Los Altos City Council
February 10, 2026

CITY COUNCIL MEETING
AGENDA
February 10, 2026 - 7:00 PM
In Person
PARTICIPATION: Members of the public are invited to participate by attending the meeting at the Los Altos Council Chamber, located at Los Altos City Hall, 1 N. San Antonio Rd, Los Altos, CA, during the meeting.

Public comments are accepted in person at the physical meeting location or via email to [email protected] or through the Public Comment forum on the city website: Public Comments Form.

RULES FOR CONDUCT: According to Los Altos Municipal Code, Section 2.05.010 "Interruptions and rules for conduct": Understanding that the purpose of the city council meetings is to conduct the people's business for the benefit of all the people, in the event that any meeting of the city council is willfully interrupted by a person or group of persons so as to render the orderly conduct of the meeting impossible, the mayor, mayor pro tem, or any other member of the city council acting as the chair may order the removal of the person or persons responsible for the disruption and bar them from further attendance at the council meeting, or otherwise proceed pursuant to Government Code Section 54957.0 or any applicable penal statute or city ordinance.

REMOTE MEETING OBSERVATION: Members of the public may view the meeting via the link below, but will not be permitted to provide public comment via Zoom or telephone. Public comments will be accepted in person, and members of the public may submit written comments by following the instructions below. https://losaltosca-gov.zoom.us/j/99430388413?pwd=BwrrHegQAVkvXugEaH6NhAd8u1vJoh.1 Telephone: 1-669-444-9171 / Webinar ID: 994 3038 8413 / Passcode: 277058 SUBMIT WRITTEN COMMENTS: Before the meeting, comments on matters listed on the agenda may be emailed to [email protected]. Emailed public comments sent directly to the City Council, either as a group or individually, will not be included in the agenda packet but may be disclosable as part of a public records request. Emails sent to [email protected] will be included in the appropriate agenda packet and are also disclosable as part of a public records request.

Please note: Personal information, such as e-mail addresses, telephone numbers, home addresses, and other contact information, is not required to be included with your comments. If this information is included in your written comments, it will become part of the public record. Redactions and/or edits will not be made to public comments, and the comments will be posted as submitted. Please do not include any information in your communication that you do not want to be made public.

Correspondence submitted in hard copy/paper format must be received by 2:00 p.m. on the day of the meeting to ensure distribution prior to the meeting. Hard copy/paper format comments presented during the meeting will be distributed to the City Council the following day. Members of the public may present a copy of their comments or attachments to the City Clerk for distribution to the City Council.

The Mayor will open public comment and will announce the length of time provided for comments during each item.

AGENDA

CALL MEETING TO ORDER

ESTABLISH QUORUM

PLEDGE OF ALLEGIANCE

REPORT ON CLOSED SESSION

CHANGES TO THE ORDER OF THE AGENDA

PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDA
Members of the audience may bring to the Council's attention any item that is not on the agenda. The Mayor will announce the time speakers will be granted before comments begin. Please be advised that, by law, the City Council is unable to discuss or take action on issues presented during the Public Comment Period.

According to State Law (also known as “The Brown Act”) items must first be noted on the agenda before any discussion or action.

CONSENT CALENDAR
These items will be considered by one motion unless any member of the Council or audience wishes to remove an item for discussion. Any item removed from the Consent Calendar for discussion will be handled at the discretion of the Mayor.

1. Approval of Meeting Minutes - Draft Regular Meeting of January 27, 2026

2. FY2025 Annual Comprehensive Financial Report (ACFR)
Accept the City’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2025, as presented by the City’s independent auditors.

3. Adoption of Resolution - Caretaker House Demolation Project Acceptance Adopt a resolution accepting completion of the Caretaker House Demolition Project (CF-01049); authorize the Park & Recreation Director to record a Notice of Completion as required by law; and find the project categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301(L) (demolition and removal of individual small structures), with none of the exceptions in CEQA Guidelines Section 15300.2 applicable.

DISCUSSION ITEMS

4. Adoption of Resolutions - Fiscal Year 2025/26 Mid-Year Budget Update

1. Adopt a Resolution approving FY2025/26 Mid-Year Financial Update and Budget Adjustments

2. Adopt a Resolution approving the updated FY2025/26 Pay Schedule

5. Discuss Number of Commissioners on Commissions
Provide direction on any adjustments to the Commissions of the City of Los Altos.

6. Review of City Council Norms and Procedures
Review the City Council Norms and Procedures and provide direction on modifications as needed

7. City Council Discussion - Vacancy
Discuss and provide direction on City Council vacancy

INFORMATIONAL ITEMS / COUNCIL Q&A
There will be no discussion or action on Informational Items. The Council Q&A will be included in the packet

the day of the meeting.

8. Receive Report - Update on Senate Bill 707
Receive report on Senate Bill (SB) 707

9. Update on Los Altos Chamber of Commerce Contract

10. Tentative Council Calendar and Housing Element Implementation Schedule

11. 02-10-2026 Council QA

COUNCIL/STAFF REPORTS AND DIRECTIONS ON FUTURE AGENDA ITEMS

ADJOURNMENT

SPECIAL NOTICES TO THE PUBLIC
According to the City Council Norms and Procedures: It will be customary to have a recess at approximately 9:00 p.m. Before the recess, the Mayor shall announce whether any items will be carried over to the next meeting. The established hour after which no new items will be started is 11:00 p.m. Remaining items, however, may be considered by consensus of the Council.

In compliance with the Americans with Disabilities Act, the City of Los Altos will make reasonable arrangements to ensure accessibility to this meeting. If you need special assistance to participate in this meeting, please get in touch with the City Clerk at least 72 hours before the meeting.

All public records relating to an open session item on this agenda, which are not exempt from disclosure according to the California Public Records Act, and that are distributed to a majority of the legislative body, will be available for public inspection at the same time that the public records are distributed or made available to the legislative body.

CITY OF LOS ALTOS

CITY COUNCIL MEETING MINUTES
TUESDAY, JANUARY 27, 2026
7:00 p.m.
1 N. San Antonio Rd. ~ Los Altos, CA
Sally Meadows,, Mayor
Larry Lang, Vice Mayor
Pete Dailey, Councilmember
Jonathan D. Weinberg, Councilmember
CALL MEETING TO ORDER – Sally Meadows, Mayor, called the meeting to order at 7:00 p.m.

ESTABLISH QUORUM – All Councilmembers were present.

PLEDGE OF ALLEGIANCE – Larry Lang, Vice Mayor, led the Pledge of Allegiance.

REPORT ON CLOSED SESSION
There was no reportable action to the Closed Session meeting held on January 27, 2026 at 5:30 p.m. The City Council adjourned the Closed Session meeting to continue the discussion immediately following the adjournment of the regular meeting on January 27, 2026.

CHANGES TO THE ORDER OF THE AGENDA
There were no changes to the order of the agenda.

PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDA
The following members of the public spoke during public comment:
• Yanhua Mao
• David Zhao
• Nancy Martin

CONSENT CALENDAR
The following members of the public spoke regarding items on the Consent Calendar:
• Thomas Chapman (Item 3)
• Andrea Wald (Item 4)
• Teresa Morris (Item 4)
• Maria Bautista (Item 4)
Motion by Lang and Second by Weinberg to approve the Consent Calendar. Motion carried unanimously by roll call vote.

1. Approval of Meeting Minutes
Approve the Draft Regular Meeting Minutes of January 13, 2026

2. Affirm 2026 City Council Assignments to Regional Boards and City Commissions

City of Los Altos
City Council Regular Meeting Minutes
January 27, 2026

Affirm 2026 City Council Mayoral Appointments to Local, Regional Boards and City Committees and Commissions Pursuant to the City Council Norms and Procedures

3. Adoption of Resolution - Weed Abatement Annual Property Identification Adopt a Resolution Declaring Weeds, Brush and/or Rubbish on Certain Described Properties to be a Public Nuisance and find that this action is exempt from environmental review pursuant to Section 15301(h) of the California Environmental Quality Act (CEQA) Guidelines

4. Adoption of Resolution - Playground Renovations at Grant Park and Shoup Park
Adopt a resolution to authorize the City Manager to enter into an agreement with PlayCore Wisconsin Inc. dba GameTime of Fort Payne, Alabama, to design, purchase, and install new playground equipment and safety surfacing at Grant Park in an amount not-to-exceed $444,098.99 and at Shoup Park in an amount not-to-exceed $536,845.04, with a contingency of up to 15% for each project (not-to-exceed $66,615 for Grant Park and $80,527 for Shoup Park), for a total combined project cost not-toexceed $1,128,086.03, to complete the playground renovations at Grant Park and Shoup Park

5. Adoption of Resolution - Grant Park Project Acceptance Adopt a resolution accepting completion of the Grant Park Building Mechanical and Electrical Renovations Project (CF-01034); authorize the Park & Recreation Director to record a Notice of Completion as required by law; and find the project categorically exempt under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301

PUBLIC HEARINGS

6. Adoption of Resolution - Vesting Tentative Map at 996 Loraine Avenue Adopt a Resolution approving a Vesting Tentative Map (Application No. TM22- 0005) for the creation of thirteen (13) condominium lots and one (1) common lot at 996 Loraine Avenue per the recommended findings and conditions of approval; and find the project is statutorily exempt from environmental review pursuant to Public Resources Code (PRC) Section 21080.66
Jonathan D. Weinberg, Councilmember, announced that his law firm currently represents the engineering firm for the item on a separate matter, but that he does not have a conflict of interest on the item, which he confirmed with the City Attorney.

Sean Gallegos, Senior Planner, presented the report.

Jeff Potts, Project Applicant Representative, provided a presentation to the City Council.

City of Los Altos
City Council Regular Meeting Minutes
January 27, 2026

Sally Meadows, Mayor, opened the Public Hearing.

There were no speakers during the Public Hearing.

Sally Meadows, Mayor, closed the Public Hearing.

Motion by Weinberg and Second by Lang to Adopt a Resolution approving a Vesting Tentative Map (Application No. TM22-0005) for the creation of thirteen (13) condominium lots and one (1) common lot at 996 Loraine Avenue per the recommended findings and conditions of approval; and find the project is statutorily exempt from environmental review pursuant to Public Resources Code (PRC) Section 21080.66. Motion carried unanimously by roll call vote.

7. Appeal of Development Project at 4898 El Camino Real Adopt a Resolution denying Appeal No. APPL25-0006 and upholding the Planning Commission’s approval of a Design Review and Conditional Use Permit with a State Density Bonus for an eight-story, 85-unit multifamily housing development at 4898 El Camino Real; and find the project is categorically exempt pursuant to Section 15332 of the California Environmental Quality Act (CEQA) Guidelines, and that none of the exceptions outlined in Section 15300.2 apply
Sean Gallegos, Senior Planner, presented the report.

Yanhua Mao and Anatol Shmelev, Appellant Representatives, provided a presentation to the City Council. The appellant, Guiting Ye, did not provide a statement.

Brian O’Niel, Navneet Aron, and Steven Abrams, Applicant Representatives, provided a presentation to the City Council.

Sally Meadows, Mayor, opened the Public Hearing.

The following members of the public spoke during the Public Hearing:
• Thomas Chapman • Walter
• Anna Shmelev • Jing Xin
• Alan Loh • Kate Farmer
• Han Ren • Dean Shetty
• Ethan • Puneet Garg
• Sarah • Martin Montalvo
• Vahid Far • Imtesham Chowdhury
Yanhua Mao and Anatol Shmelev, Appellant Representatives, provided a rebuttal statement to the City Council. The appellant, Guiting Ye, did not provide a statement.

City of Los Altos
City Council Regular Meeting Minutes
January 27, 2026

Brian O’Niel, Jeff Potts, and Navneet Aron, Applicant Representatives, provided a rebuttal statement to the City Council.

Sally Meadows, Mayor, closed the Public Hearing.

Motion by Meadows and Second by Weinberg to Adopt a Resolution denying Appeal No. APPL25-0006 and upholding the Planning Commission’s approval of a Design Review and Conditional Use Permit with a State Density Bonus for an eight-story, 85- unit multifamily housing development at 4898 El Camino Real; and find the project is categorically exempt pursuant to Section 15332 of the California Environmental Quality Act (CEQA) Guidelines, and that none of the exceptions outlined in Section 15300.2 apply. Motion carried unanimously by roll call vote.

The City Council took a recess at 9:20 p.m.

The City Council reconvened at 9:35 p.m.

8. Adoption of Resolution - Vesting Tentative Map at 4898 El Camino Real Adopt a Resolution approving a Vesting Tentative Map (Application No. TM25- 0001) for the creation of eighty-five (85) condominium lots and one common lot at 4898 El Camino Real per the recommended findings and conditions of approval; and find the project is categorically exempt from environmental review pursuant to Section 15332 (In-Fill Development Projects) of the California Environmental Quality Act (CEQA)
Jonathan D. Weinberg, Councilmember, announced that his law firm previously associated with the firm who created the map for the item on a separate matter, but that he does not have a conflict of interest on the item, which he confirmed with the City Attorney.

Sean Gallegos, Senior Planner, presented the report.

Pete Carlino, Project Applicant, addressed the City Council.

Sally Meadows, Mayor, opened the Public Hearing.

The following members of the public spoke during the Public Hearing:
• Yanhua Mao
• Han Ren
• John Mudge
• Jeff Potts
Sally Meadows, Mayor, closed the Public Hearing.

Motion by Weinberg and Second by Meadows to Adopt a Resolution Adopt a Resolution approving a Vesting Tentative Map (Application No. TM25-0001) for the

City of Los Altos
City Council Regular Meeting Minutes
January 27, 2026

creation of eighty-five (85) condominium lots and one common lot at 4898 El Camino Real per the recommended findings and conditions of approval; and find the project is categorically exempt from environmental review pursuant to Section 15332 (In-Fill Development Projects) of the California Environmental Quality Act (CEQA). Motion carried unanimously by roll call vote.

9. Appeal of the Removal of 81 Pepper Drive from the Los Altos Historic Resource Inventory
Adopt a Resolution of the City Council of the City of Los Altos denying Appeal No.

APPL25-0004 and upholding the decision of the Historical Commission approving the removal of the property located at 81 Pepper Drive from the Los Altos Historic Resource Inventory; and find the project is exempt from environmental review under the California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) Sally Meadows, Mayor, announced that although her home is near 81 Pepper Drive, she does not live in the vicinity which would require her to recuse herself from hearing or voting on the item.

Brittany Whitehill, Senior Planner, presented the report.

Sally Meadows, Mayor, opened the Public Hearing.

Jon Baer, Maria Bautista, and Thomas Chapman, Appellants, and April Halberstadt, Appellant Representative, provided a presentation to the City Council.

James Parivash, Project Applicant, addressed the City Council.

The following members of the public spoke during the Public Hearing:
• Alice Mansell
• Han Ren
Jon Baer, Maria Bautista, and Thomas Chapman, Appellants, provided a rebuttal statement to the City Council.

James Parivas, Project Applicant, provided a rebuttal statement to the City Council.

Sally Meadows, Mayor, closed the Public Hearing.

Motion by Lang and Second by Meadows to Adopt a Resolution of the City Council of the City of Los Altos denying Appeal No. APPL25-0004 and upholding the decision of the Historical Commission approving the removal of the property located at 81 Pepper Drive from the Los Altos Historic Resource Inventory; and find the project is exempt from environmental review under the California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3). Motion carried unanimously by roll call vote.

City of Los Altos
City Council Regular Meeting Minutes
January 27, 2026

DISCUSSION ITEM

10. City Council Discussion - Vacancy
Discuss and provide direction on City Council vacancy
Sally Meadows, Mayor, opened the item for discussion.

There were no speakers regarding the item.

The City Council continued to the item to the meeting of February 10, 2026 for further discussion.

INFORMATIONAL ITEMS / COUNCIL Q&A
There will be no discussion or action on Informational Items. The Council Q&A will be included in the packet the day of the meeting.

11. Tentative Council Calendar and Housing Element Update Implementation Calendar

COUNCIL/STAFF REPORTS AND DIRECTIONS ON FUTURE AGENDA ITEMS • Larry Lang, Vice Mayor – Requested a future agenda item:

Traffic flow downtown (Supported by Meadows and Weinberg) ADJOURNMENT – The regular meeting adjourned at 11:36 p.m. to the continued Closed Session meeting from January 27, 2026 at 5:30 p.m.

The meeting minutes were prepared by Melissa Thurman, City Clerk, for approval at the regular meeting on February 10, 2026.
_________________________________ __________________________________ Sally Meadows Melissa Thurman, MMC
Mayor City Clerk
The January 27, 2026, City Council meeting recording may be viewed via the following external website: https://www.youtube.com/@CityofLosAltosCA
The City of Los Altos does not own or operate YouTube. The video referenced in these minutes was live at the time the minutes were published.

City Council Staff Report
Meeting Date: February 10, 2026
Prepared By: Jessie Kim
Approved By: Gabe Engeland
Subject: FY2025 Annual Comprehensive Financial Report (ACFR)

COUNCIL PRIORITY AREA
General Government

RECOMMENDATION
Accept the City’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2025, as presented by the City’s independent auditors.

ENVIRONMENTAL IMPACT
Not Applicable

FISCAL IMPACT
None

PREVIOUS COUNCIL CONSIDERATION
None

BACKGROUND
The City contracted with Badawi & Associates, CPAs to conduct the independent audit for Fiscal Year 2024/25, marking the second year of their engagement with the City. The resulting Annual Comprehensive Financial Report (ACFR) was prepared in accordance with Generally Accepted Accounting Principles (GAAP) and the standards established by the Governmental Accounting Standards Board (GASB). The ACFR presents the City’s financial position and results of operations across all fund types, including governmental, proprietary (enterprise and internal service), and fiduciary funds, as required for comprehensive financial reporting under GASB standards.

On February 02, 2026, the Financial Commission received a presentation on the contents of the ACFR. The City received an unmodified (clean) audit opinion, which is the highest level of assurance issued by independent auditors under generally accepted auditing standards.

ANALYSIS

DISCUSSION
Financial Analysis and Outlook

1. Financial Stability and Reserves: In FY 2024/25, the City’s governmental fund revenues increased by $19.6 million, reaching $83.0 million. Expenditures increased by $11.7 million, totaling $64.0 million. The General Fund closed the year with a $16.0 million operating surplus before transfers. The City continues to maintain healthy reserves, including a 20% operating reserve, in accordance with City policy.

2. General Fund Revenue and Expenditures: General Fund revenue increased by approximately $7.2 million compared to the prior year. This growth was driven primarily by higher property tax collections, which rose by $1.8 million, along with increased charges for services and development-related activity. Charges for services increased by $2.3 million, reflecting strong permit and plan review activity, while revenue from licenses, permits, and fees grew by $2.2 million. On the expenditure side, General Fund spending increased by approximately $2.8 million, due primarily to higher personnel costs, increased contracted services, and other general operating expenses.

3. Outlook: The City ended FY2025 in a strong financial position, with continued growth in General Fund revenues and reserves. Property tax collections increased, investment income rebounded, and documentary transfer tax revenues rose compared to the prior year, reflecting ongoing strength in the local real estate market. Charges for services and development-related revenues also remained high due to activity from major projects. At the same time, the City is monitoring several fiscal pressures. Sales tax growth was modest, and cost increases related to personnel, contracted services, and inflation continue to affect operations. Long-term pension obligations and aging infrastructure remain key areas of focus in long-range financial planning. Looking ahead, the City will continue to apply conservative forecasting assumptions, maintain healthy reserves, and invest in priority capital projects that support core services and long-term resilience.

ATTACHMENTS

1. Attachment 1 - ACFR

ANNUAL COMPREHENSIVE

FINANCIAL REPORT
For Fiscal Year ended June 30, 2025

LOS ALTOS
City of

CITY OF LOS ALTOS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2025
Prepared by:

Finance Department

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City of Los Altos
For the Year Ended June 30, 2025
Table of Contents
Page
INTRODUCTORY SECTION:

Letter of Transmittal ....................................................................................................................................................................... i Organizational Chart ..................................................................................................................................................................... x List of Principal Officials .............................................................................................................................................................. xi GFOA Certificate of Achievement ............................................................................................................................................ xii FINANCIAL SECTION:

Independent Auditor’s Report ..................................................................................................................................................... 1 Management’s Discussion and Analysis .................................................................................................................................... 5

BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements:

Statement of Net Position ............................................................................................................................................. 35 Statement of Activities .................................................................................................................................................. 36 Governmental Fund Financial Statements:

Balance Sheet – Governmental Funds ......................................................................................................................... 43 Reconciliation of the Balances Sheet of Governmental Funds to the Statement of Net Position ........................................................................................................................... 44 Statement of Revenues Expenditures and Changes in Fund
Balances – Governmental Funds .......................................................................................................................... 45 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ...................................................... 46 Proprietary Fund Financial Statements:

Statement of Net Position – Proprietary Funds ........................................................................................................ 49 Statement of Revenues, Expenses and Changes in Fund
Net position – Proprietary Funds ......................................................................................................................... 50 Statement of Cash Flows – Proprietary Funds ........................................................................................................... 51 Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position ........................................................................................................................... 55 Statement of Changes in Fiduciary Net Position ....................................................................................................... 56 Notes to Financial Statements ............................................................................................................................................ 59

City of Los Altos
For the Year Ended June 30, 2025
Table of Contents
Page
FINANCIAL SECTION, Continued:

REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Proportionate Share of the Net Pension Liability – CalPERS Cost-Sharing Plan ................................. 102 Schedule of Plan Contributions – CalPERS Cost-Sharing Plan .................................................................................... 104 Schedule of Changes in the Net OPEB Liability and Related Ratios ........................................................................... 106 Schedule of OPEB Contributions ...................................................................................................................................... 108 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual:

General Fund ................................................................................................................................................................ 111 Park Impact Fee ............................................................................................................................................................ 112 Notes to the Required Supplementary Information ....................................................................................................... 113

SUPPLEMENTARY INFORMATION
Major Funds:

Schedule of Revenues, Expenditures and Change in Fund Balances – Budget and Actual Capital Projects Fund ........................................................................................................................................... 117 Non-Major Governmental Funds:

Description of Non-Major Funds ............................................................................................................................... 119 Combining Balance Sheet ........................................................................................................................................... 122 Combining Statement of Revenues, Expenditures and Changes in Fund Balance ............................................. 126 Statements of Revenues, Expenditures and Change in Fund Balances – Budget and Actual Vehicle Impound .................................................................................................................................................. 130 Supplemental Law Enforcement ........................................................................................................................ 131 Gas Tax ................................................................................................................................................................... 132 Proposition 1B ....................................................................................................................................................... 133 Storm Drain Deposits ........................................................................................................................................... 134 Downtown Parking .............................................................................................................................................. 135 Traffic Impact Fee ................................................................................................................................................. 136 Estate Donation ..................................................................................................................................................... 137 TDA ........................................................................................................................................................................ 138 PEG ......................................................................................................................................................................... 139 Vehicle Registration Fees ..................................................................................................................................... 140 SB1 Road Maintenance Rehabilitation ............................................................................................................... 141 Public Art ............................................................................................................................................................... 142 AB-1379 .................................................................................................................................................................. 143 Public Safety Impact Fees .................................................................................................................................... 144 General Government Impact Fees ...................................................................................................................... 145 Equipment Replacement ...................................................................................................................................... 146 Debt Service General ............................................................................................................................................ 147 Los Altos Community Center Lease Fund ........................................................................................................ 148

City of Los Altos
For the Year Ended June 30, 2025
Table of Contents
Page
FINANCIAL SECTION, Continued:

Internal Service Funds:

Combining Statement of Net Position ...................................................................................................................... 151 Combining Statement of Revenues, Expenses, and Changes in Net Position ..................................................... 152 Combining Statement of Cash Flows ........................................................................................................................ 153 Custodial Funds:

Combining Statement of Net Position ...................................................................................................................... 157 Combining Statement of Activities............................................................................................................................ 158 STATISTICAL SECTION:

Financial Trends:

Net Position by Component ...................................................................................................................................... 159 Changes in Net Position .............................................................................................................................................. 160 Fund Balances of Governmental Funds .................................................................................................................... 162 Changes in Fund Balances of Governmental Funds ............................................................................................... 164 Revenue Capacity Information:

Tax Revenue by Source – Governmental Funds ..................................................................................................... 166 Assessed Value of Taxable Property ......................................................................................................................... 167 Assessed Value of Property by Use Code ................................................................................................................ 168 Property Tax Dollar Breakdown ................................................................................................................................ 169 Property Tax Dollar by Recipient Group .................................................................................................................. 170 Principal Property Taxpayers ..................................................................................................................................... 171 Property Tax Levies and Collections ......................................................................................................................... 172 Debt Capacity Information:

Direct and Overlapping Tax Rates ............................................................................................................................ 173 Ratio of Outstanding Debt by Type .......................................................................................................................... 174 Schedule of Direct and Overlapping Bonded Debt ................................................................................................. 175 Legal Debt Margin Information ................................................................................................................................. 176 Demographic and Economic Information:

Demographic Statistics ................................................................................................................................................ 177 Principal Employers .................................................................................................................................................... 178 Operating Information:

Full-Time Equivalent City Employees by Function/Program .............................................................................. 179 Full-Time Equivalent City Employees ...................................................................................................................... 180 Operating Indicators by Function/Program ............................................................................................................ 181 Capital Asset Statistics by Function/Program ......................................................................................................... 182 Trust and Agency Debt Administration ................................................................................................................... 183

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One North San Antonio Road
Los Altos, California 94022
December 31, 2025
Honorable Mayor
and Members of the City Council
City of Los Altos, California
We are pleased to present the Annual Comprehensive Financial Report (ACFR) of the City of Los Altos, California (the City) for the fiscal year ended June 30, 2025. This document provides citizens, businesses, property owners, investors, and other interested parties with an overview of the City's finances. The information in this ACFR is prepared in accordance with Generally Accepted Accounting Principles (GAAP) and includes an unmodified opinion on the report issued by the City's independent certified public accountants. Although we rely on the standards and expertise of these external authorities, the responsibility for the accuracy and fairness of this report ultimately rests with the City. For readers interested in a more detailed review of the City's financial statements, the Management's Discussion and Analysis (MD&A) is also included in this document. The MD&A reports on the financial highlights of the City and provides additional analysis of the variances and trends reported as part of the financial statements. The MD&A also discloses significant items affecting the financial condition of the City and is designed to be read in conjunction with this Letter of Transmittal and can be found immediately following the report of the independent auditors.

PROFILE OF THE CITY AND ITS SERVICES
Tree-lined streets and a small village atmosphere characterize Los Altos, which is in the heart of the world-famous Silicon Valley. Just 40 miles south of San Francisco, Los Altos is a residential community with a population of approximately 30,000 served by seven small retail areas. The seven-square-mile residential city is developed with small businesses, schools, libraries, and churches. Incorporated on December 1, 1952, Los Altos is a general law city operating under the Council-Managerform of government. There are five Council members elected at large, serving i

four-year overlapping terms. Municipal services provided include police, street maintenance, engineering, community development, parks, recreation, and sewer. Fire protection is contracted with the Santa Clara County Central Fire Protection District.

City Structure
The City operates under the Council-Manager form of government, with five at-large Council Members elected to staggered four-year terms. The Mayor and Mayor Pro Tem are elected by the Council from their membership, and each serves a one-year term. The City Council serves as the legislative and policy-making body of City government and is responsible for enacting City ordinances, adopting resolutions, approving the annual budget, appointing commissions and committees, and hiring the City Manager and City Attorney.

The City Manager is responsible for implementing City Council policies, ordinances, and directives; overseeing day-to-day operations; and appointing the directors of the City's departments and all personnel. As of June 30, 2025, the City had a permanent staff of 153 and augmented this staff with temporary, limited duration, and seasonal employees to address needs such as summer recreation programs.

The City provides an array of services that include Public Safety/Police Services, Parks, Recreation & Community Services, Executive, Finance, Human Resources, Public Works, Environmental & Utilities Services, Development Services. Responsibilities in each service area include:
• Executive - includes The City Manager's Office, Economic Development, Emergency Preparedness, City Clerk's Office, City Attorney’s Office, Risk Management, Human Resources, Information Technology, and Public Relations. • Public Safety - includes all Police functions, comprised of Training, Communications, Patrol, Investigations, Community Policing, Animal Control, School Service Officers, and Traffic Enforcement. Fire Services are contracted to the County. • Finance - includes Finance, Budget, Treasury, and Accounting. • Parks, Recreation & Community Services - includes Parks, Facilities, Recreation Classes, Senior Services, Facility Rentals, Sports, and Camps.
• Development Services - includes Building Code Enforcement, Planning, Housing, Business License and Transportation Planning.
• Public Works / Engineering- includes managing the Capital Investment Program, Streets ii

Project, and Transportation Planning.
• Environmental & Utilities Services - includes Sewer, Storm Drain Operations, and Environmental Sustainability Program.

The City also oversees the enterprise funds associated with sewer and solid waste operations, along with several special revenue funds such as the Park Impact Fee Fund. Financial information for these operations is included in the ACFR. Library services are provided by the County. Fire services are contracted to the County, and water utilities are provided by a separate special district with its own governing body.

SERVICE EFFORTS AND MAJOR INITIATIVES
Service Efforts
In Fiscal Year 2025, the City continued its commitment to delivering high-quality municipal services while navigating rising operational costs, slowed development activity, and ongoing inflationary pressures. Despite these challenges, departments maintained core service levels and advanced Council priorities in public safety, mobility, infrastructure renewal, technology modernization, and organizational resiliency. Budget-to-actual results in this ACFR reflect a disciplined approach to financial management and responsible stewardship of public resources, with all major funds operating within acceptable parameters.

Major Initiatives
Capital Improvements: Fiscal Year 2025 marked significant progress across multiple capital programs, reflecting the City’s long-term investment in critical infrastructure, safety, and organizational modernization. Notable FY25 expenditures and project milestones include:
• $3,470,349 – New City Hall (formerly LAYC)
• $1,786,041 – Emergency Operations Center
• $1,147,149 – Annual Street Resurfacing
• $689,075 – Grant Park Facility
• $463,936 – New Financial System
• $463,563 – Police Department EV
Pedestrian Safety, Roads, and Walkways: Los Altos continued increasing investments in transportation safety projects. FY25 activities included installation of pedestrian beacons, refreshed striping, ADA curb ramps, crosswalk enhancements, alley rehabilitation, and roadway resurfacing across key corridors. FY25 also advanced traffic sign replacement and intersection visibility improvements, reinforcing the City’s commitment to safe multimodal iii

mobility.

Civic Facilities: Throughout Fiscal Year 2025, the City of Los Altos advanced several major facility initiatives aimed at improving operational efficiency, accessibility, and long-term resilience. FY25 marked a significant milestone with the completion of the new City Hall, providing modernized, efficient workspace for departments and improving service coordination across administrative functions.

Facility improvements also continued at Grant Park, where electrical, HVAC, and infrastructure upgrades enhanced comfort, energy efficiency, and long-term sustainability. In addition, the Emergency Operations Center (EOC) modernization progressed further in FY25, strengthening the City’s preparedness through upgraded technology, communication capabilities, and resilient building systems.

Collectively, these investments ensure that civic spaces remain safe, functional, and adaptable to the evolving needs of both staff and the community.

FINANCIAL CONTROLS AND PROCEDURES
Financial Policies: On an annual basis, the City Council adopts financial policies that promote sound fiscal management and long-term financial sustainability. During Fiscal Year 2025, the City continued to apply these policies to guide budget development, reserve planning, investment practices, and multiyear forecasting. This ACFR reflects the implementation of those policies and presents fund reserves, commitments, and designations in accordance with Governmental Accounting Standards Board (GASB) requirements as of the fiscal year end.

Internal Control Structure: City management is responsible for establishing and maintaining a system of internal controls that safeguards public assets, ensures accurate financial reporting, and supports compliance with generally accepted accounting principles. In FY25, the City strengthened internal controls further through updates associated with the implementation of the new financial system, including enhanced workflow approvals, improved segregation of duties, and expanded audit trails. The City’s internal control system is designed to provide reasonable, though not absolute, assurance that financial practices are sound and that the cost of controls does not exceed the benefits likely to be derived.

Cash Management Policies: The City continued to strategically manage its investment portfolio in FY25 by pooling available cash from all funds and adhering to the annually adopted investment policy prioritizing safety, liquidity, and yield. Investments remained diversified among the Local Agency Investment Fund (LAIF) and Public Trust Advisors (PTA). Persistently elevated interest rates in the early part of FY25 contributed to strong investment performance, while the City continued to emphasize preservation of capital and prudent risk management iv

consistent with best practices in municipal treasury operations.

Strengthening Key Fund Reserves: Maintaining robust fiscal reserves remains a foundational element of the City’s long-term financial strategy. In FY25, the City continued to meet its reserve targets, including sustaining the General Fund Operating Reserve at the 20% policy threshold.

Reserve planning efforts remained focused on addressing anticipated increases in CalPERS obligations, supporting capital and technology infrastructure needs, and preserving stability amid revenue fluctuations associated with economic conditions. These actions reinforce the City’s ability to maintain service levels and address unforeseen fiscal challenges.

Risk Management: The City participates in the Bay Cities Joint Powers Insurance Authority for its general liability and workers’ compensation coverage. For FY25, the City maintained liability coverage up to $10 million with a self-insured retention of $250,000 per claim, and workers’ compensation coverage up to the statutory limit with a $250,000 self-insured retention. The City continues to maintain adequate funding for its actuarially determined liabilities; however, rising claims costs and market pressures will require continued monitoring and long-term financial planning.

GASB 75 Compliance: The City continues to comply with GASB Statement No. 75 for reporting Other Post-Employment Benefits (OPEB). FY25 reporting reflects updated actuarial valuations and incorporates changes in demographic assumptions, benefit cost trends, and discount rate projections. These updates ensure transparent reporting of the City’s long-term OPEB obligations and their impact on government-wide financial statements.

EXECUTIVE FINANCIAL OVERVIEW
This executive financial overview supplements the more detailed analysis presented in the Management’s Discussion and Analysis (MD&A). The information below highlights key FY25 trends affecting the City’s major funds.

General Fund
The General Fund, the primary operating fund of the City, experienced strong financial performance in Fiscal Year 2025, ending the year with an operating surplus of $16.0 million before transfers. This positive result was driven by higher-than-expected revenues in property taxes, licenses and permits, charges for services, and investment income.

At year end, the total General Fund balance equaled $47.1 million, with an unassigned fund balance of $25.0 million after commitments and assignments. The unassigned fund balance represents 49.1% of General Fund expenditures, significantly above the City’s 20% reserve requirement and reinforcing the City’s strong financial position.

As planned during the budget process, a portion of the surplus was allocated to strengthen longv

term liabilities and internal service reserves. Non-operating and transfer activities totaled $7.1 million and were distributed as follows:
• $6,000,000 transfer to the PERS Reserve Fund
• $1,000,000 transfer to the Workers’ Compensation Fund • $98,000 transfer to the Equipment Replacement Fund
General Fund Key Revenue Streams performed above expectations in FY25. Property tax revenues totaled $36.0 million, an increase of $1.8 million or 5.2% over the prior year, reflecting continued growth in the City’s assessed valuation. Charges for services increased by $3.6 million, driven by significant building permit and plan review activity associated with a major development project. Licenses and permits increased by $2.2 million, reflecting elevated construction and entitlement activity. Interest earnings rose by $0.4 million, or 11.9%, as higherrate investments continued to support the portfolio’s performance.

General Fund expenditures totaled $50.8 million, an increase of $2.8 million, or 5.9%, compared to FY24. Public Safety and Public Works recorded the largest increases due to personnel costs, pension obligations, contract services, and expanded operational needs. Administrative and Community Development expenditures declined as several one-time FY24 projects and consulting engagements concluded.

Overall, the General Fund ended FY25 in a strong fiscal position, maintaining reserves well above policy targets and demonstrating structural stability driven by solid revenue growth, responsible cost management, and strategic investments in long-term financial resilience.

Other Funds
Special Revenue, Internal and Enterprise Funds: The outcomes of all other Governmental and Business-Type funds aligned with expectations for FY25 and reflect the City’s continued investment in long-term infrastructure, internal reserves, and utility operations. The Capital Projects Fund recorded $11.4 million in capital expenditures during the year, reflecting substantial progress on major projects including the New City Hall, Grant Park improvements, Emergency Operations Center upgrades, and citywide street rehabilitation. Due to the timing of revenues and expenditures, the Capital Projects Fund ended FY25 with a temporary fund balance of $(0.4) million, which will be replenished through a planned $12.1 million transfer in FY26.

The Park Impact Fee Fund experienced significant growth, concluding the year with a $19.4 million fund balance resulting from $12.2 million in park impact fee revenues associated with major development activity. Internal Service Funds closed FY25 with a combined net position of $10.4 million, an increase of $6.9 million, reflecting the City’s deliberate investment in workers’ compensation, liability insurance, and equipment replacement reserves. vi

Enterprise operations also remained stable. The Sewer Fund increased its net position to $30.6 million, supported by operating income and investment earnings, while the Solid Waste Fund ended the year with a $2.2 million net position, reflecting increases in contractual service costs that affected year-end results.

Fiduciary Funds: The City acts as a custodian of funds held for the benefit of others. The Blue Oak Lane Sewer Special Assessment District is classified within the custodial fund category due to the limited nature of this obligation, which is fully collateralized by homeowner assessments.

The City bears no financial liability for the district.

ECONOMIC TRENDS
Several factors influenced the City’s economic outlook during Fiscal Year 2025. General Fund revenues outperformed expectations, supported by steady property tax growth, higher development-related activity, and continued strength in investment earnings. At the same time, broader regional and national conditions influenced key revenue trends and contributed to a cautious outlook for the coming fiscal year.

The Federal Reserve maintained elevated interest rates throughout FY25, contributing to strong investment returns for the City but placing downward pressure on real estate activity. Higher mortgage rates continued to reduce the volume of home sales, leading to lower Documentary Transfer Tax revenues and moderating the long-term upward trend in assessed valuations. While Property Tax revenues remained stable and continued to increase, the rate of growth was slower than in prior years due to fewer property transfers.

The regional economy remained relatively strong. According to the U.S. Bureau of Labor Statistics, the San Jose–Sunnyvale–Santa Clara metropolitan area experienced low unemployment levels, reflecting ongoing strength in the technology and professional services sectors. However, consumer spending remained uneven across taxable sectors, contributing to soft Sales Tax performance in FY25.

While economic indicators do not currently point to a near-term slowdown, the City remains attentive to broader economic risks, including inflationary pressures, interest rate uncertainty, and continued volatility in development-related revenues. Property Tax remains the City’s most stable source of revenue, but Business License Tax, building permits, and utility-related revenues continue to be sensitive to regional economic conditions. These trends reinforce the importance of conservative revenue forecasting and maintaining strong fiscal reserves.

The FY26 budget continues the City’s proactive investment strategy by advancing long-term infrastructure priorities across public safety, transportation, parks and recreation, technology, vii

and civic facilities. Planned investments in FY26 include further upgrades to emergency response systems, ongoing modernization of City facilities, continued implementation of cybersecurity enhancements, and sustained commitment to roadway and pedestrian safety improvements.

These investments strengthen City operations, support community well-being, and bolster organizational resilience as the City navigates evolving economic conditions and future service demands.
viii

INDEPENDENT AUDIT
The public accounting firm of Badawi and Associates performed the annual independent audit.

The auditors’report on the City’s financial statements is included in the financial section of this report.

AWARDS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its ACFR for the fiscal year ended June 30, 2024. In the last 19 years, the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized ACFR. This report must satisfy both 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 ACFR 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.

ACKNOWLEDGEMENTS
The preparation of this report could not have been accomplished without the efficient and dedicated services of the Finance Division staff. Every member of the department deserves recognition and thanks for their commitment to the City and their profession. We also want to thank Badawi & Associates, our independent auditors, for their professionalism in performing this year-end financial audit, as well as the members of the Financial Commission for their dedication and expertise to help shape policies and procedures. We would also like to thank the members of the City Council, Jon Maginot and the Executive Team for their leadership and oversight in managing the financial operations of the City.

Respectfully submitted,
Gabriel Engeland (Dec 31, 2025 09:44:04 GMT+1) Jessie Kim (Dec 30, 2025 23:22:52 PST) Gabriel Engeland Jessie Kim
City Manager Finance Director
ix

City of Los Altos
x

City of Los Altos
List of Principal Officials
As of June 30, 2025

ELECTED OFFICIALS
Mayor..................................................................................Pete Dailey Vice Mayor ........................................................................ Neysa Fligor City Council........................................................................ Sally Meadows City Council........................................................................Larry Lang City Council........................................................................Jonathan D. Weinberg

APPOINTED OFFICIALS
City Manager...................................................................... Gabriel Engeland City Attorney......................................................................Jolie Houston

EXECUTIVE TEAM
Assistant City Manager..................................................... Nick Zornes Chief of Police..................................................................... Saskia Lagergren Finance Director.................................................................Jessie Kim Human Resources Director...............................................Irene Barragan Public Works Director....................................................... Aida Fairman Parks, Recreation & Community Services........................Manuel Hernandez Assistant City Manager.....................................................Jon Maginot xi

Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Los Altos
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2024
Executive Director/CEO
xii

INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of Los Altos
Los Altos, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Los Altos (City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise City’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

Responsibilities of Management for the Financial Statements The City’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 1

To the Honorable Mayor and Members of the City Council
of the City of Los Altos
Los Altos, California

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

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

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

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, required pension and OPEB information, and budgetary comparison schedules for the General Fund and the Park Impact Fee Fund, on pages 5-30 and 101–115 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. 2

To the Honorable Mayor and Members of the City Council
of the City of Los Altos
Los Altos, California

We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The budgetary comparison schedules for the Capital Projects Fund, the combining and individual statements and the budgetary comparison schedules for the nonmajor governmental funds are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The budgetary comparison schedules for the Capital Projects Fund and the Los Altos Community Center Lease Fund, the combining and individual statements, and the budgetary comparison schedules for the nonmajor governmental funds are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary comparison schedules for the Capital Projects Fund, the combining and individual statements and the budgetary comparison schedules for the nonmajor 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 comprehensive financial report. The other information comprises the introductory and statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
3

To the Honorable Mayor and Members of the City Council
of the City of Los Altos
Los Altos, California

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 26, 2025 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Badawi & Associates, CPAs
Emeryville, California
December 26, 2025
4

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
As management of the City of Los Altos (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ending June 30, 2025, in accordance with standards established by the Governmental Accounting Standards Board. We encourage readers to consider the information presented here, in conjunction with the additional information furnished in the Letter of Transmittal, which can be found in the preceding introductory section of this report, and with the City’s basic financial statements and accompanying notes to those financial statements.

USING THIS ANNUAL REPORT
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements, which are comprised of three components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Reporting on the City as a Whole
Government-wide Financial Statements: The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances in a manner similar to a private sector business.

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

The statement of activities presents how the City’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., uncollected taxes and earned but unused vacation leave).

The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities).

The governmental activities of the City include general government, public safety, maintenance, and public works services, planning, building, engineering, and recreation. The City’s business-type activities include sewer and solid waste.

The government-wide financial statements can be found on pages 35 to 37 of this report. 5

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Reporting on the City’s Most Significant Funds
Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The City’s funds can be divided into three categories: governmental funds; proprietary funds; and fiduciary funds.

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

In addition to the basic financial statements and accompanying notes, this report also presents certain required and other supplementary information, such as budgetary comparison information relating to the City’s General Fund and major special revenue funds. The report also contains a schedule of the City's proportionate shares in the Miscellaneous Pool and Safety Pool of a cost-sharing pension plan, and a schedule of the City's pension contributions to the plan. This information is intended to furnish additional details to support the basic financial statements.

Governmental Funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the governmentwide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year.

Such information may be useful in evaluating a government’s near-term financing requirements.

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

The City maintains 22 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Park Impact Fee Fund, and Capital Project Fund, each of which are major funds. Data from the other 19 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 the fund supplementary information section of this report.

The City adopts a budget annually for the General Fund, Special Revenue Funds, (except for the Storm Drain Deposits Fund), and Equipment Replacement Capital Projects Fund that is effective July 1 for the ensuing fiscal year. A budgetary comparison statement has been provided for several key governmental funds.

The basic governmental fund financial statements can be found on pages 43 to 46 of this report. 6

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Proprietary Funds: The City maintains two types of proprietary funds. Services for which the City charges customers a fee are generally reported in the City’s enterprise funds. These proprietary funds, like the government-wide statements, provide both long-term and short-term financial information. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its City dental plan and unemployment insurance, Workers’ Compensation and Liability Insurance costs, as well as CalPERS pension and retiree health payments. Because these services predominantly benefit the governmental function, they have been included in the government-wide financial statements and, accordingly, the related intra-fund charges have been eliminated.

Proprietary fund financial statements provide the same type of information as the government-wide financial statements, only in more detail. All five internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The City’s two enterprise funds (Sewer and Solid Waste) are classified as major funds and are presented as such in the fund financial statements. The City follows the practice of adopting annual budgets for these operations as well.

The combining statements referred to earlier in relation to non-major governmental funds, proprietary and internal service funds, are presented immediately following the required supplementary information section. Combining and individual fund statements and schedules can be found on pages 124 to 131 of this report.

Notes to the Basic Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. These can be found on pages 49 to 98 of this report.

Other Information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s budget-to-actual financial comparisons for the General Fund and major special revenue funds. 7

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
The City as Trustee
Fiduciary Fund: The City is the fiduciary for one special assessment district – Blue Oak Lane Sewer.

Fiduciary funds are used to account for resources held for the benefit of parties outside the government.

Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

In summary, the various sections of this financial report are arranged as follows:

FINANCIAL HIGHLIGHTS
Financial highlights for the year ending June 30, 2025, include the following:

The City ended its fiscal year on a government-wide basis with total revenues of $95.7 million, which was an increase of $20.2 million or 26.8% compared to the prior year, and total expenses of $68.4 million, an increase of $2.1 million or 3.1%. The results represent combined government and business operations, with an overall increase in net position of $27.4 million primarily due to an increase in property tax and Charges for services in Governmental Activities. Charges for services increased by $16.5 million, and Property tax increased by $1.8 million.

The increase in Government-wide expenses is primarily due to higher public safety and public works costs, which increased by $1.4 million and $2.9 million, respectively. 8

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
The General Fund reported an operating surplus of $16.0 million before transfers in/(out). During the year, the General Fund transferred $6.0 million to the PERS Reserve Fund to support long-term pension liability objectives and $1.5 million to the Workers’ Compensation and Liability Insurance Funds to provide for related program costs. General Fund revenues increased to $66.8 million, up $7.2 million from the prior year's $59.6 million. Expenditure increased to $50.8 million, up $2.8 million from the prior year's $48.0 million.

General Fund unassigned fund balance for the current year totaled $24.9 million, a decrease of $2.9 million or 10.4% when compared to prior year reported at $27.8 million. The unassigned fund balance represents

48.9% of General Fund expenditure. The City ended the fiscal year 2025 on a healthy reserve balance for general services.

Other Post-Employment Benefits (OPEB) liabilities decreased by $0.1 million to $0.6 million from the prior year. The change for the current year reflects the normal accrual of benefits earned during the year and the interest applied to the outstanding liability, both of which typically increase the obligation. These increases were offset by updated actuarial assumptions that reduced the estimated long-term liability. The actuarial changes included revisions to the discount rate, healthcare cost trends, and demographic projections. As a result of these combined factors, the City’s OPEB liability declined slightly for the year.

As of June 30, 2025, the City’s net pension liability decreased to $46.8 million from $47.5 million in the prior year, reflecting a reduction of $0.7 million. This modest improvement corresponds with CalPERS’ investment return of 9.3% for the fiscal year ending June 30, 2024, which exceeded the assumed rate of

6.8%. Under CalPERS’ actuarial asset smoothing policy, only a portion of that gain is recognized in the current year, with the remainder to be phased in over the following four years. As a result, the current year’s liability reduction reflects both the initial recognition of those gains and other contributing factors, including a slight decrease in the City’s proportionate share of the total plan liability and consistent employer contributions. The City also maintained a dedicated PERS Reserve to help manage future rate volatility.

Together, these elements supported a gradual improvement in the City’s long-term pension position.

In FY25, the City delivered several key capital improvements, including the City Hall Expansion, Street Resurfacing Program, Grant Park Facility Renovation, and implementation of the new Financial System.

Work continues on priority projects such as the Downtown Park Space with Parking Project, Hillview/McKenzie Dog Parks, Downtown Parking Lot Resurfacing, and Emergency Operations Center.

Additional investments in parks, drainage, and community spaces further support the City’s long-term infrastructure and service needs.

Government-Wide View
This section focuses on the net positions and changes in net positions of the City's governmental activities and business-type activities presented in the Government-wide Statement of Net Position and Statement of Activities. Changes in net position may serve over time as a beneficial indicator of the City’s financial position.
9

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
 City total assets increased by $27.1 million to $250.2 million, of which $212.8 million represented governmental assets and $37.5 million represented business-type assets.  City total liabilities decreased by $4.4 million to $68.0 million, of which $61.8 million were governmental liabilities and $6.2 million were business-type liabilities.  City total deferred outflows of resources related to its pension and OPEB obligations decreased by $4.6 million to $14.9 million, of which $13.1 million represented governmental deferred outflows and $1.8 million were business-type deferred outflows.
 City total deferred inflows of resources related to pension and OPEB decreased by $2.6 million to $2.4 million, of which $2.1 million represented governmental deferred inflows and $0.3 million were business-type deferred inflows.
 City net position increased by $29.4 million to $194.7 million, unrestricted net position increased by $6.9 million to $40.0 million from $33.1 million, of which $23.9 million represented governmental unrestricted net positions $16.1 million were business type.  Total government-wide revenues were $95.7 million, an increase of $19.7 million from the prior year's $76.0 million. The City’s governmental activities generated $83.1 million in revenue, while the business-type activities generated $12.6 million in revenue.  Total government-wide expenses were $68.4 million, an increase of $2.1 million from the prior year's $66.3 million. The City’s governmental activities reported $56.3 million in expenses, while the business-type activities reported $12.1 million in expenses.  As noted earlier, net positions may serve over time as a useful indicator of a government’s financial position. In the case of the City of Los Altos, total net positions of governmental activities amounted to $161.9 million as of June 30, 2025, and $133.3 million as of June 30, 2024. The net positions for governmental activities increased by $28.6 million when compared to prior year’s.

Of the total net positions of governmental activities, $109.7 was invested in capital assets as of June 30, 2025 and $102.2 million as of June 30, 2024.

Fund Level View
 Total governmental fund revenues increased $19.6 million to $83.0 million. Total governmental fund expenditure increased by $7.9 million from $53.0 million in the prior year to $64.0 million in the current year.
 The General Fund realized an operating surplus of $16.0 million before transfers. Revenues increased by $7.2 million compared to the prior year, largely driven by increases in property tax of $1.8 million, charges for services of $2.3 million, and licenses, permits and fees of $2.2 million. 10

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
 Total governmental fund balances equaled $75.5 million at fiscal year-end, an increase of $12.0 million from prior year’s fund balance of $63.5 million.  Park Impact Fee Fund ended the year with a fund balance of $19.4 million, supported by $12.2 million in revenues and $0.6 million in transfers out for eligible projects and debt service payments.  General government capital spending totaled $11.4 million in FY2025, reflecting the City’s ongoing investment in infrastructure and facilities. As of June 30, 2025, the Capital Projects Fund showed a temporary shortfall of $0.4 million, due to timing differences between expenditures and incoming revenues. The FY2026 Adopted Budget includes a $12.1 million transfer, which is projected to fully restore the fund balance.
 Other Non-Major Governmental Funds ended the FY2025 with a total combined fund balance of $9.5 million, an increase of $2.9 million from $6.5 million in fiscal year 2024.  Sewer operations ended the year with a net position of $30.6 million. Operating revenue increased by $0.4 million from $10.4 million in fiscal year 2024 to $10.8 million in fiscal year 2025.  Solid waste operations ended the year with a net position of $2.2 million. Operating expenses increased by $0.6 million, rising from $1.8 million in fiscal year 2024 to $2.4 million in fiscal year 2025, primarily due to higher costs in outside services and employee-related expenses.  Internal Service Funds ended the year with a total combined net position of $10.5 million in fiscal year 2025, an increase of $6.9 million from $3.6 million in fiscal year 2024.

GOVERNMENT-WIDE FINANCIAL ANALYSIS
This analysis focuses on the net position and changes in net position at the City-wide level as presented in the statement of net position and statement of activities which are summarized in the tables below as of June 30, 2025.

As noted earlier, the net position represents the difference between assets, the deferred outflow of resources and liabilities, and the deferred inflow of resources of the City's governmental activities and may over time serve as a useful indicator of the City’s financial position. The City’s governmental activities, assets, and deferred outflows exceeded liabilities and deferred inflows by $161.9 million on June 30, 2025. Table 1 summarizes the City’s governmental wide activities net position.

Restricted net position totaled $28.3 million in the current year, representing approximately 17.5% of the City’s total net position. This reflects an increase of $14.7 million, or 108.2%, compared to the prior year balance of $13.6 million. The growth is primarily attributable to increased revenues in the Park Impact Fee Fund, which is reported as a special revenue fund. As these funds are designated for park-related purposes, the associated balances are classified as restricted.
11

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Governmental Activities
Of the governmental activities total net position, $109.7 million, or 67.8%, reflects its net investment in capital assets (e.g., land, infrastructure, buildings, and equipment). The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.

The governmental activities total assets of $212.8 million represent a $27.1 million or a 12.1% increase, primarily driven by higher investment income and increased tax receipts.

Capital Assets (net) increased by $7.3 million or 5.7% compared to prior year, primarily due to increased capital project activities during the current year.
2025 2024 2025 2024
Cash and investments $ 92.2 $ 73.4 $ 19.9 $ 18.5
Other assets 2.9 3.4 0.8 0.7
Capital assets 117.7 110.7 16.7 16.4
Total assets 212.8 187.5 37.4 35.6
Deferred outflows of resources 13.1 17.9 1.8 1.6
Current liabilities 7.8 8.4 0.3 0.2
Non-current liabilities 54.0 59.2 5.9 4.5
Total liabilities 61.8 67.6 6.2 4.8
Deferred inflows of resources 2.1 4.5 0.3 0.5
Net Position
Net investment in capital assets 109.7 102.2 16.7 16.4
Restricted 28.3 13.6 0.0 0.0
Unrestricted 23.9 17.5 16.1 15.6
Total net position $ 161.9 $ 133.3 $ 32.8 $ 32.0
Governmental Wide Activities Statement of Net Position (In Millions) Governmental Activities Business- Type Activities
Table 1
12

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
The governmental activities, total liabilities of $61.8 million represent outstanding obligations for operations, capital projects, deposits held for development projects, long-term debt, and net pension liability. Total liabilities decreased by $4.4 million or 6.1%.

The governmental activities deferred outflows of resources and deferred inflows of resources are related to the pension and OPEB obligations. The total deferred outflows of resources decreased $4.6 million, and deferred inflows of resources decreased $2.6 million compared to the prior year.

The following charts summarize governmental activities programs and general City revenues available for funding all City programs and major expense program categories.

For the fiscal year ended June 30, 2025, total revenues from all sources relating to governmental activities excluding transfers were $83.1 million, and total expenses for all City programs relating to governmental activities were $56.2 million.
13

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Charges for Services,

30.4%
Operating
Grants, 1.2%
Capital
Grants, 1.5%
Property Tax, 43.5%
Sales & Use
Tax, 4.3%
Utility User
Tax, 4.5%
Other Taxes, 5.9%
Franchise Fee, 3.4%
Investment
Income, 4.0%
Other
items, 1.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%
Governmental Activities
Sources of Revenue
FY 2025
Public Safety, 43.6%
Public works, 20.6%
Recreation, 6.6%
Community
Development, 11.9%
Administration,

17.0%
Debt Service, 0.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%
Governmental Activities
Expenses by Function
FY 2025
14

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Table 2 shows that governmental activities expenses, which totaled $56.2 million, were higher than program revenues for governmental activities of $27.5 million. These program revenues included $25.3 million in charges for services, $1.0 million in operating grants and contributions, and $1.3 million in capital grants and contributions.

Revenues 2025 2024
Program revenues
Charges for service $ 25.3 $ 8.8
Operating contributions and grants 1.0 0.8
Capital grants 1.3 2.0
Total program revenues 27.5 11.6
General revenues
Taxes:

Property 36.2 34.4
Sales and use 3.6 3.5
Utility User 3.7 3.5
Other taxes 4.9 4.3
Franchise fees 2.8 2.6
Investment income 3.3 3.0
Other 1.1 1.2
Total general revenues 55.5 52.5
Total revenues 83.0 64.1
Expenses
Public Safety 24.5 23.1
Public works 11.6 8.7
Recreation 3.7 3.8
Community Development 6.6 7.4
Administration / Community Services 9.5 13.2
Interest on Long Term Debt 0.2 0.2
Total expenses 56.2 56.4
Excess (deficiency) before transfers 26.8 7.7
Transfers (Net) (7.5) 0.3
Change in net position - Governmental Activities 19.3 8.0 Net position - beginning of year, as previously presented 133.4 125.4 Restatements 1.7 -
Net position - beginning of year, as restated 135.1 -
Net Position - End of year $ 154.4 $ 133.4
(A) the 2024 columns do not include prior year restatements made in fiscal year 2025 (In Millions)
Change in Net Position - Governmental Activities
TABLE 2
15

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Governmental Activities Revenues
Charges for services include permits, plan check fees, building inspection fees, and other developmentrelated revenues, along with fees for recreational programs and activities. These revenues increased by $16.5 million, or 187.8%, compared to the prior year. The substantial increase was primarily due to permit and inspection revenues associated with a large one-time development project, which significantly boosted activity in the Community Development department during the fiscal year.

Operating grants and contributions encompass funds provided by developers and grants allocated by local, state, and federal governments. These funds are earmarked for specific grant obligations or designated for one-time expenditures. On the other hand, capital grants and contributions are specifically intended to finance capital investments. General revenues, detailed in Table 2 of the preceding section, are available to cover expenses not fully met by revenues generated from programs. In the current fiscal year, the City received $1.0 million in operating grants and $1.3 million in capital grants.

Governmental Activities Expenses
Public Safety expenses increased by $1.4 million, or 6.1%, from the prior year. The increase is primarily due to rising salary costs, higher liability insurance premiums, and increased payments to the Santa Clara County Central Fire Protection District under the City's fire protection and EMS contract.

Public Works expenses rose by $2.9 million, or 33.4%, compared to the prior year. This was largely driven by higher depreciation associated with infrastructure assets and increased costs tied to maintenance and restricted fund project activity.

Community Development expenses decreased by $0.8 million, or 10.7%, primarily due to the winding down of one-time professional service contracts following the completion of development-related initiatives in the prior year.

Recreation expenses decreased by $0.1 million, or 2.6%, which reflects cost savings from staffing shifts and operational efficiencies despite expanded programming.

Administration and Community Services expenses declined by $3.7 million, or 27.9%, compared to FY2024. The reduction was driven by lower litigation costs, the phasing out of interim staffing contracts, and a decrease in professional service fees related to the City’s financial system transition. 16

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
2025 2024 2025 2024
Public Safety $ 0.8 $ 0.9 $ (23.7) $ (22.2)
Public works 1.7 2.6 (9.9) (6.1)
Recreation 1.5 1.5 (2.3) (2.3)
Community Development 22.9 6.3 16.3 (1.1)
Administration / Community Services 0.6 0.3 (8.9) (12.9) Interest on Long Term Debt (0.2) (0.2)
Totals $ 27.5 $ 11.6 $ (28.7) $ (44.7)
Program Revenues Net (Expense) Revenue
Table 3
Governmental Activities
Program Revenues and Net (Expense) Revenue From Services (In Millions)
17

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Business-Type Activities
As shown in Table 4 below, the net position of the City’s business-type activities was $32.8 million on June 30, 2025. Assets totaling $37.4 million included a total of $19.9 million in cash and investments, $0.8 in receivables and other assets, and $16.7 million in capital assets. Liabilities totaled $6.2 million including $0.3 million in current liabilities and $5.9 million in non-current liabilities such as compensated absences and other liabilities.

Table 5 shows that Business type activities expenses, which totaled $10.0 million, were augmented by revenues of $11.9 million. These revenues included $11.3 million in charges for services and $0.6 million in interest earnings, and others, thus adding $1.2 million to the net position at the end of the year. 2025 2024
Cash and investments $ 19.9 $ 18.5
Other assets 0.8 0.7
Capital assets 16.7 16.4
Total assets 37.4 35.6
Deferred outflows of resources 1.8 1.6
Current liabilities 0.3 0.2
Non-current liabilities 5.9 4.5
Total liabilities 6.2 4.8
Deferred inflows of resources 0.3 0.5
Net Position
Net investment in capital assets 16.7 16.4
Restricted 0.0 0.0
Unrestricted 16.1 15.6
Total net position $ 32.8 $ 32.0
Table 4
Business - Type Activities Statement of Net Position
(In Millions)
18

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
The Joint Sewer System Authority (JSSA) formed in 1968 by a joint exercise of powers among the Cities of Palo Alto, Mountain View, Los Altos Hills, and Los Altos, constructed, maintains, and operates sewage treatment facilities serving its member cities. The City of Palo Alto acts as administrator for JSSA and bills each member its share of the operating costs. Los Altos is obligated through the year 2025 under an operating agreement with the City of Palo Alto for the water treatment plant and sewer services. Payments under this agreement are based on expected usage and are adjusted annually based on actual use and site operating costs.
2025 2024
Revenues
Program revenues
Charges for services $ 11.9 $ 11.3
Total program revenues 11.9 11.3
General revenues
Investment income and other 0.8 0.6
Total revenues 12.6 11.9
Expenses
Outside Services 7.2 5.9
Employee services 4.5 3.7
Depreciation 0.4 0.4
Total expenses 12.1 10.0
Excess (deficiency) before transfers 0.5 1.9
Transfers 0.0 (0.7)

0.5 1.2
Change in net position - Business-type Activities
Net position - beginning of year, as previously presented 32.0 30.8 Restatements 0.2 -
Net position - beginning of year, as restated 32.2 -
Net Position - End of year $ 32.7 $ 32.0
(A) The 2024 columns do not include prior year restatements made in fiscal year 2025 Table 5
Change in Net Position - Business-type Activities
(In Millions)
19

City of Los Altos
Management’s Discussion and Analysis
For the year ended June 30, 2025

FUND FINANCIAL STATEMENTS AND FINANCIAL ANALYSIS
These statements provide more detailed information about the City’s major funds. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

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

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

The City has several governmental funds, of which three are considered major funds for presentation purposes. Each major fund is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance. The City’s three major funds are - the General Fund, the Park Impact Fee Fund, and the Capital Project Fund. Data from the other governmental funds are combined into a single, aggregated presentation.

The City Council adopts an annual appropriated budget for the General Fund and other governmental funds.

Budgetary comparison schedules are presented in the Required Supplementary Information section for the General Fund and each major special revenue fund to demonstrate compliance with the adopted budgets.

Proprietary funds
The City maintains two types of proprietary funds: Enterprise Funds and Internal Service Funds. Enterprise funds are used to report the same functions presented as business-type activities in government-wide financial statements. The City uses Enterprise funds to account for its Sewer and Solid Waste operations, all of which are classified as major funds in the City’s Statement of Net Position. Internal Service funds are used to accumulate and allocate costs internally among the City’s various functions and to build up reserves for future liabilities related to the workforce. The City uses Internal Service funds to account for such activities as dental reimbursements, unemployment insurance, workers’ compensation, liability insurance, 20

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
pension and OPEB related costs. Because these services solely benefit the governmental function, they have been included within governmental activities in the government-wide financial statements.

Proprietary fund financial statements provide the same type of information as government-wide financial statements, only in more detail. All five internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements in the Supplemental Information section of this report.

Fiduciary Funds
The City is the agent for certain agencies and assessment districts, holding amounts collected that await payment as directed. The City’s fiduciary activities are reported in the separate Statement of Fiduciary Net Position. These activities are excluded from the City’s other financial statements because the City is acting as a trustee for these funds and cannot use these assets to finance its own operations. The City’s fiduciary funds include the Blue oak Lane Sewer special district.

Summary Analysis of Governmental Funds
As of June 30, 2025, the City’s governmental fund balances totaled $75.5 million, reflecting an overall increase of $12.0 million, or 18.9%, compared to the prior fiscal year. This increase was primarily driven by an $8.9 million growth in the General Fund balance, supported by higher revenues from property taxes, licenses and permits, and charges for services. The Park Impact Fee Fund also increased by $11.4 million, primarily due to one-time development-related fees. These increases were partially offset by an $11.2 million decrease in the Capital Projects Fund, attributable to increased capital outlay for ongoing infrastructure improvements, facility maintenance, and modernization efforts. 21

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Detailed Analysis of Major Governmental Funds by Fund
Revenues 2025 2024
Taxes:

Property $ 36.2 $ 34.4
Sales and Use 3.6 3.4
Utility Users 3.7 3.5
Other taxes 4.9 4.3
Licenses, permits and fees 19.2 5.4
Intergovernmental 1.9 2.3
Grants and Donations 0.6 1.6
Charges for services 8.5 4.9
Fines, forfeitures and penalties 0.2 0.3
Interest and Rentals 3.4 3.0
Other 0.8 0.1
Total revenues 83.0 63.4
Expenditures
Current:

Public Safety 24.5 22.1
Public works 7.3 5.5
Recreation 3.3 3.1
Community Development 6.7 7.1
Administration / Community Development 9.1 10.7
Utility and sustainability 0.2 0.2
Capital Improvements 12.1 2.7
Debt Service
Principal 0.6 0.6
Interest and Fiscal Charges 0.2 0.2
Total expenditures 64.0 52.3
Excess (deficiency) before transfers 19.0 11.1
Other
Transfers (net) (7.0) (0.5)
Net change in fund balance 12.0 10.6
Beginning Fund Balance* Restated 63.5 52.8
Ending Fund Balance $ 75.5 $ 63.5
Table 6
Statement of Revenues, Expenditures and Other Financing Sources/Uses Governmental Funds
(In Millions)
22

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
General Fund
The General Fund is the chief operating fund of the City. For the year ending June 30, 2025, the total fund balance was $47.1 million, $22.1 million of which is non-spendable, restricted, or has been committed or assigned to cover contingencies, claims, encumbrances, advances to other funds, and other City projects.

The unassigned fund balance is $24.9 million, a decrease of $2.9 million from the prior year. Revenues were $7.2 million higher in the fiscal year ended June 30, 2025, compared to last fiscal year, a change of

12.1%.

Expenditures increased $2.8 million in the fiscal year ended June 30, 2025, compared to the last fiscal year, a change of 5.9%. Significant changes in revenues and expenditures that affected the General Fund balances are discussed below:

General Fund Revenues
Property Taxes increased by $1.8 million or 5.2%. The growth in property tax revenue is attributed to the increase in net taxable assessed values, which rose from $21.6 billion in FY 2023/24 to $22.8 billion in FY 2025. Residential properties made up 93.0% of the assessed value, reflecting continued demand and higher valuations in the local real estate market.

Charges for Services increased by $3.6 million, or 71.4% in FY2025. This growth was primarily driven by one-time revenues from large-scale building permits and plan check activity associated with a major development project.

Interest and Rentals increased by $0.4 million or 11.9%, mainly due to higher interest rates during the first part of the year. Although the Federal Reserve began lowering rates in September and December 2024, the City continued to earn strong returns on investments made earlier when rates were higher. Because the City staggers its investments over time, it was able to maintain higher interest income even as rates started to decline.

General Fund Expenditures
Public safety increased by $2.3 million, or 10.6%, compared to the prior year. The rise is largely attributable to the filling of previously vacant positions, which drove up salary and benefit costs, including pension contributions. Additionally, service costs grew due to expanded patrol support and an increase in animal control contract expenses.

Public works increased by $1.8 million, or 33.0%, reflecting a combination of financial reporting realignments and rising pension obligations.

Recreation increased by $0.2 million or 4.9% compared to FY2024. This increase was primarily due to a modest rise in salaries and part-time staffing costs associated with expanded program offerings, as well as higher utility expenses driven by rate increases during the fiscal year. 23

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Community Development decreased by $0.5 million, or 7.6%. The decrease reflects the phasing out of consultant-supported services following the completion of prior-year planning work.

Administration decreased by $1.0 million, or 10%, primarily due to reduced costs for litigation services, pension contributions, and professional services. The decrease in consulting costs reflects the phasing out of the interim Finance Director position as permanent staffing was established.

The Park Impact Fee
The Park Impact Fee Fund ended FY2025 with a fund balance of $19.4 million, supported by $12.2 million in revenues and offset by $0.9 million in transfers out for eligible projects and debt service payments.

Revenues increased by $11.3 million compared to the prior year, primarily due to a one-time park impact fee associated with a large development project, including the 5150 El Camino Real project.

Capital Project Fund
The Capital Projects Fund accounts for funding used to support capital improvements and significant maintenance projects. Total expenditures increased by $8.6 million, from $2.8 million in the prior year to $11.4 million in FY2025. This increase reflects higher spending on Council-prioritized capital projects and ongoing maintenance efforts, including work on the Emergency Operations Center, Grant Park Facility, New City Hall, and annual street maintenance. As of June 30, 2025, the Capital Projects Fund reported a temporary shortfall of $0.4 million due to timing differences between expenditures and incoming revenues.

The FY2026 Adopted Budget includes a $12.1 million transfer that is projected to fully restore the fund balance.
24

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Summary Analysis of Proprietary Funds
As of June 30, 2025, the Enterprise Funds had a total net position of $32.8 million, reflecting an increase of $0.5 million compared to the prior year. The Internal Service Funds reported a net position of $10.4 million, an increase of $6.9 million from the previous fiscal year, largely due to a $7.0 million transfer in to support long-term insurance obligations.

Sewer Fund
The Sewer Fund accounts for the administration and operation of the City’s sanitary sewer system. As of June 30, 2025, the fund had a total net position of $30.6 million, an increase of $1.7 million over the prior year. The fund remained financially stable, with operating revenues of $10.8 million exceeding operating expenses of $9.7 million, resulting in an operating income of $1.1 million. Interest income also contributed positively to the fund’s net position.

Solid Waste Fund
The Solid Waste Fund accounts for the City’s solid waste and recycling services. As of June 30, 2025, the fund had a net position of $2.2 million, reflecting a decrease of $1.2 million from the prior year. While operating revenues remained relatively flat at $1.1 million, operating expenses increased by 11.7%, contributing to an operating loss of $1.3 million.
2025 2024 2025 2024
Operating revenues $ 11.9 $ 11.3 $ 1.8 $ 5.0
Operating expenses 12.1 10.0 1.9 5.9
Operating income (loss) (0.3) 1.3 (0.1) (0.9)
Non-operating revenues (expenses) 0.8 0.6 0.0 0.0
Net income (loss) before contributions
and operating transfers 0.5 1.9 (0.1) (0.9)
Transfers in (out) and Capital Contributions 0.0 (0.7) 7.0 1.2 Change in net position $ 0.5 $ 1.2 $ 6.9 $ 0.3
Total Enterprise Funds Total Internal Service Funds
Table 7
Change in Fund Net Position - Proprietary Funds
(In Millions)
25

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
BUDGETARY HIGHLIGHTS OF THE CITY’S GENERAL FUND
General Fund actual revenues exceeded the final budget by $8.1 million, or 13.8%, primarily due to higherthan-anticipated receipts from other taxes, licenses and permits, and interest earnings.

General Fund actual expenditures were $5.6 million or 9.9% under the final budget, with savings from Public safety of $1.6 million, Public works of $0.8 million, Administrative and Community Services of $2.8 million, and Recreation of $0.5 million.

CAPITAL ASSETS AND LONG-TERM DEBT
Capital Assets
The City records all of its capital assets, including infrastructure, in the Statement of Net Position.

Infrastructure includes roads, bridges, signals, and similar assets used by the entire population. The City has recorded its capital assets at historical cost or estimated historical cost if the actual historical cost was not available. In addition, donated fixed assets have been valued at their estimated acquisition value on the date donated.

On June 30, 2025, the cost of infrastructure and other capital assets recorded on the City's financial statements is shown in Table 8 on the next page:
26

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
On June 30, 2025, the City had assets of $117.7 million, net of depreciation, invested in a broad range of capital assets used in governmental activities, and $16.7 million, also net of depreciation, invested in Business-type activities assets, as shown in Table 8 above.

The City depreciates all its capital assets on a straight-line basis over their estimated useful lives. The purpose of depreciation is to spread the cost of a capital asset over the years of its useful life so that an allocable portion of the cost of the asset is borne by all users. Additional information on capital assets may be found in Notes 1 and 4 to the Basic Financial Statements on pages 59 and 75, respectively. 2025 2024
Governmental activities
Land $ 11.6 $ 11.6
Construction in progress 29.2 20.8
Buildings 23.6 23.6
Improvements 6.9 6.9
Machinery and equipment 8.5 7.9
Infrastructure 89.4 87.7
Less accumulated depreciation (51.5) (47.7)
Totals $ 117.7 $ 110.8
Business-type activities
Construction in progress $ 0.3 $ 0.3
Buildings 16.0 16.0
Machinery and equipment 1.8 1.1
Infrastructure 12.1 12.1
Less accumulated depreciation (13.5) (13.1)
Totals $ 16.7 $ 16.4
Table 8
Capital Assets
(in Millions)
27

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Long-Term Debt
On June 30, 2025, the City's debt was comprised of the following:

The City made all required debt service payments on the issues listed above. Additional information on the City’s long-term debt may be found in Notes 1 and 5 to the Basic Financial Statements on pages 59 and 77, respectively.

ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The City of Los Altos remains in a strong financial position as it enters fiscal year 2025. General Fund revenues totaled $66.8 million, representing a 6% increase over FY2024. This growth was driven by continued strength in property taxes ($36.2M), a rebound in utility users tax ($3.7M), and a significant recovery in licenses, permits, and fees ($7.6M). The rebound in tourism-related revenues such as Transient Occupancy Tax (TOT) and Documentary Transfer Tax (DTT) also contributed to the increase.

Economic Conditions
While local revenues are stable, the City continues to monitor broader economic conditions. Property values in Los Altos remain strong, but growth is slowing due to increased mortgage rates and subdued real estate activity. Documentary Transfer Tax and development-related revenues have softened in early FY2025, consistent with trends across California. Statewide unemployment stood at 5.2% as of December 2024, compared to the national rate of 3.8%, highlighting the importance of conservative forecasting and fiscal safeguards.
2024 2024
Governmental activities
2004 Certificate of Participation $ 0.3 $ 0.5
Community Center Lease 7.8 8.3
Compensated Absences 3.1 5.1
Total governmental activities debt $ 11.2 $ 13.8
Business-type activities
Compensated Absences $ 0.2 $ 0.4
Total business-type activities debt $ 0.2 $ 0.4
Total debt $ 11.4 $ 14.2
Table 9
Outstanding Debt
(In Millions)
28

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
Investment and Interest Earnings
One notable area of improvement in FY2024 and FY2025 has been investment performance. The City’s interest income reached $2.4 million in FY2025, a significant increase from $0.4 million in FY2024. This gain is attributable to both rising interest rates and the City’s disciplined investment strategy, executed in partnership with Public Trust Advisors. The City continues to comply with all provisions of California Government Code Section 53601, maintaining a diversified portfolio with appropriate liquidity and risk management protocols.

STRATEGIC FINANCIAL MANAGEMENT
To address long-term retirement costs, the City established a PERS Rate Reserve, which holds approximately $7 million in FY2025. Of this amount, $5 million was appropriated and paid toward the City’s unfunded accrued liability in early FY2026. This one-time UAL payment directly reduces long-term pension obligations and helps moderate future cost increases.

Pension rates for FY2025 are based on CalPERS actuarial assumptions. On July 15, 2024, CalPERS reported a preliminary 9.3% investment return for FY2024. Although stronger than recent years, this result is still below the long-term actuarial target of 6.8%, which continues to place upward pressure on future employer contribution rates.

At the same time, the City continues to strengthen its long-term infrastructure funding. The Facility Maintenance Fund increased from $2.0 million in FY2024 to $12.0 million in FY2025, significantly enhancing the City’s capacity to address major building and system needs. The Fleet Vehicle Fund rose to $2 million, with a planned decrease to approximately $1.2 million in FY2025/26 to support timely replacement of essential vehicles. These actions reflect the City’s commitment to long-term financial sustainability and responsible stewardship of pension and infrastructure obligations.

During FY2025, the City successfully completed several major capital projects that reflect long-standing community and operational priorities. The New City Hall construction project reached substantial completion, delivering a modernized, energy-efficient facility designed to enhance staff efficiency and public services. The City’s new financial management software system was also completed and officially went live at the start of FY2026, streamlining budgeting, purchasing, and financial reporting processes across all departments. Additionally, the Annual Street Resurfacing Program was completed on schedule, resulting in improved roadway conditions at multiple sites citywide and extending the useful life of the transportation network. These achievements underscore the City’s ongoing commitment to infrastructure reinvestment, operational excellence, and community service.

In FY2026, the City continues to invest in critical capital infrastructure aligned with community priorities.

Key facility and park investments include the Library Construction Project, with a total budget of $955,891, supported by grants and prior-year rollover funds. The Downtown Park Space with Parking project is advancing with $1.71 million in funding from the Park Impact Fees, enabling continued design, public 29

City of Los Altos
Management’s Discussion and Analysis, Continued
For the year ended June 30, 2025
engagement, and initial construction. Similarly, the Hillview/McKenzie Dog Parks redevelopment is funded at $1.28 million, supporting accessibility and amenity upgrades.

Street improvements remain a significant focus, with a combined $4.47 million allocated to the Annual Street Resurfacing Program. This effort spans four funding sources — Gas Tax, RMAA Fund, Measure B, and the Capital Improvement Fund — and reflects a comprehensive, citywide approach to road maintenance and pavement condition improvement. These projects enhance safety, extend the lifespan of existing infrastructure, and ensure alignment with the City's long-term pavement management goals.

Through these initiatives, the City of Los Altos continues to demonstrate prudent financial management and alignment with community priorities. By maintaining strong reserves, strategically investing in critical infrastructure, and planning ahead for long-term obligations, the City is well-positioned to adapt to economic shifts while preserving the quality and reliability of core public services.

Major Capital Projects in construction for fiscal years 2025 include:
 $3,470,349 – LAYC (New City Hall)
 $1,786,041 – Emergency Operation Center
 $1,147,149 – Annual Street Resurfacing
 $689,075 – Grant Park Facility
 $463,936 – New Financial System
 $463,563 – Police Department EV

CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This Annual Comprehensive Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City's finances. Questions about this report should be directed to the following address: City of Los Altos, Finance Department, 1 North San Antonio Road, Los Altos, California 94022.

A copy of this financial report can be found on the City’s website at http://www.losaltosca.gov, by selecting “Audited Financials” in the “Quick Links” section and then selecting “Other Financial Reports.”

1. https://www.calpers.ca.gov/page/newsroom/calpers-news/2024/calpers-preliminary-investment-return-fiscal-year-2023-24 30

BASIC

FINANCIAL STATEMENTS
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GOVERNMENT-WIDE

FINANCIAL STATEMENTS
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City of Los Altos
Statement of Net Position
June 30, 2025
Governmental Business-type
Activities Activities Total
ASSETS
Current assets:

Cash and investments $ 92,060,263 $ 19,908,158 $ 111,968,421 Accounts receivable 2,651,747 840,195 3,491,942
Prepaids and inventory 213,821 - 213,821
Total current assets 94,925,831 20,748,353 115,674,184
Noncurrent assets:

Restricted cash and investments 177,415 - 177,415
Capital assets:

Nondepreciable 40,794,854 345,292 41,140,146
Depreciable 128,367,310 29,862,582 158,229,892
Less accumulated depreciation (51,511,453) (13,497,183) (65,008,636) Total capital assets 117,650,711 16,710,691 134,361,402 Total noncurrent assets 117,828,126 16,710,691 134,538,817 Total assets 212,753,957 37,459,044 250,213,001

DEFERRED OUTFLOWS OF RESOURCES
Related to pension 12,455,663 1,746,918 14,202,581
Related to OPEB 671,004 69,618 740,622
Total deferred outflows of resources 13,126,667 1,816,536 14,943,203

LIABILITIES
Current liabilities:

Accounts payable 4,094,503 115,248 4,209,751
Interest payable 992 - 992
Accrued liabilities 1,076,257 70,904 1,147,161
Oher payable 109,524 - 109,524
Compensated absences, due in one year 984,905 75,893 1,060,798 Claims and judgements, due in one year 987,632 - 987,632 Long-term debt, due in one year 597,951 - 597,951
Total current liabilities 7,851,764 262,045 8,113,809
Noncurrent liabilities:

Compensated absences 2,092,923 161,272 2,254,195
Claims and judgements 2,726,319 - 2,726,319
Net pension liability 41,018,122 5,752,799 46,770,921
Net OPEB liability 562,488 58,360 620,848
Long-term debt 7,544,049 - 7,544,049
Total noncurrent liabilities 53,943,901 5,972,431 59,916,332 Total liabilities 61,795,665 6,234,476 68,030,141

DEFERRED INFLOWS OF RESOURCES
Related to pension 1,706,342 239,314 1,945,656
Related to OPEB 429,796 44,592 474,388
Total deferred inflows of resources 2,136,138 283,906 2,420,044

NET POSITION
Net investment in capital assets 109,686,126 16,710,691 126,396,817 Restricted for:

Debt service 222,725 - 222,725
Special programs:

Public safety 238,240 - 238,240
Recreation 19,412,446 - 19,412,446
Streets and roads 6,218,179 - 6,218,179
Public education 1,024,342 - 1,024,342
Parking 984,821 - 984,821
Other purposes 208,935 - 208,935
Total restricted 28,309,688 - 28,309,688
Unrestricted 23,953,007 16,046,507 39,999,514
Total net position $ 161,948,821 $ 32,757,198 $ 194,706,019 Primary Government
See accompanying Notes to Basic Financial Statements.
35

City of Los Altos
Statement of Activities
For the year ended June 30, 2025
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total Governmental activities:

Public safety $ 24,495,205 $ 359,924 $ 400,871 $ - $ 760,795 Public works 11,588,792 55,566 548,820 1,121,908 1,726,294 Recreation 3,735,290 1,447,307 9,900 - 1,457,207
Community development 6,666,413 22,948,884 - - 22,948,884 Admin/ community services 9,550,522 489,256 - 145,891 635,147 Interest on long-term debt 209,031 - - - -
Total governmental activities 56,245,253 25,300,937 959,591 1,267,799 27,528,327 Business-type Activities:

Sewer 9,721,175 10,780,016 - - 10,780,016
Solid waste 2,411,198 1,080,905 - - 1,080,905
Total business-type activities 12,132,373 11,860,921 - - 11,860,921 Total primary government $ 68,377,626 $ 37,161,858 $ 959,591 $ 1,267,799 $ 39,389,248 General Revenues:

Taxes:

Property taxes
Sales and use taxes
Utility users' tax
Other taxes
Franchise fees
Total taxes
Interest income
Miscellaneous
Total general revenues and transfers
Change in net position
Net position - beginning of year, as previously presented Restatements
Net position - beginning of year, as restated
Net position - end of year
Program Revenues
See accompanying Notes to Basic Financial Statements.
36

Governmental Business-Type
Activities Activities Total
$ (23,734,410) $ - $ (23,734,410)
(9,862,498) - (9,862,498)
(2,278,083) - (2,278,083)
16,282,471 - 16,282,471
(8,915,375) - (8,915,375)
(209,031) - (209,031)
(28,716,926) - (28,716,926)
- 1,058,841 1,058,841
- (1,330,293) (1,330,293)
- (271,452) (271,452)
(28,716,926) (271,452) (28,988,378)
36,186,927 - 36,186,927
3,591,444 - 3,591,444
3,725,468 - 3,725,468
4,888,106 - 4,888,106
2,804,350 - 2,804,350
51,196,295 - 51,196,295
3,319,110 785,524 4,104,634
1,055,320 - 1,055,320
55,570,725 785,524 56,356,249
26,853,799 514,072 27,367,871
133,318,663 32,035,433 165,354,096
1,776,359 207,693 1,984,052
135,095,022 32,243,126 167,338,148
$ 161,948,821 $ 32,757,198 $ 194,706,019
and Changes in Net Position
Net (Expense) Revenue
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FUND

FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
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City of Los Altos
Major Government Funds
For the Year Ended June 30, 2025
The funds described below were determined to be Major Funds by the City in fiscal 2025. Individual nonmajor funds may be found in the Supplemental section.

General Fund
Accounts for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in other funds. The General Fund supports essential City services such as police, fire, street and parks maintenance, maintenance services, community development and recreation activities. The General Fund also includes the Real Property Proceeds Funds, which accounts for the proceeds from the sale of real property and the Community Facilities Renewal Fund, which accounts for the revenues and expenditures related to the community facilities renewal efforts.

In-Lieu Parkland Fund
Accounts for revenues received in lieu of park land dedications. The revenues are dedicated for purchasing or improving park or recreational facilities.

Capital Projects Fund
Accounts for the acquisition and construction of major capital projects and plans that are financed by resources other than proprietary funds.
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City of Los Altos
Balance Sheet
Governmental Funds
June 30, 2025
Other Total
Governmental Governmental
Funds Funds
ASSETS
Cash and investments $ 48,124,192 $ 19,601,092 $ 1,111,632 $ 9,142,751 $ 77,979,667 Restricted cash and investments - - - 177,415 177,415
Receivables, net:

Accounts 1,952,404 - 92,285 194,724 2,239,413
Interest 185,762 60,967 - 22,072 268,801
Prepaids 195,237 - - - 195,237
Inventory 18,584 - - - 18,584
Due from other funds 24,415 - - - 24,415
Total assets $ 50,500,594 $ 19,662,059 $ 1,203,917 $ 9,536,962 $ 80,903,532

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable $ 2,150,689 $ 249,613 $ 1,598,393 $ 33,381 $ 4,032,076 Accrued liabilities 1,076,257 - - - 1,076,257
Other payable 109,524 - - - 109,524
Due to other funds - - - 24,415 24,415
Total liabilities 3,336,470 249,613 1,598,393 57,796 5,242,272 Deferred Inflows of Resources
Unavailable revenue 85,989 - - 29,711 115,700
Total deferred inflows of resources 85,989 - - 29,711 115,700 Fund Balances:

Nonspendable 213,821 - - - 213,821
Restricted - 19,412,446 - 8,897,242 28,309,688
Assigned 22,007,584 - - 576,628 22,584,212
Unassigned 24,856,730 - (394,476) (24,415) 24,437,839
Total fund balances 47,078,135 19,412,446 (394,476) 9,449,455 75,545,560 Total liabilities and fund balances $ 50,500,594 $ 19,662,059 $ 1,203,917 $ 9,536,962 $ 80,903,532 General Fund
Park Impact
Fee
Capital
Projects
See accompanying Notes to Basic Financial Statements.
43

Total Fund Balances - Total Governmental Funds $ 75,545,560 Nondepreciable 40,794,854
Depreciable, net 76,855,857
(992)
Deferred outflows of resources related to pension 12,455,663 Deferred outflows of resources related to OPEB 671,004
Deferred inflows of resources related to pension (1,706,342) Deferred inflows of resources related to OPEB (429,796) Compensated absences - due within one year (984,905)
Long-term debt - due within one year (597,951)
Compensated absences - due in more than one year (2,092,923) Long-term debt - due in more than one year (7,544,049)
Net pension liability (41,018,122)
Net OPEB liability (562,488)

10,447,751
Net Position of Governmental Activities $ 161,948,821
City of Los Altos
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2025
Amounts reported for governmental activities in the statement of net position are different because:

Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Governmental-Wide Statement of Net Position.

Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet.

Interest payable on long-term debt does not require current financial resources. Therefore, interest payable was not reported as a liability in the governmental funds balance sheet.

Long-term liabilities were not due and payable in the current period. Therefore, they were not reported in the governmental funds balance sheet.

Deferred outflows below are not current assets or financial resources; and the deferred inflows are not due and payable in the current period and therefore are not reported in the Governmental Funds.

See accompanying Notes to Basic Financial Statements.
44

City of Los Altos
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the year ended June 30, 2025
Other Total
Governmental Governmental
Funds Funds
REVENUES:

Property tax $ 36,186,927 $ - $ - $ - $ - $ 36,186,927
Sales tax 3,591,444 - - - - 3,591,444
Utility users 3,725,468 - - - - 3,725,468
Other tax 4,888,106 - - - - 4,888,106
Licenses, permits and fees 7,608,378 11,490,809 - - 62,618 19,161,805 Intergovernmental - - - - 1,938,011 1,938,011
Grants and donations 378,807 - 40,908 - 206,207 625,922 Charges for services 7,098,566 - - - 1,359,776 8,458,342 Fines and forfeitures 134,235 - - - 21,458 155,693
Interest and rentals 2,357,398 750,291 - - 275,400 3,383,089 Other 868,545 - - - - 868,545
Total revenues 66,837,874 12,241,100 40,908 - 3,863,470 82,983,352 EXPENDITURES:

Current:

Public safety 24,367,654 - - - 75,145 24,442,799
Public works 7,324,196 - - - - 7,324,196
Recreation 3,290,687 - - - - 3,290,687
Community development 6,644,752 - - - 3,245 6,647,997
Admin / community development 9,023,541 - 2,526 - 99,041 9,125,108 Utility and sustainability 206,594 - - - - 206,594
Capital improvements - 249,613 11,348,190 - 531,744 12,129,547 Debt service:

Principal - - - - 583,034 583,034
Interest and fiscal charges - - - - 209,031 209,031
Total expenditures 50,857,424 249,613 11,350,716 - 1,501,240 63,958,993

REVENUES OVER (UNDER)
EXPENDITURES 15,980,450 11,991,487 (11,309,808) - 2,362,230 19,024,359 OTHER FINANCING SOURCES (USES):

Transfers in - - 150,000 - 720,090 870,090
Transfers out (7,098,000) (622,090) - - (150,000) (7,870,090) Total other financing sources (uses) (7,098,000) (622,090) 150,000 - 570,090 (7,000,000) Net change in fund balances 8,882,450 11,369,397 (11,159,808) - 2,932,320 12,024,359 FUND BALANCES:

Beginning of year, as previously presented 38,195,685 8,043,049 10,765,332 2 6,517,133 63,521,201 Restatement - - - (2) 2 -
Beginning of year, as restated 38,195,685 8,043,049 10,765,332 - 6,517,135 63,521,201 End of year $ 47,078,135 $ 19,412,446 $ (394,476) $ - $ 9,449,455 $ 75,545,560 General Fund
Park Impact
Fee
Los Altos
Community
Center Lease
Capital
Projects
See accompanying Notes to Basic Financial Statements.
45

City of Los Altos
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities For the year ended June 30, 2025
Net Change in Fund Balances - Total Governmental Funds $ 12,024,359 Governmental funds reported capital outlay as expenditures. However, in the Government-Wide Statement of Activities, the cost of those assets was allocated over their estimated lives as depreciation expense. This was the amount of capital assets recorded in the current period, net of the amount related to internal service funds. 10,686,231
Depreciation expense on capital assets was reported in the Government-Wide Statement of Activities, but did not require the use of current financial resources. Therefore, depreciation expense was not reported as expenditures in the governmental funds, net of the amount related to internal service funds. (3,765,352) Accrued compensated leave payments were reported as expenditures in the governmental funds, however expense is recognized in the Government-Wide Statement of Activities based on earned leave accruals. 197,263 Debt proceeds provide current financial resources to governmental funds, but issuing debt increased longterm liabilities in the Government-Wide Statement of Net Position. Repayment of debt was an expenditure in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position.

Long-term debt repayments 583,034
Current year employer pension contributions are recorded as expenditures in the governmental funds, however, these amounts are reported as a deferred outflow of resources in the Government-Wide Statement of Net Position. 6,309,383
Pension income/(expense) is reported in the Government-Wide Statement of Activities does not require the use of current financial resources, and therefore is not reported as expenditures in governmental funds. (6,037,062) Current year employer OPEB contributions are recorded as expenditures in the governmental funds, however, these amounts are reported as a deferred outflow of resources in the Government-Wide Statement of Net Position. 175,502
OPEB income/(expeense) is reported in the Government-Wide Statement of Activities does not require the use of current financial resources, and therefore is not reported as expenditures in governmental funds. (310,610) Unavailable revenues recorded in the fund financial statements resulting from activities in which revenues were earned but were not available are reclassified as revenues in the Government-Wide Financial Statements. 115,700
Internal service funds were used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net revenue of the internal service funds was reported with governmental activities. 6,875,351

Change in Net Position of Governmental Activities $ 26,853,799 Amounts reported for governmental activities in the Government-Wide Statement of Activities were different because:

See accompanying Notes to Basic Financial Statements.
46

City of Los Altos
Major Proprietary Funds
For the Year Ended June 30, 2025
Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges.

The City reported all of its Enterprise Funds as major funds in fiscal 2025.

Sewer
To account for the operation (including wastewater treatment) of the City's sewer treatment activities, a selfsupporting activity which provides services on a user charge basis.

Solid Waste
To account for the collection and disposal of solid waste, a self-supporting activity that provides service on a user charge basis.
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City of Los Altos
Statement of Net Position
Proprietary Funds
June 30, 2025
Governmental
Activities -
Internal Service
Totals Funds
ASSETS
Current Assets:

Cash and investments $ 16,469,376 $ 3,438,782 $ 19,908,158 $ 14,080,596 Accounts receivable 675,419 103,043 778,462 143,533
Interest receivable 50,667 11,066 61,733 -
Total current assets 17,195,462 3,552,891 20,748,353 14,224,129 Noncurrent:

Capital assets:

Nondepreciable capital assets 345,292 - 345,292 -
Depreciable capital assets 29,862,582 - 29,862,582 -
Accumulated depreciation (13,497,183) - (13,497,183) -
Net capital assets 16,710,691 - 16,710,691 -
Total noncurrent assets 16,710,691 - 16,710,691 -
Total assets 33,906,153 3,552,891 37,459,044 14,224,129

DEFERRED OUTFLOWS OF RESOURCES
Related to pension 1,235,625 511,293 1,746,918 -
Related to OPEB 50,362 19,256 69,618 -
Total deferred outflows of resources 1,285,987 530,549 1,816,536 -

LIABILITIES
Current liabilities:

Accounts payable 57,211 58,037 115,248 62,427
Accrued liabilities 52,836 18,068 70,904 -
Compensated absences - current 68,937 6,956 75,893 -
Claims and judgements - current - - - 987,632
Total current liabilities 178,984 83,061 262,045 1,050,059 Noncurrent liabilities:

Compensated absences - noncurrent 146,492 14,780 161,272 - Claims and judgments - - - 2,726,319
Net pension liability 4,069,053 1,683,746 5,752,799 -
Net OPEB liability 42,218 16,142 58,360 -
Total noncurrent liabilities 4,257,763 1,714,668 5,972,431 2,726,319 Total liabilities 4,436,747 1,797,729 6,234,476 3,776,378

DEFERRED INFLOWS OF RESOURCES
Related to pension 169,271 70,043 239,314 -
Related to OPEB 32,258 12,334 44,592 -
Total deferred inflows of resources 201,529 82,377 283,906 -

NET POSITION
Net investment in capital assets 16,710,691 - 16,710,691 - Unrestricted 13,843,173 2,203,334 16,046,507 10,447,751 Total net position $ 30,553,864 $ 2,203,334 $ 32,757,198 $ 10,447,751 Sewer Solid Waste
Business-Type Activities
See accompanying Notes to Basic Financial Statements.
49

City of Los Altos
Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds
For the year ended June 30, 2025
Governmental
Activities -
Internal Service
Totals Funds
OPERATING REVENUES:

Charges for services $ 10,780,016 $ 1,080,905 $ 11,860,921 $ 1,826,466 Total operating revenues 10,780,016 1,080,905 11,860,921 1,826,466 OPERATING EXPENSES:

Outside services 6,032,535 1,165,372 7,197,907 -
Employee services 3,275,205 1,245,826 4,521,031 -
Claims and insurance - - - 1,471,792
Administration - - - 479,323
Depreciation 413,435 - 413,435 -
Total operating expenses 9,721,175 2,411,198 12,132,373 1,951,115 Operating income (loss) 1,058,841 (1,330,293) (271,452) (124,649) NONOPERATING REVENUES (EXPENSES):

Interest income 606,835 178,689 785,524 -
Total nonoperating revenues (expenses) 606,835 178,689 785,524 - Income before contributions and transfers 1,665,676 (1,151,604) 514,072 (124,649) CONTRIBUTIONS AND TRANSFERS:

Transfers in - - - 7,000,000
Total contributions and transfers - - - 7,000,000
Change in net position 1,665,676 (1,151,604) 514,072 6,875,351 NET POSITION:

Beginning of year, as previously presented 28,705,472 3,329,961 32,035,433 3,572,400 Restatements 182,716 24,977 207,693 -
Beginning of year, as restated 28,888,188 3,354,938 32,243,126 3,572,400 End of year $ 30,553,864 $ 2,203,334 $ 32,757,198 $ 10,447,751 Sewer Solid Waste
Business-Type Activities
See accompanying Notes to Basic Financial Statements.
50

City of Los Altos
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2025
Governmental
Activities -
Internal
Service
Totals Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers $ 10,816,942 $ 1,045,988 $ 11,862,930 $ 1,835,413 Cash payments to suppliers for goods and services (6,082,918) (1,177,622) (7,260,540) (992,581) Cash payment to employees for services (2,365,237) (869,739) (3,234,976) - Insurance premiums, settlements and rebates - - - (1,728,446) Net cash provided by (used in) operating activities 2,368,787 (1,001,373) 1,367,414 (885,614) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Transfers from (to) other funds - - - 7,000,000
Net cash provided by (used in)
noncapital financing activities - - - 7,000,000
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Acquisition and construction of capital assets (728,462) - (728,462) - Net cash provided by (used in)
capital and related financing activities (728,462) - (728,462) - CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received 556,168 167,623 723,791 -
Net cash provided by (used in) investing activities 556,168 167,623 723,791 - Net cash flows 2,196,493 (833,750) 1,362,743 6,114,386
CASH AND INVESTMENTS - Beginning of year 14,272,883 4,272,532 18,545,415 7,966,210 CASH AND INVESTMENTS - End of year $ 16,469,376 $ 3,438,782 $ 19,908,158 $ 14,080,596

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:

Operating income (loss) $ 1,058,841 $ (1,330,293) $ (271,452) $ (124,649) Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:

Depreciation 413,435 - 413,435 -
Change in assets and liabilities: -
Receivables, net 36,926 (34,917) 2,009 8,947
Accounts payable and other accrued expenses (50,383) (12,250) (62,633) (73,000) Unearned revenue - - -
Net pension liabilities and deferred inflows and outflows 940,785 419,607 1,360,392 - inflows and outflows - - - -
Net OPEB liabilities and deferred inflows and outflows (54,722) (45,932) (100,654) - Compensated absences 23,905 2,412 26,317 -
Claims and judgments - - - (696,912)
Net cash provided by (used in) operating activities $ 2,368,787 $ (1,001,373) $ 1,367,414 $ (885,614) Sewer Solid Waste
Business-Type Activities
See accompanying Notes to Basic Financial Statements.
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City of Los Altos
Fiduciary Funds
For the Year Ended June 30, 2025
The City of Los Altos only reports one type of Fiduciary Funds: Custodial Funds Custodial Funds are custodial in nature and does not involve measurement of the results of operations. It is used to account for assets held in a custodial capacity for others and therefore cannot be used to support the City's programs. 53

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54

City of Los Altos
Statement of Fiduciary Net Position
Fiduciary Funds
For the year ended June 30, 2025
Custodial
Funds
ASSETS
Cash and investments $ 36,950
Restricted cash and investments 48,283
Total assets 85,300

NET POSITION
Restricted for:

Improvement district 85,300
Total Net Position $ 85,300
See accompanying Notes to Basic Financial Statements.
55

City of Los Altos
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the year ended June 30, 2025
Custodial
Funds
ADDITIONS:

Fee collections $ 53,091
Total additions 53,091
DEDUCTIONS:

Distributions 59,106
Total deductions 59,106
Change in net position (6,015)
NET POSITION:

Beginning of year 91,315
End of year $ 85,300
See accompanying Notes to Basic Financial Statements.
56

NOTES TO BASIC

FINANCIAL STATEMENTS
57

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58

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Los Altos, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below.

A. Financial Reporting Entity
The City incorporated in 1952. The City operates under an elected Council and appointed City Manager form of government and provides the following services: public safety, recreation, community development, public works, capital improvements, and general supporting administrative services. The City has no component units.

B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for within a separate set of self-balancing accounts which includes its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with such provisions and managerial requirements.

Government-Wide Financial Statements
The City’s Government-wide Financial Statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present summaries of governmental activities and business-type activities for the City, the primary government, accompanied by a total column.

Fiduciary activities of the City are not included in these statements.

These basic financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities and Changes in Net Position presents changes in the net position of the City. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability for goods or services is incurred.

Certain types of transactions are reported as program revenues for the city in three categories:
• Charges for services
• Operating grants and contributions
• Capital grants and contributions
59

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Government-Wide Financial Statements, Continued
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regard to interfund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities and Changes in Net Position internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following inter-fund activities have been eliminated:
• Due to, due from other funds
• Transfers in, transfers out
• Internal service fund transactions
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds in the aggregate. An accompanying schedule is included to reconcile and explain the differences in fund balances as presented in these statements to the net position presented in the Government-Wide financial statements.

Governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.

Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The City’s primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, hotel tax, special assessments, intergovernmental revenues, other taxes, interest revenue, rental revenue and certain charges for services.

Expenditures are recorded in the accounting period in which the related fund liability is incurred and are accrued accordingly.

Deferred inflow of resources arises when potential revenues do not meet both the “measurable” and “available” criteria for recognition in the current period. Unearned revenues arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the revenue is recognized.

The reconciliation of the Fund Financial Statements to the Government-wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. 60

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Proprietary Fund Financial Statements
Proprietary Fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses and Change in Net Position, and a Statement of Cash Flows for all proprietary funds.

A column representing the City’s internal service funds, those funds that support agency wide shared service costs, is also presented in these statements. These internal service balances and activities are combined with the governmental activities in the Government-wide Financial Statements.

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

Proprietary Funds distinguish operating revenues and expenses and non-operating items. Operating revenues and expenses generally result from providing services in connection with the fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise and internal service funds are charges for customer services, including sewer charges, solid waste fees, and support charges.

Operating expenses for enterprise funds and internal service funds include the cost of services, administrative expenses, and depreciation on capital assets. All other revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

Fiduciary Fund Financial Statements
The City’s Fiduciary Funds are comprised of custodial funds used to account for the operating activities and for the special assessment collections pertaining to the North County Library Authority (NCLA) and Gutter Districts, and Blue Oak Lane Sewer Improvements. Custodial Funds are accounted for on the full accrual basis of accounting.

Internal Service Fund Financial Statements
Internal Service Funds account for services provided to other departments pertaining to the employee self-insurance dental program, unemployment insurance, workers’ compensation insurance and liability insurance, all of which are funded on a cost reimbursement basis as budget projections and valuations develop.

C. Major Funds
Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds. 61

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Major Funds, Continued
The City reported the following major governmental funds in the accompanying financial statements:

General Fund – Accounts for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in another funds. The General Fund supports essential City services such as police, fire, street and park maintenance, public works, and community development and recreation activities. The General Fund also includes the Real Property Proceeds Funds, which accounts for the proceeds from sale of real property and the Community Facilities Renewal Fund, which accounts for the revenues and expenditures related to the community facilities renewal efforts.

Park Impact Fee Fund – Accounts for revenues received in lieu of parkland dedications. The revenues are dedicated for purchasing or improving park or recreational facilities.

Capital Project Fund – Accounts for the acquisition and construction of major general government capital projects and plans that are financed by resources other than proprietary funds.

The City reported all of its enterprise funds as major funds in the accompanying financial statements:

Sewer Fund – Accounts for the operation (including wastewater treatment) of the City’s sewer treatment activities, a self-supporting activity which provides services on a user charge basis.

Solid Waste Fund – Accounts for the administration and support of contracted solid waste services, a self-supporting user charge for services activity.

D. Recognition of Interest Payable
In the Governmental Fund Financial Statements, interest expenditures on long-term debt are recognized when payment is made. In the Government-wide Financial Statements and Proprietary Fund Financial Statements interest expense is recognized as the liability is incurred.

E. Use of Restricted and Unrestricted Net Position
When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City’s policy is to apply restricted net position first.

F. Cash, Cash Equivalents and Investments
The City pools its available cash for investment purposes. The City considers pooled cash and investment amounts, with original maturities of three months or less, to be cash equivalents.

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. 62

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued F. Cash, Cash Equivalents and Investments, Continued
The City participates in an investment pool managed by the State of California known as the Local Agency Investment Fund (LAIF) which has invested a portion of the pool funds in Structured Notes and Assetbacked Securities. LAIF’s investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset-backed Securities are subject to market risk as to change in interest rates.

The City places liquid assets in a pooled investment account with the goal of enhancing the diversity of its investment holdings. This portfolio complies with state code investment requirements and is subject to a more restrictive City adopted investment policy. Such funds are held independently in City established investment custodial accounts.

For purposes of reporting cash flows, the City considers each fund’s share in the cash and investments pool to be cash and cash equivalents including cash with fiscal agents.

G. Fair Value Hierarchy
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for an asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for an asset or liability.

If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement.

H. Inventories
Inventory, mainly consisting of vehicle fuel and prepaid supplies, is stated at cost on an average cost basis and is controlled by a perpetual inventory system which is adjusted to reflect periodic physical counts.

Inventories are recorded as expenditures in the General Fund and charged to departments as consumed.

I. Restricted Cash
Fiscal agents acting on behalf of the City hold investment funds arising from the proceeds of long-term debt issuances. The funds may be used for specific capital outlays or for the payment of certain bonds, certificate of participation and have been invested only as permitted by specific State statutes or applicable City ordinance, resolution or bond indenture.
63

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued J. Compensated Absences
Compensated absences comprise unused vacation, sick leave, and similar compensatory leave balances.

Compensated absences (unpaid vacation, sick leave, and other compensatory leave) are recorded in the statements of net position. Liabilities for leave are assumed to be accrued using the First In, First Out (FIFO) method, meaning the leave that was earned first is used or paid first. The City has recorded a liability only when it is more likely than not the leave will be taken or paid for. All compensated absences and related costs are reported as incurred in the governmental-wide and proprietary fund financial statements, as these amounts will be recorded as fund expenditures in the year in which they are paid or become due on demand to terminated employees. The liability for compensated absences is determined annually.

K. Property Taxes
Santa Clara County (County) assesses all properties in the City, and it bills, collects and distributes property taxes to the City. Both secured and unsecured property taxes are levied on January 1. The County assesses properties, and it bills, collects and distributes property taxes to the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are levied on July 1 for the fiscal year. Secured property tax is due in two installments, on November 1 and February 1, and it becomes delinquent after December 10 and April 10, respectively. The City and the County adopted the “alternative method of property tax distribution” known as the Teeter Plan that authorizes the County to allocate 100% of the secured property tax based on levy instead of collection and to retain all delinquent penalties and interest. Unsecured property tax is due on July 1 and becomes delinquent after August 31. Distribution of the unsecured property taxes is based on collections. Collection of delinquent accounts is the responsibility of the County, which retains all penalties. The County also distributes both penalties and interest collected for delinquent unsecured property taxes.

L. Capital Asset
Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not available. Donated capital assets are valued at their estimated acquisition value on the date contributed.

City policy has set the capitalization threshold for reporting capital assets at $5,000 for equipment, $25,000 for building and facility improvements and $100,000 for infrastructure.

Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as follows:

In accordance with GASB Statement No. 34, the City has included all infrastructures in its Statement of Net Position.

Type Useful Life (years)
Buildings 50 years
Improvements 30-50 years
Machinery and Equipment 3-10 years
Infrastructure 30-100 years
64

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued L. Capital Asset, Continued
The City defines infrastructure as basic physical assets that allow the City to function. The assets include the street system. Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, streetlights and traffic control devices (signs, signals and pavement markings). These subsystems were not delineated in the Governmentwide Financial Statements. The appropriate operating department maintains information regarding the subsystems.

For all infrastructure systems, the City has elected to use the Basic Approach, as defined by GASB Statement No. 34, for infrastructure reporting. The valuation of the City’s infrastructure assets is determined based on the original cost using one of the following methods:

1. Use of historical records where available

2. Standard unit costs appropriate for the construction/acquisition date of the asset.

3. Present replacement cost indexed by a reciprocal factor of the price increase from the construction/acquisition date to the current date.

Accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date, was computed on a straight-line method. The book value was then computed by deducting the accumulated depreciation from the original cost.

M. Long-Term Debt
Government-wide Financial Statements: Long-term debt and other financial obligations are reported as liabilities in the appropriate activities.

Bond premiums and discounts are deferred and amortized over the life of the bonds using the straightline method. Bonds payable are reported net of the applicable premium or discount.

Fund Financial Statements: The Governmental Fund Financial Statements do not present long-term debt, which are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position.

Governmental Funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuance are reported as other financing sources while discounts on debt issuance are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Proprietary Fund Financial Statements use the same principles as those used in the Government wide Financial Statements.

N. Unearned Revenue
Unearned revenue is recognized for transactions for which revenue has not yet been earned. 65

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued O. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position or balance sheet reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of financial position or balance sheet reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.

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

Q. OPEB Liabilities, OPEB Expenses and Deferred Outflows/Inflows of Resources Related to 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 City’s OPEB Plan and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis as they are reported by California Employers’ Retiree Benefit Trust (CERBT). For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

R. Implementation of Governmental Accounting Standards Board (GASB) Pronouncements Management adopted the provisions of the following Governmental Accounting Standards Board (GASB) Statement, which became effective during the year ended June 30, 2025. 66

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued R. Implementation of Governmental Accounting Standards Board (GASB) Pronouncements, Continued GASB Statement No. 101, Compensated Absences - The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. The City restated its beginning compensated absence balances and its current year accounting and disclosures as part of implementation of this Statement.

GASB Statement No. 102, Certain Risk Disclosures - The objective of this Statement is to provide users of government financial statements with essential information about risks related to a government’s vulnerabilities due to certain concentrations or constraints. The requirements of this statement did not apply to the City for the current fiscal year OR The City implemented the requirement of this statement during the current fiscal year. It resulted in no disclosure.

2. CASH AND INVESTMENTS
A. Cash Deposit
The City’s cash and investments at June 30, 2025 are presented as follows:

Cash and investments consist of the following as of June 30, 2025 :

Cash and investments $ 111,968,421
Restricted cash and investments 177,415
Custodial funds:

Cash and investments 36,950
Restricted cash and investments 48,283
Total cash and investments $ 112,231,069
Cash on hand $ 1,242
Deposits with finanial institutions 10,827,227
investments:

Liquid investments $ 47,684,107
Managed investments 53,718,493 101,402,600
Total cash and investments $ 112,231,069
67

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

2. CASH AND INVESTMENTS, Continued
B. Authorized Investments
Under the provisions of the City’s investment policy and in accordance with Section 53601 of the California Government Code, the City is authorized to invest or deposit in the following, with the limitations as they relate to interest rate risk, credit risk, and concentration of credit risk:

C. Interest Risk
Interest rate risk is the market rate changes that adversely affect the fair value of an investment. Generally, the sensitivity of an investment fair value to changes in market rates is greater when the maturity of the investment is longer.

Investments held in city treasury grouped by maturity date at June 30, 2025, are shown below:

Maximum
Maximum Minimum Credit Maximum % Investment
Authorized Investment Type Maturity Quality* of Portfolio in One Issuer Local Agency Investment Fund N/A N/A 100% $75 million
Money Market Mutual Funds N/A N/A 20% 10%
Certificates of Deposit 3 years A 50% 10%
Bankers Acceptances 180 days N/A 20% 10%
Commercial Paper 270 days A-1 25% 5%
Repurchase Agreements 180 days N/A 20% 10%
U.S. Treasury Bills, Notes and Bonds 5 years N/A 100% N/A Supra-National Agency Notes and Bonds 5 years AA 20% N/A U.S. Government-Sponsored Enterprise Agencies 5 years N/A 100% 20% Medium-Term Corporate Notes 5 years A 30% 3%
Asset-backed Securities 5 years AAA 20% 3%
12 Months 13 to 24 25 to 36 37 to 60
Investment Type Total or less Months Months Months
Money Market Mutual Fund $ 18,989,863 $18,989,863 $ - $ - $ - Government Sponsored Enterprise Agencies:

Federal National Mortgage Association Notes (FNMA) 380,552 119,705 260,847 - - Federal Home Loan Mortgage Corporation (FHLMC) 3,288,644 663,622 2,456,918 - 168,104 U.S. Treasury Notes 18,395,972 10,641,346 7,754,626 - - Certificate of Deposit 1,866,768 1,003,542 863,226 - -
Supra-National Agency Notes and Bonds 416,247 416,247 - - - Medium-Term Corporate Notes 6,345,180 3,755,534 2,589,646 - - Asset-Backed Securities 4,260,964 261,236 887,274 2,482,015 630,439 Local Agency Investment Funds (LAIF) 28,699,466 28,699,466 - - - California Asset Management Program (CAMP) 18,758,944 18,758,944 - - - Total investments 101,402,600 $83,309,505 $14,812,537 $ 2,482,015 $ 798,543 Demand Deposits and Cash on Hand 10,828,469
Total cash and investments $112,231,069
Investment Maturities (in Months)
68

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

2. CASH AND INVESTMENTS, Continued
D. Fair Value Hierarchy
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

The following is a summary of the fair value hierarchy of the fair value of investments of the City as of June 30, 2025:

Investments above classified in Level 1 of the fair value hierarchy are valued using a quoted price in an active market for an identical asset. Investments above classified in Level 2 of the fair value hierarchy are valued using a quoted price in a non-active market for an identical asset. These prices are obtained from various pricing sources by the custodian bank. Certificates of Deposit, Money Market Mutual Fund, LAIF and CAMP are exempt from being classified under GASB 72.

E. Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is usually measured by the assignment of a rating by a nationally recognized statistical rating organization.

Investments Type Total Level 1 Level 2
Government Sponsored Enterprise Agencies:

Federal National Mortgage Association Notes (FNMA) $ 380,552 $ - $ 380,552 Federal Home Loan Mortgage Corporation (FHLMC) 3,288,644 - 3,288,644 U.S. Treasury Notes 18,395,972 - 18,395,972
Supra-National Agency Notes and Bonds 416,247 - 416,247 Medium-Term Corporate Notes 6,345,180 - 6,345,180
Asset-backed Securities 4,260,964 - 4,260,964
Total Investments 33,087,559 $ - $ 33,087,559
Investments not subject to leveling disclouser:

Certificates of Deposit 1,866,768
Money Market Mutual Fund 18,989,863
California Local Agency Investment Fund (LAIF) 28,699,466 California Asset Management Program (CAMP) 18,758,944
Cash in banks and on hand 10,828,469
Total Cash and investments $ 112,231,069
69

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

2. CASH AND INVESTMENTS, Continued
E. Credit Risk, Continued
At June 30, 2025, the City’s deposit and investments were rated as follows:

Investment Type Moody's S&P Market Value
Asset-backed Securities Aaa AAA $ 1,402,557
Asset-backed Securities NA AAA 1,264,640
Asset-backed Securities NR AAA 384,392
Asset-backed Securities Aaa NA 1,209,375
Medium-Term Corporate Notes:

BANK OF NEW YORK MELLON CORP Aa3 A 249,892
HOME DEPOT INC A2 A 106,037
TRUIST FINANCIAL CORP Baa1 A- 129,948
BANK OF AMERICA NA Aa2 A+ 278,900
JOHN DEERE CAPITAL CORP A1 A 201,257
AMERICAN HONDA FINANCE CORP A3 A- 201,679
STATE STREET CORP Aa3 A 202,008
AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD (NAa2 EW Y AA- 252,546 COMCAST CORP A3 A- 197,187
PACCAR FINANCIAL CORP A1 A+ 126,305
PEPSICO INC A1 A+ 65,819
WELLS FARGO BANK NA Aa2 A+ 380,408
GOLDMAN SACHS GROUP INC A2 BBB+ 197,661
JPMORGAN CHASE & CO A1 A 224,915
MORGAN STANLEY A1 A- 84,920
INTERNATIONAL BUSINESS MACHINES CORP A3 A- 374,835
INTEL CORP Baa1 BBB 199,344
BANK OF AMERICA CORP A1 A- 224,878
COLGATE-PALMOLIVE CO Aa3 A+ 54,895
WALMART INC Aa2 AA 149,865
COMMONWEALTH BANK OF AUSTRALIA (NEW YORK BRANAa2CH) AA- 250,445 HOME DEPOT INC A2 A 54,943
AMERICAN HONDA FINANCE CORP A3 A- 175,477
LOCKHEED MARTIN CORP A2 A- 175,049
UNITEDHEALTH GROUP INC A2 A+ 80,135
BRISTOL-MYERS SQUIBB CO A2 A 123,383
AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD (NAa2 EW Y AA- 250,595 TOYOTA MOTOR CREDIT CORP A1 A+ 175,428
CITIGROUP INC A3 BBB+ 199,283
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPA2 A- 125,053 BANK OF AMERICA CORP A1 A- 173,788
WELLS FARGO & CO A1 BBB+ 197,794
CATERPILLAR FINANCIAL SERVICES CORP A2 A 250,142
TOYOTA MOTOR CREDIT CORP A1 A+ 210,367
Credit Quality Ratings
70

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

2. CASH AND INVESTMENTS, Continued
E. Credit Risk, Continued
Investment Type Moody's S&P Market Value
U.S. Treasury Notes Aa1 AA+ 18,395,972
Certificates of Deposit:

Natixis, New York Branch A1 A+ 381,625
Coöperatieve Rabobank U.A., New York Branch Aa2 A+ 481,600 Toronto-Dominion Bank - New York Branch Aa2 A+ 501,856
Nordea ABP - New York Branch Aa3 AA- 501,686
Supra-National Agency Notes and Bonds Aa2 AA- 416,247
Money Market Funds Aaa AAA 18,989,863
Securities of Government SRonsored EnterRrise Agencies:

Federal National Mortgage Association Notes (FNMA) Aa1 AA+ 380,552 Federal Home Loan Mortgage CorRorate Notes (FHLMC) Aa1 AA+ 3,017,471 Federal Home Loan Mortgage CorRorate Notes (FHLMC) Aa1 AAA 271,173 Subtotal 53,944,190
Not Rated:

Cash on hand Not Rated Not Rated 1,242
Cash in banks Not Rated Not Rated 10,827,227
Local Agency Investment Funds (LAIF) Not Rated Not Rated 28,699,466 California Asset Management Program (CAMP) Not Rated Not Rated 18,758,944 Total Investments $ 112,231,069
Credit Quality Ratings
71

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

2. CASH AND INVESTMENTS, Continued
F. Custodial Credit Risk – Deposits
This is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City does not have a policy for custodial credit risk for deposits. However, the California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105% of the secured deposits.

As of June 30, 2025, the City's bank balance was $12,158,817 and the corresponding carrying book balance was $10,827,227. Of the bank balance, $250,000 was covered by federal depository insurance and $14,947,957 was collateralized.

Investments: The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments.

G. Investment in State Investment Pool
The City is a voluntary participant in LAIF that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool as reported in the accompanying financial statements is based upon the Entity’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio).

As of June 30, 2025, the City held $28,699,466 in LAIF. The LAIF fair value factor of 1.00119831 was used to calculate the fair value of the investments in LAIF and average maturity of 248 days.

3. INTERFUND ACTIVITIES
A. Due To/From Other Funds
Current year due to/from other fund balances arose in the normal course of operations and are expected to be repaid shortly after the end of the fiscal year. At June 30, 2025, the City’s due to/from other fund balances comprised of the following:

Due From Other Funds Due To Other Funds Amount
General Fund Non-Major Governmental Funds $24,415
72

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

3. INTERFUND ACTIVITIES, Continued
B. Transfers In/Out
During the year ended June 30, 2025, the City had the following transfers in/out:

Interfund transfers were principally used for the following purposes:
• $7,000,000 transfer from the General Fund to internal service funds are to fund workers compensation insurance as well as to fund pension and OPEB reserve. • $150,000 transfer from the General Fund to the Non-major Governmental Funds is to fund non-major governmental activities, including traffic impact fees, gas tax allocations, and other restricted-use funds that support public infrastructure and safety initiatives. • $622,090 transfer from Park Impact Fee Fund to Non-Major Governmental Fund is to support debt service payments for the Community Center.
• $98,000 transfer from the General Fund to the Non-Major Governmental Fund is for equipment replacement cost.

Capital Internal Nonmajor
Projects Service Governmental
Transfers Out Fund Fund Funds Total
General Fund $ - $ 7,000,000 $ 98,000 $ 7,098,000
Park Impact Fee Fund - - 622,090 622,090
Nonmajor Governmental Funds 150,000 - - 150,000
Total $ 150,000 $ 7,000,000 $ 720,090 $ 7,870,090
Transfers In
73

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

4. CAPITAL ASSETS
A. Government-wide Financial Statements
For the year ended June 30, 2025 the City’s capital asset consisted of the following:

The following is a summary of capital assets for governmental activities for the year ended June 30, 2025:

Governmental Business-Type
Activities Activities Total
Governmental Activities:

Nondepreciable capital assets:

Land $ 11,642,285 $ 345,292 $ 11,987,577
Construction in progress 29,152,569 - 29,152,569
Total nondepreciable capital assets 40,794,854 345,292 41,140,146 Depreciable capital assets:

Buildings 23,607,089 15,990,759 39,597,848
Improvements 6,865,435 - 6,865,435
Machinery and Equipment 8,515,415 1,798,897 10,314,312
Infrastructure 89,379,371 12,072,926 101,452,297
Total depreciable capital assets 128,367,310 29,862,582 158,229,892 Less Accumulated depreciation: (51,511,453) (13,497,183) (65,008,636) Depreciable capital assets, net 76,855,857 16,365,399 93,221,256 Total capital assets $ 117,650,711 $ 16,710,691 $ 134,361,402 Balance Retirements & Balance
July 1, 2024 Additions Transfers Adjustment June 30, 2025 Governmental Activities:

Nondepreciable capital assets:

Land $ 11,642,285 $ - $ - $ - $ 11,642,285
Construction in progress 20,846,762 10,057,890 (1,752,083) - 29,152,569 Total nondepreciable capital assets 32,489,047 10,057,890 (1,752,083) - 40,794,854 Depreciable capital assets:

Buildings 23,607,089 - - - 23,607,089
Improvements 6,865,435 - - - 6,865,435
Machinery and Equipment 7,887,074 628,341 - - 8,515,415 Infrastructure 87,627,288 - 1,752,083 - 89,379,371
Total depreciable capital assets 125,986,886 628,341 1,752,083 - 128,367,310 Accumulated depreciation:

Buildings (14,592,956) (389,468) - - (14,982,424)
Improvements (3,267,175) (158,533) - - (3,425,708)
Machinery and Equipment (5,944,854) (381,298) - - (6,326,152) Infrastructure (23,941,116) (2,836,053) - - (26,777,169) Total accumulated depreciation (47,746,101) (3,765,352) - - (51,511,453) Depreciable capital assets, net 78,240,785 (3,137,011) 1,752,083 - 76,855,857 Total capital assets $ 110,729,832 $ 6,920,879 $ - $ - $ 117,650,711 74

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

4. CAPITAL ASSETS, Continued
A. Government-wide Financial Statements, Continued
The governmental activities depreciation expenses for capital assets for the year ended June 30, 2025, are as follows:

The following is a summary of capital assets for business-type activities:

The depreciation expense for business-type activities consisted solely of the Sewer activity.

B. Fund Financial Statements
The Governmental Fund Financial Statements do not present capital assets, which are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position.

The capital assets of the Enterprise Funds in the Proprietary Fund Financial Statements are the same as those shown in the business-type activities of the Government-wide Financial Statements.

Governmental Activities:

Public safety $ 280,129
Public works 2,830,005
Recreation 437,807
Community development 9,233
Admin / community services 208,178
Total depreciation expense $ 3,765,352
Balance Retirements & Balance
July 1, 2024 Additions Transfers Adjustment June 30, 2025 Business-Type Activities:

Nondepreciable capital assets:

Construction in progress $ 348,923 $ 8,289 $ - $ (11,920) $ 345,292 Total nondepreciable capital assets 348,923 8,289 - (11,920) 345,292 Depreciable capital assets:

Buildings 15,990,759 - - - 15,990,759
Machinery and Equipment 1,066,804 732,093 - - 1,798,897 Infrastructure 12,072,926 - - - 12,072,926
Total depreciable capital assets 29,130,489 732,093 - - 29,862,582 Accumulated depreciation:

Buildings (9,288,326) (145,714) - 5 (9,434,035)
Machinery and Equipment (996,314) (35,247) - - (1,031,561) Infrastructure (2,799,108) (232,479) - - (3,031,587)
Total accumulated depreciation (13,083,748) (413,440) - 5 (13,497,183) Depreciable capital assets, net 16,046,741 318,653 - 5 16,365,399 Business-type Activity capital assets, Net $ 16,395,664 $ 326,942 $ - $ (11,915) $ 16,710,691 75

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

5. LONG-TERM LIABILITIES
A. Governmental Activities Long-Term Debt
The City generally incurs long-term debt to finance projects, which will have useful lives equal to or greater than the related debt. The City’s long-term debt activity for the year ended June 30, 2025 was as follows:
2004 Refunding Certificate of Participation: On November 1, 1996, the City issued $2,630,000 principal amount of Certificates of Participation (ABAG 38 COPs). The purpose of the ABAG 38 COPs was to finance the partial purchase of the 5.5-acre Saint William School site for public purposes and uses. During 2004 the City issued $2,500,000 of 2004 Refunding Certificates of Participation to advance refund $2,390,000 of outstanding principal on the ABAG 38 Certificates of Participation, set up reserve funds, and to pay related issuance costs. The entire ABAG 38 Certificates of Participation had been paid off by June 30, 2004. This advance refunding was undertaken to reduce total future debt service payments.

The Certificates of Participation are limited obligations of the City, payable from appropriations budged for in the City’s annual adopted budget. The Certificate covenants contain events of default that may result in the termination of the lease, collection of rent due and other monetary charges and terminate the City's right to possession of the leased property as applied by the Trustee and specified in the terms of the agreement if any of the following conditions occur: default on debt service payments; the failure of the City to observe or perform the conditions, covenants, or agreement terms of the debt; bankruptcy filing by the City; or if any court or competent jurisdiction shall assume custody or control of the City.

There were no such events occurred during the fiscal year ending June 30, 2025.

Direct Borrowing - Community Center Lease Agreement: On December 1, 2020, the City entered into Lease Agreements with the Public Property Financing Corporation of California, which subsequently assign the Agreement to Sterling National Bank (Assignee), under which the City leased certain facilities and the land on which the City’s Community Center is located, for which the Assignee made a one‐time up‐front lease payment to the City in the amount of $10,000,000. Simultaneously, the City will lease back from the Assignee with annual lease payments over a lease term of 19 years, at a fixed interest rate of

2.290% per year. The Sublease is secured by the leased property. The Sublease is repayable in semi‐annual payments beginning June 2021 through June 30, 2040. The pledge of repayment is from the General Fund.

Amount
Balance Balance due within
July 1, 2024 Additions Retirements June 30, 2025 one year Governmental Activities - Direct Borrowings:
2004 Certificate of Participation $ 470,000 $ - $ (150,000) $ 320,000 $ 155,000 Direct Borrowing-Community Center Lease 8,255,034 - (433,034) 7,822,000 442,951 $ 8,725,034 $ - $ (583,034) $ 8,142,000 $ 597,951
76

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

5. LONG-TERM LIABILITIES, Continued
A. Governmental Activities Long-Term Debt, Continued
Annual debt service requirements for the bonds are as follow:

B. Non-City Obligations
The following bonds are not reported in the City’s financial statements as they are special obligations payable solely from and secured by specific revenue sources as described in the resolutions and official statements of the respective issues. Neither the faith and credit nor the taxing power of the City is pledged for payment of these obligations.

Blue Oak Lane Special Assessment District: On November 5, 2009, Limited Obligation Improvement Bonds were issued for a newly formed Blue Oak Lane Sewer Assessment District (series 2009) to finance the acquisition and construction, by the City, of sanitary sewer improvements serving properties within the subject assessment District. These bonds are issued upon and secured by individual parcel levied assessments to be included in the annual property tax billings annually. The Bonds mature in 2039, were issued in a principal amount of $662,880 and are subject to semi-annual debt service payments administered by the City.

Year Ending
June 30, Principal Interest Principal Interest Total
2026 $ 155,000 $ 13,600 $ 442,951 $ 179,139 $ 790,690
2027 165,000 7,012 453,094 168,995 794,101
2028 - - 463,470 158,620 622,090
2029 - - 474,083 148,006 622,089
2030 - - 484,940 137,150 622,090
2031-2035 - - 2,596,451 513,997 3,110,448
2036-2040 - - 2,907,011 202,772 3,109,783
Total $ 320,000 $ 20,612 $ 7,822,000 $ 1,508,679 $ 9,671,291 2004 COP Community Center Lease
Amount Amount
Balance Balance due within due more than
July 1, 2024 Additions Retirements June 30, 2025 one year one year Blue Oak Lane $ 435,000 $ - $ (20,000) $ 415,000 $ 20,000 $ 395,000 $ 435,000 $ - $ (20,000) $ 415,000 $ 20,000 $ 395,000
77

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

6. COMPENSATED ABSENCES PAYABLE
The City’s compensated absences payable activity for the year ended June 30, 2025 was as follows:

7. NET POSITION AND FUND BALANCES
A. Fund Balances
In the fund financial statements, governmental funds report the following classifications: nonspendable, restricted, committed, assigned, and unassigned. The City Council, as the highest level of decisionmaking authority for the City, can commit fund balances through the adoption of a formal action in accordance with the adoption of its annual Financial Policy. This formal action includes committing funds through budget adoption or by resolution. This policy authorizes the City Manager to assign fund balances and has set the budgetary level of control at the Fund and Capital Project level for the governing body and the department level for the City Manager and assignees.

B. General Fund Reserve
The City Council has established a General Fund Reserve goal level of 20% of annual operating expenditures has set funds aside accordingly through its annual budgetary actions. These funds would be available for use in such conditions to mitigate negative economic fiscal impacts or State takeaways and can be activated within any one budget cycle through Council action. An economic downturn would entail a projected and/or sudden drop in core revenues (major tax and service revenue loss) of equal to or greater than 5% (including the impact of inflation) and/or a change in economic parameters (such as interest rates, debt service rates, commodity prices, pension rates) that cause a material change in expenditures of 5% or more, or the occurrence of a local natural disaster or unexpected financial claim requiring the immediate use of cash balances of 5% or more, or the occurrence of a local natural disaster or unexpected financial claim requiring the immediate use of cash balances. In fiscal year 2020/2021, in line with budget approval, the City reallocated the pre-established State Budget Stabilization reserve into the aforementioned General Fund reserve. This results in the establishment of one Reserve balance to assist in periods of economic downturn or extraordinary need. The City’s reserve goal is at 20% during fiscal year 2024/25 based on total expenditures for the year.

Governmental Business-type
Activities Activities Total
Balance at July 1, 2024, restated $ 2,736,300 $ 210,848 $ 2,947,148 Net Change 341,528 26,317 367,845
Balance at June 30, 2025 $ 3,077,828 $ 237,165 $ 3,314,993 Current Portion $ 984,905 $ 75,893 $ 1,060,798
Long-Term Portion $ 2,092,923 $ 161,272 $ 2,254,195
78

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

7. NET POSITION AND FUND BALANCES, Continued
C. Classifications
In the Government-wide Financial Statements, net position is classified in the following categories:

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

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

Unrestricted Net Position – This amount is all net position that do not meet the definition of “net investment in capital assets” or “restricted net position.” As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. As of June 30, 2025, fund balances for government funds are made up of the following:
• Non-spendable 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, long-term notes receivable and land.
• 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 – Committed fund balances include amounts that can be used only for the specific purposes determined by a formal action of the City Council's highest level of decision-making authority. The City Council can, by adoption of a resolution prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution remains in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation.
• Assigned Fund Balance – comprised of amounts intended to be used by the City for specific purposes that are neither restricted nor committed. Intent is expressed by (a) the City Council or (b) a body (for example: a budget or finance committee) or official to which the City Council has delegated the authority to assign amounts to be used for specific purposes. • Unassigned Fund Balance – conveys 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. General fund is the only fund that reports a positive unassigned fund balance amount. In governmental funds other than the general fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, a negative unassigned fund balance is reported in that fund. 79

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

7. NET POSITION AND FUND BALANCES, Continued
D. Policies
Order of Use
The standard also requires governments to disclose the accounting policies that indicate the order in which restricted, committed, assigned and unassigned amounts are spent. The City considers restricted amounts to have been spent first when expenditures are incurred and both restricted and unrestricted fund balances are available. Additionally, the City considers committed amounts to have been spent first, assigned amounts to have been spent second, and unassigned amounts to have been spent last when an expenditure is incurred for purposes of which committed, assigned, and unassigned fund balance is available. In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned.

Assignment and Commitment Authority
The City Council has approved by resolution a financial policy authorizing the City Manager to assign fund balances to facilitate year-end reporting requirements. The City Council, as the highest level of decision-making authority for the City, has the ability to commit fund balances through the adoption by resolution. The same action must be taken to modify or rescind the commitment.

E. Fund Balances
Fund balances for all the major and non-major governmental funds as of June 30, 2025 were distributed as follows:

Other
General In Lieu Capital Governmental Total
Classifications Fund Park Land Projects Fund Governmental Nonspendable:

Inventory and Prepaid Items $ 213,821 $ - $ - $ - $ 213,821 Total Nonspendable 213,821 - - - 213,821
Restricted:

Debt Service - - - 222,725 222,725
Special revenue programs and projects - 19,412,446 - 8,674,517 28,086,963 Total Restricted - 19,412,446 - 8,897,242 28,309,688
-
Assigned:

Emergency and operating 10,171,485 - - - 10,171,485
Veteran Mmorial reserve 8,615 - - - 8,615
Technology reserve 827,484 - - - 827,484
Capital and equipment:

Capital and equipment reserve 11,000,000 - - 576,628 11,576,628 Total Assigned 22,007,584 - - 576,628 22,584,212
Unassigned: 24,856,730 - (394,476) (24,415) 24,437,839
Total Unassigned 24,856,730 - (394,476) (24,415) 24,437,839 Total Fund Balances $ 47,078,135 $ 19,412,446 $ (394,476) $ 9,449,455 $ 75,545,560 80

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

7. NET POSITION AND FUND BALANCES, Continued
F. Net Deficit
The funds listed in the table below had fund balance deficits at June 30, 2025. These deficits are expected to be eliminated by future revenues.

G. OPEB Reserves
As of June 30, 2025, $772,628 in General Fund reserves have been assigned in recognition of existing PostRetirement Health actuarial liability.

H. Encumbrances
The City utilized an encumbrance system during fiscal year 2025 to assist in controlling expenditures.

Under this system, governmental funds are encumbered when purchase orders, contracts, or other commitments are signed or approved. The General fund had an encumbrance balance at June 30, 2025 of $14,712, which is reflected in the fiscal year 2025 budget.

I. Net Investment in Capital Assets
The balances related to Net Investment in Capital Assets are comprised of the following as of June 30, 2025:

8. RISK MANAGEMENT
A. Bay Cities Joint Powers Insurance Authority
The City is exposed to various risks of loss related to torts; theft of damage to and destruction of assets; errors and omissions; and floods for which the City is insured through Bay Cities Joint Powers Insurance Authority (Bay Cities).

Fund
Fund Deficit
Capital Projects Fund $ (394,476)
Vehicle Impound Special Revenue Fund (24,415)
Governmental Business-Type
Activities Activities Total
Capital Asset, net of accumulated depreciation $ 117,650,711 $ 16,710,691 $ 134,361,402 Minus: Capital-related long-term liabilities (8,142,000) - (8,142,000) Add: Unspent bond proceeds 177,415 - 177,415
Net Investment in Capital Assets $ 109,686,126 $ 16,710,691 $ 126,396,817 81

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

8. RISK MANAGEMENT, Continued
A. Bay Cities Joint Powers Insurance Authority, Continued The City joined worker’s compensation program with Bay Cities as of 7/1/2024. Bay Cities is a public agency created in 1986 by and among various municipalities in Northern California to provide a pooled approach to liability insurance pursuant to the California Government Code. It is governed by a Board of Directors comprised of appointed officials from the member entities. The purpose of the pool is to provide various levels of liability coverage, claims administration, and loss control support to member agencies.

Annually, each member pays an actuarially determined premium based on a formula which takes into account the prior three years’ loss experience, annual payroll, and population.

Bay Cities provides coverage for its Members in excess of the member's retained limit, or self-insured retention (SIR), up to $1,000,000 per occurrence. Each Member retains the portion of every loss that falls within their SIR, ranging from $2,500 to $1,000,000. Bay Cities is also a member of the California Affiliated Risk Management Authorities (CARMA), a risk sharing joint powers authority. When losses exceed the $1,000,000 per occurrence limit, CARMA provides coverage up to $28,000,000.

The City self-insures the first $100,000 of each liability loss. Once the City’s deductible is met, Bay Cities becomes responsible for payment of all claims up to the upper limit. During the year ended June 30, 2025, the City contributed $6,609 for current year coverage.

The City continues to carry excess insurance policy for Workers’ Compensation claims through the CSAC Excess Insurance Authority JPA up to the statutory limits and does so using the services of a contracted third-party administrator. The City has a $250,000 deductible as of June 30, 2025. During the year, the City contributed $1,663,010 for current year coverage.

As of June 30, 2025 , $97,000 of revolving funds was held in trust on behalf of the City by the workers’ compensation third-party claims administrator. $10,000 is also being held by Bay Cities in the procurement of liability and claims coverage. The City will receive these funds upon termination of services subject to final withdrawal adjustments.

The Bay Cities financial statements may be obtained from Bay Cities Joint Powers Insurance Authority, Bickmore, 1750 Creekside Oaks Drive Suite 200, Sacramento, CA 95833. CSAC Excess Insurance Authority financial statements may be obtained from CSAC Excess Insurance Authority, 75 Iron Point Circle Suite 200, Folsom, CA 95630.
82

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

8. RISK MANAGEMENT, Continued
B. Liability for Uninsured Claims
The GASB requires municipalities to record their liability for uninsured claims and to reflect the current portion of this liability as an expenditure in their financial statements. As discussed in the section above, the City has coverage for such claims, but it has retained the risk for the deductible or uninsured portion, of these claims. The current accounting standards require that this amount be separately identified and recorded as a liability. Changes in the balances of claims liabilities during the past three years were as follows:

In conformance with current accounting standards the City obtained an independent actuarial valuation of all outstanding Workers Compensation and Liability claims. Both the Workers Compensation report and the General Liability report presented a valuation as of June 30, 2025, and projected values through fiscal years 2026 and 2027. The fiscal year 2024-2025 values presented above reflect the estimated present value of open claims as developed in this actuarial report, and those values do not represent the pending claims.
2025 2024 2023
Unpaid claims, beginning of year $ 4,410,863 $ 4,233,761 $ 5,400,302 Incurred claims and changes in estimates (160,976) 667,639 (715,812) Claim payments (535,936) (490,537) (450,729)
Unpaid claims, end of year $ 3,713,951 $ 4,410,863 $ 4,233,761 Current Portion $ 987,632 $ 1,107,082 $ 1,056,753
Long-Term Portion $ 2,726,319 $ 3,303,781 $ 3,177,008
June 30,
83

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

9. SELF-FUNDED REIMBURSEMENT DENTAL AND VISION PLAN
The City provides a self-funded reimbursement based dental and vision plans. The City’s contribution for these plans is accounted for in the Dental Reimbursement Fund. The City contributed $75 per month for each fulltime budgeted position. The funds accumulated are used to reimburse full-time salaried employees and their dependents, as well as council members for covered dental and vision claims. There are no administrative charges for this plan. Contributions and reimbursements for the past five fiscal years as follows:

The dental and vision plan year commences January 1st of each calendar year. An annual maximum dental and vision reimbursements of $2,176 are provided for each employee and $1,449 for each of their dependents. Any remaining balance in the fund for each plan year is carried forward to the following year. In subsequent years, the maximum coverage for both employees and dependents is increased annually based on the Consumer Price Index but not to exceed 3%.

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

A. General Information about the Pension Plan
Plan Descriptions – All qualified permanent and probationary employees are eligible to participate in the City’s Miscellaneous and Safety Tier I, Tier II and PEPRA Employee Pension Rate Plan. The City’s Miscellaneous Rate Plan is part of the public agency cost-sharing multiple employer defined benefit pension plan (PERF C), which is administered by the California Public Employees’ Retirement System (CalPERS). PERF C consists of a miscellaneous pool and a safety pool (also referred to as “risk pools”), which are comprised of individual employer miscellaneous and safety rate plans, respectively. Individual employers may sponsor more than one miscellaneous and safety rate plan. The employer participates in one cost-sharing multiple employer defined benefit pension plan regardless of the number of rate plans the employer sponsors. The City sponsors three miscellaneous and three safety rate plans. Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Year Ending Contribution Reimbursement
June 30, Amount Amount
2021 $ 264,121 $ 308,786
2022 340,693 340,693
2023 406,905 406,905
2024 489,602 386,311
2026 409,150 409,150
Total $ 1,910,471 $ 1,851,845
84

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

10. PENSION PLAN, Continued
A. General Information about the Pension Plan, Continued Benefits Provided – CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following:
the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The costof-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

The Plan’s provisions and benefits in effect at June 30, 2025, are summarized as follows:

Hire date Piror to 1/1/2012
Benefit formula 2.7% @ 55
Benefit vesting schedule 5 years service
Benefit Payments monthly for life
Retirement age 50-67
Monthly benefits, as a % of annual salary 2% to 2.7%
Required employee contribution rate 8.00%
Required employer contribution rate * 16.02%
1/1/2012 -
Hire date 12/31/2012
Benefit formula 2% @ 60
Benefit vesting schedule 5 years service
Benefit Payments monthly for life
Retirement age 50-67
Monthly benefits, as a % of annual salary 1.092% - 2.418% Required employee contribution rate 7.00%
Required employer contribution rate * 10.15%
Hire date On or after January 1, 2013
Benefit formula 2% @ 62
Benefit vesting schedule 5 years service
Benefit Payments monthly for life
Retirement age 52-67
Monthly benefits, as a % of annual salary 1.000% - 2.500% Required employee contribution rate 6.75%
Required employer contribution rate * 7.87%
Miscellaneous -Tier 1
Miscellaneous -PEPRA
Miscellaneous -Tier 2
85

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

10. PENSION PLAN, Continued
A. General Information about the Pension Plan, Continued Beginning in fiscal year 2018, CalPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as dollar amount for contributions toward the unfunded liability and side fund. The dollar amounts are billed on a monthly basis. The City’s required contribution for the unfunded liability and side fund was $3,196,970 in fiscal year 2025.

Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan 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 City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

Hire date Piror to 1/1/2012
Benefit formula 3% @ 50
Benefit vesting schedule 5 years service
Benefit Payments monthly for life
Retirement age 50-55
Monthly benefits, as a % of annual salary 3.00%
Required employee contribution rate 9.00%
Required employer contribution rate * 27.32%
1/1/2012 -
Hire date 12/31/2012
Benefit formula 3% @ 55
Benefit vesting schedule 5 years service
Benefit Payments monthly for life
Retirement age 50-55
Monthly benefits, as a % of annual salary 2.400% - 3.000% Required employee contribution rate 9.00%
Required employer contribution rate * 23.00%
Hire date On or after January 1, 2013
Benefit formula 2.7% @ 57
Benefit vesting schedule 5 years service
Benefit Payments monthly for life
Retirement age 50 - 57
Monthly benefits, as a % of annual salary 2.000% - 2.700% Required employee contribution rate 13.00%
Required employer contribution rate * 13.76%
Safety - PEPRA
Safety - Tiers 1 and 2
Safety - Tier 3
86

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

10. PENSION PLAN, Continued
A. General Information about the Pension Plan, Continued For the year ended June 30, 2025, the employer contributions which were reported as deferred outflows of resources were as follows:

B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2025, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan as follows:

The City’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2024, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for the Plan as of June 30, 2023 and 2024 was as follows:

For the year ended June 30, 2025 , the City recognized pension expense of $6,348,621. At June 30, 2025 , the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Miscellaneous Safety Total
Contribution - employer $ 3,502,112 $ 2,807,271 $ 6,309,383 Cost Sharing Plan
Proportionate Share of Net Pension Liability $ 46,770,921 Cost Sharing Plan
Proportion - June 30, 2023 0.38056%
Proportion - June 30, 2024 0.38566%
Change-Increase (Decrease) 0.00510%
Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions made subsequent to the measurement date $ 6,309,383 $ - Differences between actual and expected experience 3,941,172 142,551 Changes of assumptions 1,179,599 -
Change in employer's proportion - 1,803,105
Differences between the employer’s contributions and the employer’s proportionate share of contributions 275,205 -
Net differences between projected and actual earnings
on plan investments 2,497,222 -
Total $ 14,202,581 $ 1,945,656
87

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

10. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
$6,309,383 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Actuarial Assumptions – For the measurement period ended June 30, 2024, the total pension liability was determined using the actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 using the standard update procedures. The total pension liability in the June 30, 2023, actuarial valuations were determined using the following actuarial methods and assumptions:

June 30 Cost Sharing Plan
2026 $ 1,201,562
2027 5,599,602
2028 1,600
2029 (855,222)
$ 5,947,542
All Plans
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method Entry Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Salary Increase (1)
Investment Rate of Return 6.90%
Mortality Derived using CalPERS’ membership data for all funds (2) Post Retirement Benefit Increase Contract COLA up to 2.30% until Purchasing Power Protection Allowance Floor on Purchasing Power applies,

2.30% thereafter
(1) Varies by entry age and service
(2) The mortality table used was developed based on CalPERS’ specific data. The table includes generational mortality improvements using the Society of Actuaries Scale 80% of scale MP 2020. For more details on this table, please refer to the CalPERS November 2021 experience study report (based on CalPERS demographic data from 2001 to 2019) that can be found on the CalPERS website. 88

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

10. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Discount Rate – The discount rate used to measure the total pension liability as of the measurement date of June 30, 2024, for the Plan was 6.9%. The projection of cash flows used to determine the discount rate for the Plan assumed that contributions from all plan members in the Public Employees Retirement Fund (PERF) will be made at the current member contribution rates and the contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. A detailed report testing these projections can be obtained from the CalPERS website.

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

In determining the long-term expected rate of return, CalPERS took into account the long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated and combined with risk estimates, are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return.

The expected real rates of return by asset class are as follows:

Assumed
asset
Asset class allocation Real return
1,2
Global Equity - Cap-weighted 30.00% 4.54%
Global Equity - Non-Cap-weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
Total 100.00%
(1)An expected inflation of 2.30% used for this period. (2)Figures are based on the 2021-22 Asset Liability Management study. 89

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

10. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – The following presents the City’s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1- percentage point higher than the current rate:

Pension Plan Fiduciary Net Position – Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

11. OTHER POST EMPLOYMENT BENEFITS (OPEB)
A. General Information about the City’s Other Post Employment Benefit (OPEB) Plan Plan Description – The City’s defined benefit post-employment healthcare plan (OPEB Plan) is an agent multiple-employer plan that provides medical benefits to eligible retired City employees.

Benefits Provided – The following is a summary of the OPEB Plan benefits by employee group as of June 30, 2025:

For the year ended June 30, 2025, the City’s contribution to the OPEB Plan was $174,236 Cost Sharing Plan
Discount Rate 1% Decrease 5.90%
Net Pension Liability $ 71,628,454
Current Discount Rate 6.90%
Net Pension Liability $ 46,770,921
Discount Rate 1% Increase 7.90%
Net Pension Liability $ 26,368,659
Retire directly from the City under CalPERS
(age 50 and 5 years of service or disability)
Benefit - 5% of active contribution times years in PEMHCA (increase each year not greater than $100 per month)
- Joined PEMHCA in 2001
- 100% of PEMHCA minimum in 2022
- Monthly amounts:

Year Actives Retirees
2024 $146 $158
Surviving Spouse Benefit Surviving spouse coverage continues based on CalPERS retirement plan election
Other - No dental, vision & life or Medicare reimbursement - Implicit rate subsidy included
All Bargaining Units
Eligibility
90

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

11. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
A. General Information about the City’s Other Post Employment Benefit (OPEB) Plan, Continued Employees Covered by Benefit Terms – Membership in the OPEB Plan consisted of the following at June 30, 2024, the measurement date:

B. Net OPEB Liability
Actuarial Methods and Assumptions – The City’s net OPEB liability was measured as of June 30, 2024 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2024 , based on the following actuarial methods and assumptions:

Active employees 150
Inactive employees or beneficiaries currently
receiving benefit payments 52
Inactive employees entitled to but not yet
receiving benefit payments 124
Total 326
Actuarial Assumptions June 30, 2024 Measurement Date
Valuation Date January 1, 2023
Actuarial Cost Method • Entry Age Normal, Level Percentage of Payroll Contribution Policy • City contributes full Actuarial Determined Contribution through CERBT #1 • 6.25% at June 30, 2024
• 6.25% at June 30, 2023
• Expected City contributions projected to keep sufficient plan assets to pay all benefits from trust General Inflation • 2.50% annually
Termination • CalPERS 2000-2019 Experience Study
Mortality Improvement • Mortality Improvement Scale MP-2021 Salary Increases • Aggregate - 2.75% annually
• Merit - CalPERS 2000-2019 Experience Study
Medical Trend
• Non-Medicare - 7.90% for 2026, decreasing to an ultimate rate of 3.45% in 2076 • Medicare (Non-Kaiser) - 6.90% for 2026, decreasing to an ultimate rate of 3.45% in 2076 • Medicare (Kaiser) - 5.65% for 2026, decreasing to an ultimate rate of 3.45% in 2076 PEMHCA Minimum
Increases
• 3.50% annually
Healthcare participation • 60%
Discount Rate and Long
Term Expected Rate of Return
on Assets
91

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

11. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
B. Net OPEB Liability, Continued
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:

Discount Rate – The discount rate used to measure the total OPEB liability was 6.25%. The projection of cash flows used to determine the discount rate assumed that City contributions will 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 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.

C. Changes in the Net OPEB Liability
The changes in the net OPEB liability during the measurement period were as follow:

During fiscal year 24-25, the City paid $175,502 for retiree healthcare plan benefits, including $96,236 in premium payments for retirees, $78,000 for implied subsidies, and $1,266 for administrative costs. The plan does not issue separate financial statements.

Target Allocation Expected Real
Asset Class CERBT - Strategy 1 Rate of Return
Global equity 49% 4.56%
Fixed income 23% 1.56%
Treasury Inflation Protected Securities (TIPS) 5% -0.08% Commodities 3% 1.22%
REITs 20% 4.06%
Total 100%
Assumed long-term rate of inflation 2.50%
Expected long-term net rate of return, rounded 6.25%
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability/(Asset)
(a) (b) (a) - (b)
Balance at June 30, 2023 $ 4,465,736 $ 3,734,597 $ 731,139 Changes Recognized for the Measurement Period:

Service cost 177,742 - 177,742
Interest on the total OPEB liability 285,123 - 285,123
Administrative expenses - (2,633) 2,633
Contributions from the employer - 164,439 (164,439)
Net investment income - 411,350 (411,350)
Benefit payments (163,024) (163,024) -
Net changes 299,841 410,132 (110,291)
Balance at June 30, 2024 (Measurement Date) $ 4,765,577 $ 4,144,729 $ 620,848 Increase (Decrease)
92

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

11. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
D. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate and Healthcare Cost Trend Rates
The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate 1-percentage point (1%) lower or higher than the current discount rate:

The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates 1-percentage point (1%) lower or higher than the current healthcare cost trend rates:

Discount Rate -1% Current Discount Rate Discount Rate +1%

5.25% 6.25% 7.25%
$ 1,260,863 $ 620,848 $ 94,175
Net OPEB Liability/(Asset)
1% Decrease Current Healthcare Cost 1% Increase
Trend Rates
$ (26,623) $ 620,848 $ 1,424,461
Net OPEB Liability/(Asset)
93

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

11. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
E. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2025, the City recognized OPEB expense of $209,956.

At June 30, 2025, the City reported deferred outflows and inflows of resources related to OPEB from the following sources:
$175,502 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ended June 30, 2026.

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

12. LEASES
A. Policies
A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. The City recognizes lease receivable or liabilities with an initial, individual value of $300,000 or more for all funds, based on the future lease payments remaining at the start of the lease.

Lessor
The City is a lessor for noncancellable leases of buildings and facilities. The City recognizes a lease receivable and a deferred inflow of resources in the government‐wide and fund financial statements, as applicable.

Deferred Outflows Deferred Inflows
of Resources of Resources
Employer contributions made subsequent to the measurement date $ 175,502 $ - Differences between projected and actual earnings on
plan investments 53,577 -
Changes of assumptions 27,084 51,230
Differences between expected and actual experience 484,459 423,158 Total $ 740,622 $ 474,388
Year Annual
Ended June 30 Amortization
2026 $ (34,480)
2027 68,638
2028 (41,111)
2029 (39,885)
2030 64,938
Thereafter 72,632
Total $ 90,732
94

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

12. LEASES, Continued
A. Policies, Continued
At the commencement of a lease, the City 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.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts as follows:
• The City uses bond interest rate as the discount rate for leases. • The lease term includes the noncancellable period of the lease. • Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

As of June 30, 2025, The City has no leases over the threshold subject to GASB 87 as a lessor.

Lessee
The City is a lessee for miscellaneous leases. If the lease is over the threshold, the City will recognize a lease liability and an intangible right‐to‐use lease asset (lease asset) in the government-wide financial statements.

At the commencement of a lease, City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight‐line basis over its useful life.

Key estimates and judgments related to leases include how City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments as follows:
• The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, City generally uses bond interest rate as the discount rate for leases.
• The lease term includes the noncancellable period of the lease. • Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that City is reasonably certain to exercise. 95

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

12. LEASES, Continued
A. Policies, Continued
The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the Statement of Net Position.

As of June 30, 2025, the City has no leases over the threshold subject to GASB 87 as a lessee.

13. CONTINGENCIES
The City is presently involved in certain matters of litigation that have arisen in the normal course of conducing City business. City management believes, based upon consultation with the City Attorney, that these cases in the aggregate, although they could potentially result in a material adverse financial impact on the City, a reasonable estimate of the outcome and impacts could not be made at the financial statement issuance date.

The City participates in several Federal and State grant programs. These programs are subject to the audits by the City’s independent accountants in accordance with the provisions of the Federal Single Audit Act as amended and applicable State requirements. In addition, these programs are subject to further examination by the grantors and the amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial.

14. OTHER INFORMATION
A. Joint Powers Agreements
The City participates in joint ventures through Joint Powers Authorities (JPAs) established underthe Joint Exercise of Powers Act of the State of California. As separate legal entities, these JPAs exercise full powers and authorities within the scope of the related Joint Powers Agreement, including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Obligations and liabilities of the JPAs are not those of the City.

Each JPA is governed by a board consisting of representatives from each member agency. Each board controls the operations of its respective JPA, including selection of management and approval of operating budgets, independent of any influence of member agencies beyond their representation of the board.

City of Palo Alto Regional Water Quality Control Plant: The City has an agreement with the City of Palo Alto to purchase treatment capacity at the Palo Alto Regional Water Quality Control Plant. It was formed in 1968 by a joint exercise of powers among the cities of Palo Alto, Mountain View, and Los Altos, constructed, maintains and operates sewage treatment facilities serving its member cities. The agreement provides that the City will purchase capacity for 50 years. The City of Palo Alto acts as administrator and bills each member its share of the operating costs. The audited financial statements can be obtained by contacting the City of Palo Alto at P.O. Box 10250, Palo Alto, CA 94303. 96

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

14. OTHER INFORMATION, Continued
A. Joint Powers Agreements, Continued
North County Library Authority (NCLA): The NCLA, formed in 1985 by a joint exercise of powers agreement between the City and the Town of Los Altos Hills, provides library services for member residents. The NCLA was created to provide financing for capital improvements and additional services by the public libraries serving the area. Although the City owns the libraries and their sites, the County of Santa Clara (County) is responsible for all library operations. However, since 1985, the NCLA has levied a voter approved special parcel tax to compensate for service reductions due to cutbacks by the County.

The special tax has been collected by the County, transferred to the City, on behalf of NCLA, and then transferred back to the County for the specifically requested services provided by the libraries within the NCLA’s service area. The City performs administrative and accounting services for NCLA. In 1991, the NCLA issued Special Tax Bonds in the amount of $3,645,000. The Special Tax Bonds were repaid off as of June 30, 2012. In 2010, NCLA successfully passed an updated twenty year parcel tax extending the assessment term to 2030. No new debt was issued in association with this election. The audited financial statements can be obtained by contacting the NCLA at One North San Antonio Road, Los Altos, CA, 94022.

Community Health Awareness Council (CHAC): CHAC was organized as a joint powers agency between the City of Los Altos, City of Mountain View, Town of Los Altos Hills, Los Altos School District, Mountain View Whisman School District, and Mountain View-Los Altos High School District. CHAC provides prevention and intervention services concentrating on positive alternatives to health abuse and self-destructive behaviors within the communities served. The audited financial statements can be obtained by contacting CHAC at P.O. Box 335, Mountain View, CA, 94042.

Silicon Valley Clean Energy Authority: The Silicon Valley Clean Energy Authority (SVCEA) was established in 2016 by 12 agencies in Santa Clara County including the City of Los Altos. The purpose of SVCEA is to enable the member agencies to pool the electricity demand within their jurisdictions to directly procure or generate electrical power supplies on behalf of the residents and businesses in their communities, thus allowing those agencies to provide a clean energy option for residents at a competitive price with traditional energy sources. As part of the implementation of SVCEA, the City of Los Altos paid $100,000 for its portion of the start-up costs. These funds are to be reimbursed to the City once the Authority has achieved financial sustainability.
97

City of Los Altos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

15. OTHER COMMITMENTS
A summary of remaining authorized CIP project balances at June 30, 2025 for all City funds by service area are as follows:

16. RESTATEMENTS
The City’s restatements for the fiscal year 2025 were as follows:

Project No. Project Name
Outstanding
Commitment
CD01003 Sculpture $ 6,250
CD01021 Champer AV Equipment Upgrade 46,693
CD01030 Downtown Park Space with Parking 341,575
CF01004 Halsey House Rehabilitation 56,220
CF01006 999 Fremont 9,700
CF01021 Emergency Operations Center (EOC) 658,489
CF01032 Hillview Dog Park 77,341
CF01034 Grant Park Facility (Electrictal, Hot Water & HVAC) 277,302 CF01044 LAYC 37,499
CF01049 Caretaker House Demolition 8,079
CF01058 City Hall Signage 48,135
LI01001 Library Construction 44,209
TS01055 Fremont Ave. Pedestrian Bridge Rehabilitation 73,518 TS01057 Traffic Signal Maintenance 102,020
TS01058 Intersection Access Barrier Removal 97,923
WW01002 Annual Structural Reach Replacement 123,931
WW01012 Adobe Creek Sewer Maint. Replacement 1,887,327
Total Total 3,896,211 $
Sewer Solid Waste
Governmental
Acitivities
Business-Type
Activites
June 30, 2024, as previously presented $ 20,705,472 $ 3,329,961 $ 133,318,663 $ 32,035,433 Implementation of GASB 101 182,716 24,977 1,776,359 207,693 June 30, 2024, as restated $ 20,888,188 $ 3,354,938 $ 135,095,022 $ 32,243,126 Fund Statements Government-Wide
98

REQUIRED

SUPPLEMENTARY INFORMATION
99

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100

City of Los Altos
Required Supplementary Information
For the year ended June 30, 2025

1. COST-SHARING EMPLOYER DEFINED PENSION PLAN
Schedule of Proportionate Share of the Net Pension Liability and Related Ratios This schedule reports the proportion (percentage) of the collective net pension liability, the proportionate share (amount) of the collective net pension liability, the employer’s covered employee payroll, the proportionate share (amount of the collective net pension liability as a percentage of the employer’s covered employee payroll and the pension plan’s fiduciary net position as a percentage of the total pension liability.

Schedule of Contributions
This schedule reports the cost sharing employer’s contributions to the plan which are actuarially determined, the employer’s actual contributions, the difference between the actual and actuarially determined contributions, and a ratio of the actual contributions divided by covered employee payroll. 101

City of Los Altos
Required Supplementary Information
For the year ended June 30, 2025
Cost-Sharing Multiple-Employer Defined Pension Plan
Schedule of the Proportionate Share of the Net Pension Liability - Last Ten Fiscal Years Fiscal Year 2016 2017 2018 2019
Measurement Date 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Plan's proportion of the net pension liability (Asset) 0.35723% 0.36321% 0.36487% 0.37506% Plan's proportionate share of the net pension liability (Asset) $ 24,519,671 $ 31,428,897 $ 36,185,071 $ 36,142,132 Plan's covered payroll $ 11,452,614 $ 12,319,737 $ 12,023,939 $ 13,968,233 Plan's Proportionate Share of the Net Pension
Liability/(Asset) as a Percentage of its Covered
Payroll 214.10% 255.11% 300.94% 258.75%
Fiduciary net position as a percentage of the total
pension liability 78.40% 74.06% 73.31% 75.26%
Notes to Schedule:

The CalPERS mortality assumptions were adjusted in fiscal year 2019.

The CalPERS discount rate was increased from 7.5% to 7.65% in fiscal year 2016, decreased from 7.65% to 7.15% in fiscal year 2018, and then decreased from 7.15% to 6.9% in fiscal year 2023. 102

2020 2021 2022 2023 2024 2025
6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024

0.38190% 0.38941% 0.78341% 0.38348% 0.38056% 0.38566%
$ 39,132,989 $ 42,369,117 $ 27,641,351 $ 44,295,062 $ 47,476,004 $ 46,770,921 $ 13,890,298 $ 14,321,206 $ 15,476,410 $ 15,681,551 $ 16,258,354 $ 17,499,268 281.73% 295.85% 178.60% 282.47% 292.01% 267.27%

75.26% 75.10% 88.29% 76.68% 76.21% 78.08%
103

City of Los Altos
Required Supplementary Information
For the year ended June 30, 2025
Cost-Sharing Multiple-Employer Defined Pension Plan
Schedule of Pension Plan Contributions - Last 10 Fiscal Years Fiscal Year Ended 2016 2017 2018 2019
Actuarially determined contribution $ 2,590,752 $ 9,882,141 $ 3,160,073 $ 3,580,122 Contributions in relation to actuarially
deemed contributions (2,590,752) (9,882,141) (3,160,073) (3,580,122) Contribution deficiency (excess) $ - $ - $ - $ -
Covered payroll $ 12,319,737 $ 12,023,939 $ 13,968,233 $ 13,890,298 Contributions as a percentage of covered
payroll 21.03% 82.19% 22.62% 25.77%
Notes to Schedule
Valuation date: 6/30/2013 6/30/2014 6/30/2015 6/30/2016 Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age
Amortization method Level percentage of payroll, closed Remaining amortization period 15 years
Asset valuation method 5-year smoothed market
Inflation 2.30%
Salary increases Depending on age, service, and type of employment Investment rate of return 6.80%
Mortality Derived using CalPERS Membership Data
Post Retirement Benefit Increase Contract COLA up to 2.30% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.30% thereafter 104

2020 2021 2022 2023 2024 2025
$ 4,318,698 $ 4,789,774 $ 7,247,286 $ 5,282,099 $ 5,368,386 $ 6,309,383 (4,318,698) (4,789,774) (7,247,286) (5,282,099) (5,368,386) (6,309,383) $ - $ - $ - $ - $ - $ -
$ 14,321,206 $ 15,476,410 $ 15,681,551 $ 16,258,354 $ 17,499,268 $ 18,511,531

30.16% 30.95% 46.22% 32.49% 30.68% 34.08%
6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 105

City of Los Altos
Required Supplementary Information
For the year ended June 30, 2025
Retiree Healthcare OPEB Plan - Agent Multiple Employer
Schedule of Changes in the Net OPEB Liability and Related Ratios - Last 10 Fiscal Years* Measurement Date 6/30/2018 6/30/2019 6/30/2020 6/30/2021 Total OPEB Liability
Service cost $ 158,000 $ 162,743 $ 195,973 $ 201,852
Interest 223,000 238,629 231,856 252,731
Differences between expected and
actual experience - (524,133) - (617,999)
Assumption changes - 128,646 - (5,045)
Benefit payments (142,000) (161,000) (117,894) (131,033) Net change in the total OPEB liability 239,000 (155,115) 309,935 (299,494) Total OPEB liability - beginning 3,214,000 3,453,000 3,297,885 3,607,820 Total OPEB liability - ending (a) 3,453,000 3,297,885 3,607,820 3,308,326 Plan Fiduciary Net Position
Contribution - employer 143,000 162,000 118,972 132,024 Net investment income 134,000 110,961 67,723 545,286
Administrative expense (4,000) (1,387) (2,014) (1,742)
Benefit payments (142,000) (161,000) (117,894) (131,033) Net change in plan fiduciary net position 131,000 110,574 66,787 544,535 Plan fiduciary net position - beginning 1,674,000 1,805,000 1,915,574 1,982,361 Plan fiduciary net position - ending (b) 1,805,000 1,915,574 1,982,361 2,526,896 Net OPEB liability/asset - ending (a) - (b) $ 1,648,000 $ 1,382,311 $ 1,625,459 $ 781,430 Plan fiduciary net position as a percentage of the total OPEB liability 52.3% 58.1% 54.9% 76.4%
Covered-employee payroll $ 14,000,000 $ 15,000,000 $ 15,000,000 $ 15,366,121 Net OPEB liability as a percentage of coveredemployee payroll 11.77% 9.22% 10.84% 5.09% * Fiscal year 2017 was the 1st year of implementation.
106

6/30/2022 6/30/2023 6/30/2024
$ 187,991 $ 193,160 $ 177,742
214,597 232,221 285,123
- 645,945 -
- (64,903) -
(125,513) (126,088) (163,024)
277,075 880,335 299,841
3,308,326 3,585,401 4,465,736
3,585,401 4,465,736 4,765,577
1,626,491 127,466 164,439
(515,999) 225,479 411,350
(1,737) (2,398) (2,633)
(125,513) (126,088) (163,024)
983,242 224,459 410,132
2,526,896 3,510,138 3,734,597
3,510,138 3,734,597 4,144,729
$ 75,263 $ 731,139 $ 620,848

97.9% 83.6% 87.0%
$ 16,416,717 $ 17,681,206 $ 19,956,557

0.46% 4.14% 3.11%
107

City of Los Altos
Required Supplementary Information
For the year ended June 30, 2025
Retiree Healthcare OPEB Plan - Agent Multiple Employer
Schedule of OPEB Contributions - Last 10 Fiscal Years*
Fiscal Year Ended June 30, 2019 2020 2021 2022
Actuarially determined contribution $ 333,000 $ 333,000 $ 316,000 $ 316,000 Contributions in relation to the actuarially
determined contribution 314,000 118,972 132,024 1,626,491 Contribution deficiency (excess) $ 19,000 $ 214,028 $ 183,976 $ (1,310,491) Covered employee payroll $ 15,000,000 $ 15,000,000 $ 15,366,121 $ 16,416,717 Contributions as a percentage of
covered employee payroll 2.1% 0.8% 0.9% 9.9%
*Fiscal year 2018 was the 1st year of implementation.

Notes to Schedule
Valuation Date
Actuarial cost method
Amortization method
Amortization period
Asset valuation method
Discount Rate
Inflation
Medical Trend
Mortality, Retirement, Disability, Termination
Mortality Improvement
PEMHCA Minimum Increases
Healthcare participation
• 6.25%
• 2.50%
• Non-Medicare - 7.90% for 2026, decreasing to an ultimate rate of

3.45% in 2076 and later years
• Medicare (Non-Kaiser) - 6.90% for 2026, decreasing to an ultimate rate of 3.45% in 2076 and later years
• Medicare (Kaiser) - 5.65% for 2026, decreasing to an ultimate rate of

3.45% in 2076 and later years
• CalPERS 2000-2019 Experience Study
• Mortality Improvement Scale MP-2021
• January 1, 2023
• Entry Age Normal, Level Percentage of Payroll
• Level percent of pay
• 10-year average fixed period for 2023/24
• Investment gains and losses spread over 5-year rolling period • 60%
• 3.5% annually
108

2023 2024 2025
$ 174,000 $ 241,000 $ 237,000
127,466 164,439 175,502
$ 46,534 $ 76,561 $ 61,498
$ 17,681,206 $ 19,956,557 $ 22,131,855

0.7% 0.82% 0.79%
109

City of Los Altos
General Fund
For the Year Ended June 30, 2025
General Fund
Accounts for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in other funds. The General Fund supports essential City services such as police, fire, street and parks maintenance, maintenance services, community development and recreation activities. The General Fund also includes the Real Property Proceeds Funds, which accounts for the proceeds from the sale of real property and the Community Facilities Renewal Fund, which accounts for the revenues and expenditures related to the community facilities renewal efforts.
110

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Property tax $ 35,928,295 $ 35,928,295 $ 36,186,927 $ 258,632 Sales tax 3,571,000 3,571,000 3,591,444 20,444
Utility users 3,579,921 3,579,921 3,725,468 145,547
Other tax 3,590,000 3,590,000 4,888,106 1,298,106
Licenses, permits and fees 5,348,078 5,348,078 7,608,378 2,260,300 Grants and donations 10,000 10,000 378,807 368,807
Charges for services 5,472,557 5,472,557 7,098,566 1,626,009 Fines and forfeitures 147,100 147,100 134,235 (12,865)
Interest and rentals 452,500 452,500 2,357,398 1,904,898 Other 638,000 638,000 868,545 230,545
Total revenues 58,737,451 58,737,451 66,837,874 8,100,423 EXPENDITURES:

Current:

Public safety 25,982,627 25,982,627 24,367,654 1,614,973 Public works 8,097,790 8,097,790 7,324,196 773,594
Recreation 3,747,901 3,747,901 3,290,687 457,214
Community development 6,352,244 6,352,244 6,644,752 (292,508) Admin / community development 11,867,116 11,867,116 9,023,541 2,843,575 Utility and sustainability 396,430 396,430 206,594 189,836 Total expenditures 56,444,108 56,444,108 50,857,424 5,586,684

REVENUES OVER (UNDER)
EXPENDITURES 2,293,343 2,293,343 15,980,450 13,687,107
OTHER FINANCING SOURCES (USES):

Transfers out (3,519,791) (15,019,791) (7,098,000) 7,921,791 Total other financing sources (uses) (3,519,791) (15,019,791) (7,098,000) 7,921,791 Net change in fund balances $ (1,226,448) $ (12,726,448) 8,882,450 $ 21,608,898 FUND BALANCES:

Beginning of year 38,195,685
End of year $ 47,078,135
Budgeted Amounts
111

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Park Impact Fee
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Licenses, permits and fees $ 1,200,000 $ 1,200,000 $ 11,490,809 $ 10,290,809 Interest and rentals - - 750,291 750,291
Total revenues 1,200,000 1,200,000 12,241,100 11,041,100 EXPENDITURES:

Capital improvements - - 249,613 (249,613)
Total expenditures - - 249,613 (249,613)

REVENUES OVER (UNDER)
EXPENDITURES 1,200,000 1,200,000 11,991,487 10,791,487
OTHER FINANCING SOURCES (USES):

Transfers out (570,000) (570,000) (622,090) (52,090)
Total other financing sources (uses) (570,000) (570,000) (622,090) (52,090) Net change in fund balances $ 630,000 $ 630,000 11,369,397 $ 10,739,397 FUND BALANCES:

Beginning of year 8,043,049
End of year $ 19,412,446
Budgeted Amounts
112

City of Los Altos
Required Supplementary Information
For the year ended June 30, 2025

BUDGET AND BUDGETARY DATA
The City adopts a budget annually for General Fund, Special Revenue Funds, (except for the Storm Drain Deposits Fund), and Equipment Replacement Capital Projects Fund that is effective July 1 for the ensuing fiscal year.

From the effective date of the budget, which is adopted and controlled at the fund level, the amounts stated therein as proposed expenditures become appropriations to the various City departments. The City Council may amend the budget during the fiscal year. The City Manager is authorized to transfer budgeted amount between departments and line items within any fund to achieve a balanced budget; however, any revisions which alter the total expenditures of any fund must be approved by the City Council. Transfers between funds must be approved by the City Council. All appropriations lapse at year-end unless otherwise authorized by the City Council and the City Manager, except for capital improvement projects and open purchase order commitments for which appropriations endure until the project or obligation is completed.

Budgets are adopted on a basis consistent with generally accepted accounting principles except for capital projects funds, which are adopted on a project length basis, which means budgets are used until the project’s completion for the entire project amount.
113

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114

SUPPLEMENTARY INFORMATION
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116

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Capital Projects
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Grants and donations $ 2,130,000 $ 2,130,000 $ 40,908 $ (2,089,092) Total revenues 2,130,000 2,130,000 40,908 (2,089,092)
EXPENDITURES:

Current:

Admin / community development - - 2,526 (2,526)
Capital improvements 23,767,182 23,767,182 11,348,190 12,418,992 Total expenditures 23,767,182 23,767,182 11,350,716 12,416,466

REVENUES OVER (UNDER)
EXPENDITURES (21,637,182) (21,637,182) (11,309,808) 10,327,374 OTHER FINANCING SOURCES (USES):

Transfers in 4,031,139 4,031,139 150,000 (3,881,139)
Total other financing sources (uses) 4,031,139 4,031,139 150,000 (3,881,139) Net change in fund balances $ (17,606,043) $ (17,606,043) (11,159,808) $ 6,446,235 FUND BALANCES:

Beginning of year 10,765,332
End of year $ (394,476)
Budgeted Amounts
117

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118

City of Los Altos
Nonmajor Governmental Funds
For the Year Ended June 30, 2025
Special Revenue Funds
Vehicle Impound Fund
To account for revenues collected from arrest and towing fees that are dedicated for public safety purposes.

Supplemental Law Enforcement Fund
To account for revenues from the Citizen's Option for Public Safety Program in support of additional frontline law enforcement services.

Gas Tax Funds
To account for the revenues received from the State gas taxes under the provision of the Streets and Highways Codes.

These revenues are restricted to uses related to construction and improvements, an maintenance and repair of local streets.

Proposition 1B Fund
To account for the allocated bond fund amount from the State under the Proposition 1B provisions.

Storm Drain Deposits Fund
To account for fees collected from new subdivision development. All funds are restricted to construction and improvement of the storm drain system.

Downtown Parking Fund
To account for revenues received from the lease of the public parking plazas and in-lieu program fees. The revenues are dedicated for the construction and improvement of downtown parking facilities.

Traffic Impact Fee Fund
To account for revenues received from development. The revenues are dedicated for transportation improvements within the City.

Estate Donation Fund
To account for donations received that are dedicated for purposes specified by the donors.

TDA Fund
To account for State Transportation Development Act, Article 3 funds for bike route and pedestrian facilities improvements.

PEG Fund
To account for fees collected by local Cable Television franchise. All funds are restricted for public education and government access programming.
119

City of Los Altos
Nonmajor Governmental Funds
For the Year Ended June 30, 2025
(Continued)
Special Revenue Funds, Continued
Vehicle Registration Fees Fund
To account for fees collected by the Department of Motor Vehicles from registrations in Santa Clara County. All funds are restricted to street projects.

SB 1 Road Maintenance Rehabilitation Fund
To account for revenues received from the State Streets and Highways Codes. These revenues are restricted to address deferred maintenance on the State Highway System and the local street and road system.

Public Art Fund
To account for fees collected from private development projects. The fund is restricted to public art acquisition, placement, and maintenance.

AB-1379 Fund
To account for fees collected through Business License. Under the AB1379, the local jurisdiction allows to remain 90% of the AB1379 fees for Certified Access Specialist (CASp) certification and training. Restricted by State Statute Public Safety Impact Fees Fund
To account for impact fees collected from new development to fund public safety infrastructure. Revenues are restricted to capital improvements such as police facilities, emergency response equipment, and related public safety assets.

General Government Impact Fees Fund
To account for fees collected for new development to support the expansion of general government facilities. Funds are restricted to capital projects like City Hall improvements. Administrative buildings, and technology infrastructure needed to serve a growing population.

Capital Projects Fund
Equipment Replacement Fund
To account for the revenues and expenditures related to the replacement of certain City equipment and vehicles.

Debt Service Fund
General Debt Service
To account for the accumulation of revenues for periodic payment of principal and interest on Certificates of Participation and related authorized costs.

Los Altos Community Center Lease
To account for the periodic payment of principal and interest on the community center lease and related authorized costs.
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121

City of Los Altos
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
ASSETS
Cash and investments $ - $ 238,240 $ 1,810,170 $ -
Restricted cash and investments - - - -
Receivables, net of allowance for uncollectibles:

Accounts - - 75,234 -
Total assets $ - $ 238,240 $ 1,890,187 $ -

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable $ - $ - $ - $ -
Due to other funds 24,415 - - -
Total liabilities 24,415 - - -
Deferred Inflows of Resources
Unavailable revenue - - - -
Total deferred inflows of resources - - - -
Fund Balances:

Restricted:

Debt service
Special revenue programs and projects - 238,240 1,890,187 - Assigned - - - -
Unassigned (24,415) - - -
Total fund balances (24,415) 238,240 1,890,187 -
Total liabilities, deferred inflows of
resources and fund balances $ - $ 238,240 $ 1,890,187 $ - Special Revenue Funds
Vehicle
Impound
Supplemental Law
Enforcement Gas Tax
Proposition
1B
122

$ 56,086 $ 981,183 $ 898,411 $ 18,639 $ 642 $ 328,651
- - - - - -
- 30,217 - - - 17,107
$ 56,086 $ 1,014,532 $ 901,115 $ 18,639 $ 644 $ 346,808 $ - $ - $ - $ - $ - $ -
- - - - - -
- - - - - -
- 29,711 - - - -
- 29,711 - - - -
56,086 984,821 901,115 18,639 644 346,808
- - - - - -
- - - - - -
56,086 984,821 901,115 18,639 644 346,808
$ 56,086 $ 1,014,532 $ 901,115 $ 18,639 $ 644 $ 346,808 Special Revenue Funds
Storm
Drain
Deposits
Downtown
Parking
Traffic
Impact Fee
Estate
Donation TDA PEG
123

City of Los Altos
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
ASSETS
Cash and investments $ 1,396,472 $ 1,936,141 $ 677,534 $ 116,499 Restricted cash and investments - - - -
Receivables, net of allowance for uncollectibles:

Accounts - 72,166 - -
Total assets $ 1,400,734 $ 2,014,365 $ 677,534 $ 116,499

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable $ - $ - $ - $ -
Due to other funds - - - -
Total liabilities - - - -
Deferred Inflows of Resources
Unavailable revenue - - - -
Total deferred inflows of resources - - - -
Fund Balances:

Restricted:

Debt service
Special revenue programs and projects 1,400,734 2,014,365 677,534 116,499 Assigned - - - -
Unassigned - - - -
Total fund balances 1,400,734 2,014,365 677,534 116,499 Total liabilities, deferred inflows of
resources and fund balances $ 1,400,734 $ 2,014,365 $ 677,534 $ 116,499 Public Art AB-1379
Special Revenue Funds
Vehicle
Registration
Fees
SB1 Road
Maintenance
Rehabilitation
124

Special Revenue Capital Project
Fund Fund
Total Nonmajor
Governmental
Funds
$ 11,745 $ 17,019 $ 610,009 $ 45,308 $ 2 $ 9,142,751
- - - 177,415 - 177,415
- - - - - 194,724
$ 11,778 $ 17,067 $ 610,009 $ 222,723 $ 2 $ 9,536,962
$ - $ - $ 33,381 $ - $ - $ 33,381
- - - - - 24,415
- - 33,381 - - 57,796
- - - - - 29,711
- - - - - 29,711
222,723 2 222,725
11,778 17,067 - - - 8,674,517
- - 576,628 - - 576,628
- - - - - (24,415)
11,778 17,067 576,628 222,723 2 9,449,455
$ 11,778 $ 17,067 $ 610,009 $ 222,723 $ 2 $ 9,536,962
Equipment
Replacement
Los Altos
Community Center
Lease
Public Safety
Impact Fees
General
Government
Impact Fees General
Debt Service Funds
125

City of Los Altos
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
For the year ended June 30, 2025
REVENUES:

Licenses, permits and fees $ - $ - $ - $ -
Intergovernmental - 194,663 885,363 -
Grants and donations - - - -
Charges for services - - - -
Fines and forfeitures 21,458 - - -
Interest and rentals - - 51,462 -
Total revenues 21,458 194,663 936,825 -
EXPENDITURES:

Current:

Public safety - 75,145 - -
Community development - - - -
Admin / community development - - - -
Capital improvements - - - -
Debt service:

Principal - - - -
Interest and fiscal charges - - - -
Total expenditures - 75,145 - -

REVENUES OVER (UNDER)
EXPENDITURES 21,458 119,518 936,825 -
OTHER FINANCING SOURCES (USES):

Transfers in - - - -
Transfers out - - - -
Total other financing sources (uses) - - - -
Net change in fund balances 21,458 119,518 936,825 -
FUND BALANCES:

Beginning of year (45,873) 118,722 953,362 -
Restatements - - - -
Beginning of year, as restated (45,873) 118,722 953,362 - End of year $ (24,415) $ 238,240 $ 1,890,187 $ -
Special Revenue Funds
Vehicle
Impound
Supplemental Law
Enforcement Gas Tax
Proposition
1B
126

$ - $ 50,688 $ - $ - $ - $ -
- - - - - -
- - - - - -
- - 1,030,006 - - 72,601
- - - - - -
- 52,592 26,681 3 28 14,193
- 103,280 1,056,687 3 28 86,794
- - - - - -
- - - - - -
- 45,904 - - - -
- - - - - -
- - - - - -
- - - - - -
- 45,904 - - - -
- 57,376 1,056,687 3 28 86,794
- - - - - -
- (100,000) - - - (50,000)
- (100,000) - - - (50,000)
- (42,624) 1,056,687 3 28 36,794
56,086 1,027,445 (155,572) 18,636 616 310,014
- - - - - -
56,086 1,027,445 (155,572) 18,636 616 310,014
$ 56,086 $ 984,821 $ 901,115 $ 18,639 $ 644 $ 346,808
Special Revenue Funds
Storm
Drain
Deposits
Downtown
Parking
Traffic
Impact Fee
Estate
Donation TDA PEG
127

City of Los Altos
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
For the year ended June 30, 2025
REVENUES:

Licenses, permits and fees $ - $ - $ - $ 11,930
Intergovernmental - 857,985 - -
Grants and donations 206,207 - - -
Charges for services - - 228,699 -
Fines and forfeitures - - - -
Interest and rentals 52,913 63,606 - -
Total revenues 259,120 921,591 228,699 11,930
EXPENDITURES:

Current:

Public safety - - - -
Community development - - 3,245 -
Admin / community development - - - -
Capital improvements - - - -
Debt service:

Principal - - - -
Interest and fiscal charges - - - -
Total expenditures - - 3,245 -

REVENUES OVER (UNDER)
EXPENDITURES 259,120 921,591 225,454 11,930
OTHER FINANCING SOURCES (USES):

Transfers in - - - -
Transfers out - - - -
Total other financing sources (uses) - - - -
Net change in fund balances 259,120 921,591 225,454 11,930 FUND BALANCES:

Beginning of year 1,141,614 1,092,774 452,080 104,569
Restatements - - - -
Beginning of year, as restated 1,141,614 1,092,774 452,080 104,569 End of year $ 1,400,734 $ 2,014,365 $ 677,534 $ 116,499 Public Art AB-1379
Special Revenue Funds
Vehicle
Registration
Fees
SB1 Road
Maintenance
Rehabilitation
128

Special Revenue Special Revenue Capital Projects
Fund Fund Fund
Total Nonmajor
Governmental
Funds
$ - $ - $ - $ - $ - $ 62,618
- - - - - 1,938,011
- - - - - 206,207
11,624 16,846 - - - 1,359,776
- - - - - 21,458
154 221 - 13,547 - 275,400
11,778 17,067 - 13,547 - 3,863,470
- - - - - 75,145
- - - - - 3,245
- - 53,137 - - 99,041
- - 531,744 - - 531,744
- - - 150,000 433,034 583,034
- - - 19,975 189,056 209,031
- - 584,881 169,975 622,090 1,501,240
11,778 17,067 (584,881) (156,428) (622,090) 2,362,230
- - 98,000 - 622,090 720,090
- - - - - (150,000)
- - 98,000 - 622,090 570,090
11,778 17,067 (486,881) (156,428) - 2,932,320
- - 1,063,509 379,151 - 6,517,133
- - - - 2 2
- - 1,063,509 379,151 2 6,517,135
$ 11,778 $ 17,067 $ 576,628 $ 222,723 $ 2 $ 9,449,455
Equipment
Replacement General
Los Altos
Community Center
Lease
Public Safety
Impact Fees
General
Government Impact
Fees
Debt Service Funds
129

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Vehicle Impound
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Fines and forfeitures $ 15,000 $ 15,000 $ 21,458 $ 6,458 Total revenues 15,000 15,000 21,458 6,458

REVENUES OVER (UNDER)
EXPENDITURES 15,000 15,000 21,458 6,458
Net change in fund balances $ 15,000 $ 15,000 21,458 $ 6,458 FUND BALANCES:

Beginning of year (45,873)
End of year $ (24,415)
Budgeted Amounts
130

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Supplemental Law Enforcement
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ 100,000 $ 100,000 $ 194,663 $ 94,663 Total revenues 100,000 100,000 194,663 94,663
EXPENDITURES:

Current:

Public safety 264,691 264,691 75,145 189,546
Total expenditures 264,691 264,691 75,145 189,546

REVENUES OVER (UNDER)
EXPENDITURES (164,691) (164,691) 119,518 284,209
Net change in fund balances $ (164,691) $ (164,691) 119,518 $ 284,209 FUND BALANCES:

Beginning of year 118,722
End of year $ 238,240
Budgeted Amounts
131

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Gas Tax
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ 871,412 $ 871,412 $ 885,363 $ 13,951 Interest and rentals - - 51,462 51,462
Total revenues 871,412 871,412 936,825 65,413

REVENUES OVER (UNDER)
EXPENDITURES 871,412 871,412 936,825 65,413
OTHER FINANCING SOURCES (USES):

Transfers out (861,932) (861,932) - 861,932
Total other financing sources (uses) (861,932) (861,932) - 861,932 Net change in fund balances $ 9,480 $ 9,480 936,825 $ 927,345 FUND BALANCES:

Beginning of year 953,362
End of year $ 1,890,187
Budgeted Amounts
132

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Proposition 1B
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Net change in fund balances $ - $ - $ - $ -
FUND BALANCES:

Beginning of year -
End of year $ -
Budgeted Amounts
133

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Storm Drain Deposits
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Net change in fund balances $ - $ - $ - $ -
FUND BALANCES:

Beginning of year 56,086
End of year $ 56,086
Budgeted Amounts
134

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Downtown Parking
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Licenses, permits and fees $ 12,581 $ 12,581 $ 50,688 $ 38,107 Interest and rentals 50,000 50,000 52,592 2,592
Total revenues 62,581 62,581 103,280 40,699
EXPENDITURES:

Current:

Admin / community development - - 45,904 (45,904)
Total expenditures - - 45,904 (45,904)

REVENUES OVER (UNDER)
EXPENDITURES 62,581 62,581 57,376 (5,205)
OTHER FINANCING SOURCES (USES):

Transfers out (100,000) (100,000) (100,000) -
Total other financing sources (uses) (100,000) (100,000) (100,000) - Net change in fund balances $ (37,419) $ (37,419) (42,624) $ (5,205) FUND BALANCES:

Beginning of year 1,027,445
End of year $ 984,821
Budgeted Amounts
135

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Traffic Impact Fee
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services $ - $ - $ 1,030,006 $ 1,030,006
Interest and rentals - - 26,681 26,681
Total revenues - - 1,056,687 1,056,687

REVENUES OVER (UNDER)
EXPENDITURES - - 1,056,687 1,056,687
OTHER FINANCING SOURCES (USES):

Transfers in 950,000 950,000 - (950,000)
Total other financing sources (uses) 950,000 950,000 - (950,000) Net change in fund balances $ 950,000 $ 950,000 1,056,687 $ 106,687 FUND BALANCES:

Beginning of year (155,572)
End of year $ 901,115
Budgeted Amounts
136

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Estate Donation
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rentals $ - $ - $ 3 $ 3
Total revenues - - 3 3

REVENUES OVER (UNDER)
EXPENDITURES - - 3 3
Net change in fund balances $ - $ - 3 $ 3
FUND BALANCES:

Beginning of year 18,636
End of year $ 18,639
Budgeted Amounts
137

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual TDA
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Grants and donations $ 46,000 $ 46,000 $ - $ (46,000)
Interest and rentals - - 28 28
Total revenues 46,000 46,000 28 (45,972)

REVENUES OVER (UNDER)
EXPENDITURES 46,000 46,000 28 (45,972)
Net change in fund balances $ 46,000 $ 46,000 28 $ (45,972) FUND BALANCES:

Beginning of year 616
End of year $ 644
Budgeted Amounts
138

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual PEG
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services $ 100,577 $ 100,577 $ 72,601 $ (27,976) Interest and rentals - - 14,193 14,193
Total revenues 100,577 100,577 86,794 (13,783)

REVENUES OVER (UNDER)
EXPENDITURES 100,577 100,577 86,794 (13,783)
OTHER FINANCING SOURCES (USES):

Transfers out (50,000) (50,000) (50,000) -
Total other financing sources (uses) (50,000) (50,000) (50,000) - Net change in fund balances $ 50,577 $ 50,577 36,794 $ (13,783) FUND BALANCES:

Beginning of year 310,014
End of year $ 346,808
Budgeted Amounts
139

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Vehicle Registration Fees
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Grants and donations $ 280,000 $ 280,000 $ 206,207 $ (73,793) Interest and rentals - - 52,913 52,913
Total revenues 280,000 280,000 259,120 (20,880)

REVENUES OVER (UNDER)
EXPENDITURES 280,000 280,000 259,120 (20,880)
OTHER FINANCING SOURCES (USES):

Transfers out (629,367) (629,367) - 629,367
Total other financing sources (uses) (629,367) (629,367) - 629,367 Net change in fund balances $ (349,367) $ (349,367) 259,120 $ 608,487 FUND BALANCES:

Beginning of year 1,141,614
End of year $ 1,400,734
Budgeted Amounts
140

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual SB1 Road Maintenance Rehabilitation
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ 810,433 $ 810,433 $ 857,985 $ 47,552 Interest and rentals - - 63,606 63,606
Total revenues 810,433 810,433 921,591 111,158

REVENUES OVER (UNDER)
EXPENDITURES 810,433 810,433 921,591 111,158
OTHER FINANCING SOURCES (USES):

Transfers out (744,354) (744,354) - 744,354
Total other financing sources (uses) (744,354) (744,354) - 744,354 Net change in fund balances $ 66,079 $ 66,079 921,591 $ 855,512 FUND BALANCES:

Beginning of year 1,092,774
End of year $ 2,014,365
Budgeted Amounts
141

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Public Art
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services $ 150,000 $ 150,000 $ 228,699 $ 78,699 Total revenues 150,000 150,000 228,699 78,699
EXPENDITURES:

Current:

Community development 10,000 10,000 3,245 6,755
Total expenditures 10,000 10,000 3,245 6,755

REVENUES OVER (UNDER)
EXPENDITURES 140,000 140,000 225,454 85,454
Net change in fund balances $ 140,000 $ 140,000 225,454 $ 85,454 FUND BALANCES:

Beginning of year 452,080
End of year $ 677,534
Budgeted Amounts
142

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual AB-1379
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Licenses, permits and fees $ - $ - $ 11,930 $ 11,930
Total revenues - - 11,930 11,930

REVENUES OVER (UNDER)
EXPENDITURES - - 11,930 11,930
Net change in fund balances $ - $ - 11,930 $ 11,930
FUND BALANCES:

Beginning of year 104,569
End of year $ 116,499
Budgeted Amounts
143

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Public Safety Impact Fees
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services $ - $ - $ 11,624 $ 11,624
Interest and rentals - - 154 154
Total revenues - - 11,778 11,778

REVENUES OVER (UNDER)
EXPENDITURES - - 11,778 11,778
Net change in fund balances $ - $ - 11,778 $ 11,778
FUND BALANCES:

Beginning of year -
End of year $ 11,778
Budgeted Amounts
144

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Government Impact Fees
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services $ - $ - $ 16,846 $ 16,846
Interest and rentals - - 221 221
Total revenues - - 17,067 17,067

REVENUES OVER (UNDER)
EXPENDITURES - - 17,067 17,067
Net change in fund balances $ - $ - 17,067 $ 17,067
FUND BALANCES:

Beginning of year -
End of year $ 17,067
Budgeted Amounts
145

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Equipment Replacement
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES:

Current:

Admin / community development $ - $ - $ 53,137 $ (53,137) Capital improvements 939,000 939,000 531,744 407,256
Total expenditures 939,000 939,000 584,881 354,119

REVENUES OVER (UNDER)
EXPENDITURES (939,000) (939,000) (584,881) 354,119
OTHER FINANCING SOURCES (USES):

Transfers in 1,098,000 1,098,000 98,000 (1,000,000)
Transfers out (247,000) (247,000) - 247,000
Total other financing sources (uses) 851,000 851,000 98,000 (753,000) Net change in fund balances $ (88,000) $ (88,000) (486,881) $ (398,881) FUND BALANCES:

Beginning of year 1,063,509
End of year $ 576,628
Budgeted Amounts
146

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Debt Service General
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rentals $ - $ - $ 13,547 $ 13,547
Total revenues - - 13,547 13,547
EXPENDITURES:

Debt service:

Principal 150,000 150,000 150,000 -
Interest and fiscal charges 19,975 19,975 19,975 -
Total expenditures 169,975 169,975 169,975 -

REVENUES OVER (UNDER)
EXPENDITURES (169,975) (169,975) (156,428) 13,547
OTHER FINANCING SOURCES (USES):

Transfers in 169,975 169,975 - (169,975)
Total other financing sources (uses) 169,975 169,975 - (169,975) Net change in fund balances $ - $ - (156,428) $ (156,428) FUND BALANCES:

Beginning of year 379,151
End of year $ 222,723
Budgeted Amounts
147

City of Los Altos
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Los Altos Community Center Lease
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES:

Debt service:

Principal $ 433,050 $ 433,050 $ 433,034 $ 16
Interest and fiscal charges 189,040 189,040 189,056 (16) Total expenditures 622,090 622,090 622,090 -

REVENUES OVER (UNDER)
EXPENDITURES (622,090) (622,090) (622,090) -
OTHER FINANCING SOURCES (USES):

Transfers in 622,090 622,090 622,090 -
Total other financing sources (uses) 622,090 622,090 622,090 - Net change in fund balances $ - $ - - $ -
FUND BALANCES:

Beginning of year -
End of year $ 2
Budgeted Amounts
148

City of Los Altos
Internal Service Funds
For the Year Ended June 30, 2025
Internal Service Funds are used to account for the financing of goods and services provided by one City department or agency to other departments or agencies of the City, or to other government units on a costreimbursement basis (including depreciation).

Dental Reimbursement
To account for costs of the City's self-insurance dental program. Funds are provided primarily from charges to departments.

Unemployment Insurance
To account for the unemployment insurance premiums and claims made against the City. Funds are provided primarily from charges to departments.

Workers’ Compensation Insurance
To account for the premium costs and self-insured claim losses made against the City for workers compensation. Funds are provided primarily from charges to departments.

Liability Insurance
To account for the premium costs and self-insured claim losses made against the City for property-related and general liability. Funds are provided primarily from charges to departments.

PERS & OPEB Reserve
To account for the CalPERS pension and retiree health payments. Funds are provided primarily from charges to departments.
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