistent with generally accepted accounting principles for all governmental funds except the capital projects funds, which adopt project-length budgets. All appropriations lapse at fiscal year-end. Encumbrances, which are commitments related to unperformed contracts for goods or services at year-end lapse and are automatically re-appropriated and re-encumbered in the subsequent fiscal year. There are no outstanding encumbrances in the governmental funds on June 30, 2024. Budgets are also adopted and controlled for the proprietary funds. Budget comparisons for these funds are not legally mandated and thus are not presented.

General Fund actual expenditures in Fiscal Year 2023-24 exceeded budget $1 million, primarily for Winterstorm Infrastructure repairs. The Police and Fire Special Tax Fund actual expenditures in Fiscal Year 2023-24 were in excess of the budget by $1,142. It is unusual for the Town to have expenditure exceeding budgeted amounts. These excess amounts were the result of the budget being an estimate for expenditures.

The City Manager submits a proposed operating budget to the city council for review prior to June 30. The Council holds public hearings, and a final budget is adopted on or before June 30.

The appropriated budget is prepared by fund, function, and department. The Town’s department heads may make transfers of appropriations within a department. The City Manager may transfer budgeted amounts within any fund.

The City Council must approve any revisions that alter the total expenditures of any fund. The fund level is the legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations). Budget amounts shown in these financial statements include all supplemental appropriations made during the year for the General and the Special Revenue funds.

Net Pension, Net OPEB Liability and Contributions to Pension and OPEB Plans CalPERS administer the Town’s pension liabilities cost sharing plans. The Town’s pension liabilities are calculated based on the Town’s proportionate share of the overall pension liabilities and related deferrals. The schedule of pension liability and the schedule of contributions show ten-year trend information, where available, about these amounts, and they are changing from one year to another.

The Town’s OPEB liability is administered as an agent multiple-employer plan, which is also administered by CalPERS. The schedule of changes in Net OPEB liability and the schedule of contributions show ten-year trend information, where available, about these amounts, which change from year to year. -117-

COMBINING STATEMENTS AND INDIVIDUAL FUND

SCHEDULES
-118-

TOWN OF HILLSBOROUGH

COMBINING STATEMENTS AND INDIVIDUAL

FUND SCHEDULES
JUNE 30, 2024
74 NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
The special revenue funds are used to account for specific revenues that are legally restricted or committed to expenditure for particular purposes.

Gas Tax Fund - This fund is used to account for receipts and disbursements of funds apportioned under Streets and Highway Code Sections 2103, 2105, 2106, 2107, 2107.5 and 2031 of the State of California and the Road Repair and Accountability Act of 2017 (RMRA) for the purpose of financing major street construction projects.

Measure "A" Fund - This fund is used to account for receipts and disbursements of a San Mateo County half-cent sales tax approved by the voters in June 1988 (Measure A) and again in November 2004 extending it for an additional 25 years, beginning January 2009, for the purpose of improving local transportation including streets and roads.

Measure "W" Fund - This fund is used to account for receipts and disbursements of a San Mateo County half-cent sales tax approved by the voters in November 2018 (Measure W) beginning July 2019 and goes for 30 years, for the purpose of improving local transportation including bicycle and pedestrian facilities, streets, and roads.

Police Grants Fund - This fund is used to account for activities funded by proceeds from various police grants and programs.
-119-

TOWN OF HILLSBOROUGH

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET
JUNE 30, 2024
75 Total
Nonmajor
Gas Police Governmental
Tax Measure A Measure W Grants Funds
ASSETS
Cash and investments -$ 423,639$ -$ 1,371,942$ $ 1,795,581 Accounts receivable 27,282 56,285 57,123 - 140,690
Total assets 27,282$ 479,924$ 57,123$ 1,371,942$ $ 1,936,271

FUND BALANCES
Restricted for streets projects 27,282$ 479,924$ 57,123$ -$ 564,329 $ Restricted for police projects - - - 1,371,942 1,371,942 Total fund balances 27,282$ 479,924$ 57,123$ 1,371,942$ $ 1,936,271 Special Revenue Funds
-120-

TOWN OF HILLSBOROUGH

NONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
76 Total
Nonmajor
Gas Police Governmental
Tax Measure A Measure W Grants Funds
REVENUES:

Intergovernmental 604,348$ 791,024$ 344,847$ $ 186,159 $ 1,926,378 Investment earnings 19,584 40,776 29,156 54,123 143,639 Total revenues 623,932 831,800 374,003 240,282 2,070,017 EXPENDITURES:

Current:

Streets 29,987 - - 29,987 -
Capital outlay - - - 109,375 109,375
Total expenditures 29,987 - - 109,375 139,362
Excess of revenues
over expenditures 593,945 831,800 374,003 130,907 1,930,655

OTHER FINANCING
SOURCES (USES):

Transfers Out (798,138) (1,001,654) (750,980) (2,550,772) - Net change in fund balances (204,193) (169,854) (376,977) 130,907 (620,117) Fund balances - beginning 231,475 649,778 434,100 1,241,035 2,556,388 Fund balances - ending 27,282$ 479,924$ 57,123$ $ 1,371,942 $ 1,936,271 Special Revenue Funds
-121-

TOWN OF HILLSBOROUGH

GAS TAX FUND

SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
77 Variance with
Final Budget -
Original Final Positive
Budget Budget Actual (Negative)
REVENUES:

Intergovernmental $ 613,537 $ 613,537 $ 604,348 $ (9,189) Investment earnings - 19,584 - 19,584
Total revenues 613,537 613,537 623,932 10,395
EXPENDITURES:

Current:

Streets 31,711 31,711 29,987 1,724
Total Expenditures 31,711 31,711 29,987 1,724
Excess of revenues over expenditures 581,826 581,826 593,945 12,119 OTHER FINANCING USES:

Transfers Out (781,223) (781,223) (798,138) (16,915)
Net change in fund balances (199,397) (199,397) (204,193) (4,796) Fund balances - beginning 231,475 231,475 231,475 -
Fund balances - ending $ 32,078 $ 32,078 $ 27,282 $ (4,796) -122-

TOWN OF HILLSBOROUGH
MEASURE "A" FUND

SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
78 Variance with
Final Budget -
Original Final Positive
Budget Budget Actual (Negative)
REVENUES:

Intergovernmental $ 668,299 $ 668,299 $ 791,024 $ 122,725 Investment earnings 3,670 3,670 40,776 37,106
Total revenues 671,969 671,969 831,800 159,831
EXPENDITURES:

Current:

Streets - - - -
Total Expenditures - - - -
Excess of revenues over expenditures 671,969 671,969 831,800 159,831 OTHER FINANCING USES:

Transfers Out (1,132,416) (1,132,416) (1,001,654) 130,762 Net change in fund balances (460,447) (460,447) (169,854) 290,593 Fund balances - beginning 649,778 649,778 649,778 -
Fund balances - ending $ 189,331 $ 189,331 $ 479,924 $ 290,593 -123-

TOWN OF HILLSBOROUGH
MEASURE "W" FUND

SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
79 Variance with
Final Budget -
Original Final Positive
Budget Budget Actual (Negative)
REVENUES:

Intergovernmental $ 297,022 $ 297,022 $ 344,847 $ 47,825 Investment earnings - 29,156 - 29,156
Total revenues 297,022 297,022 374,003 76,981
EXPENDITURES:

Current:

Streets - - - -
Total Expenditures - - - -
Excess of revenues over expenditures 297,022 297,022 374,003 76,981 OTHER FINANCING USES:

Transfers Out (652,786) (652,786) (750,980) (98,194)
Net change in fund balances (355,764) (355,764) (376,977) (21,213) Fund balances - beginning 434,100 434,100 434,100 -
Fund balances - ending $ 78,336 $ 78,336 $ 57,123 $ (21,213) -124-

TOWN OF HILLSBOROUGH

POLICE GRANTS FUND

SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
80 Variance with
Final Budget -
Original Final Positive
Budget Budget Actual (Negative)
REVENUES:

Intergovernmental $ 100,000 $ 100,000 $ 186,159 $ 86,159 Investment earnings 100 100 54,123 54,023
Total revenues 100,100 100,100 240,282 140,182
EXPENDITURES:

Current:

Public safety - - - -
Capital Outlay 100,000 100,000 109,375 (9,375)
Total Expenditures 100,000 100,000 109,375 (9,375)
Excess of revenues over expenditures 100 130,907 100 130,807 Net change in fund balances 100 130,907 100 130,807
Fund balances - beginning 1,241,035 1,241,035 1,241,035 - Fund balances - ending $ 1,241,135 $ 1,241,135 $ 1,371,942 $ 130,807 -125-

TOWN OF HILLSBOROUGH

CAPITAL ASSETS USED IN THE OPERATION OF

GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULES BY SOURCE (1)
JUNE 30, 2024
81 2024 2023
Governmental funds capital assets:

Land $ 1,456,560 $ 1,456,560
Land improvements 3,579,317 3,579,317
Building and improvements 5,875,919 5,799,962
Machinery and equipment 447,597 447,597
Infrastructure 15,247,443 15,247,443
Total governmental funds capital assets $ 26,606,836 $ 26,530,879 Investments in governmental funds capital assets by source:

General fund $ 829,273 $ 829,273
Special revenue fund 100,192 100,192
Capital projects funds 19,731,222 19,655,265
Other - unclassified 5,946,149 5,946,149
Total governmental funds capital assets $ 26,606,836 $ 26,530,879 assets reported in the internal service fund are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net position. (1) This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital -126-

TOWN OF HILLSBOROUGH

CAPITAL ASSETS USED IN THE OPERATION OF

GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY (1)
JUNE 30, 2024
82 Governmental Governmental
Funds Capital Funds Capital
Assets Assets
July 1, 2023 Additions Retirements June 30, 2024
General Government:

Council $ 13,046 -$ -$ 13,046 $
Finance 94,401 - - 94,401
General Services 6,061,942 110,691 104,888 6,067,745
Total General Government 6,169,389 110,691 104,888 6,175,192 Public Safety:

Police 802,880 - - 802,880
Fire 1,626,924 70,154 - 1,697,078
Total Public Safety 2,429,804 70,154 - 2,499,958
Community Services:

Building 169,532 - - 169,532
Total Community Services 169,532 - - 169,532
Public Work:

Streets and Improvements 17,762,154 - - 17,762,154
Total Public Work 17,762,154 - - 17,762,154
Total Governmental Funds
Capital Assets $ 26,530,879 180,845$ 104,888$ $ 26,606,836 (1) This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the internal service fund are excluded from the above amounts. Generally, the capital assets of the internal service fund are included as governmental activities in the statement of net position. -127-

TOWN OF HILLSBOROUGH

CAPITAL ASSETS USED IN THE OPERATION OF

GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY (1)
JUNE 30, 2024
83 Machinery
Land Buildings and and
Function and Activity Land Improvements Improvements Equipment Infrastructure Total General Government:

Council $ - $ - $ 6,155 $ 6,891 $ 13,046 - $
Finance - - 94,401 - 94,401 -
General Services 1,456,560 2,965,531 1,359,741 226,033 59,880 6,067,745 Total General Government 1,456,560 2,965,531 1,365,896 327,325 59,880 6,175,192 Public Safety:

Police 49,751 - 802,823 (49,693) 802,881 -
Fire 46,735 - 1,517,661 132,681 1,697,077 -
Total Public Safety 96,486 - 2,320,484 82,988 2,499,958 - Community Services:

Building (43,333) - 110,868 101,997 169,532 -
Total Community Services (43,333) - 110,868 101,997 169,532 - Public Work:

Streets and Improvements 560,633 - 2,078,671 (64,713) 15,187,563 17,762,154 Total Public Work 560,633 - 2,078,671 (64,713) 15,187,563 17,762,154 Total Governmental Funds
Capital Assets $ 1,456,560 $ 3,579,317 $ 5,875,919 $ 447,597 $ 15,247,443 $ 26,606,836 (1) This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the internal service fund are excluded from the above amounts. Generally, the capital assets of the internal service fund are included as governmental activities in the statement of net position. -128-
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-129-
84 STATISTICAL SECTION
This part of the Town’s Annual Comprehensive Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Town’s overall financial health.

Contents Page
Financial Trends 85
These schedules contain trend information to help the reader understand how the Town’s financial performance and well-being have changed over time.

Revenue Capacity 88
These schedules contain information to help the reader assess the Town’s most significant local revenue source, the property tax.

Debt Capacity 96
These schedules present information to help the reader assess the affordability the Town’s current levels of outstanding debt and the Town’s ability to issue additional debt in the future.

Demographic and Economic Information 101
This schedule offers demographic and economic indicators to help the reader understand the environment within which the Town’s financial activities taken place.

Operating Information 103
These schedules contain service and infrastructure data to help the reader understand how the information in the Town’s financial report relates to the services the Town provides and activities it performs.

Source: Unless otherwise noted, the information in these schedules is derived from the Annual Comprehensive Financial Reports for the relevant year.
-130-

TOWN OF HILLSBOROUGH
NET POSITION BY COMPONENT (accrual basis of accounting)

LAST TEN FISCAL YEARS
85 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Governmental activities:

Net investments in
capital assets $ 11,122,842 $ 11,452,814 $ 10,792,547 $ 10,665,462 $ 10,403,101 $ 10,005,668 $ 9,426,844 $ 9,506,356 $ 10,622,901 $ 10,347,727 Restricted 483,242 280,529 281,094 545,609 647,100 837,627 2,020,966 1,198,230 2,556,388 1,982,659 Unrestricted 7,688,366 10,699,690 12,377,163 1,585,599 5,967,436 7,437,812 7,194,656 9,330,033 13,918,318 13,286,495 Total governmental activities
net position 19,294,450 22,433,033 23,450,804 12,796,670 17,017,637 18,281,107 18,642,466 20,034,619 27,097,607 25,616,881 Business-type activities:

Net investment in capital asset 14,228,241 16,043,824 25,925,584 27,303,121 29,365,910 34,969,122 39,047,391 40,560,774 48,305,856 59,204,019 Restricted 750,000 1,265,000 1,131,835 1,131,835 1,181,801 1,181,801 1,181,801 1,181,801 431,801 431,801 Unrestricted 21,534,214 20,082,986 17,950,317 19,749,223 24,431,777 25,869,289 28,532,950 35,223,976 34,325,015 29,805,487 Total business-type activities
net position 36,512,455 37,391,810 45,007,736 48,184,179 54,979,488 62,020,212 68,762,142 76,966,551 83,062,672 89,441,307 Primary government:

Net investments in
capital assets 25,351,083 27,496,638 36,718,131 37,968,583 39,769,011 44,974,790 48,474,235 50,067,130 58,928,757 69,551,746 Restricted 1,233,242 1,545,529 1,412,929 1,677,444 3,898,199 2,019,428 3,202,767 2,380,031 2,988,189 2,414,460 Unrestricted 29,222,580 30,782,676 30,327,480 21,334,822 28,329,915 33,307,101 35,727,606 44,554,009 48,243,333 43,091,982 Total primary government
net position $ 55,806,905 $ 59,824,843 $ 68,458,540 $ 60,980,849 $ 71,997,125 $ 80,301,319 $ 87,404,608 $ 97,001,170 $ 110,160,279 $ 115,058,188 Governmental Activities Net Position: The decrease in FY 23/24 is primarily due to timing of street repaving capital projects, offset somewhat by an increase in property taxes. The restricted net position change is due to the timing of street and other capital improvement projects. With the biennial cycle, monies accumulate in one year and are drawn down in the next year. The decrease in FY 14/15 is primarily due to the implementation of GASB 68 - Pension and in FY 17/18 for GASB 75 – Other Post-Employment Benefits (OPEB), which decreases net position due to the net pension and OPEB liabilities being added into the Statement of Net Position.

Business-Type Activities Net Position: The increase in FY 23/24 is primarily due to user rate increase, and a transfer from the General Fund for storm drain capital projects, as well as timing of capital spending in the water and sewer enterprises.
-131-

TOWN OF HILLSBOROUGH
CHANGES IN NET POSITION (accrual basis of accounting)

LAST TEN FISCAL YEARS
86 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Expenses:

Governmental activities:

General government $ 1,440,949 $ 1,237,668 $ 1,101,642 $ 1,651,645 $ 1,772,674 $ 2,343,943 $ 2,273,947 $ 1,990,984 $ 1,727,443 $ 2,635,187 Public safety 13,415,141 13,934,621 16,183,032 16,711,271 17,525,119 19,341,808 20,058,933 20,223,279 18,685,885 23,879,234 Community services 2,583,821 2,668,325 2,740,114 2,447,628 2,753,950 3,126,283 3,863,894 3,934,667 3,723,761 5,968,725 Streets 2,390,733 4,253,687 2,609,530 5,086,027 4,081,758 4,341,759 5,065,221 6,290,672 3,518,522 8,788,267 Interest expense - - - - - - - 14,666 - 32,335
Total governmental activities expenses 19,830,644 22,094,301 22,634,318 25,896,571 26,133,501 29,153,793 31,261,995 32,439,602 27,670,277 41,303,748 Business-type activities:

Water 10,173,406 10,845,215 12,302,076 13,083,410 12,272,300 13,194,795 14,714,173 13,066,074 13,749,371 14,959,677 Sewer 8,535,762 10,122,581 8,932,190 10,704,394 9,611,847 10,523,977 11,359,129 10,649,566 12,517,293 13,024,026 Total business-type activities 18,709,168 20,967,796 21,234,266 23,787,804 21,884,147 23,718,772 26,073,302 23,715,640 26,266,664 27,983,703 Program Revenues:

Governmental activities:

Charges of services:

General government 716,896 705,961 741,268 772,233 818,055 805,114 831,057 550,956 554,318 497,493 Public safety 440,242 468,667 435,396 407,497 462,095 442,062 352,437 374,505 445,955 481,753 Community services 1,830,985 1,617,138 1,810,631 1,792,327 2,073,463 1,499,212 1,843,575 2,183,888 2,133,123 1,954,617 Streets 818,772 719,496 804,199 826,645 926,610 580,944 1,210,566 944,024 871,152 838,562 Operating grants and functional taxes 1,292,466 1,241,798 1,204,673 1,399,235 1,311,308 1,710,116 1,811,351 5,034,025 2,135,945 2,966,712 Total governmental activities
program revenues 5,099,361 4,753,060 4,996,167 5,197,937 5,591,531 5,037,448 6,048,986 9,087,398 6,140,493 6,739,137 Business-type activities:

Charges for services:

Water 11,650,371 12,290,648 13,692,123 14,702,348 14,468,790 15,792,826 16,405,140 14,693,894 13,428,299 15,266,249 Sewer 8,847,036 9,357,385 10,278,455 11,187,404 12,332,212 13,078,529 14,091,293 14,523,404 15,223,102 15,820,702 Capital grants, contributions and other
non-operating revenues 1,117,463 1,409,826 - - - - - - - - Total business-type program revenues 21,614,870 21,648,033 25,380,404 25,889,752 26,801,002 28,871,355 30,496,433 29,217,298 28,651,401 31,086,951 26,714,231 26,401,093 30,376,571 31,087,689 32,392,533 33,908,803 36,545,419 38,304,696 34,791,894 37,826,088 Net (Expense)/Revenue:

Governmental activities (14,731,283) (17,341,241) (17,638,151) (20,698,634) (20,541,970) (24,116,345) (25,213,009) (23,352,204) (21,529,784) (34,564,611) Business-type activities 2,905,702 680,237 4,146,138 2,101,948 4,916,855 5,152,583 4,423,131 5,501,658 2,384,737 3,103,248 Total primary government net revenues (11,825,581) (16,661,004) (13,492,013) (18,596,686) (15,625,115) (18,963,762) (20,789,878) (17,850,546) (19,145,047) (31,461,363) -132-

TOWN OF HILLSBOROUGH
CHANGES IN NET POSITION (accrual basis of accounting), Continued

LAST TEN FISCAL YEARS
87 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
General Revenues and Other
Changes in Net Position
Governmental activities:

Taxes:

Property tax $12,629,286 $ 13,783,039 $ 14,872,305 $ 15,785,068 $ 16,680,762 $ 17,413,680 $ 18,455,541 $ 19,324,411 $ 20,647,291 $ 21,685,506 Public safety taxes 2,240,792 2,242,334 2,242,686 2,243,038 2,243,876 2,244,228 2,246,340 2,247,128 2,246,910 2,247,481 Property transfer tax 371,174 345,986 380,016 380,986 380,950 316,893 623,797 621,578 404,621 334,558 Franchise tax 715,352 723,843 739,249 741,207 714,541 768,487 771,157 800,915 872,162 900,682 Sales tax 65,277 73,853 98,856 100,563 128,297 207,880 143,535 171,454 112,343 120,051 Motor vehicle license tax 1,016,527 1,108,302 1,188,946 1,261,095 1,330,092 1,343,173 839,339 1,396,460 1,818,496 1,666,666 Business license tax 658,006 633,949 664,654 683,726 675,464 519,581 935,893 854,351 785,666 728,547 ERAF Refund 2,144,753 1,432,614 1,470,846 1,693,630 2,209,536 2,300,581 2,381,601 3,153,308 2,900,861 3,233,269 HOPTR 66,635 66,261 65,236 63,293 61,428 59,611 58,841 58,508 56,837 54,974 All others 76,314 54,655 212,368 190,715 492,275 226,314 414,574 592,396 743,271 1,157,379 Unrestricted investment earnings 72,299 109,988 196,501 363,702 1,045,716 1,179,383 903,750 (1,674,854) 924,314 2,784,772 Miscellaneous 160,000 (3,346,214) (95,000) (2,229,769) (1,200,000) (1,200,000) (2,200,000) (2,801,295) (2,920,000) (1,830,000) Total governmental activities 20,216,415 20,479,824 18,785,449 21,277,254 24,762,937 25,379,811 25,574,368 24,744,360 28,592,772 33,083,885 Business-type activities:

Investment earnings 76,710 104,118 123,575 233,973 678,454 688,141 118,799 (98,549) 791,383 1,445,387 Miscellaneous (160,000) 3,346,214 95,000 2,229,769 1,200,000 1,200,000 2,200,000 2,801,295 2,920,000 1,830,000 Total business-type activities (83,290) 199,118 3,469,789 2,463,742 1,878,454 1,888,141 2,318,799 2,702,746 3,711,383 3,275,387 Total primary government 20,133,125 20,678,942 22,255,238 23,740,996 26,641,391 27,267,952 27,893,167 24,447,106 32,304,155 36,359,272 Change in Net Position
Governmental activities 5,485,132 3,138,583 1,147,298 578,620 4,220,967 1,263,466 361,359 1,392,157 7,062,988 (1,480,726) Business-type activities 2,822,412 879,355 7,615,927 4,565,690 6,795,309 7,040,724 6,741,930 8,204,404 6,096,120 6,378,635 Total primary government $ 8,307,544 $ 4,017,938 $ 8,763,225 $ 5,144,310 $ 11,016,276 $ 8,304,190 $ 7,103,289 $ 9,596,561 $ 13,159,108 $ 4,897,909 Governmental Activities: The Change in the Net Position of Governmental Activities in FY 23/24 is the result of higher expenses for the filling of open positions, increased required annual pension contributions, and one-time winter storm repairs to police building and other governmental facilities. These costs are somewhat offset by higher property tax, excess ERAF, and investment earnings. The property tax increase is driven by higher assessed valuations and the investment earnings increase is driven by improved market condtitions.

Business-Type Activities: The Change in Net Position of Business-Type Activities in FY 23/24 improved over the prior year, primarily attributable to timing of capital spending as well as an increase in investment earnings and an increase in water and sewer revenue driven primarily by user rate increases. -133-

TOWN OF HILLSBOROUGH
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE (accrual basis of accounting)

LAST TEN FISCAL YEARS
88 (1) (2) (3)
Fiscal
Year
Property
Tax
Police and Fire
Special Tax
Excess
ERAF
Vehicle
License Tax
Property
Transfer Tax
Franchise
Tax
Sales
Tax/In-Lieu
Business
License Tax
14/15 $ 12,629,286 $ 2,240,792 $ 2,144,753 $ 1,016,527 $ 371,174 $ 715,352 $ 65,277 $ 658,006 15/16 13,783,039 2,242,334 1,432,614 1,108,302 345,986 723,843 73,853 633,949 16/17 14,872,305 2,242,686 1,470,846 1,188,946 380,016 739,249 98,856 664,654 17/18 15,785,068 2,243,038 1,693,630 1,261,095 380,986 741,207 100,563 683,726 18/19 16,680,762 2,243,876 2,209,536 1,330,092 380,950 714,541 128,297 675,464 19/20 17,413,680 2,244,228 2,300,581 1,343,173 316,893 768,487 207,880 519,581 20/21 18,455,541 2,246,340 2,381,601 839,339 623,797 771,157 143,535 935,893 21/22 19,324,411 2,247,128 3,153,308 1,396,460 621,578 800,915 171,454 854,351 22/23 20,647,291 2,246,910 2,900,861 1,818,496 404,621 872,162 112,343 785,666 23/24 21,685,506 2,247,481 3,233,269 1,666,666 334,558 900,682 120,051 728,547 (1) The Police and Fire Special Tax was approved by the voters on June 1998 to replace the existing General Fund Tax and used solely to help maintain and enhance police protection, fire protection and prevention services. (2) Starting FY 03/04, property tax contributions to the Education Revenue Augmentation Fund (ERAF) in San Mateo County reached a level where such contributions were in excess of State mandated school funding. The excess contributions are returned to the County agencies and other taxing districts. (3) Vehicle license fee is backfilled by the State of California starting in 1998 when the State reduced the rate from 2% to .65%. -134-

TOWN OF HILLSBOROUGH
FUND BALANCES OF GOVERNMENTAL FUNDS (modified accrual basis of accounting)

LAST TEN FISCAL YEARS
89 Special Capital
Fiscal Non- Revenue Funds Projects Fund(1)
Year Spendable Restricted(2) Assigned(3) Unassigned Total Restricted Assigned Total 14/15 $ 5,864 -$ $ 16,246,015 - $ $ 12,075,834 ( $ 483,242 $ 4,029,620 $ 4,512,862 15/16 5,479 - 19,880,416 - 16,251,879 280,529 3,213,579 3,494,108 16/17 8,065 - 20,085,943 - 19,885,895 281,094 4,237,398 4,518,492 17/18 8,571 - 22,495,369 - 20,094,008 545,609 2,439,001 2,984,610 18/19 2,069,298 8,570 5,863,000 18,357,790 26,298,658 647,100 2,990,041 3,637,141 19/20 5,041,521 5,930 5,863,000 17,925,091 28,835,542 837,627 3,377,044 4,214,671 20/21 5,348,587 11,817 5,863,000 18,754,314 29,977,718 2,020,966 3,096,289 5,117,255 21/22 4,384,217 26,095 8,587,000 18,824,100 31,821,412 1,198,230 3,839,502 5,037,732 22/23 4,672,481 36,644 5,863,000 20,969,756 31,541,881 2,556,388 5,173,221 7,729,609 23/24 5,156,520 51,531 5,863,000 21,848,090 32,919,141 1,982,659 4,607,648 6,590,307 (1) Fluctuations in the Capital Projects Fund fund balance is timing of capital spending, primarily in street repaving program, which is on a biennial cycle. (3) The Assigned balance is held for capital projects, including storm drain, sewer and tree replacement. (2) The Restricted balance is held in a Section 115 pension trust for future pension obligations.

General Fund
-135-

TOWN OF HILLSBOROUGH
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS (modified accrual basis of accounting)

LAST TEN FISCAL YEARS
90 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 Revenues:

Taxes (3) $ 19,544,649 $ 19,381,521 $ 20,625,423 $ 21,761,555 $ 23,174,591 $ 23,912,273 $ 25,707,422 $ 27,338,357 $ 28,142,845 $ 29,424,180 Permits 1,293,814 1,296,528 1,382,578 1,433,876 1,626,587 1,154,983 1,890,169 1,760,441 1,638,930 1,522,474 Intergovernmental 2,307,932 2,308,153 2,331,557 2,730,058 2,707,593 3,126,785 2,709,566 6,411,744 3,962,838 4,654,018 Service charges 1,179,642 1,150,751 1,119,679 1,090,405 1,218,912 1,176,300 961,695 1,454,288 1,264,934 1,116,657 Fines and forfeitures 194,506 49,718 148,187 159,528 197,322 23,777 38,850 21,534 15,752 14,222 Other fees and charges (1) 510,121 - 641,144 630,260 642,978 395,277 854,306 666,826 778,976 763,848 Investment earnings 63,256 95,590 140,791 303,068 869,798 1,001,271 903,750 (1,683,071) 731,583 2,389,866 Miscellaneous 561,125 517,858 550,205 528,962 882,935 590,881 712,886 618,844 744,452 1,310,864 Total revenues 25,144,924 25,310,240 26,939,564 28,637,712 31,320,716 31,381,547 33,778,644 36,588,963 37,280,310 41,196,129 Expenditures:

Current:

General government 1,032,408 1,083,386 1,193,117 1,319,841 1,598,755 1,756,749 1,928,027 1,825,699 2,113,529 1,965,593 Public safety 13,682,047 14,684,875 15,689,634 16,195,735 16,990,728 17,808,901 18,795,622 19,918,895 21,299,326 22,766,981 Community services 2,561,612 2,672,549 2,719,138 2,729,304 3,086,589 3,425,185 3,836,232 3,902,093 4,086,103 5,604,707 Streets 2,292,809 3,896,794 2,392,966 5,255,841 3,435,091 3,876,263 4,485,333 6,065,777 3,296,897 8,376,116 Debt service
Principal - - - - - - - - 213,034 -
Interest - - - - - - - - 20,895 -
Capital outlay - - 522,941 - 637,304 200,015 488,670 311,029 816,110 180,845 Total expenditures 19,568,876 22,337,604 21,994,855 26,023,662 25,748,467 27,067,113 29,533,884 32,023,493 31,611,965 39,128,171 Excess of revenues over (under)
expenditures 5,576,048 2,972,636 4,944,709 2,614,050 5,572,249 4,314,414 4,244,760 4,565,470 5,668,345 2,067,958 Other Financing Sources (Uses):

Transfers in 3,253,766 3,435,093 3,279,368 3,363,402 4,270,579 4,342,785 3,515,248 5,752,124 3,718,456 5,290,418 Transfers out (2) (3,745,482) (3,792,469) (6,991,582) (5,101,402) (5,395,579) (5,542,785) (5,715,248) (8,553,419) (6,974,456) (7,120,418) Total Other Financing Sources (Uses) (491,716) (357,376) (3,712,214) (1,738,000) (1,125,000) (1,200,000) (2,200,000) (2,801,295) (3,256,000) (1,830,000) NET CHANGE IN FUND BALANCES $ 5,084,332 $ 2,615,260 $ 1,232,495 $ 876,050 $ 4,447,249 $ 3,114,414 $ 2,044,760 $ 1,764,175 $ 2,412,345 $ 237,958

NET CHANGE IN FUND BALANCES -
GENERAL FUND (3) $ 4,176,045 $ 3,634,015 $ 208,112 $ 2,409,932 $ 3,794,718 $ 2,536,884 $ 1,142,176 $ 1,843,694 $ (279,532) $ 1,377,260 DEBT SERVICE EXPENDITURES $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

RATIO OF DEBT SERVICE TO
NONCAPITAL EXPENDITURES 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% (1) Starting in FY 15/16, the fees and charges for the Capital Fund street related fees are broken out separately as Other Fees and Charges. In prior years, these amounts are included in Taxes. (2) Transfers generally are for capital improvement contributions. In FY 15/16, the transfer included new water automated meter readers. In FY 22/23, transfer included transfers for ARPA capital projects in the Water and Sewer Funds. (3) Net change in the General Fund Fund Balance in FY 23/24 is primarily due to lower capital transfers out. Total Governmental Fund Net excess before transfers increased primarily for increased property tax revenue and investment income, offset somewhat by timing of street related expenditures.
-136-

TOWN OF HILLSBOROUGH

PROPERTY TAX DOLLAR BREAKDOWN
FOR THE FISCAL YEAR ENDED JUNE 30, 2024
91 ATI (Annual Tax Increment) Ratios for Tax Rate Area 006-001, Excluding Redevelopment Factors & Additional Debt Service.

Data Source: San Mateo County Assessor 2023/24 Annual Tax Increment Tables.

This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren and Cone.
-137-

TOWN OF HILLSBOROUGH

NET TAXABLE ASSESSED VALUE HISTORY

LAST TEN FISCAL YEARS
92 Total Direct
Lien Year Secured Unsecured SBE Nonunitary Net Total AV % Change Tax Rate 2014/15 $ 7,833,939,940 $ 5,908,200 $ - $ 7,839,848,140 6.20% 0.15767 2015/16 8,460,687,856 8,612,367 - 8,469,300,223 8.03% 0.15782 2016/17 9,121,371,245 6,096,108 - 9,127,467,353 7.77% 0.15781 2017/18 9,673,123,078 5,220,467 - 9,678,343,545 6.04% 0.15779 2018/19 10,210,348,568 5,112,653 - 10,215,461,221 5.55% 0.15778 2019/20 10,757,039,454 5,454,728 - 10,762,494,182 5.35% 0.15777 2020/21 11,331,663,036 7,428,937 - 11,339,091,973 5.36% 0.15775 2021/22 11,821,444,062 8,820,787 - 11,830,264,849 4.33% 0.15774 2022/23 12,493,154,078 7,425,944 - 12,500,580,022 5.67% 0.15773 2023/24 13,271,737,393 7,111,378 - 13,278,848,771 6.23% 0.15772 This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone.

Data Source: San Mateo County Assessor 2014/15 - 2023/24 Combined. -138-

TOWN OF HILLSBOROUGH

DIRECT AND OVERLAPPING PROPERTY TAX RATES
(RATE PER $100 OF TAXABLE VALUE)
93 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 Agency
Basic Levy¹ 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 Burlingame Elementary 0.0744 0.0636 0.0568 0.0762 0.0706 0.0633 0.0658 0.0728 0.0503 0.0595 Hillsborough Elementary 0.0271 0.0264 0.0256 0.0276 0.0271 0.0292 0.0289 0.0297 0.0296 0.0583 San Mateo Community College 2005 Series B - - - - - 0.00 0.0037 - - - San Mateo Junior College 0.0190 0.0250 0.0247 0.0235 0.0175 0.0231 0.0176 - - - San Mateo Junior Comm College 0.0227 0.0193 0.0190
San Mateo Union High 0.0475 0.0466 0.0415 0.0433 0.0407 0.0385 0.0449 0.0488 0.0504 - Total Direct & Overlapping² Tax Rates 1.1680 1.1616 1.1486 1.1706 1.1559 1.1576 1.1609 1.1740 1.1496 1.1844 City's Share of 1% Levy Per Prop 13³ 0.1871 0.1871 0.1871 0.1871 0.1599 0.1599 0.1599 0.1599 0.1599 0.1598 Voter Approved City Debt Rate
Redevelopment Rate⁴
Total Direct Rate5 0.15736 0.15767 0.15782 0.15779 0.15778 0.15777 0.15775 0.15774 0.15773 0.15772 Last Ten Fiscal Years
Notes:
¹In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within.

In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. ²Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners. ³City's Share of 1% Levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the City. ERAF general fund tax shifts may not be included in tax ratio figures.
⁴Redevelopment Rate is based on the largest RDA tax rate area and only includes rate(s) from indebtedness adopted prior to 1989 per California State statute. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1 26 eliminated Redevelopment from the State of California for the fiscal year 2012/13 and years thereafter. ⁵Total Direct Rate is the weighted average of all individual direct rates applied by the City/Agency preparing the statistical section information and excludes revenues derived from aircraft.

Beginning in 2013/14 the Total Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas. Challenges to recognized enforceable obligations are assumed to have been resolved during 2012/13. For the purposes of this report, residual revenue is assumed to be distributed to the City/Agency in the same proportions as general fund revenue.

Data Source: San Mateo County Assessor 2014/15 - 2023/24 Tax Rate -139-

TOWN OF HILLSBOROUGH

PRINCIPAL PROPERTY TAXPAYERS
FISCAL YEAR 2023-24 COMPARED TO NINE YEARS PRIOR
94 Percentage of Percentage of
Taxable Total Taxable Taxable Total Taxable
Assessed Assessed Assessed Assessed
Taxpayer (Number of Parcels) Value Rank Value Value Rank Value ALPHA YIELD HOLDINGS LIMITED $ 35,566,861 1 0.27% $ 26,450,000 1 0.34% GATSBY 2 0 LLC 30,600,000 2 0.23%
2120 RAH LLC 28,626,862 3 0.22%
NICOLE R WEBB TRUST 27,127,011 4 0.20%
THEODORE H KRUTTSCHNITT 27,054,260 5 0.20% 22,961,182 2 0.29% 123 NEW PLACE LLC 26,634,853 6 0.20%
QUAM DELIGHT PROPERTIES LLC 26,338,128 7 0.20%
PETER SPIRO STAMOS TRUST 21,962,712 8 0.17% 13,500,000 6 0.17% GOENKA SANGINI TRUST 20,400,000 9 0.15%
899 SHARON AVENUE LLC 19,653,215 10 0.15%
AUGUST MOON 1971 LLC 19,003,682 3 0.24%
CHRISTOPHER R REDLICH JR TRUST 17,415,340 4 0.22%
GEORGE HSU TRUST 15,468,183 5 0.20%
JAMES ROBERT MEYERS TRUST 13,354,581 7 0.17%
WEI WU 13,270,000 8 0.17%
JINCHEN AN 13,059,020 9 0.17%
OTTO J MILLER 12,251,314 10 0.16%
$ 263,963,902 1.99% $ 166,733,302 2.13%
Source: San Mateo Tax Assessor's Office
2023-24 2014-15
-140-

TOWN OF HILLSBOROUGH
PROPERTY TAX LEVIES AND COLLECTIONS (1)

LAST TEN FISCAL YEARS
95 % of
Tax Levy (1)
ERAF Shift Net Levy Chg Amount % of Levy
14/15 14,530,754 $ $ 2,094,115 $ 12,436,639 7% 12,331,999 $ 99% 15/16 15,630,336 2,264,366 13,365,970 7% 13,385,540 100% 16/17 16,956,940 2,442,572 14,514,368 9% 14,445,762 100% 17/18 17,993,645 2,591,569 15,402,076 6% 15,378,546 100% 18/19 18,893,426 2,736,956 16,156,470 5% 16,197,533 100% 19/20 20,025,328 2,885,025 17,140,303 6% 17,121,136 100% 20/21 21,106,412 3,041,105 18,065,307 5% 17,966,303 99% 21/22 21,909,150 3,174,001 18,735,149 4% 18,810,659 100% 22/23 23,306,746 3,355,554 19,951,192 6% 20,002,608 100% 23/24 24,775,568 3,566,283 21,209,285 6% 21,199,718 100% (1) Includes Secured, Unsecured, HOPTR, and Unitary taxes. Secured taxes are paid under the TEETER PLAN, which requires full payment of the tax levy with no deductions for delinquencies. However, secured property tax collections may include adjustments and refunds processed throughout the year.

Unsecured, HOPTR, and Unitary taxes are based on actual collections and the tax levy is an estimate only.

Total Collections to Date (1)
Source: San Mateo County Assessor's Office and Town of Hillsborough Finance Department -141-

TOWN OF HILLSBOROUGH

RATIO OF OUTSTANDING DEBT BY TYPE

LAST TEN FISCAL YEARS
96 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 Governmental Activities
Subscription Liability $ - $ - $ - $ - $ - $ - $ - $ - $ 852,183 $ 639,149 Total Governmental Activities - - - - - - - - 852,183 639,149 Business Type Activities
Certificates of Participation 31,565,000 30,330,000 29,080,000 27,615,000 26,135,000 24,640,000 23,130,000 21,605,000 - - Funding Agreement- Wastewater Treatment Plant - - - - - - - 26,588,799 34,514,769 38,797,302 State Clean Water Loan - Direct Borrowing - 6,982,206 9,051,234 8,804,249 9,683,838 9,406,978 9,125,689 8,839,898 8,549,535 8,254,526 ECE-ARRA lona- Direct Borrowing 740,486 682,124 623,157 563,599 503,445 442,700 381,333 319,350 256,746 193,521 Refunding Bonds - - - - - - - - 19,250,000 17,510,000
Premiums - - - - - - - - 2,039,875 1,686,468
Total Business-Type Activities $ 32,305,486 $ 37,994,330 $ 38,754,391 $ 36,982,848 $ 36,322,283 $ 34,489,678 $ 32,637,022 $ 57,353,047 $ 64,610,925 $ 66,441,817 Property Assessment Roll (1) $ 7,839,848,140 $ 8,469,300,223 $ 9,127,467,353 $ 9,678,343,545 $ 10,215,461,221 $ 10,762,494,182 $ 11,339,091,973 $ 11,830,246,849 $ 12,500,580,022 $ 13,278,848,771 Percentage of Net Taxable Values of Property 0.41% 0.45% 0.42% 0.38% 0.36% 0.32% 0.29% 0.48% 0.52% 0.51% Percentage of Personal Income 2.5% 2.7% 2.8% 2.8% 2.6% 2.2% 2.0% 3.2% 3.6% 3.5% Population (2) 11,266 11,687 11,753 11,543 11,769 11,418 11,391 11,018 10,962 11,116 Debt Per Capita $ 2,868 $ 3,251 $ 3,297 $ 3,204 $ 3,086 $ 3,021 $ 2,865 $ 5,205 $ 5,972 $ 6,035 Source: Town Records
(1) Net Taxable Assessed Value can be found on Net Taxable Assessed Values page (2) Population can be found on Demographic and Economic Page -142-

TOWN OF HILLSBOROUGH

COMPUTATION OF DIRECT AND OVERLAPPING DEBT
97 2023-24 Assessed Valuation $13,278,878,771
Total Debt Applicable Town's Share of
6/30/2024 Percentage (1) Debt 6/30/2024
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:

San Mateo Community College District $ 682,237,216 4.314% $ 29,431,713 San Mateo Union High School District 703,110,767 12.791% 89,937,898 Hillsborough School District 98,867,884 99.872% 98,741,333 Burlingame School District 190,086,282 0.011% 20,909
Town of Hillsborough - 100.000% -
Total Direct and Overlapping Tax and Assessment Debt $ 218,131,853 OVERLAPPING GENERAL FUND DEBT:

San Mateo County General Fund Obligations $ 565,146,645 4.314% $ 24,380,426 San Mateo County Board of Education Certificates of Participation 5,735,000 4.314% 247,408 San Mateo Mosquito and Vector Contril District General Fund Obligations 3,404,654 4.314% 146,877 Town of Hillsborough 639,149 0.005% 639,149
Total Gross Overlapping General Fund Obligation Debt $ 25,413,860 TOTAL DIRECT DEBT $ 639,149
TOTAL OVERLAPPING DEBT $ 242,906,564
COMBINED TOTAL DEBT (2) $ 243,545,713
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

RATIOS TO ASSESSED VALUATION:

Direct Debt 0.00%
Total Direct and Overlapping Tax and Assessment Debt 1.64% Combined Total Debt 1.83%
Source: California Municipal Statistics, Inc.

Jurisdiction
(1) The percentage of overlapping debt applicable to the town is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the town divided by the district's total taxable assessed value.
-143-

TOWN OF HILLSBOROUGH

LEGAL DEBT MARGIN INFORMATION

LAST TEN FISCAL YEARS
98 Total
Net Debt Legal
Fiscal Assessed Debt Limit Applicable Debt
Year Value (2) 3.75% (1) to Limit Margin
14/15 $ 7,839,848,140 $ 293,994,305 $ 293,994,305 -
15/16 8,469,300,223 317,598,758 317,598,758 -
16/17 9,127,467,353 342,280,026 342,280,026 -
17/18 9,678,343,545 362,937,883 362,937,883 -
18/19 10,215,461,221 383,079,796 383,079,796 -
19/20 10,762,494,182 403,593,532 403,593,532 -
20/21 11,339,091,973 425,215,949 425,215,949 -
21/22 11,830,246,849 443,634,257 443,634,257 -
22/23 12,500,580,022 468,771,751 468,771,751 -
23/24 13,278,848,771 497,956,829 497,956,829 -
(1) Pursuant to California Government Code Section 43605 (15% of 25% of full cash value). (2) Net Taxable Assessed Values can be found in the Net Taxable Assessed Values history page.

Source: Town of Hillsborough Finance Department.
-144-

TOWN OF HILLSBOROUGH

SCHEDULE OF ENTERPRISE FUNDS DEBT COVERAGE

LAST TEN FISCAL YEARS
99 Net Revenues Interest and Total
Fiscal Available for Fiscal Debt
Year Revenues Expenses (1) Debt Service Principal(3) Charges Service Coverage 14/15 20,574,117 $ (2) $ 13,530,875 $ 7,043,242 1,282,802$ $ 1,330,150 2,612,952$ 2.70 15/16 21,853,129 (2) 14,294,305 7,558,824 1,293,362 1,399,018 2,692,380 2.81 16/17 24,094,147 (2) 15,854,082 8,240,065 1,308,966 1,297,414 2,606,380 3.16 17/18 26,123,725 18,257,869 7,865,856 1,771,543 1,288,616 3,060,159 2.57 18/19 27,479,456 16,673,966 10,805,490 1,830,308 1,210,879 3,041,187 3.55 19/20 29,559,496 17,881,478 11,678,018 1,832,606 1,131,802 2,964,408 3.94 20/21 30,615,232 19,852,024 10,763,208 1,852,656 1,152,449 3,005,105 3.58 21/22 29,118,749 17,565,676 11,553,073 1,872,608 1,059,140 2,931,748 3.94 22/23(3) 29,820,444 19,336,403 10,484,041 5,512,736 1,651,940 7,164,676 1.46 23/24(4) 32,164,909 20,247,163 11,917,746 2,913,297 1,911,950 4,825,247 2.47 (1) Total expenses excludes depreciation and interest.
(2) Expenses exclusive of capital contributions for a water treatment plant and other contracts. In Fiscal Years 14/15, 15/16, and 16/17, expenses excluded El Cerrito sewer project contributions.
(3) FY 22/23 includes debt service on SRF loan, ARRA loan, Certificates of Participation, and San Mateo Treatment plan loan. FY 22/23 is the first year of debt service on the San Mateo loan, and the principal includes one year of debt service plus a one-time principal payment of $2.4 million.
(4) 'FY 23/24 includes debt service on SRF loan, ARRA loan, San Mateo Treatment plan loan, and first year of debt service on the 2023 Revenue Refunding bonds. The Q1-Q3 payments for the Treatment plant were paid in FYE 6/30/24; Q4 is paid in FYE 6/30/25 due to timing of billing and payment.

Source: Town of Hillsborough's Finance Department.
-145-

TOWN OF HILLSBOROUGH

WATER AND SEWER RATES

LAST TEN FISCAL YEARS
100
Fiscal Year (1) 1st Tier % of Change Residential % of Change 14/15 $ 7.14 13% $ 2,173 7%
15/16 8.74 22% 2,325 7%
16/17 5.54 n/a 2,558 10%
17/18 5.98 8% 2,814 10%
18/19 5.98 0% 3,095 10%
19/20 5.98 0% 3,312 7%
20/21 5.98 0% 3,543 7%
21/22 6.16 3% 3,832 4%
22/23 6.16 0% 3,985 4%
23/24 6.77 10% 4,145 4%
Source: Town's Finance Department
(1) Rates shown are for bimonthly billing. Generally, Water rates are effective January and Sewer rates in July.

See the Town's budget document for the Master Fee Schedule that outlines all fees and charges Water Sewer
-146-

TOWN OF HILLSBOROUGH

DEMOGRAPHIC AND ECONOMIC STATISTICS

LAST TEN FISCAL YEARS
101
Calendar
Year Population
Personal
Income
(Thousands)
Per Capita
Personal Income
Unemployment
Rate
Median
Age
% of Pop 25+
with High
School Degree
% of Pop 25+
with Bachelor's
Degree
Note 1
2014 11,266$ 1,309,199$ $ 116,208 3.6% 46.6 96.1% 76.0% 2015 11,687 1,425,471 121,970 2.9% 46.3 96.8% 75.7%
2016 11,753 1,367,991 116,395 2.6% 47.8 97.6% 78.6%
2017 11,543 1,314,050 113,839 2.6% 47.2 97.5% 77.1%
2,018 11,769 1,390,438 118,144 2.3% 47.6 97.1% 75.7%
2019 11,418 1,593,255 139,538 2.1% 47.8 96.6% 77.2%
2020 11,391 1,612,232 141,535 5.6% 47.9 96.5% 78.9%
2021 11,018 1,798,989 163,277 4.0% 46.6 97.5% 81.1%
2022 10,962 1,810,334 165,146 2.3% 46.3 98.6% 83.1%
2023 11,116 1,896,909 170,646 2.9% 46.5 98.5% 82.6%
110,000
120,000
130,000
140,000
150,000
160,000
170,000
180,000
0 1
2 3
4 5
6 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Per Capita Pers Income Unemployment Rate
Per Capita Personal Income
Unemployment Rate
Personal Income and Unemployment
0 1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Less Than High School High School Graduate College Graduate Population
Education Level Attained for Population 25
and Over
The Department of Finance applies regional growth assumptions, yet the Town is nearly fully built out and does not grow at the same rate as the region.

The Town estimates that population is typically below the figure reported by the Department of Finance.

Notes and Data Sources:

Note 1: The above population figures as stated by the California State Department of Finance are typically higher than the actual results that are taken at census for the Town.

Projections are developed by incorporating all of the prior census data released to date. Demographic Data is totaled from Census Block Groups that overlap the City's boundaries 2010 and later - Income, Age and Education Data - US Census Bureau, most recent American Community Survey -147-

TOWN OF HILLSBOROUGH

COUNTY OF SAN MATEO AND NEIGHBORING CITIES

LARGEST EMPLOYERS ON THE PENINSULA
102
Name (1) Description Industry
1 Tower Place SSF South San Francisco Real Estate
Bart Station-Daly City Daly City Transit Lines
Box Inc Redwood City Prepackaged Software
Electric Charging Station Menlo Park Research Service
Electronic Arts Inc Redwood City Game Designers (mfrs)
Fisher Investments San Mateo Investment Management
Fisher Investments Woodside Investments
Forced Dump Debris Box Svc Burlingame Garbage Collection Franklin Resources Inc San Mateo Asset Management
Genentech Inc South San Francisco Biotechnology Products & Services Gilead Sciences Inc Foster City Biological Products (mfrs) Kaiser Permanente Redwood City Redwood City Hospitals
Meta Platforms Inc Menlo Park Social Media & Blogs
Mills-Peninsula Medical Ctr Burlingame Hospitals
Plateau Systems San Mateo Software/Application/Platform Publishing San Francisco Intl Airport-Sfo San Francisco Airports
San Mateo County Behavior San Mateo Government Offices-County San Mateo County Tax Collector Redwood City Tax Return Preparation & Filing San Mateo Medical Ctr San Mateo Hospitals
SRI International Menlo Park Engineers-Research
Visa Inc Foster City Credit Card & Other Credit Plans
Youtube LLC San Bruno Online Services
Sources: California Employment Development Department
(1) This list of major employers was extracted from the America's Labor Market Information System (ALMIS) Employer Database, 2024 2nd Edition -148-

TOWN OF HILLSBOROUGH

FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION

LAST TEN FISCAL YEARS
103
14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 Function
General Government:

City Manager 4 4 4 5 5 5 6 6 6 6
Finance 5 5 5 6 6 6 6 6 6 6
Community Services 8 8 8 8 8 8 9 9 10 12
Public Safety:

Police 32 34 35 36 36 37 37 37 38 38
Public Works:

Administration 9 10 11 11 11 11 11 11 12 12
Maintenance:

Streets 6 5 5 5 5 6 6 6 6 6
Water 8 9 9 9 9 8 8 8 8 8
Sewer 8 8 8 8 8 8 8 8 8 8
Total 80 83 85 88 88 89 91 91 94 96
Source: Town of Hillsborough's Finance Department.
-149-

TOWN OF HILLSBOROUGH

OPERATING INDICATORS BY FUNCTION

LAST TEN YEARS (WHEN AVAILABLE)
104
14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 Function:

Police
Total Incidents N/A N/A 26,888 35,145 34,477 29,772 31,530 29,339 31,232 29,676 Officer Initiated Incidents N/A N/A 18,048 25,871 22,752 18,835 21,101 20,532 22,770 22,356 Calls for Service N/A N/A 8,840 9,274 11,725 10,937 10,429 8,807 8,462 7,320 Average Response time (all calls) 6:09 5:35 5:15 6:10 5:32 6:23 6:09 5:54 6:40 7:11 Average Response time
(emergency calls) 3:40 3:26 2:31 3:01 2:49 3:11 2:45 2:12 4:05 2:44 Burglar Alarm Activations 2,586 2,500 2,608 2,253 2,281 2,118 1,648 1,608 1,639 1,710 Arrests:

Adult 36 45 62 93 146 69 61 59 55 41
Juvenile 11 3 4 7 1 2 - - - 1
Traffic Activity:

Fatal Injury Accidents - - - - - - - - -
Traffic Stops N/A N/A 875 1,826 2,291 1,630 898 1,284 858 931 Injury Accidents 8 14 7 8 7 11 7 10 7 13
Non-injury Accidents 50 36 43 52 56 27 27 40 48 33
Moving Citations 171 127 225 425 464 385 387 514 174 273 Courtesy Warning Citations 162 355 435 721 404 322 135 34 178 260 Criminal Activity:

Residential Burglary N/A N/A 34 20 35 24 33 39 48 28
Auto Theft N/A N/A 3 5 - 2 6 4 4 7
Attempted Murder N/A N/A - 2 - - - 1 - -
Murder N/A N/A - - - - - - - -
Assault with Deadly Weapon N/A N/A 4 2 - 2 4 2 1 1
Sexual Assault N/A N/A 2 3 4 1 3 3 - 1
Robbery N/A N/A 1 - 1 - 1 1 5 -
Domestic Violence N/A N/A 5 9 9 5 7 6 3 2
CPS Investigations N/A N/A 23 30 31 22 26 20 14 18
Planning - Design Review
New Houses Approved 23 25 20 13 27 6 15 12 12 11
Other Applications Approved 254 307 273 249 271 175 266 191 262 171 Building
# of Permits Issued 1,410 1,493 1,402 1,452 1,417 1,228 1,822 1,586 1,524 1,757 # of Projects 509 526 501 511 504 231 307 312 361 259
Valuation of Permits Issued (in 000's) $ 77,430 $ 72,217 $ 84,430 $ 78,012 $ 79,695 $ 54,639 $105,977 $ 94,101 $ 89,293 $ 79,121 Total New Dwellings 13 13 20 11 11 6 3 2 3 11
Streets
Street resurfacing (miles) - - 16 22 1 15 27 16 - 28
Potholes repaired 55 51 60 47 50 20 18 14 21 27
Guardrail replacement (LF) 50 45 100 40 50 - 75 150 158 12 Storm drains cleaned 1,150 1,250 1,350 1,425 1,400 164 88 278 256 1,173 After hour callbacks 21 47 46 31 50 13 4 13 54 25
Water
New connections 8 2 3 5 3 3 0 1 2 1
Water mains breaks 28 24 18 10 28 19 44 19 15 29
Water purchased (in thousand units) 1,226 1,050 1,139 1,214 1,125 1,281 1315 1,141 1,001 1,057 Retail water sales (in thousand units) 1,177 981 1,027 1,149 1,094 1,188 1268 1,109 951 993 Meter replacements 39 10 4,277 29 54 23 22 31 58 28
No of meter reads (calendar year) 28,424 40,277 51,208 n/a n/a n/a n/a n/a n/a n/a After hour callbacks 67 69 120 115 95 49 135 58 88 80
Wastewater
Average daily flow (sewer-MGD)
San Mateo 1 0 1 0 1 0 0.68 1 1 1
Burlingame 0 0 0 0 0 0 0.37 0 0 0
Total 1 1 1 1 1 1 1.05 1 1 1
After hour callbacks 37 29 27 22 54 30 16 31 24 15
Source: Various Departments - Town of Hillsborough
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TOWN OF HILLSBOROUGH

CAPITAL ASSETS STATISTICS BY FUNCTION

LAST TEN FISCAL YEARS (WHEN AVAILABLE)
105
14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 Function:

Public Safety
Police:

Stations 2 2 2 2 2 2 2 2 2 2
Patrol units 17 17 17 17 17 17 21 21 21 25
Patrol motorcycles 4 4 4 4 4 4 3 3 3 2
Fire:

Fire Stations (1) 2 2 2 2 2 2 2 2 2 2
Streets and Storm Drains
Streets (miles) 81 81 81 81 81 81 81 81 81 81
Storm drains (miles) 34 34 34 34 34 34 34 34 34 34
Water
Water mains (miles) 108 108 108 108 108 108 108 108 108 108 Fire Hydrants 1,010 1,010 1,020 1,020 1,020 1,020 1,020 1,020 1,021 1,021 Maximum daily capacity
(Million Gallons) 8,325 8,325 8,325 8,325 8,325 8,325 8,325 8,325 8,325 8,325 Sewer
Sanitary sewers (miles) 98 98 96 96 96 96 98 94 98 98
Source: Various Departments - Town of Hillsborough
Note: No capital asset indicators are available for the general government function. (1) Fire services are provided by Central County Fire Department Joint Powers Authority, between the Town of Hillsborough and the City of Burlingame. Fire services are provided by the JPA to the City of Millbrae on a contractual basis. Millbrae shares in 30% of the costs of Central County Fire Department operations. The Fire Stations included on this chart reflect the fire stations the Town owns that CCFD operates within the Hillsborough city limits.
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TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
4 CONSENT CALENDAR

CITY COUNCIL MEETING
DECEMBER 9, 2024

AGENDA STAFF REPORT
ITEM SUBJECT: RESOLUTION AMENDING THE FY 2024-25 BUDGET APPROPRIATING $363,608.00 FOR CONTRIBUTION TO THE CENTRAL COUNTY FIRE DEPARTMENT JOINT

POWERS AUTHORITY
SUMMARY: This agenda item is a proposed resolution to approve a FY 2024-25 budget amendment in the amount of $363,608.00 for a contribution to the Central County Fire Department Joint Powers Authority ("JPA"). The increase is for hiring additional firefighters to staff an additional fire station on Rollins Road and support an additional firefighter on Truck 34. The contribution is needed due to the timing of the costs and receipt of a federal grant. This payment paid in six equal installments (for the six months from January to June 2025) is offset in the last six months of the three-year grant cycle and will be credited to the cities (as an offset to annual contributions) at that time.

The Central County Fire Department Board, comprised of City Council members from the JPA cities of Burlingame and Hillsborough, adopted a resolution approving the budget amendment for the JPA, and the Town’s share is based on the JPA formula. The requested action with this staff report now amends the Town’s budget for the increase in the contribution paid to the Central County Fire Department. The staff report from the Central County Fire Department board agenda packet for the November 13, 2024, meeting is attached for reference. It provides more detail regarding the operational need and funding mechanism.

FISCAL IMPACT: The proposed resolution, if adopted, will increase the Town’s FY 2024-25 budget appropriation spending by $363,608.00 in the General Fund Expenditure Account Code 10017000 5034 “Contribution to Central County Fire Department.” The current year appropriation is timing-related and should be a credit back to the cities in the last year of the three-year grant cycle. In addition, the cost of the program will be largely covered by the grant, but there will be ongoing need for some contribution from the cities to cover any overages or non-labor related costs such as equipment for the new firefighters.

ATTACHMENTS:

1. Resolution

2. Staff Report from Central County Fire Department Board Meeting Agenda Packet - November 13, 2024
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Agenda Staff Report - Hillsborough City Council
December 9, 2024

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Hillsborough City CouncilDecember 9, 2024

Hillsborough City Council
December 9, 2024