Los Altos Hills City Council
November 17, 2022

Notes to Basic Financial Statements
NOTE 8 – PENSION PLAN ....................................................................................................................58 A. General Information About the Pension Plan.........................................................................58 B. Net Pension Liability ...............................................................................................................60 C. Changes in the Net Pension Liability ......................................................................................62 D. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension .............63 E. Payable to Pension Plan .........................................................................................................63 F. Reduction of CalPERS Discount Rate ......................................................................................64 NOTE 9 – RISK MANAGEMENT............................................................................................................64 A. Risk Pool .................................................................................................................................64 NOTE 10 – CONTINGENT LIABILITIES ..................................................................................................65 A. Commitments and Contingencies ..........................................................................................65 B. Service Concession Arrangements (SCA)................................................................................65 NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB)...................................................................65 A. General Information About the OPEB Plan.............................................................................65 B. Plan Description .....................................................................................................................66 C. Benefits Provided ...................................................................................................................66 D. Employees Covered by Benefit Terms....................................................................................66 E. Contributions..........................................................................................................................66 F. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB .....................68 G. Net OPEB Liability (Asset).......................................................................................................69 H. Changes in Net OPEB Liability (Asset).....................................................................................71 I. Discount Rate .........................................................................................................................71 J. OPEB Liabilities, OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPEB...................................................................................................................72 NOTE 12 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY ......................................................73 A. Excess of Expenditures Over Appropriations..........................................................................73 B. Deficit Fund Balances .............................................................................................................73 Page | 42

Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The Town of Los Altos Hills (the Town) was incorporated in 1956, under the provisions of the State of California. The Town operates under a Council-Manager form of government and provides the following services: management, planning, code enforcement, engineering, building inspection, maintenance of public infrastructure, recreation, law enforcement, and sewer service.

For financial reporting purposes, the Town's basic financial statements include all financial activities that are controlled by or are dependent upon actions taken by the Town Council. There are no component units. The financial statements may be obtained by writing to the Town of Los Altos Hills, Administrative Services Department, 26379 Fremont Road, Los Altos Hills, California 94022.

The financial statements of the Town have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting principles of the government are described below.

B. Basis of Presentation
Government-wide Financial Statements
The Statement of Net Position and the Statement of Activities displays information about the Town. These statements include the financial activities of the overall government except for fiduciary activities. These statements distinguish between the governmental and business-type activities of the Town. Governmental activities, which normally are supported by taxes and intergovernmental revenues and other nonexchange transactions, are reported separately from business-type activities, which rely to a significant extent on fees charged to external parties.

The Statement of Net Position reports all of the financial and capital resources of the government as a whole in a format in which assets and deferred outflows of resources equal liabilities and deferred inflows of resources, plus net position. The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the Town and for each function of the Town's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include 1) fees, fines, and charges paid by the recipients of goods and services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues.

Certain eliminations have been made as prescribed by Governmental Accounting Standards Board (GASB) Statement No. 34 in regards to interfund activities, payable 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. These are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, interfund transactions have been eliminated. However, the transactions between governmental and business-type activities, which are presented as transfers, have not been eliminated from the Statement of Activities.

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Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued)
Fund Financial Statements
The fund financial statements provide information about the Town's funds, including fiduciary funds.

Separate statements for each fund category – governmental, proprietary, and fiduciary – are presented.

The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental funds are separately aggregated and reported as nonmajor funds.

Proprietary funds distinguish operating revenues and expenses and nonoperating items. Operating revenues and expenses result from providing services in connection with the fund's principal ongoing operations. The principal operating revenues of the Town's enterprise and internal service fund are charges for customer services including: sewer service fees, equipment maintenance and usage fees, and support charges. Operating expenses for enterprise funds and internal service funds include the cost of services, administrative expenses, and depreciation of capital assets. All other revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

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

The Town reports the following major governmental funds:
• The General Fund accounts for resources traditionally associated with governmental activities that are not required legally or by sound financial management to be accounted for in another fund. • The Street Capital Projects Fund accounts for the acquisition and construction of streets.

The Town reports the following major enterprise fund:
• The Sewer Fund accounts for the maintenance of the Town's sewer lines and related facilities. It is a self-supporting activity that provides services on a user charge basis to residences and businesses.

The Town reports the following additional funds:
• Internal Service Fund accounts for goods and services provided to city departments on a cost reimbursement basis. The goods and services provided include maintenance and replacement of vehicles and equipment, costs incurred for printing, copying, and mailing services; employee benefits; and expenses related to the maintenance of Town buildings. Internal Service Fund is included in the government activities at the government-wide level. • The Custodial Fund accounts for assets held by the Town in the capacity of agent. The Town's Custodial Fund includes West Loyola Sewer Assessment District #1. • The Special Revenue Funds account for specific revenues that are legally restricted to expenditures for particular purposes.

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Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued)
In prior years, the Town’s street, storm drain and pathway maintenance and operation expenditures were reported under special revenue funds; however, the operations were largely funded by transfers from the General Fund. Special revenues, such as gas tax, storm drain in-lieu fees, and pathway construction fees, were recorded in these special revenue funds but these revenues were transferred to capital project funds at the end of the year. To minimize the number of interfund transfers between the General Fund, these special revenue funds and Capital Project Funds, the City Council authorized the Administrative Services Department to record the revenues for storm drains, pathways, and streets directly into the corresponding capital project funds and to merge the ongoing operating cost into the General Fund.

Fund Balance Classification
Fund balance is classified in accordance with current governmental accounting standards, which requires classification of fund balances into five different components, where applicable. The components are nonspendable, restricted, committed, assigned and unassigned. • Nonspendable resources are not in spendable form or required to be maintained intact such as an endowment.
• Restricted resources are subject to externally enforceable legal restrictions or imposed by law through constitutional provisions or enabling legislation. • Committed resources are constrained to specific purposes by a formal action of the City Council such as an ordinance or resolution, whereby an ordinance is more binding than a resolution. The constraint remains binding unless removed in the same formal manner by the City Council. Council action to commit fund balance must occur within the fiscal reporting period while the amount committed may be determined subsequently. All use of committed fund balance requires the City Council, which is the highest level of decision making authority, to take formal action with resolution, including budget resolutions, to modify or rescind a committed fund balance. • Assigned resources are constrained by the Town's intent to be used for specific purposes, but are neither restricted nor committed. The City Council, by action, has the authority to assign amounts to be used for specific purposes. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment.
• Unassigned fund balance is the residual classification and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. The general fund is the only fund that reports a positive unassigned fund balance.

When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the Town's policy is to first apply restricted fund balance. When expenditures are incurred for purposes for which committed, assigned or unassigned fund balances are available, the Town's policy is to first apply committed fund balance. It is at the discretion of the Council's designee to then apply the remaining expenditures to assigned or unassigned fund balance.

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Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting and Measurement Focus
The government-wide and proprietary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time that liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the Town gives or receives value without directly receiving or giving equal value in exchange, include property and sales tax, grants, entitlements, franchise fees and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from sales tax are recognized when the underlying transactions take place.

Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Property and sales tax, interest, certain state, and federal grants, and charges for services are accrued when their receipt occurs within sixty days after the end of the accounting period so as to be both measurable and available. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments, are recorded only when payment is due. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds of long-term debt and capital leases are reported as other financing sources.

Fiduciary funds are custodial in nature (i.e. assets equal liabilities) and do not involve the measurement of the results of operations. The Town has one fiduciary fund for the West Loyola Sewer Assessment District.

D. Cash and Cash Equivalents
For purposes of the statement of cash flows, the Town considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.

E. Fair Value Measurements
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 Town 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.

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Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Receivables
During the course of normal operations, the Town carries various receivable balances for taxes, franchise fees, interest, license fees, and sewer fees. As of June 30, 2022, accounts receivable are shown at $350,666 in the General Fund, $302,343 in the Street Capital Project Fund and $19,404 in the Sewer Fund.

G. Capital Assets
Capital assets, including infrastructure acquired prior to GASB 34, are recorded at historical cost or at estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated acquisition value on the date of contribution. Capital assets include public domain (infrastructure) general capital assets consisting of certain improvements including roads, bridges, water/sewer, lighting systems, drainage systems, and flood control. The Town defines capital assets as assets with an estimated useful life in excess of three years and an initial, individual cost of $15,000.

Capital assets used in the operation are depreciated using the straight-line method over their estimated useful lives in the government-wide statements and proprietary funds. The estimated useful lives are as follows:

Infrastructure 20 - 50 Years
Structure and Improvements 10 - 30 Years
Vehicles 5 - 10 Years
Equipment 3 - 10 Years
Maintenance and repairs are charged to operations when incurred. Betterments and major improvements, which significantly increase values, change capacities, or extend useful lives, are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.

H. Deferred Inflows and Deferred Outflows of Resources
In addition to assets, the Statement of Net 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. The Town has pension-related and OPEB-related deferred outflows of resources arising from certain changes in the collective net pension liability and net OPEB liability.

In addition to liabilities, the Statement of Net 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 or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Town has deferred inflows of resources arising from certain changes in the collective net pension liability, net OPEB liability as well as leases. These amounts are deferred and amortized over a stated period.

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Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. Property Taxes
Revenue is recognized in the fiscal year for which the tax and assessment are levied. The County of Santa Clara levies, bills, and collects property taxes for the Town. Under the Teeter Bill, the County remits the entire amount levied and handles the delinquencies, retaining interest and penalties.

Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in two installments on November 1 and February 1 and become delinquent on December 10, and April 10, respectively. Unsecured property taxes are payable in one installment on or before August 31.

J. Accumulated Compensated Absences
The Town accrues the cost for compensated absences (vacation and comp time) when they are earned.

Employees have a vested interest in accrued vacation time and all vacation hours will eventually either be used or paid by the Town. Generally, employees earn and use their current vacation hours with a small portion being accrued or unused each year. As this occurs, the Town incurs an obligation to pay for these unused hours. Sick leave benefits do not vest and no liability is recorded.

All compensated absences for governmental activities are paid out of the general fund. Compensated absences as of June 30, 2022 are as follows:

Governmental
Activities
BusinessType
Activities Total
Beginning Balance 165,715 $ $ 2,402 $ 168,117
Additions 67,104 4,986 72,090
Reductions (51,570) (1,740) (53,310)
Ending Balance $ 181,249 $ 5,648 $ 186,897
Current Portion $ 57,233 4,473$ $ 61,706
K. Interfund Transactions
Interfund transactions are reflected as services provided, reimbursements, or transfers. Services provided, deemed to be at market, or near market rates, are treated as revenues and expenditures/expenses.

Reimbursements are when one fund incurs a cost, charges the appropriate benefit fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers within governmental and proprietary funds are netted as part of the reconciliation to the government-wide presentation.

L. Use of Estimates
The preparation of the basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

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Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. Leases
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.

N. New Fund
During the year ended June 30, 2022, the Town established the ARPA Special Revenue Fund to account for moneys received from the Federal government for the American Rescue Plan Act.

O. New GASB Pronouncements
Management adopted the provisions of the following Governmental Accounting Standards Board (GASB) Statements, which became effective during the year ended June 30, 2022.

In June 2017, GASB issued Statement No. 87, Leases. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities.

The Statement is effective for the reporting periods beginning after June 15, 2021, or fiscal year 2021-22.

As part of the implementation of this Statement, the Town has accounted for certain lessor transactions, which required the restatement of beginning fund balances of the leases receivable and deferred inflows in the amounts of $2,830,502 and $944,559, respectively, in the General Fund and Other Capital Projects Fund. The net effect on beginning net position and fund balances is zero. See the leases disclosure in Note

5. In June 2018, GASB issued Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. The objectives of this Statement are to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and to simplify accounting for certain interest costs. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in the financial statements. The Statement is effective for reporting periods beginning after December 15, 2020, or fiscal year 2021-22. GASB Statement No. 89 did not have an effect on the Town’s fiscal year 2021- 22 financial statements.

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Notes to Basic Financial Statements
NOTE 2 – DEPOSITS AND INVESTMENTS
The Town pools cash from all sources and all funds so that it can be invested at the maximum yield consistent with safety and liquidity, while individual funds can make expenditures at any time.

A. Policies
The Town invests in individual investments and in investment pools. Individual investments are evidenced by specific identifiable securities instruments, or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system.

California Law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the Town’s cash on deposit, or first trust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. Under California Law this collateral is held in a separate investment pool by another institution in the Town’s name and places the Town ahead of general creditors of the institution.

The Town’s investments are carried at fair value, as required by generally accepted accounting principles.

The Town adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year.

The Town shall not engage in leveraged investing, such as in margin accounts or any form of borrowing for the purpose of investment. The Town also shall not invest in instruments whose principal and interest have no backing, such as options and future contracts, nor in derivatives, outside of authorized pools. The Town's investments were in compliance with the above provisions as of and for the year ended June 30, 2022.

B. Classification
As of June 30, 2022, cash and investments are classified in the accompanying financial statements as follows:

Cash on hand $ 1,900
Deposits with financial institutions 2,090,060
Investments 29,019,652
Investments with fiscal agent 147,368
Investments held in Pension trust 1,040,671
Total Cash and Investments $ 32,299,651
As of June 30, 2022, cash and investments consist of the following:

Statement of Net Position:

Cash and investments 30,937,892 $
Cash and investments held in Pension trust 1,040,671
Fiduciary funds:

Cash and investments - West Loyola 321,088
Total Cash and Investments $ 32,299,651
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Notes to Basic Financial Statements
NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
C. Authorized Investments
The table below identifies the investment types that are authorized for the Town by the California Government Code and are further limited by the Town's investment policy. Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in the schedules below:

Authorized Investment Type
Maximum
Maturity
Maximum
Percentage/Dollar
of Portfolio
Maximum
Investment in
One Issuer
Securities issued by the U.S. Treasury 5 years No limit No limit U.S. Agency Securities 5 years No limit No limit
Municipal Securities 5 years 30% 5%
State Treasury Notes/Bonds 5 years 30% 5%
Bankers' Acceptances 180 days 40% 5%
Asset-Backed Securities 5 years 50% 5%
Negotiable Certificates of Deposit 5 years 30% 5%
Local Government Investment Pools (LAIF) 5 years $75.0 mil No limit Insured savings account and bank money market accounts 5 years No limit 5% Money market mutual funds registered with SEC 5 years 20% 5% California Asset Management Program (CAMP) 5 years 20% No limit Medium-term corporate notes with A or better rating 5 years 30% 5% D. Interest Rate Risk and Fair Value Hierarchy
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The Town manages its exposure to interest rate risk by purchasing only shorter term investments as necessary to provide the cash flow and liquidity needed for operations.

As of June 30, 2022, the Town had the following investments:
12 Months 13 to 25 to
or less 24 Months 60 Months Total
U.S. Treasury Bonds/Notes $ 1,455,223 $ 4,566,622 $ 6,478,555 $ 12,500,400 Federal Agency Collateralized
Mortgage Obligation 24,724 412,980 276,843 714,547
U.S. Agency Notes 130,770 415,203 642,825 1,188,798
Municipal Bonds 100,033 115,196 1,281,708 1,496,937
Certificates of Deposit 122,566 - - 122,566
LAIF Investment Pool 8,392,829 - - 8,392,829
Money Market Mutual Funds 1,188,039 - - 1,188,039
Corporate Notes 182,327 423,246 3,352,014 3,957,587
CAMP Investment Pool 148,965 - - 148,965
Supranationals - 110,741.00 386,282 497,023
Total Investments $ 11,745,476 $ 6,043,988 $ 12,418,227 $ 30,207,691 Page | 51

Notes to Basic Financial Statements
NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
D. Interest Rate Risk and Fair Value Hierarchy (Continued) The Town 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.

Investments by Fair Value Level: Level 1 Level 2 Total
U.S. Treasury Bonds/Notes $ 12,500,400 $ - $ 12,500,400 Federal Agency Collateralized
Mortgage Obligation - 714,547 714,547
U.S. Agency Notes - 1,188,798 1,188,798
Municipal Bonds - 1,496,937 1,496,937
Certificates of Deposit - 122,566 122,566
Corporate Notes - 3,957,587 3,957,587
CAMP Investment Pool - 148,965 148,965
Supranationals - 497,023 497,023
Total Investments $ 12,500,400 $ 8,126,423 20,626,823
Investments Measured at Amortized Cost:

Money Market Mutual Funds 1,188,039
Local Agency Investment Fund 8,392,829
Cash in banks and on hand 2,091,960
Total Cash and investments $ 32,299,651
U.S. Treasury Notes classified in Level 1 of the fair value hierarchy are valued using quoted prices in active markets. Federal Agency Collateralized Mortgage Obligations, U.S. Agency Notes and Corporate Notes, classified in Level 2 of the fair value hierarchy, are valued using pricing techniques of matrix pricing or market corroborated pricing, with inputs such as yield curves or indices. These prices are obtained from various pricing sources by our custodian bank. The Town does not have any Level 3 investments.

The Town is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The Town reports its investment in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF. Included in LAIF’s investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations. At June 30, 2022, these investments matured in an average of 311 days. The California Local Agency Investment Fund is classified as exempt in the fair value hierarchy, as it is valued at amortized cost, which is exempt from being classified under GASB 72.

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Notes to Basic Financial Statements
NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
D. Interest Rate Risk and Fair Value Hierarchy (Continued) The Town is a participant in the California Asset Management Program (CAMP). CAMP is an investment pool offered by the California Asset Management Trust (the Trust). The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of the California Joint Exercise of Powers Act (California Government Code Sections 6500 et seq., or the “Act”) for the purpose of exercising the common power of its Participants to invest certain proceeds of debt issues and surplus funds. CAMP’s investments are limited to investments permitted by subdivisions (a) to (n), inclusive, of Section 53601 of the California Government Code. The Town reports its investments in CAMP at the fair value amounts provided by CAMP, which is the same as the value of the pool share in accordance with GASB 79 requirements. At June 30, 2022, the CAMP pool had an average maturity of 28 days and is exempt from the fair value hierarchy.

The Town, as a CAMP shareholder, may withdraw all or any portion of the funds in its CAMP account at any time by redeeming shares. The CAMP Declaration of Trust permits the CAMP trustee to suspend the right of withdrawal from CAMP or to postpone the date of payment of redemption proceeds if the New York Stock Exchange is closed other than for customary weekend and holiday closings, if trading on the New York Stock Exchange is restricted, or if, in the opinion of the CAMP trustees, an emergency exists such that disposal of the CAMP pool securities or determination of its net asset value is not reasonably practicable. If the right of withdrawal is suspended, the Town may either withdraw its request for that withdrawal or receive payment based on the net asset value of the CAMP pool next determined after termination of the suspension of the right of withdrawal.

Mutual funds are available for withdrawal on demand. At June 30, 2022, these investments have an average maturity of 46 days.

E. Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The state investment pool is not rated.

Investment Type AAA AA+ AA AA- A+ A A- A-1 AAAm BBB+ Total Federal Agency Collateralized
Mortgage Obligation $ 714,547 - $ -$ $ - $ - $ - $ - $ - $ - -$ 714,547 $ U.S. Agency Notes 1,188,798 - - - - - - - - - 1,188,798 Municipal Bonds 420,751 468,655 461,673 145,858 - - - - - - 1,496,937 Certificates of Deposit - - - - - - 122,566 - - 122,566 Money Market Mutual Fund - - - - - - - 147,368 - - 147,368 CAMP Investment Pool - - - - - - - 148,965 - - 148,965
Corporate Notes - - 90,313 508,728 457,805 990,035 1,473,081 - - 437,625 3,957,587 Supranationals 497,023 - - - - - - - - - 497,023
Totals $ 917,774 $ 2,372,000 $ 551,986 $ 508,728 $ 603,663 $ 990,035 $ 1,473,081 $ 122,566 $ 296,333 $ 437,625 8,273,791 Not Rated:

Cash and investments held with Pension trust 1,040,671
U.S. Treasury Notes 12,500,400
Local Agency Investment Fund (LAIF) 8,392,829
Total Investments $ 30,207,691
Bank balances are insured up to $250,000 per bank by the Federal Deposit Insurance Company ("FDIC").

As of June 30, 2022, the Town’s cash in bank exceeded the insured limit by $2,550,325. None of the Town’s deposits with financial institutions in excess of FDIC limits were held in uncollateralized accounts.

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Notes to Basic Financial Statements
NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
F. Concentration of Credit Risk
The investment policy of the Town contains limitations on the amount that can be invested in any one issuer beyond the amount stipulated by the California Government Code.  As of June 30, 2022, there are no investments, other than U.S. Treasury securities, US Agency securities, and authorized pools such as Local Agency Investment Fund (LAIF) and California Asset Management Program (CAMP), that represent five percent or more of total investments at the Entity‐wide level or in individual funds.

NOTE 3 – INTERFUND TRANSACTIONS
The following schedule briefly summarizes the Town's transfer activity for the fiscal year ended June 30, 2022:

Amount
Fund Receiving Transfers Fund Making Transfers Transferred General Fund COPS Special Revenue Fund $         638,923 (A) Streets Capital Fund General Fund 468,883 (B)
Other Capital Projects Fund 40,000 (B)
General Fund 21,747 (E)
Sewer Fund General Fund 9,300 (D)
Non‐Major Governmental Funds General Fund         1,191,915 (B) General Fund               15,874 (C)
General Fund               48,760 (E)
Total Interfund Transfers $      2,435,402
(A) To transfer remaining fund balance after fund merge in FY 2021. (B) To fund capital project.
(C) To fund the Neighborhood Watch Program and the Emergency Operations. (D) To pay the Sewer fund for costs incurred for the Town's use of sewer system for the past year. (E) To fund overhead and Internal Service Fund allocation for the past year.

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Notes to Basic Financial Statements
NOTE 4 – CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2022, was as follows:

Balance at Transfers and Balance at
June 30, 2021 Additions Adjustments Deletions June 30, 2022 Governmental activities
Capital assets not being depreciated:

Land $ 250,535 $ - $ - $ - 250,535 $
Total capital assets not being depreciated 250,535 - - 250,535 - Capital assets being depreciated:

Infrastructure 88,450,289 3,046,967 9,187 91,506,443 -
Buildings 5,152,825 - - 5,152,825 -
Vehicles 760,716 24,587 - 82,712 702,591
Office Equipment 465,307 - - 465,307 -
Total capital assets being depreciated 94,829,137 3,071,554 9,187 82,712 97,827,166 Less accumulated depreciation for:

Infrastructure (65,686,292) (1,504,559) - (67,190,851) - Buildings (2,163,842) (130,638) - - (2,294,480)
Vehicles (523,355) (38,075) - (82,712) (478,718)
Office Equipment (452,766) (4,179) - - (456,945)
Total accumulated depreciation (68,826,255) (1,677,451) - (82,712) (70,420,994) Net governmental-type activities
Capital assets being depreciated 26,002,882 1,394,103 9,187 27,406,172 - Governmental activities capital assets, net 26,253,417 $ $ 1,394,103 $ 9,187 $ - 27,656,707 $ Balance at Balance at
June 30, 2021 Additions June 30, 2022
Business-type activities
Capital assets being depreciated:

Sewer collection system $ 11,269,018 $ 383,891 $ 11,652,909 Office equipment 1,509 - 1,509
Total capital assets being depreciated 11,270,527 383,891 11,654,418 Less accumulated depreciation for:

Sewer collection system (3,551,283) (236,129) (3,787,412) Office equipment (1,509) - (1,509)
Total accumulated depreciation (3,552,792) (236,129) (3,788,921) Net capital assets being depreciated 7,717,735 147,762 7,865,497 Business-type activities capital assets, net $ 7,717,735 $ 147,762 $ 7,865,497 Page | 55

Notes to Basic Financial Statements
NOTE 4 – CAPITAL ASSETS (CONTINUED)
Depreciation expense was charged to governmental functions as follows:

Governmental Activities Amount
General Government $ 350,134
Public safety 273,051
Community development 444,717
Parks and recreation 149,791
Public works 286,866
Internal service funds 172,892
Total $ 1,677,451
Business-Type Activities Amount
Sewer $ 236,129
Total $ 236,129
NOTE 5 –LEASES
The Town is a lessor for of six cell phone communications site locations. The Town recognizes a lease receivable and a deferred inflow of resources in the government-wide financial statements, as well as in the applicable funds.

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

Key estimates and judgments include how the Town 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 Town uses its estimated incremental borrowing 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 Town 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.

Page | 56

Notes to Basic Financial Statements
NOTE 5 –LEASES (CONTINUED)
A summary of lease activities for the year ended June 30, 2022 are as follows:

Governmental Activities:

Lessor
Original
Lease
Date
Expiration Date
Including Options
Monthly
Revenue as of
June 30, 2022
Lease Receivable
Balance at
June 30, 2022
Deferred Inflow of
Resources at June
30, 2022
General Fund:

Purissima Hills Water 4/1/2005 3/31/2050 $ 2,781 $ 1,284,467 $ 1,262,546 Crown Castle 3/23/2006 2/23/2031 2,994 345,355 339,311
AT&T 7/18/2013 6/18/2033 2,111 321,615 316,007
Verizon Wireless 2/18/2011 2/28/2032 2,000 258,319 253,808 AT&T 6/18/2013 5/18/2033 3,296 484,415 475,971
Other Capital Projects Fund:

American Tower 3/23/2006 8/31/2036 4,407 893,613 882,280 $ 17,589 $ 3,587,784 $ 3,529,923
NOTE 6 – SPECIAL ASSESSMENT DEBT WITHOUT TOWN COMMITMENT Special assessment districts are established in various parts of the Town to provide improvements to properties located in those districts. Properties are assessed for the cost of the improvements. These assessments are payable solely by the property owners over the term of the debt issued to finance the improvements. The Town acts solely as the collecting and paying agent for the District's debt which is not included in the general debt of the Town. The bonds are not general obligation of the Town. The Town is not legally obligated to pay these debts or be the purchaser of last resort of foreclosed properties in the special assessment district.

At June 30, 2022, the balance of the assessment district's outstanding debt was as follows:

Fiscal Year Fiscal Years Outstanding
Issue Issued Interest Rate Annual Amount Ended June 30, 2022 West Loyola Sewer Assessment District No. 1 2009 2.25% - 6.15% $35,000 - $775,000 2010-2040 1,535,000 $ Principal Maturities
NOTE 7 – NET POSITION/FUND BALANCES
A. Net Position
The government-wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted, and unrestricted.

Net Investment in Capital Assets – This category presents all capital assets, including infrastructure, into one component of net position. Accumulated depreciation reduces the balance in this category.

Restricted Net Position – This category presents external restrictions imposed by creditors, grantors, contributors, laws or regulations of other governments, or restrictions imposed by law through constitutional provisions or enabling legislation.

Unrestricted Net Position – This category presents net position of the Town not restricted for any project or other purpose.

Page | 57

Notes to Basic Financial Statements
NOTE 7 – NET POSITION/FUND BALANCES (CONTINUED)
B. Fund Balances – Components
Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables less its liabilities. Portions of a fund's balance may be non-spendable, restricted, committed, assigned or unassigned. At June 30, 2022, the following represents the components of fund balance:

Street Nonmajor
General Capital Projects Governmental Total
Fund Balance Classifications Fund Fund Funds Governmental Restricted for:

Parks and Recreation $ - $ - $ 379,996 $ 379,996
Public Safety - - 6,104 6,104
Art donations - - 58,578 58,578
Pension Trust 1,040,671 - 1,040,671 -
American Rescue Plan Act - - 701,927 701,927
Total Restricted Fund Balances 1,040,671 1,146,605 - 2,187,276 Committed for:

Disaster Contingency Reserve 1,250,000 - 1,250,000 -
Pension Contributions Reserve 2,575,000 - 2,575,000 -
IT Equipment Replacement Reserve 50,000 - - 50,000
Facilities Replacement Reserve 1,902,700 - 1,902,700 -
Equipment Relacement Reserve 594,000 - - 594,000
Street & Road Repairs Capital Projects - 745,049 - 745,049 All other Capital Projects - - 1,956,630 1,956,630
Total Committed Fund Balances 6,371,700 745,049 1,956,630 9,073,379 Assigned for:

Operating Contingency Reserve 2,071,500 - 2,071,500 -
Total Assigned Fund Balances 2,071,500 - 2,071,500 -
Unassigned: 8,599,777 - 8,599,777 -
Total Unassigned Fund Balances 8,599,777 - 8,599,777 -
Total Fund Balances $ 18,083,648 $ 745,049 $ 3,103,235 $ 21,931,932 NOTE 8 – PENSION PLAN
A. General Information About the Pension Plan
The Town participates in the Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Cost Sharing) for its Miscellaneous employees. It is administered by the California Public Employees Retirement System (CalPERS). A cost-sharing multiple-employer defined benefit pension plan is a plan in which the pension obligations to the employees of more than one employer are pooled and pension plan assets can be used to pay benefits of the employees of any employer that provides pensions through the plan.

Page | 58

Notes to Basic Financial Statements
NOTE 8 – PENSION PLAN (CONTINUED)
A. General Information about the Pension Plan (Continued) The Town’s pension plan and its financial position is measured and reported on the same basis as the Plan’s fiduciary net position reported by CalPERS. This includes the measurement of the Plan’s fiduciary net position and additions to/deductions, as well as the Town’s share of the Plan’s net pension liability, deferred outflows/inflows of resources related to pensions, and pension expense. 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.

Plan Descriptions – All qualified permanent employees are eligible to participate in the Town’s Miscellaneous cost-sharing Plans administered by CalPERS. The Town’s Miscellaneous Plans are a costsharing multiple-employer defined benefit pension plan administered by CalPERS since the plan has less than 100 active members, commonly referred to as risk pool. The Town has three retirement benefit tiers in the Miscellaneous Plans. Tier 1 is for employees hired prior to September 1, 2011. Tier 2 is for employees hired after September 1, 2011 and enrolled as a member of CalPERS prior to January 1, 2013. Tier 3 is for employees hired on or after January 1, 2013.

Benefits Provided – CalPERS provides retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees, and their beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment, age and the average of the final 3 years’ compensation. 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 1959 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

Benefit provisions under the Plans are established by State statute and Town resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information can be found on the CalPERS website at:
http://www.calpers.ca.gov/index.jsp?bc=/about/forms-pubs/calpers-reports/actuarial-reports/home.xml.

The plans’ provisions and benefits in effect at June 30, 2022, are summarized as follows:

Tier I Tier II Tier III
Hire date
Prior to
September 1, 2011
Starting
September 1, 2011
On or after
January 1, 2013
Benefit formula 2.0% @ 55 2.0% @ 60 2.0% @ 62
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50-63+ 50 - 63+ 52 - 67+
Monthly benefits, as a % of eligible compensation 1.426% - 2.418% 1.092%-2.418% 1.0%-2.5% Required employee contribution rates 7.00% 7.00% 7.25%
Required employer contribution rates 11.060% 9.300% 7.730% Miscellaneous
Beginning in fiscal year 2016, 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 a dollar amount for contributions toward the unfunded liability (UAL). The dollar amounts are billed on a monthly basis or can be paid in a lump sum at a reduced amount. The Town elected to make the lump sum contribution for the unfunded liability in the amount of $210,183 in fiscal year 2022.

Page | 59

Notes to Basic Financial Statements
NOTE 8 – PENSION PLAN (CONTINUED)
A. General Information about the Pension Plan (Continued) Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The Town is required to contribute the difference between the actuarially determined rate and the contribution rates of employees.

For the year ended June 30, 2022, the contribution recognized as part of pension expense for the Plans were as follows:

Miscellaneous Plans
Contributions - employer $ 439,202
B. Net Pension Liability
The Town’s net pension liability for each Miscellaneous Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2021, using an actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures.

The Town’s proportion of the net pension liability was based on a projection of the Town’s long-term share of contributions of all participating employers, actuarially determined.

Actuarial Methods and Assumptions – The total pension liabilities in June 30, 2022 actuarial valuations were determined using the following actuarial assumptions for Miscellaneous Plan:

Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Payroll Growth
Projected Salary Increase
Investment Rate of Return
Mortality Rate Table
(1) Depending on age, service, and type of employment
(2) Net of pension plan investment expenses, including inflation (3) The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Preretirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

All CalPERS Plans
June 30, 2020
June 30, 2021
Entry-Age Normal Cost Method

7.15%

2.50%
(1)
Varies by Entry Age and Service

7.15% (2)
Derived using CalPERS Membership Data for all Funds (3) Page | 60

Notes to Basic Financial Statements
NOTE 8 – PENSION PLAN (CONTINUED)
B. Net Pension Liability (Continued)
Discount Rate – The discount rate used to measure the total pension liability for the Plan was 7.15 percent.

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 that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of protected benefit payments to determine the total pension liability.

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

In determining the long-term expected rate of return, CalPERS took into account both short-term and longterm market return expectations as well as the expected pension fund (PERF) cash flows. Using historical and forecasted information for of all the Public Employees Retirement Funds’ asset classes (which includes the agent plan and two cost-sharing plans or PERF A, B, and C funds), expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long term (11+ years) using a buildingblock approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

The table below reflects the expected real rates of return by asset.

Asset Class
New Strategic
Allocation
Real Return
Years 1 - 10(b)
Real Return
Years 11+(c)
Global Equity 50.00% 4.80% 5.98%
Global Fixed Income 28.00% 1.00% 2.62%
Inflation Sensitive 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Assets 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
Total 100.00%
(a) In the CalPERS Annual Comprehensive Financial Report, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investment; Inflation Assets are included in both Global Equity Securites and Global Debt Securities. (b) An expected inflation of 2.00% is used this period. (c) An expected inflation of 2.92% is used this period.

Page | 61

Notes to Basic Financial Statements
NOTE 8 – PENSION PLAN (CONTINUED)
C. Changes in the Net Pension Liability
As of June 30, 2022, the Town’s reported net pension assets for its proportionate share of the net pension asset/liability of the Miscellaneous Plan as follows:

Proportionate Share
of Net Pension Asset
Miscellaneous Plans $ 213,880
Total Net Pension Asset $ 213,880
The Town’s proportionate share of the net pension liability for each Miscellaneous Plan as of June 30, 2020 and 2021 is as follows:

Miscellaneous Plans
Proportion - June 30, 2020 0.05917%
Proportion - June 30, 2021 0.01126%
Change - Increase (Decrease) -0.04791%
Sensitivity of the Proportionate Share of the Net Pension Liability for Miscellaneous Plans to Changes in the Discount Rate – The following presents the net pension liability of the Town’s proportionate share of the net pension liability for Miscellaneous Plans, calculated using the discount rate as well as what the Town’s net pension liability would be if it were calculated using a discount rate that is 1- percentage point lower or 1- percentage point higher than the current rate:

Miscellaneous Plans
1% Decrease 6.15%
Net Pension Liability $ 2,099,951
Current Discount Rate 7.15%
Net Pension Asset $ (213,880)
1% Increase 8.15%
Net Pension Asset $ (2,126,691)
Pension Plan Fiduciary Net Position – Detailed information about the pension plans’ fiduciary net position is available in the separately issued CalPERS financial reports.

Page | 62

Notes to Basic Financial Statements
NOTE 8 – PENSION PLAN (CONTINUED)
D. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension For the year ended June 30, 2022, the Town’s recognized pension expense of negative $2,164,530 for the Miscellaneous Plans. At June 30, 2022, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources for Miscellaneous Plans:

Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to measurement date $ 439,202 $ - Differences between actual and expected experience (23,984) - Changes in assumptions -
Difference between proportional and actual contributions 106,402 (154,595) Net differences between projected and actual earnings
on plan investments 183,479 186,706
Adjustment due to differences in proportion (75,529)
Total $ 705,099 $ (43,418)
The $439,202 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, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Years Ending June 30
2023 42,577 $
2024 59,093
2025 69,212
2026 51,597
$ 222,479
E. Payable to Pension Plan
As of June 30, 2022, the Town reported a payable of $24,834 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2022.

Page | 63

Notes to Basic Financial Statements
NOTE 8 – PENSION PLAN (CONTINUED)
F. Reduction of CalPERS Discount Rate
On July 12, 2021, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-

21. Based on the thresholds specified in CalPERS Funding Risk Mitigation policy approved by the CalPERS Board in 2015, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%. Since CalPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle, the CalPERS Board elected to defer any changes to the asset allocation until the ALM process concluded, and the board could make its final decision on the asset allocation in November 2021.

On November 17, 2021, the board adopted a new strategic asset allocation. The new asset allocation along with the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of 6.90% (net of investment expense, but without a reduction for administrative expense) for financial reporting purposes. This includes a reduction in the price inflation assumption from

2.50% to 2.30% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modifications to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the CalPERS Board. These new assumptions will be reflected in the CalPERS GASB 68 accounting valuation reports for the June 30, 2022, measurement date.

NOTE 9 – RISK MANAGEMENT
A. Risk Pool
The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

The Town participates in the Pooled Liability Assurance Network Joint Powers Authority (PLAN JPA), a selfinsurance pool. The PLAN JPA Plan provides certain levels of liability insurance coverage, claims management, risk management services and legal defense to each participant. The Town's general liability claims are insured up to $1 million per occurrence and $30 million per year. The Town's property claims are insured for up to $30 million per year. The Town has a deductible or uninsured liability of up to $25,000 per claim. Once the Town's deductible is met, PLAN JPA becomes responsible for payment of all claims up to the limit. During the fiscal year ended June 30, 2022, the Town contributed $264,370 for current year coverage plus settlement payments. Part of the contribution is to maintain the Plan’s reserve at 60 percent confidence funding level, per the annual actuarial report, to meet future claim liabilities.

Settlement amounts did not exceed insurance coverage for the past three years. The Town also received $48,285 in insurance recoveries during fiscal year 2022. The Town's insurance costs will increase/decrease based on its own adverse claims experience and the adverse claims experience of other agencies in the Town's risk pool.

The Shared Agency Risk Pool Joint Powers Agency (SHARP JPA) Shared Risk Pool (Pool) covers workers' compensation claims up to $250,000 each and has coverage above that limit to the statutory maximum. The Town has no deductible for these claims. During the fiscal year ended June 30, 2022, the Town contributed $86,993 for current year coverage.

As of June 30, 2022, the Town does not have earthquake insurance.

Page | 64

Notes to Basic Financial Statements
NOTE 9 – RISK MANAGEMENT (CONTINUED)
A. Risk Pool (Continued)
• Each risk pool is governed by a Board consisting of representatives from member municipalities. The Board controls the operations of each risk pool, including selections of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on the Board. The Town's contribution to each risk pool is generally equal to the ratio of the Town's payroll to the total payrolls of all entities participating in the same layer of each program further adjusted for adverse claims experience, in each program year.
• Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. Financial statements for each agency can be obtained from PLAN, 1750 Creekside Oaks Drive, Suite 200, Sacramento, CA, 95833. • For PLAN JPA and SHARP JPA, all participating members are responsible for their weighted share of claim liability and to replenish the Plan/Pool reserve fund as necessary.

NOTE 10 – CONTINGENT LIABILITIES
A. Commitments and Contingencies
The Town is subject to litigation arising in the normal course of business. In the opinion of the Town Attorney, there is no pending litigation that is likely to have a material adverse effect on the financial position of the Town.

B. Service Concession Arrangements (SCA)
In February 2014, the Town and Victoria Dye Equestrian, LLC (VDE) entered into an agreement to operate the Westwind Community Barn (Westwind) which is owned by the Town. VDE provides horse boarding and equestrian classes to the community. The Town provides a monthly subsidy to VDE to defray costs related to managing barn operations and shares in certain utility costs. VDE remits 25% of all equestrian class revenues to the Town and the Town keeps 25% of revenues it collects for equestrian camps the Town offers operated by VDE. Westwind activity is included in the Town’s General Fund.

NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB)
A. General Information About the OPEB Plan
Town employees are provided with other postemployment benefits (OPEB) through the Town’s agent multiemployer defined benefit postemployment healthcare plan (the “Plan”) administered by the California Public Employees’ Retirement System (CalPERS). The Plan consists of participating employers of the State of California and public agencies. During fiscal year 2008, the Town elected to prefund its OPEB liabilities through an irrevocable trust, the California Employers’ Retiree Benefit Trust (CERBT). CERBT is administered by CalPERS. CERBT is a tax qualified irrevocable trust organized under the Internal Revenue Code (IRC) Section 115.

The CERBT was established by Chapter 331 of the 1988 California Statues, and employers elect to participate in the CERBT to pre-fund health, dental, and other non-pension postemployment benefits for their retirees and survivors.

Page | 65

Notes to Basic Financial Statements
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) B. Plan Description
The Plan provides postemployment healthcare benefits to eligible employees who retire directly from the Town under CalPERS at the minimum age of 50 with at least 5 years of CalPERS service or disability. Retirees must make a retirement election with CalPERS within 120 days following the date of separation from the Town. Benefit provisions are established, and may be amended, by the City Council. The following Note 11C below is a summary of Plan benefits by employee group as of June 30, 2022.

C. Benefits Provided
The Town participates in the CalPERS healthcare program (PEMHCA) and allows retirees to continue participation in the medical insurance program after retirement. Under the Plan, the Town reimburses a portion of the premium for retiree medical coverage as follows:
• Retirees from the Town and employees receiving Town medical benefits as of October 11, 2007 are eligible for a Town contribution up to an amount that is equal to what active employees receive in the cafeteria plan. As stated above, an individual must also qualify as a CalPERS annuitant in order to receive this benefit.
• Employees hired or first receiving Town medical benefits after October 11, 2007 are only eligible to receive a Town contribution equal to the PEMHCA minimum upon retirement from the Town. As stated above, retirees must qualify as a CalPERS annuitant and meet all statutory and legal requirements necessary to receive this benefit.

D. Employees Covered by Benefit Terms
Membership in the plan consisted of the following at the measurement date of June 30, 2022:

Count
Inactive employees or beneficiaries currently receiving benefits 14 Inactive employees entitled to but not yet receiving benefits 2 Active employees 20
Total 36
E. Contributions
Town contributions to the Plan occur as benefits are paid to retirees and/or to the CERBT. Benefit payments may occur in the form of direct payments for premiums and taxes (“explicit subsidies”) and/or indirect payments to retirees in the form of higher premiums for active employees (“implicit subsidies”). Benefits and other contributions paid by the Town during the measurement period and those expected to be made in the following the measurement period but prior to the end of the fiscal year are shown below. For fiscal year ending June 30, 2022, Town contributions totaled $60,918.

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Notes to Basic Financial Statements
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) E. Contributions (Continued)
Benefits Paid by Trust $       60,918
Benefits Paid by Employer (not reimbursed by Trust)         129,223 Implicit benefit payments           37,115
Total Benefit Payments During the Measurement Period $     227,256 Employer Contributions to the Trust $       60,918
‐
‐
Implicit Contributions ‐
Total Employer Contributions During the Measurement Date $       60,918 Employer Contributions to the Trust $                ‐
‐
‐
Implicit Contributions ‐
Total Employer Contributions Subsequent to the Measurement Date $                ‐ Benefit Payments during the Measurement Period
(July 1, 2020 through June 30, 2021)
Employer Contributions During the Measurement Period
(July 1, 2020 through June 30, 2021)
Employer Contributions in the Form of Direct Benefit Payments (not reimbursed by the Trust)
Employer Contributions Subsequent to the Measurement Period (July 1, 2021 through June 30, 2022)
Employer Contributions in the Form of Direct Benefit Payments (not reimbursed by the Trust)
Page | 67

Notes to Basic Financial Statements
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) E. Contributions (Continued)
The Town prefundsits OPEB liability by contributing 100% or more of the Actuarily Determined Contribution (“ADC”) each year.  The ADC consists of two components, which has been adjusted with interest, to the Town’s fiscal year ending June 30, 2022:
 The amounts attributed to service performed in the current fiscal year (the normal cost); and  Amortization of the unfunded actuarial accrued liability (UAAL).

Expected contributions, relative to the ADC, for the fiscal year ending June 30, 2022 are as follows:

Actuarially determined contribution $       20,926
Contributions in relation to the
actuarially determined contributions                 ‐
Contribution deficiency (excess) $       20,926
Covered payroll $ 2,528,304
F. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ending June 30, 2022, the Town recognized OPEB expense of negative $147,570.  At June 30, 2022, the Town reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
OPEB contributions subsequent to the measurement date $ ‐ $ ‐ Changes of assumptions ‐ (68,440)
Differences between expected and
actual experience ‐ (325,767)
Net difference between projected and actual earnings on OPEB plan investments ‐ (412,490)
Total $ ‐ $                (806,697)
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Fiscal Year Ended
June 30
2023 $ (182,100)
2024 (173,470)
2025 (172,652)
2026 (184,416)
2027             (67,947)
Thereafter             (26,112)
Total $ (806,697)
Page | 68

Notes to Basic Financial Statements
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) G. Net OPEB Liability (Asset)
Actuarial Methods and Assumptions
The Town’s net OPEB liability (asset) was measured as of June 30, 2021 and the total OPEB liability used to calculate the net OPEB liability (asset) was determined by an actuarial valuation dated June 30, 2021 that was rolled forward using standard update procedures to determine the total OPEB liability as of June 30, 2022, based on the following actuarial methods and assumptions:

Actuarial Assumptions:

Actuarial Valuation Date June 30, 2021
Measurement Date June 30, 2021
Actuarial Cost Method Entry-Age Normal Cost Method, level percent of pay Asset Valuation Method Market Value of Assets
Long Term Return on Assets 6% as of June 30, 2021 and June 30, 2020 net of plan investment expenses and including inflation.

Discount Rate 6.00%
Participants Valued Only current active employees and retired participants and covered dependents are valued. No future entrants are
considered in this valuation.

Salary Increase 3% per year, used only to allocate the cost of benefits between service years.

General Inflation 2.5% per year
Healthcare Trend Rate 5.80% in 2022, reducing between 0.1% - 0.2% per year in 2023 & later.

Mortality rates were based on the CalPERS published rates and adjusted to back out 20 years of Scale BB to central year 2017 and then projected by medical plan premiums and claims costs by age that are assumed to increase once each year. The required PEMHCA minimum employer contribution (MEC) is assumed to increase annually by 4.5%.

The demographic actuarial assumptions used in the June 30, 2021 valuation were based on the 2017 experience study of the CalPERS system using data from 1997 to 2015, except for a different basis used to project future mortality improvements.

The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimate ranges of 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.

Page | 69

Notes to Basic Financial Statements
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) G. Net OPEB Liability (Asset) (Continued)
The Town has elected CERBT Strategy Risk Level 1. This portfolio consists of assets management internally by CalPERS and/or external advisors. The CalPERS Investment Committee and Board of Administration directs the investment strategy and investments of the CERBT. As the CERBT is not a defined benefit plan, there is no guarantee that the portfolio will achieve its investment objectives nor provide sufficient funding to meet these employer obligations. CalPERS will not make up the difference between the employer’s CERBT assets and the actual cost of OPEB provided to the employer’s plan members. These investments are not insured by FDIC, CalPERS, the State of California, or any other government agency. As discussed in Note 2, the balance in the Town’s CERBT account as of June 30, 2022 was $1,040,671.

The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table.

Asset Class Target Allocation Benchmarks
Global Equity 49.0% MSCI All Country World Indez IMI (net) Fixed Income 23.0% Bloomberg Barclays Long Liability Index Real Estate Investment Trusts 20.0% FTSE EPRA/NAREIT Developed Liquid Index (net) Treasury Inflation Protection Securities 5.0% Bloomberg Barclays Barclays US TIPS Index Commodities 3.0% S&P GSCI Total Return Index
Total 100.0%
Page | 70

Notes to Basic Financial Statements
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) H. Changes in Net OPEB Liability (Asset)
The changes in the net OPEB liability (asset) follows:

Increase (Decrease)
Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability (Asset)
Balance at June 30, 2021
(Measurement Date 6/30/2020) $ 2,304,662 $ 2,517,701 $ (213,039) Changes for the year:

Service Cost 68,834 - 68,834
Interest on the Total OPEB Liability 137,420 - 137,420
Differences between Expected and Actual
Experience (130,843) - (130,843)
Contributions
Employer - 60,918 (60,918)
Net Investment Income 694,774 - (694,774)
Benefit payments, including Refunds of
Employee Contributions (166,338) (166,338) -
Administrative Expense - (954) 954
Changes of assumptions (61,901) (61,901) -
Net changes (152,828) 588,400 (741,228)
Balance at June 30, 2022
(Measurement Date 6/30/2021) $ 2,151,834 $ 3,106,101 $ (954,267) Detailed information about the OPEB plan’s fiduciary net position is available through CalPERS for the Schedule of Changes in Fiduciary Net Position by Employer as of the measurement date on the CalPERS’ website.

I. Discount Rate
The discount rate used to measure the total OPEB liability was 6.0%. The projection of cash flows used to determine the discount rate assumed that contributions from the Town will be made at contractually required rates, actuarially determined. Based on this assumption, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current and inactive employees. 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. There has not been a change in the discount rate since the prior measurement date.

Page | 71

Notes to Basic Financial Statements
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) I. Discount Rate (Continued)
Sensitivity of the Town’s proportionate share of the net OPEB liability to changes in the discount rate.

The following presents the Town’s proportionate share of the net OPEB liability, as well as what the Town’s proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1- percentage-point lower (5.0%) or 1-percentage-point higher (7.0%) than the current discount rate:
1% Decrease 5.00%
Net OPEB Liability (Asset) $ (720,573)
Current Discount Rate 6.00%
Net OPEB Liability (Asset) (954,267) $
1% Increase 7.00%
Net OPEB Liability (Asset) $ (1,152,475)
Sensitivity of the Town’s proportionate share of the net OPEB liability to changes in the healthcare cost trend rates.

The following presents the Town’s proportionate share of the net OPEB liability, as well as what the Town’s proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point (5.8% decreasing to 4.8%) or 1-percentage point higher (5.8% increasing to

6.8%) than the current healthcare cost trend rates:
1% Decrease 4.80%
Net OPEB Liability (Asset) $ (1,165,518)
Trend Rate 5.80%
Net OPEB Liability (Asset) (954,267) $
1% Increase 6.80%
Net OPEB Liability (Asset) $ (703,348)
J. OPEB Liabilities, OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPEB For purposes of measuring the net OPEB liability (asset), deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Town’s 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 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.

Page | 72

Notes to Basic Financial Statements
NOTE 12 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Excess of Expenditures Over Appropriations
The following funds had expenditures over appropriations at June 30, 2022:

Fund
Expenditures in
Excess of
Appropriations
General Fund
Community development $222,997
Parks and recreation 54,640
Nondepartmental 279,754
Parks and Recreation In-Lieu Fee Special Revenue Fund 1,570 Special Donation Special Revenue Fund 50,000
B. Deficit Fund Balances
No individual funds had a deficit fund balance at June 30, 2022.

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Page | 73

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Required
Supplemental Information
Page | 75

Variance with
Final BudgetActual Positive
Original Final Amounts (Negative)

REVENUES
Property taxes $ 7,241,751 $ 7,241,751 $ 7,592,741 $ 350,990 Taxes other than property 459,101 459,101 813,072 353,971 Franchise fees 379,106 379,106 414,154 35,048
Licenses and permits 1,285,264 1,285,264 2,529,635 1,244,371 Intergovernmental 886,624 136,624 100,484 (36,140)
Use of money and property 100,000 100,000 (810,353) (910,353) Charges for services 914,100 914,100 1,179,570 265,470
Rental income 128,998 128,998 205,090 76,092
Fines and forfeitures - - 32,400 32,400
Interfund charges 2,709,515 2,709,515 2,603,083 (106,432) Miscellaneous 10,000 10,000 86,186 76,186
Total revenues 14,114,459 13,364,459 14,746,062 1,381,603

EXPENDITURES
Current:

General government 3,202,144 3,237,507 2,669,013 568,494 Public safety 2,162,476 2,162,476 2,131,839 30,637
Community development 3,513,518 3,523,157 3,746,154 (222,997) Public works 2,484,072 2,509,189 2,416,468 92,721
Parks and recreation 1,181,651 1,207,467 1,262,109 (54,642) Nondepartmental:

Additional pension payments 155,657 155,657 279,754 (124,097) Total expenditures 12,699,518 12,795,453 12,505,337 290,116 Excess (Deficiency) of Revenues
Over Expenditures 1,414,941 569,006 2,240,725 1,671,719

OTHER FINANCING SOURCES (USES)
Transfers in - - 638,923 638,923
Transfers out (4,513,901) (1,818,372) (1,756,479) 61,893 Total Other Financing Sources (Uses) (4,513,901) (1,818,372) (1,117,556) 700,816 Net Change in Fund Balances (3,098,960) (1,249,366) 1,123,169 2,372,535 Fund Balances, Beginning of Year 16,960,479 16,960,479 16,960,479 - Fund Balances, End of Year $ 13,861,519 $ 15,711,113 $ 18,083,648 $ 2,372,535

TOWN OF LOS ALTOS HILLS

SCHEDULE OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2022

GENERAL FUND
Budgeted Amounts
Page | 76

Required Supplemental Information
Measurement Date 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 Plan's Proportion of the Net Pension Liability
(Asset) 0.03226% 0.07776% 0.08293% 0.08630% 0.05018% 0.05502% 0.05917% -0.01126% Plan's Proportionate Share of the Net Pension
Liability (Asset) $ 2,007,540 $ 2,133,424 $ 2,881,005 $ 3,400,941 $ 1,891,026 $ 2,203,151 $ 2,495,780 $ (213,880) Plan's Covered Payroll $ 1,607,595 $ 1,624,334 $ 1,641,880 $ 1,786,436 $ 1,877,689 $ 2,381,293 $ 2,603,667 $ 2,696,540 Plan's Proportionate Share of the Net Pension
Liability (Asset) as a Percentage of it's Covered
Payroll 124.88% 131.34% 175.47% 190.38% 100.71% 92.52% 95.86% -7.93% Plan’s Fiduciary Net Position as a Percentage of
the Total Pension Liability 79.82% 78.40% 74.06% 73.31% 77.69% 77.73% 77.71% 90.49% * Fiscal year 2015 was the 1st year of implementation.

Miscellaneous Plan
Cost-Sharing Multiple-Employer Defined Pension Plan
Last 10 Years*

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Page | 77

Required Supplemental Information
Miscellaneous Plan
Fiscal Year 2015 2016 2017 2018 2019
Actuarially determined contribution 181,280 $ $ 221,507 $ 250,340 $ 1,640,692 $ 345,118 Contributions in relation to the actuarially
determined contributions (181,280) (221,507) (250,340) (1,640,692) (345,118) Contribution deficiency (excess) $ - $ - $ - $ - $ -
Covered payroll $ 1,624,334 $ 1,641,880 $ 1,786,436 $ 1,877,689 $ 2,381,293 Contributions as a percentage of covered
payroll 11.16% 13.49% 14.01% 87.38% 14.49%
Valuation date: 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Fiscal Year 2020 2021 2022
Actuarially determined contribution $ 397,870 $ 949,129 $ 439,202 Contributions in relation to the actuarially
determined contributions (397,870) (949,129) (439,202)
Contribution deficiency (excess) $ - $ - $ -
Covered payroll $ 2,603,667 $ 2,696,540 $ 2,691,890
Contributions as a percentage of covered
payroll 15.28% 35.20% 16.32%
Valuation date: 6/30/2018 6/30/2019 6/30/2020
Notes to Schedule
Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age normal
Amortization method Level percentage of payroll, closed Remaining amortization period 30 years
Asset valuation method 5-year smoothed market
Inflation 2.50%
Salary increases Varies by Entry Age and Service
Investment rate of return 7.15%, net of pension plan investment and administrative expenses, including inflation Retirement age 55 years Tier 1 60 years Tier 2 62 years Tier 3 Mortality
* Fiscal year 2015 was the 1st year of implementation, therefore only four years are shown.

Tier 1 -The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

Tier 2 - The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

Tier 3 - The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

Cost-Sharing Multiple-Employer Defined Pension Plan
Last 10 Years*

SCHEDULE OF CONTRIBUTIONS
Miscellaneous Plan
Page | 78

Required Supplemental Information
Measurement Date 2017 2018 2019 2020 2021
Total OPEB Liability
Service Cost $ 57,272 $ 59,133 $ 61,054 $ 66,829 $ 68,834 Interest on the total OPEB Liability 145,306 148,769 152,261 134,496 137,420 Changes in benefit terms - - - - -
Differences between expected and actual experience - - (346,011) - (130,843) Changes of assumptions - - (25,019) - (61,901)
Benefit Payments (135,645) (157,788) (145,442) (142,864) (166,338) Net change in total OPEB liability 66,933 50,114 (303,157) 58,461 (152,828) Total OPEB liability - beginning 2,432,311 2,499,244 2,549,358 2,246,201 2,304,662 Total OPEB liability - ending (a) $ 2,499,244 $ 2,549,358 $ 2,246,201 $ 2,304,662 $ 2,151,834 Plan fiduciary net position
Contributions - employer-Town's contribution $ 403,645 $ 157,788 $ 145,442 $ 59,226 $ 60,918 Contributions - employer-implicit subsidy - - - - -
Net investment income 200,657 174,834 146,116 89,421 694,774 Benefit payments (135,645) (157,788) (145,442) (142,864) (166,338) Implicit rate subsidy fulfilled - - - - -
Administrative expense (1,019) (1,171) (507) (1,219) (954) Other Expenses - (2,906) - - -
Net change in plan fiduciary net position 467,638 170,757 145,609 4,564 588,400 Plan fiduciary net position - beginning 1,729,133 2,196,771 2,367,528 2,513,137 2,517,701 Plan fiduciary net position - ending (b) $ 2,196,771 $ 2,367,528 $ 2,513,137 $ 2,517,701 $ 3,106,101 Net OPEB liability/(Asset) - ending (a) - (b) $ 302,473 $ 181,830 $ (266,936) $ (213,039) $ (954,267) Town's covered payroll $ 1,856,292 $ 2,082,980 $ 2,364,255 $ 2,829,032 $ 2,929,250 Town's proportionate share of the net OPEB liability
(asset) as a percentage of its covered-employee payroll 16.29% 8.73% -11.29% -7.53% -32.58% Notes to Schedule:
* Fiscal year 2018 was the first year of implementation.

Historical information is required only for measurement periods for which GASB 75 is applicable. Future year's information will be displayed up to 10 years as information becomes available.

Prepared for Town of Los Altos Hills
For the measurement year ending June 30
Last 10 Years*

SCHEDULE OF CHANGES IN THE TOWN'S NET OPEB LIABILITY AND RELATED RATIOS Page | 79

Required Supplemental Information
Fiscal Year Ending 2018 2019 2020 2021 2022
Actuarially determined contribution $ 103,483 $ 100,051 $ 59,226 $ 60,918 $ 20,926 Contributions in relation to the actuarially
determined contributions (157,788) (145,442) (59,226) (60,918) - Contribution deficiency (excess) $ (54,305) $ (45,391) $ - $ - $ 20,926 Covered payroll $ 2,082,980 $ 2,364,255 $ 2,829,032 $ 2,929,250 $ 2,528,304 Contributions as a percentage of covered payroll 7.58% 6.15% 2.09% 2.08% 0.00% Notes to Schedule
Valuation date: 6/30/2018 6/30/2018 6/30/2019 6/30/2020 6/30/2021 Methods and assumptions used to determine contribution rates:

Actuarial cost method
Asset valuation method
Inflation
Assumed Rate of Payroll Growth
Healthcare trend rates
Rate of return on assets
Retirement Age
Mortality rate
Other information
data of 20 years of projected on-going
mortality improvement using Society of
Actuaries Scale BB in June 30, 2016, CalPERS
* - Fiscal year 2018 was the 1st year of implementation.

Prepared for Town of Los Altos Hills
For the fiscal year ending June 30
Last 10 Years*

SCHEDULE OF OPEB CONTRIBUTIONS

6.00%
Age 50 and 5 years of service
CalPERS Rates (1)
The ADC takes into account the implicit subsidy
Market value of assets

2.50%

3.00%

5.80% in 2022, fluctuates until ultimate rate of 3.90%
in 2076.

Entry age normal, level percent of pay
Page | 80

Required Supplemental Information
NOTE 1 – BUDGETARY BASIS OF ACCOUNTING
The Town follows these procedures in establishing the budgetary data reflected in the required supplementary information:

1. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them.

2. Public hearings are held to obtain taxpayer comments.

3. The budget is legally enacted through passage of a minute order.

4. The City Manager is authorized to transfer budgeted amounts between departments within any fund.

However, any revisions that increase total expenditures of any fund must be approved by the City Council. Expenditures may not legally exceed budgeted appropriations at the fund level without City Council approval.

5. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Amounts presented include amendments approved by the City Council.

NOTE 2 – PENSION LIABILITY AND RELATED CONTRIBUTIONS
These schedules present information that shows the Town’s proportionate share of the pension liability in the cost sharing pools, actuarial information, and contributions. The proportionate share information is useful in determining the Town’s liability in relation to all other entities in the pool.

NOTE 3 – SCHEDULE OF CHANGES IN THE TOWN’S NET OPEB LIABILITY AND RELATED RATIOS This schedule shows the funding progress for the Town's Other Postemployment Benefits whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits as required by current standards. There are no factors that significantly affect the identification of trends in the amount reported. Only years when actuarial valuations were performed are shown. Additional years will be included as subsequent valuations are performed.

Page | 81

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Supplemental Information
Page | 83

Variance with
Final BudgetActual Positive
Original Final Amounts (Negative)

REVENUES
Intergovernmental $ 386,700 $ 386,700 $ 842,001 $ 455,301 Charges for services (386,700) 139,800 147,280 7,480
Total revenues - 526,500 989,281 462,781

EXPENDITURES
Capital outlay 2,000,000 2,000,000 1,519,912 480,088
Total expenditures 2,000,000 2,000,000 1,519,912 480,088 Excess (Deficiency) of Revenues
Over Expenditures (2,000,000) (1,473,500) (530,631) 942,869

OTHER FINANCING SOURCES (USES)
Transfers in 970,236 1,473,500 530,630 (942,870)
Transfers (out) - - - -
Total Other Financing Sources (Uses) 970,236 1,473,500 530,630 (942,870) Net Change in Fund Balances (1,029,764) - (1) (1)
Fund Balances, Beginning of Year 745,050 745,050 745,050 - Fund Balances, End of Year $ (284,714) $ 745,050 $ 745,049 $ (1)

TOWN OF LOS ALTOS HILLS

SCHEDULE OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCE - BUDGET AND ACTUAL

STREET CAPITAL PROJECTS FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Budgeted Amounts
Page | 84

Variance with
Final Budget‐
Actual Positive
Original Final Amounts (Negative)

OPERATING REVENUES
Charges for services $    3,182,515 $    3,182,515 $    3,070,792 $      (111,723) Other income ‐  ‐                 7,469                7,469 Total Operating Revenues        3,182,515        3,182,515        3,078,261          (104,254)

OPERATING EXPENSES
Salaries and benefits           238,002           239,064             65,621           173,443 Contract services ‐ treatment plant        2,075,697        2,075,697        1,572,403           503,294 Professional services             20,000             30,000           117,032            (87,032) Support goods and services             18,850             18,850                9,013                9,837 Repairs and maintenance           500,000           500,000           398,833           101,167 Utilities                6,350                6,350                7,536              (1,186) Interfund charges           234,131           234,131           237,174              (3,043) Depreciation ‐ ‐           236,129          (236,129)
Total Operating Expenditures 3,093,030 3,104,092 2,643,741                   460,351 Operating income 89,485 78,423 434,520                      356,097

NONOPERATING REVENUES (EXPENSES)
Capital Contributions ‐ sewer connection fees ‐  ‐            236,512           236,512 Interest income ‐  ‐           (186,156)          (186,156) Nonoperating Revenues (Expenses), net ‐  ‐  50,356 50,356

NET INCOME (LOSS) BEFORE TRANSFERS
Transfers in           500,000           500,000                9,300          (490,700) Transfers out          (500,000)          (500,000) ‐           500,000 Changes in Net Position 589,485 578,423 494,176 415,753 Fund Balances, Beginning of Year     11,548,391     11,548,391     11,548,391 ‐ Fund Balances, End of Year $  12,137,876 $  12,126,814 $  12,042,567 $        415,753

TOWN OF LOS ALTOS HILLS

SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE ‐ BUDGET AND ACTUAL

SEWER ENTERPRISE FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Budgeted Amounts
Page | 85

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Non-Major Governmental Funds

SPECIAL REVENUE FUNDS
Special revenue Funds account for specific revenues that are legally restricted to expenditures for particular purposes.

Parks and Recreation In-Lieu Fee Fund accounts for revenues from parks and recreation in-lieu fees, which are designated for park maintenance, improvement and construction.

Citizens’ Option for Public Safety (COPS) Fund accounts for revenues from the Citizens’ Option for Public Safety Program, which are designated for public safety.

Special Donations Fund accounts for donations.

ARPA Fund accounts for revenues from the Federal government for purposes as designated under the American Rescue Plan Act.

CAPITAL PROJECTS FUND
Capital projects funds account for funds allocated for capital projects.

Other Capital Projects Funds accounts for financial resources that are necessary for the acquisition or construction of major capital facilities.

Page | 87

TOWN OF LOS ALTOS HILLS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS
JUNE 30, 2022
Parks and
Recreation Special
In‐Lieu Fee COPS Donations ARPA
ASSETS
Cash and investments $        379,247 $          48,228 $      58,578 $      701,927 Accounts receivable 749 95 ‐  ‐
Lease receivable ‐ ‐ ‐  ‐
Total Assets $        379,996 $          48,323       58,578$       701,927$

LIABILITIES
Accounts payable $ ‐ $          42,219 $                 ‐ $ ‐ Other liabilities ‐ ‐ ‐  ‐
Total Liabilities ‐              ‐  42,219 ‐

DEFERRED INFLOW OF RESOURCES
Related to leases ‐ ‐ ‐  ‐
Total Deferred Inflow of Resources ‐ ‐ ‐  ‐

FUND BALANCES
Restricted           379,996                6,104         58,578         701,927 Committed ‐ ‐ ‐  ‐
Total Fund Balances           379,996                6,104         58,578         701,927

TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES $        379,996 $          48,323       58,578$       701,927$

SPECIAL REVENUE FUNDS
Page | 88

Capital
Projects
Fund
Total
Other Nonmajor
Capital Governmental
Projects Funds
$   2,206,597 $    3,394,577
6,477 7,321
893,613 893,613
3,106,687$ $    4,295,511
$      263,704 $        305,923
4,073 4,073
267,777           309,996
882,280 882,280
882,280           882,280
‐        1,146,605
1,956,630 1,956,630
1,956,630        3,103,235
3,106,687$ $    4,295,511
Page | 89

TOWN OF LOS ALTOS HILLS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2022
Parks and
Recreation Special
In‐Lieu Fund COPS Donations ARPA

REVENUES
Intergovernmental $ ‐ $        161,285 $ ‐ $   1,007,480 Investment income              (7,479)              (2,454) ‐ ‐ Charges for services           354,554 ‐  ‐  ‐
Rental income ‐ ‐  ‐  ‐
Other revenues ‐ ‐               3,345 ‐
Total Revenues           347,075           158,831              3,345      1,007,480

EXPENDITURES
General government ‐ ‐           50,000         305,553 Public safety ‐           168,256 ‐  ‐
Park and recreation               1,570 ‐ ‐  ‐
Capital outlay ‐ ‐  ‐  ‐
Total Expenditures               1,570           168,256           50,000         305,553

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES           345,505              (9,425)          (46,655)         701,927

OTHER FINANCING SOURCES (USES)
Transfers in ‐             15,874 ‐  ‐
Transfers out ‐          (638,923) ‐  ‐
Total Other Financing Sources (Uses) ‐          (623,049) ‐  ‐ NET CHANGE IN FUND BALANCES           345,505          (632,474)          (46,655)         701,927 BEGINNING FUND BALANCES             34,491           638,578         105,233 ‐ ENDING FUND BALANCES $        379,996 $            6,104 $        58,578 $      701,927

SPECIAL REVENUE FUNDS
Page | 90

CAPITAL

PROJECTS
FUND
Total
Other Nonmajor
Capital Governmental
Projects Funds
50,582$ $         1,219,347
(68,286)                (78,219)
252,062               606,616
68,384                  68,384
‐ 3,345
302,742            1,819,473
415,147               770,700
‐               168,256
‐ 1,570
1,073,344            1,073,344
1,488,491            2,013,870
(1,185,749)              (194,397)
1,240,675            1,256,549
(40,000)              (678,923)
1,200,675               577,626
14,926               383,229
1,941,704            2,720,006
$   1,956,630 $         3,103,235
Page | 91

TOWN OF LOS ALTOS HILLS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022

SPECIAL REVENUE FUNDS

PARKS AND RECREATION
IN‐LIEU FEE
Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)

GOVERNMENTAL REVENUES
Charges for services $            ‐     354,554$     354,554$ $                ‐ $                ‐ $                 ‐ Intergovernmental                ‐ ‐  ‐  ‐       161,285       161,285 Rental income ‐                ‐  ‐ ‐ ‐  ‐
Investment income ‐                         (7,479)          (7,479) ‐         (2,454)          (2,454) Other revenues ‐                ‐  ‐  ‐  ‐  ‐
Total Revenues ‐                      347,075       347,075 ‐      158,831       158,831

EXPENDITURES
General government ‐                ‐  ‐  ‐  ‐  ‐
Public safety ‐                ‐  ‐       182,184      168,256         13,928 Capital outlay ‐                ‐  ‐  ‐  ‐  ‐
Park and recreation ‐                          1,570          (1,570) ‐ ‐  ‐ Total Expenditures ‐                         1,570          (1,570)      182,184      168,256         13,928

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES ‐                      345,505       348,645     (182,184)         (9,425)       144,903

OTHER FINANCING SOURCES (USES)
Transfers in ‐                ‐  ‐  ‐         15,874        (15,874) Transfers out ‐                ‐  ‐  ‐      (638,923)      (638,923) Total Other Financing Sources (Uses) ‐                ‐  ‐  ‐      (623,049)      (654,797) NET CHANGES IN FUND BALANCES $            ‐       345,505     348,645$   (182,184)$     (632,474)   (509,894)$ BEGINNING FUND BALANCES 34,491 638,578
ENDING FUND BALANCES     379,996$        6,104$
COPS
Page | 92

TOWN OF LOS ALTOS HILLS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)

GOVERNMENTAL REVENUES
Charges for services $            ‐ $                ‐ $ ‐ $ ‐ $                 ‐ $ ‐ Intergovernmental                ‐ ‐  ‐       1,007,480    1,007,480 ‐ Rental income ‐                ‐  ‐  ‐  ‐  ‐
Investment Income ‐                ‐ ‐  ‐ ‐ ‐
Other revenues ‐                         3,345             3,345 ‐ ‐  ‐ Total Revenues ‐                         3,345             3,345      1,007,480    1,007,480 ‐

EXPENDITURES
General government ‐                       50,000          (50,000)          567,280       305,553         261,727 Public safety ‐                ‐  ‐  ‐  ‐  ‐
Capital outlay ‐                ‐  ‐  ‐  ‐  ‐
Park and recreation ‐                ‐  ‐  ‐  ‐  ‐
Total Expenditures ‐                       50,000          (50,000)          567,280       305,553         261,727

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES ‐                     (46,655)           53,345          440,200       701,927       (261,727)

OTHER FINANCING SOURCES (USES)
Transfers in ‐                ‐  ‐  ‐  ‐  ‐
Transfers out ‐                ‐  ‐  ‐  ‐  ‐
Total Other Financing Sources (Uses) ‐                ‐  ‐  ‐  ‐  ‐ NET CHANGE IN FUND BALANCES $            ‐       (46,655)         53,345$ $       440,200       701,927 $    (261,727) BEGINNING FUND BALANCES 105,233 ‐
ENDING FUND BALANCES      58,578$     701,927$
(Continued)
ARPA

SPECIAL REVENUE FUNDS

SPECIAL DONATIONS
Page | 93

TOWN OF LOS ALTOS HILLS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022

CAPITAL PROJECTS FUND

OTHER CAPITAL PROJECTS
Variance
Positive
Budget Actual (Negative)

GOVERNMENTAL REVENUES
Charges for services     178,860$       252,062$ $         73,202 Intergovernmental       321,683           50,582         (271,101) Rental income         52,000           68,384             16,384 Investment Income ‐           (68,286)           (68,286) Other revenues ‐ ‐  ‐
Total Revenues       552,543         302,742         (249,801)

EXPENDITURES
General government       360,000         415,147             55,147 Public safety ‐  ‐  ‐
Capital outlay ‐      1,073,344       1,073,344
Park and recreation ‐  ‐  ‐
Total Expenditures       360,000     1,488,491       1,128,491

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES       192,543    (1,185,749)      (1,378,292)

OTHER FINANCING SOURCES (USES)
Transfers in ‐      1,240,675 ‐
Transfers out        (40,000)          (40,000) ‐
Total Other Financing Sources (Uses)        (40,000)     1,200,675 ‐ NET CHANGE IN FUND BALANCES     152,543$           14,926 $  (1,378,292) BEGINNING FUND BALANCES     1,941,704
ENDING FUND BALANCES   1,956,630$
Page | 94

STATISTICAL

SECTION

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Contents Page
Financial Trends - These schedules contain trend information to help the reader understand how Town’s financial performance and well-being have changed over time. 98 Revenue Capacity - These schedules contain information to help the reader assess one of the Town’s most significant local revenue source, the property tax. 108
Debt Capacity - These schedules present information to help the reader assess the affordability of the Town’s current levels of outstanding debt and its ability to issue additional debt in the future.
112
Demographic and Economic Information - These schedules offer demographic and economic indicators to help the reader understand the environment within which the Town’s financial activities take place.
115
Operating Information - These schedules contain service and infrastructure data to help the reader understand how the information in the Town’s CAFR relates to the services the Town provides and activities it performs.
118
Statistical Section
This part of the Town of Los Altos Hills Annual Comprehensive Financial Report presents the detailed information as a context for understand what the information in the financial statements, note disclosures, and required supplementary information says about the Town’s overall financial health.

Page | 97

Statistical Section
Net Position by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2013 2014 2015 2016
Governmental activities:

Invested in capital assets, net $ 26,654,599 $ 25,535,393 $ 25,370,209 $ 24,700,834 Restricted 1,787,750 1,520,545 1,666,812 1,706,954
Unrestricted 4,349,494 7,124,524 7,064,274 9,687,552
Total governmental activities net position $ 32,791,843 $ 34,180,462 $ 34,101,295 $ 36,095,340 Business-type activities:

Invested in capital assets, net $ 4,312,151 $ 4,774,920 $ 5,022,034 $ 5,244,525 Restricted - - - -
Unrestricted 3,227,161 3,075,429 2,774,135 2,582,858
Total business-type activities net position $ 7,539,312 $ 7,850,349 $ 7,796,169 $ 7,827,383 Primary government:

Invested in capital assets, net $ 30,966,750 $ 30,310,313 $ 30,392,243 $ 29,945,359 Restricted 1,787,750 1,520,545 1,666,812 1,706,954
Unrestricted 7,576,655 10,199,953 9,838,409 12,270,410
Total net position $ 40,331,155 $ 42,030,811 $ 41,897,464 $ 43,922,723 Source: Audited Financial Statements
Page | 98

Statistical Section
2017 2018 2019 2020 2021 2022
$ 24,739,048 $ 25,898,305 $ 26,305,865 $ 26,511,993 $ 26,253,419 $ 27,656,707 115,275 192,287 1,229,812 1,354,610 1,956,700 2,187,276 13,377,599 13,052,174 14,219,604 17,365,028 17,760,957 21,316,254 $ 38,231,922 $ 39,142,766 $ 41,755,281 $ 45,231,631 $ 45,971,076 $ 51,160,237 $ 5,831,322 $ 6,704,180 $ 7,264,306 $ 7,574,231 $ 7,717,735 $ 7,865,497 - - - - - -
2,607,749 2,647,350 3,205,406 3,291,370 3,830,656 4,177,070 $ 8,439,071 $ 9,351,530 $ 10,469,712 $ 10,865,601 $ 11,548,391 $ 12,042,567 $ 30,570,370 $ 32,602,485 $ 33,570,171 $ 34,086,224 $ 33,971,154 $ 35,522,204 115,275 192,287 1,229,812 1,354,610 1,956,700 2,187,276 15,985,348 15,699,524 17,425,010 20,656,398 21,591,613 25,493,324 $ 46,670,993 $ 48,494,296 $ 52,224,993 $ 56,097,232 $ 57,519,467 $ 63,202,804 Page | 99

Statistical Section
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2013 2014 2015 2015 (Note 1)
Governmental activities*:

Expenses:

Administration $ 1,837,120 $ 639,350 $ 538,004 $ 1,923,816 Public safety 1,440,002 1,555,955 1,567,747 1,379,621
Community development 2,448,821 3,224,490 3,324,935 2,289,743 Parks and recreation 1,314,872 1,479,822 1,358,479 621,974 Drainage and street operations 627,512 842,532 839,577 - Public works 1,413,588
Non-Departmental
Interest on long-term debt 4,526 3,955 3,304 3,304
Total governmental activities expenses 7,672,853 7,746,104 7,632,046 7,632,046 Program revenues:

Charges for services:

Administration - - - 29,038
Public safety 3,200 - 1,302 1,302
Community development 1,768,740 1,871,118 2,623,027 2,433,038 Parks and recreation 433,785 281,886 316,391 269,295
Drainage and street operations 169,526 186,631 340,110 - Public works 548,157
Operating contributions and grants 1,267,777 500,245 338,453 291,593 Capital contributions and grants - 266,736 246,533 246,533 Total governmental activities program revenues 3,643,028 3,106,616 3,865,816 3,818,956 Total governmental activities net program expenses (4,029,825) (4,639,488) (3,766,230) (3,813,090) General revenues and other changes in net position:

Governmental revenues:

Taxes
Property taxes 3,785,652 4,153,331 4,606,184 4,606,184
Other taxes 594,656 626,479 649,542 649,542
Franchise taxes 421,634 463,598 513,997 513,997
Use of money and property 142,931 199,609 208,776 208,776 Rental income *** - - - -
Investment Income *** - - - -
Other unrestricted revenue 34,057 585,089 174,469 174,469 Sale of Capital Assets-net - - - -
Other intergovernmental revenue - - - -
Special Item** - - - -
Transfers 71,000 - - 46,860
Total governmental activities general revenues
and other changes in net position 5,049,930 6,028,106 6,152,968 6,199,828 Total governmental activities changes in net position 1,020,105 1,388,618 2,386,738 2,386,738 * Governmental Activities affected by implementation of cost allocation plan in 2014. ** Special item is related to provision for one-time refund of Roadway Impact Fee *** Change in Financial Reporting in 2018
Note 1: In fiscal year 2015-16, there are changes to the account groupings between programs. For comparison purpose, we added an additional column for fiscal year 2014-15, in which the 2014-15 audited numbers are regrouped to be consistent with the new grouping in 2015-16. One main difference in the 2014-15 numbers is in the treatment of overhead allocation paid by the sewer fund.

The original 2014-15 audited charges for services included $46,860 overhead allocation to sewer operations.

The new grouping records this as "transfers".

Source: Audited Financial Statements
Page | 100

Statistical Section
2016 2017 2018 2019 2020 2021 2022
$ 2,339,474 $ 2,119,990 $ 2,459,576 $ 2,477,572 $ 2,639,241 $ 4,701,506 $ 2,523,787 1,601,654 1,817,299 2,194,391 2,388,908 2,388,202 2,331,814 2,575,786 2,167,702 2,210,748 2,894,119 2,768,476 3,408,027 3,441,398 3,490,984 738,495 680,522 1,157,213 851,096 770,495 1,061,879 790,853 - - - - - - -
1,252,271 1,461,155 1,669,907 2,001,602 2,086,121 2,235,212 2,695,189 1,106,626 279,754
1,492 - - - - - -
8,101,088 8,289,714 10,375,206 10,487,654 11,292,086 14,878,435 12,356,353 72,566 27,615 1,804,216 1,970,336 2,108,477 2,557,408 3,183,113 - - 156,083 132,138 185,743 161,285
2,217,874 2,219,769 1,792,025 1,546,016 2,028,933 2,533,045 3,189,907 199,241 222,834 394,729 255,128 224,853 290,637 695,299 - - - - -
388,931 549,729 513,771 476,146 592,434 471,259 554,423 303,292 343,107 194,053 230,351 347,577 294,139 1,097,126 398,990 69,635 94,031 185,744 591,956 374,296 605,866
3,580,894 3,432,689 4,948,908 4,795,859 6,079,973 6,520,784 9,487,019 (4,520,194) (4,857,025) (5,426,298) (5,691,795) (5,212,113) (8,357,651) (2,869,334) 4,960,016 5,302,028 5,721,224 6,385,652 6,834,083 7,315,637 7,592,741 565,055 666,631 724,609 522,946 603,657 1,038,680 922,490 474,732 573,336 579,333 530,991 340,268 350,952 414,154 356,479 222,688 - - -
- - 218,816 - -
- - 32,349 530,582 897,996 59,912 (888,572)
4,538 13,747 39,051 334,139 42,885 631,290 26,984
- 5,500 5,885 - -
- - - -
- - - - -
153,419 209,677 - - (30,426) (299,376) (9,300)
6,514,239 6,993,607 7,321,267 8,304,310 8,688,463 9,097,095 8,058,497 1,994,045 2,136,582 1,894,969 2,612,515 3,476,350 739,444 5,189,163 Page | 101

Statistical Section
Changes in Net Position (continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2013 2014 2015 2015 (Note 1)
Business‐type activities:

Expenses:

Sewer $      1,242,885 $      1,271,651 $      1,591,743 $      1,544,883 Solid waste ‐ ‐  ‐  ‐
Total business‐type activities expenses          1,242,885          1,271,651          1,591,743          1,544,883 Program revenues:

Charges for services:

Sewer          1,359,338          1,382,472          1,392,029          1,392,029 Solid waste ‐ ‐  ‐  ‐
Operating contributions and grants ‐ ‐  ‐  ‐
Capital contributions and grants             125,183             175,497             234,339             234,339 Total business‐type activities program revenues          1,484,521          1,557,969          1,626,368          1,626,368 Total business‐type activities net program revenue (expenses)             241,636             286,318               34,625               81,485 General revenues and other changes in net position:

Use of money and property 720               24,719               19,533               19,533 Investment Income *** ‐ ‐  ‐  ‐
Other unrestricted revenue
Transfers              (71,000) ‐  ‐               (46,860) Total business‐type activities general revenues
and other changes in net position              (70,280)               24,719               19,533              (27,327) Total business‐type activities changes in net position             171,356             311,037               54,158               54,158 Total primary government change in net position $      1,191,461 $      1,699,655 $      2,440,896 $      2,440,896 * Governmental Activities affected by implementation of cost allocation plan in 2014. ** Special item is related to provision for one‐time refund of Roadway Impact Fee *** Change in Financial Reporting in 2018
Note 1: In fiscal year 2015‐16, there are changes to the account groupings between programs.  For comparison purpose, we added an additional column for fiscal year 2014‐15, in which the 2014‐15 audited numbers are regrouped to be consistent with the new grouping in 2015‐16.   One main difference in the 2014‐15 numbers is in the treatment of overhead allocation paid by the sewer fund.

The original 2014‐15 audited charges for services included $46,860 overhead allocation to sewer operations.

The new grouping records this as "transfers".

Source:  Audited Financial Statements
Page | 102

Statistical Section
2016 2017 2018 2019 2020 2021 2022
$       1,997,399 $       2,129,895 $       2,114,609 $       2,061,261 $       3,005,538 $       2,750,983 $       2,643,741 ‐ ‐  ‐  ‐  ‐  ‐  ‐
1,997,399           2,129,895           2,114,609           2,061,261           3,005,538           2,750,983           2,643,741 1,925,636           2,759,287           2,917,428           3,005,050           3,104,059           3,035,410           3,070,792 ‐ ‐  ‐  ‐  ‐  ‐  ‐
‐ ‐  ‐  ‐  ‐  ‐  ‐
221,010              185,369              130,930                98,183                85,595                88,908              236,512 2,146,646           2,944,656           3,048,358           3,103,233           3,189,654           3,124,318           3,307,304 149,247              814,761              933,749           1,041,972              184,116              373,335              663,563 32,557 4,134 ‐  ‐  ‐  ‐  ‐
‐ ‐  6,642                76,210              172,060                10,079             (186,156) 2,829 2,470 3,220 ‐ 9,287 ‐ 7,469
(153,419)             (209,677) ‐  ‐                 30,426              299,376 9,300 ‐ ‐
(118,033)             (203,073) 9,862                76,210              211,773              309,455             (169,387) 31,214              611,688              943,611           1,118,182              395,889              682,790              494,176 $       2,025,259 $       2,748,270 $       2,838,580 $       3,730,697 $       3,872,239 $       1,422,234 $       5,683,339 Page | 103

Statistical Section
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2013 2014 2015 2016
General Fund
Restricted
Committed $ 286,150 $ 285,000 $ 360,000 $ 1,765,000
Assigned - - - 350,000
Unassigned 2,990,283 5,420,162 7,048,964 7,606,176
Total General Fund $ 3,276,433 $ 5,705,162 $ 7,408,964 $ 9,721,176 All other governmental funds
Restricted $ 1,787,750 $ 1,520,545 $ 1,691,286 $ 1,706,954 Committed 354,495 519,059 934,569 1,086,413
Unassigned - (435) - -
Total all other governmental funds $ 2,142,245 $ 2,039,169 $ 2,625,855 $ 2,793,367 Source: Audited Financial Statements
Page | 104

Statistical Section
2017 2018 2019 2020 2021 2022
$ 528,723 $ 550,215 $ 1,178,398 $ 1,040,671
$ 1,840,000 $ 3,125,000 3,155,000 6,371,700 6,371,700 6,371,700 350,000 350,000 350,000 2,071,500 2,071,500 2,071,500
10,267,874 8,254,294 8,841,955 7,174,940 7,338,881 8,599,777 $ 12,457,874 $ 11,729,294 $ 12,875,678 $ 16,168,355 $ 16,960,479 $ 18,083,648 $ 115,275 $ 192,287 $ 701,089 $ 804,395 $ 778,302 $ 1,146,605 2,050,545 2,041,192 2,449,411 2,666,028 2,686,754 2,701,679 - - - - - -
$ 2,165,820 $ 2,233,479 $ 3,150,500 $ 3,470,423 $ 3,465,056 $ 3,848,284 Page | 105

Statistical Section
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2013 2014 2015 2015 (Note 1) 2016
Revenues:

Property taxes $ 3,785,652 $ 4,153,332 $ 4,606,184 $ 4,606,184 $ 4,960,016 Taxes other than property 545,228 524,763 645,836 645,836 511,091 Franchise fees 421,634 463,598 513,997 513,997 474,732
Licenses and permits 754,460 1,006,907 1,485,394 1,485,394 1,334,953 Intergovernmental 1,264,716 610,850 397,470 397,470 752,717 Use of money and property 200,937 281,583 295,447 295,447 356,479 Investment Income ** - - - - -
Charges for services 1,407,987 1,411,082 1,858,220 1,811,360 1,449,127 Interfund charges - - - - -
Rental income - - - - -
Fines and forfeitures - - - - -
Miscellaneous 241,344 599,992 175,380 175,380 102,599
Total revenues 8,621,958 9,052,107 9,977,928 9,931,068 9,941,714 Expenditures
Current:

Administration 1,363,140 276,162 447,843 1,557,773 1,859,492 Public safety 1,131,772 1,209,028 1,205,913 1,075,160 1,255,198 Community development 1,918,408 2,581,031 2,557,545 1,725,877 1,641,631 Parks and recreation 1,033,239 1,178,463 1,044,944 466,881 565,440 Drainage and street operation 492,889 678,195 645,804 - - Public works - - - 1,066,943 951,786
Non-Departmental
Debt service: - - - - -
Principal 15,048 15,618 16,212 16,212 81,360
Interest 4,536 3,966 3,372 3,372 1,492
Additional pension and OPEB payments - - - - -
Capital outlay 2,719,447 783,990 1,765,807 1,765,807 1,259,010 Total expenditures 8,678,479 6,726,453 7,687,440 7,678,025 7,615,409 Excess (deficiency) of revenues
over (under) expenditures (56,521) 2,325,654 2,290,488 2,253,043 2,326,305 Other financing sources (uses)
Transfers in 2,178,543 1,490,019 2,790,955 3,097,282 2,299,774 Transfers out (2,107,543) (1,490,019) (2,790,955) (3,059,837) (2,146,355) Sale of assets - - - - -
Proceeds from debt - - - - -
Special Item* - - - - -
Other financing sources (uses) 71,000 0 0 37,445 153,419 Net change in fund balances $ 14,479 $ 2,325,654 $ 2,290,488 $ 2,290,488 $ 2,479,724 Debt service as a percentage of
noncapital expenditures 0.3% 0.3% 0.3% 0.3% 1.3%
* Special item is related to provision for one-time refund of Roadway Impact Fee ** Change in Financial Reporting in 2018
Note 1:

In fiscal year 2015-16, there are changes to the account groupings between programs. For comparison purpose, we added an additional column for fiscal year 2014-15, in which the 2014-15 audited expenditures were regrouped to be consistent with the new grouping in 2015-16.

One major difference in the 2014-15 numbers is the treatment of overhead allocation. The original 2014-15 audited expenditures for Administration was reduced due to overhead charges to other programs. Under the 2015-16 new groupings, overhead allocation was eliminated within General Fund and overhead charges to other governmental funds and sewer funds are reported as "transfers" rather than "expenditures" / "expenses".

Source: Audited Financial Statements
Page | 106

Statistical Section
2017 2018 2019 2020 2021 2022
$ 5,302,028 $ 5,721,224 $ 6,385,652 $ 6,834,083 $ 7,315,637 $ 7,592,741 610,337 667,037 466,062 537,836 978,527 813,072
573,336 579,333 530,991 340,268 350,952 414,154
1,544,996 1,246,623 1,060,772 990,768 1,830,032 2,529,635 412,855 489,392 574,257 894,577 1,019,418 2,161,832
222,688 - - -
- 32,349 530,582 897,996 59,912 (888,572)
1,482,830 1,625,306 1,282,436 1,878,256 1,514,977 1,933,466 - 1,632,812 1,748,699 1,858,142 1,898,349 2,603,083
- 218,816 155,719 222,534 200,584 273,474
- 381 - 4,797 1,680 32,400
62,048 56,902 364,999 339,605 747,187 89,531
10,211,118 12,270,175 13,100,169 14,798,862 15,917,255 17,554,816 1,813,551 1,983,939 2,113,083 2,127,557 4,415,774 3,439,713 1,560,295 1,781,425 1,974,021 2,084,618 2,035,269 2,300,095 1,833,654 2,540,121 2,642,159 2,860,410 3,045,611 3,746,154 575,594 722,696 742,986 652,562 940,742 1,263,679
- - - -
1,214,072 1,678,516 1,632,329 1,724,318 1,968,848 2,416,468 1,106,626 279,754
- - - -
- - - -
- - - -
- 1,660,209 - -
1,314,478 2,564,189 1,932,186 1,706,371 1,318,252 2,593,256 8,311,644 12,931,095 11,036,764 11,155,836 14,831,122 16,039,119 1,899,474 (660,920) 2,063,405 3,643,026 1,086,133 1,515,697 2,988,073 2,215,434 2,113,748 781,527 2,356,279 2,426,102 (2,778,396) (2,215,434) (2,113,748) (811,953) (2,655,655) (2,435,402) - - - - - -
- - - - - -
- - - - - -
209,677 0 0 (30,426) (299,376) (9,300)
$ 2,109,151 $ (660,920) $ 2,063,405 $ 3,612,600 $ 786,757 $ 1,506,397

0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Page | 107

Statistical Section
Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years
Fiscal Year Taxable Total % change Property tax
Ended Less Assessed Direct Tax in assessed revenue per
June 30 Secured Roll Unsecured Roll Exemptions Value Rate value fin stmt 2013 5,329,042,601 $ 5,859,024 $ 15,300,600.00 $ 5,319,601,025.00 $ 0.078% 4.82% 3,785,652.00 $ 2014 5,850,746,460 5,041,770 15,632,400 5,840,155,830 0.079% 9.76% 4,153,332 2015 6,220,950,601 3,384,189 14,732,200 6,209,602,590 0.074% 6.33% 4,606,184 2016 6,668,595,288 3,162,336 14,589,400 6,657,168,224 0.075% 7.21% 4,960,016 2017 7,103,893,376 3,727,197 14,357,000 7,093,263,573 0.075% 6.55% 5,302,028 2018 7,557,427,113 3,513,572 14,109,200 7,546,831,485 0.076% 6.39% 5,721,224 2019 8,089,462,808 3,773,145 13,935,660 8,079,300,293 0.079% 7.06% 6,385,652 2020 8,527,137,778 3,724,990 13,869,800 8,516,992,968 0.080% 5.42% 6,834,083 2021 8,940,832,568 3,318,142 37,796,178 8,906,354,532 0.082% 4.57% 7,315,637 2022 9,359,977,299 3,460,539 37,873,657 9,325,564,181 0.081% 4.71% 7,592,741 The total direct tax rate is computed by dividing the amount of property tax revenue recognized in the financial statements by the taxable assessed value.

Source: Santa Clara County Assessor 0/ - 2021/22 Combined Tax Rolls Page | 108

Statistical Section
Property Tax Rates - Direct and Overlapping Governments Last Ten Fiscal Years
Basic El Camino School/College Santa Clara County Mid- Per Total Fiscal County-wide Hospital District Valley and Library Peninsula Hundred $ Direct Year Levy Levy Levy Water District Retirement Open Space Total Rate 2013 1.0000 0.01290 0.1956 0.0069 0.0463 - 1.2617 0.0559 2014 1.0000 0.01290 0.1859 0.0070 0.0447 - 1.2505 0.0560 2015 1.0000 0.00910 0.1784 0.0065 0.0503 - 2016.1978 0.0559 2016 1.0000 0.01290 0.1704 0.0057 0.0500 0.0008 2017.2390 0.0558 2017 1.0000 0.01290 0.1618 0.0086 0.0498 0.0006 2018.2331 0.0579 2018 1.0000 0.01000 0.1583 0.0062 0.0621 0.0009 2019.2366 0.0589 2019 1.0000 0.01000 0.1895 0.0042 0.0589 0.0018 2020.2626 0.0600 2020 1.0000 0.01000 0.1940 0.0082 0.0581 0.0032 2021.2703 0.0603 2021 1.0000 0.01000 0.2280 0.0037 0.0481 0.0015 2022.2898 0.0600 2022 1.0000 0.01000 0.1959 0.0051 0.0600 0.0015 2023.2710 0.0602 Source: Santa Clara County Assessor 2012/13 - 2021/22 Tax Rate Table Page | 109

Statistical Section
Principal Taxpayers
Current Year And Ten Years Ago
2022 2013
Percentage Percentage
of Net of Net
Assessed Assessed Assessed Assessed
Taxpayer Type of Property Value Valuation Value Valuation LaPaloma Property LLC Single family residential 60,745,011 $ 0.65% 51,275,400 $ 0.96% Campo Vista Lane Vacant 37,744,261 0.40% - 0.00%
Douglas M Leone Trustee and Et Al Single family residential 33,248,981 0.36% 25,484,700 0.48% Westwind LAH LLC Vacant 26,279,462 0.28% - 0.00%
Weijin Dai Trustee Single family residential 27,010,219 0.29% - 0.00% Homa Natoma LLC Single family residential 25,880,386 0.28% 13,809,058 0.26% Northfork Vineyards LLC Single family residential 29,936,235 0.32% - 0.00% Energy Efficient Sustainable Single family residential 22,998,068 0.25% - 0.00% Amit Singh Trustee and Et Al Single family residential 22,200,101 0.24% - 0.00% Kumar Malavalli Trustee and Et Al Single family residential 20,556,294 0.22% 17,714,795 0.33% SUTARDJA SEHAT AND DAI WEILI Single family residential - 0.00% 16,743,485 0.32% DAVID HITZ TRUSTEE Single family residential - 0.00% 16,352,190 0.31% BOOK LLC Vacant - 0.00% 15,786,638 0.30%
LARGE HOUSE LLC Single family residential - 0.00% - 0.00% OLD TRACE TRUST Single family residential - 0.00% 15,289,800 0.29% MARK JUNG Single family residential - 0.00% 13,553,229 0.26% ASHISH K. BHARDWAJ AND BALI TANUJA Single family residential - 0.00% 13,055,975 0.25% NEARY-VIDOVICH Single family residential - 0.00% - 0.00% Totals $ 306,599,018 3.29% 199,065,270 $ 3.75%
Source: Santa Clara County Assessor 2021/22 Combined Tax Rolls and the SBE Non Unitary Tax Roll Page | 110

Statistical Section
Property Tax Levies and Collections
Last Ten Fiscal Years
Value of
property
Fiscal Year Tax Levy % of Chg Amount % of Levy Amount % of Levy subject to
local tax rate
2013 3,785,652 $ 7% 3,785,652 $ 100% 3,785,652 $ 100% 5,319,601,025 $ 2014 4,153,332 10% 4,153,332 100% 4,153,332 100% 5,840,155,830 2015 4,606,184 11% 4,606,184 100% 4,606,184 100% 6,209,602,590 2016 4,960,016 8% 4,960,016 100% 4,960,016 100% 6,657,168,224 2017 5,302,028 7% 5,302,028 100% 5,302,028 100% 7,093,263,573 2018 5,721,224 8% 5,721,224 100% 5,721,224 100% 7,546,831,485 2019 6,385,652 12% 6,385,652 100% 6,385,652 100% 8,079,300,293 2020 6,834,083 7% 6,834,083 100% 6,834,083 100% 8,516,992,968 2021 7,315,637 7% 7,315,637 100% 7,315,637 100% 8,906,354,532 2022 7,592,741 4% 7,592,741 100% 7,592,741 100% 9,325,564,181 The County of Santa Clara levies, bills, and collects property taxes for the Town. Under the Teeter Bill, the County remits the entire amount levied and handles the delinquencies, retaining interest and penalties.

Sources: Santa Clara County Assessor Office 2021-22 Combined Tax Rolls Town of Los Altos Hills financial reports
Collected within FY Total Collections
Page | 111

Statistical Section
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Total Governmental Debt to Debt
Fiscal Capital Activities and Personal per
Year Lease Loan Primary Government Income Capita
2013 $ - $ 113,191 $ 113,191 13% 14
2014 - 97,572 97,572 12% 12
2015 - 81,360 81,360 9% 10
2016 - - - - -
2017 - - - - -
2018 - - - - -
2019 - - - - -
2020 - - - - -
2021 - - - - -
2022 - - - - -
In fiscal year 2010-11, Town received loan in the amount of $47,000 for another energy efficiency project.

During Fiscal Year 2015-16, the Town paid off the loan balance.

Source: Debt Data - Town of Los Altos Hills Financial Statements Population: California Department of Finance
Page | 112

Statistical Section
Direct and Overlapping Debt
For the Year Ended June 30, 2022

TOWN OF LOS ALTOS HILLS
2021-22 Assessed Valuation: $9,325,564,181
Total Debt Town’s Share of
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/2022 % Applicable (1) Debt 6/30/22 Santa Clara County 1,130,850,000 $ 1.618% $ 18,297,153
Foothill-DeAnza Community College District 657,878,325 4.584 30,157,142 Palo Alto Unified School District 487,209,709 6.908 33,656,447 Mountain View-Los Altos Union High School District 258,658,320 9.349 24,181,966 Los Altos School District 145,755,000 20.509 29,892,893 El Camino Hospital District 111,240,000 7.700 8,565,480 Midpeninsula Regional Open Space District 84,575,000 2.638 2,231,089 Santa Clara Valley Water District Benefit Assessment District 48,150,000 1.618 779,067 Town of Los Altos Hills 0 100 0
Town of Los Altos Hills 1915 Act Bonds 1,535,000 100 1,535,000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ 149,296,237 OVERLAPPING GENERAL FUND DEBT:

Santa Clara County General Fund Obligations $ 1,210,694,365 1.618% $ 19,589,035 Santa Clara County Pension Obligation Bonds 335,638,470 1.618 5,430,630 Santa Clara County Board of Education Certificates of Participation 1,820,000 1.618 29,448 Foothill-DeAnza Community College District Certificates of Participation 21,380,000 4.584 980,059 Mountain View-Los Altos Union High School District General Fund Obligations 2,154,552 9.349 201,429 Los Altos School District General Fund Obligations 1,711,634 20.509 351,039 Santa Clara County Vector Control District Certificates of Participation 1,505,000 1.618 24,351 Midpeninsula Regional Open Space District General Fund Obligations 99,705,600 2.638 2,630,234 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $ 29,236,225
Less: Santa Clara County supported obligations 292,514
TOTAL NET OVERLAPPING GENERAL FUND DEBT 28,943,711
TOTAL DIRECT DEBT $ -
TOTAL GROSS OVERLAPPING DEBT $ 178,532,462
TOTAL NET OVERLAPPING DEBT $ 178,239,948
GROSS COMBINED TOTAL DEBT $ 178,532,462 (2)
NET COMBINED TOTAL DEBT $ 178,239,948
(1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2021-22 Assessed Valuation:

Direct Debt 0.00%
Total Direct and Overlapping Tax and Assessment Debt 1.60% Gross Combined Total Debt 1.91%
Net Combined Total Debt 1.91%
AB:($550)
Source: California Municipal Statistics
Page | 113

Statistical Section
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year Total Bonded Debt Amount of
Ended Assessed Limit - 15% of Debt Subject to Legal
June 30 Valuation Assessed Valuation Limit Debt Margin
2013 $ 5,319,601,025.00 $ 797,940,153.75 $ - $ 797,940,153.75 2014 5,840,155,830 876,023,375 - 876,023,375
2015 6,209,602,590 931,440,389 - 931,440,389
2016 6,657,168,224 998,575,234 - 998,575,234
2017 7,093,263,573 1,063,989,536 - 1,063,989,536
2018 7,546,831,485 1,132,024,723 - 1,132,024,723
2019 8,079,300,293 1,211,895,044 - 1,211,895,044
2020 8,516,992,968 1,277,548,945 - 1,277,548,945
2021 8,906,354,532 1,335,953,180 - 1,335,953,180
2022 9,325,564,181 1,398,834,627 - 1,398,834,627
The Government Code of the State of California limits the amount of general bonded indebtedness for public improvements to 15% of the assessed valuation of all real and personal property of the Town.

The Town of Los Altos Hills has no general bonded indebtedness.

Source: Santa Clara County Assessor 2021/22 Combined Tax Rolls Page | 114

Statistical Section
Demographics and Economic Statistics
Last Ten Years
% of % of
Personal Per Capita Pop 25+ with Pop 25+ with
Town Income Personal Unemployment Median High School Bachelor's Year Population (in thousands) Income Rate Age Degree Degree 2012 8,264 867,894 $ $ 105,021 3.2% 48.5 98.3% 83.3%
2013 8,354 843,253 100,940 2.6% 48.9 98.1% 84.2%
2014 8,330 930,261 111,676 3.4% 49.3 97.9% 84.7%
2015 8,658 1,015,063 117,239 2.7% 50.3 98.1% 82.8%
2016 8,634 1,028,190 119,086 2.4% 51.1 98.0% 83.7%
2017 8,580 1,214,396 141,538 2.2% 51.4 97.1% 83.5%
2018 8,559 1,211,424 141,538 2.6% 51.4 97.1% 83.5%
2019 8,413 1,234,482 146,735 14.9% 52.3 97.3% 84.3%
2020 8,390 1,302,757 155,274 4.2% 51.1 97.3% 85.3%
2021 8,400 1,299,447 154,696 3.4% 52.2 98.5% 87.6%
Sources:

Population: California State Department of Finance. Unemployment Data: California Employment Development Department Income, Age, and Education Data - US Census Bureau
Page | 115

Statistical Section
Principal Employers
Current Year And Ten Years Ago
2022 2013
Percent of Percent of
Number of Total Number of Total
Employer Employees Employment Employees Employment
Foothill Community College 874 1 68.23% - -
Pinewood School 138 10.77% - -
Saint Nicholas School 33 2.58% - -
Fremont Hills Country Club 42 3.28% - -
Congregation Beth Am 80 2 6.25% - -
Town of Los Altos Hills 27 2.11% - -
Los Altos School District 33 2.58% - -
Daughters of Charity 40 3 3.12%
Purissima Hills Water District 14 1.09% - -
Totals 1,281 100.00% - 0.00%
The agencies listed above have operated in the Town during the past ten years; however, employment information for prior years is not available. There are no commercial or industrial employers in the Town.

Note: Information was not available in 2013
Source: Information available from employers and websites. 1 Foothill Community College has 155.5 part-time teachers and employees who work a couple hours a week & 197 are working from Foothill De Anza District Office located in Los Altos Hills 2 Congregation Beth Am has 20 regular employees and the rest are part-time teachers who work a couple hours a week - Last year was less due to Covid19
3 Daughters of Charity has 30 part-time employees who work a couple hours a week Page | 116

Statistical Section
Full Time Equivalent City Government Employees by Function Last Ten Fiscal Years
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Administration 3.42 3.42 5.92 6.12 6.32 6.32 6.32 6.79 8.43 9.08 Public safety 0.60 - - - - - - 0.18 0.29 0.20
Community development 9.36 9.16 7.66 7.61 7.61 7.61 7.61 7.88 7.25 7.40 Town center and corpyard 1.50 2.09 1.00 0.85 0.85 0.85 0.85 0.94 1.23 1.27 Parks and recreation 2.54 0.75 0.60 0.60 1.65 1.65 1.65 1.45 2.65 2.35 Pathways 1.25 1.25 1.39 1.39 1.69 1.69 1.69 1.95 2.07 2.70 Drainage and street 1.92 2.02 1.70 1.70 2.15 2.15 2.15 4.41 2.91 2.87 Sewer 0.41 0.51 0.93 1.93 1.93 2.93 2.93 1.00 1.42 1.38 Solid waste - - - - - - - - - -

19.20 19.20 20.20 22.20 23.20 23.20 24.60 26.25 21.00 27.25 Source: Town of Los Altos Hills Personnel Records
Page | 117

Statistical Section
Operating Indicators by Function
Last Ten Fiscal Years
2013 2014 2015 2016
Building permits issued:

New homes 20 21 37 39
Valuation $ 20,970,084 $ 25,266,696 $ 32,021,811 $ 27,158,677 Additions and remodels 88 116 132 109
Valuation $ 10,623,625 $ 13,485,643 $ 13,479,448 $ 10,014,195 Planning permits approved 76 162 193 159
Streets resurfaced/rehabilitated 4.13 7.00 8.12 8.50
Recreation classes and activities offered* 131 * 72 92 100 *FY2014 decrease in recreation and activities offered resulted from outsourcing of Town's Barn operations ** 2018 data is currently unavailable due to implementation of new permitting software Source: Town of Los Altos Hills
Page | 118

Statistical Section
2017 2018 2019 2020 2021 2022
33 20 17 10 15 15
$ 27,718,202 $ 22,404,203 $ 20,854,456 $ 12,451,026 $ 18,835,335 $ 35,732,232 113 254 249 20 17 21
$ 17,247,476 $ - 19,960,217 $ $ 7,628,104 $ 6,178,882 $ 12,127,302 152 74 54 168 199 142

6.30 6.30 5.08 4.30 2.50 4.66
133 116 157 154 129 134
Page | 119

Statistical Section
Capital Asset Statistics By Function
Last Ten Fiscal Years
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Parks and Recreation
Baseball fields 4 4 4 4 4 4 4 4 4 4
Playground 1 1 1 1 1 1 1 1 1 1
Park 2 2 2 2 2 2 2 2 2 2
Riding Ring 1 1 1 1 1 1 1 1 1 1
Westwind Barn 1 1 1 1 1 1 1 1 1 1
Pathways - miles 85 85 85 85 85 85 85 85 82 85
Open space - acres 55 55 55 55 55 55 55 55 55 55
Drainage and Street Operations
Street lights 6 6 6 6 6 6 6 6 6 6
Traffic lights 3 3 3 3 3 3 3 3 3 3
Paved roadway - miles 58 60 60 60 65 65 65 65 65 65
Storm drains - miles 20 20 20 20 20 20 20 20 20 20
Sewer Operations
Sanitary sewers - miles 55 56 56 56 56 56 56 57 57 58
Source: Town of Los Altos Hills
Page | 120

1 TOWN OF LOS ALTOS HILLS November 17, 2022
Staff Report to the City Council
SUBJECT: RESOLUTION PROVIDING DIRECTION ON HOW STAFF SHALL

NEGOTIATE GENERATOR PERMIT REQUESTS FOR TELECOM POLES

IN TOWN
FROM: Cody Einfalt, Management Analyst II
APPROVED: Peter Pirnejad, City Manager
RECOMMENDATION: That the City Council should:

Adopt the attached resolution providing direction to Staff on how generator permit requests shall be negotiated in Town.

BACKGROUND:

In response to PG&E’s Public Safety Power Shut Off events and the 2020 stay-at-home orders that were put in place in response to the pandemic, telecommunication companies began evaluating the leases they had for telecom poles throughout the state. In these reviews, the companies primarily wanted to verify that their network infrastructure could withstand the increased demand from customers working at home and without power.

Telecom companies soon realized that many of their telecom poles did not have back-up power in the event that the power supply was lost from the main grid. This would leave many customers without a means of wireless communication during potential emergency situations. This prompted telecom companies to reach out to the property owners of their leases and request permits to install back-up power at telecom pole locations.

There are currently three telecom poles within Los Altos Hills that have current leases to telecom companies and carriers. In recent months, the Town has received two requests to install back-up diesel generators at two different Town-owned properties --- Town Hall and Westwind Community Barn.

Subsequently, in October 2021 the Town adopted a Green House Gas (GHG) Plan which outlined goals for the Town to reduce carbon emissions. One of those goals was to electrify the Town and limit the amount of GHG emitting infrastructure that is installed in the Town (Attachment 2).

Staff saw a disconnect between these generator permit requests and the GHG Plan that was adopted by the Town. Staff realized that a regional analysis was necessary to understand how other municipalities were handling this issue as well as a legal analysis to understand any legal limitations that the Town may need to address when processing these permit requests. Due to staff’s limited bandwidth and the amount of research that would need to be done to understand the issue, staff partnered with Joint Venture Silicon Valley (JVSV), a telecom consultant specializing in this subject area, to conduct the report. In July 2022 the Town entered into an agreement with AGENDA ITEM #4.G
C.E.

P.P.

Staff Report to City Council Page 2
Generator Sets for Telecom Poles in Town
November 17, 2022
JVSV for an amount not to exceed $3,600 for the work. The findings of the study are the basis for this staff report.

DISCUSSION:

Attachment 3 is the “Telecom Backup Power: Regional Survey and Analysis” from JVSV.

A key take away from JVSV’s report found that in September of 2020, Assembly Bill 2421 was signed into law which states that,
“Until January 1, 2024, this bill would require local agencies to make the installation of an emergency standby generator to serve a macro cell tower site, as defined, that meets specified requirements a permitted use and require a local agency to review an application for installation on an administrative, nondiscretionary basis”
This means that the Town cannot deny generator permits which have been submitted for the telecom poles in Town, regardless of whether the proposed work would conflict with other Town documents such as the GHG Plan. However, the Town does have the ability to adjust the monthly/annual rent that is received from telecom poles to compensate for the additional land that would be needed to install the generator infrastructure.

Given this finding, JVSV conducted a regional analysis of municipalities in the Bay Area, to understand how other cities were handling requests, including what level of increased rent is common for this type of work. The report reached out to 17 cities in the Bay Area and based on the responses JVSV compiled the following list of recommendation for the Town:

A. Town of Los Altos Hills should seek to keep rent increases in relation to the installation of a backup generator low, and if possible, eliminate them entirely.

B. Town of Los Altos Hills should not request that carriers bring in generators or “Cells on Wheels” (COWs) in lieu of installed generators.

C. Town of Los Altos Hills should not request that telecom backup power systems be built with clean technologies like solar and batteries.

D. Town of Los Altos Hills should inquire if biodiesel fuel is an option.

E. Town of Los Altos Hills should update noise ordinances/codes to account for telecom backup power using generators.

ANALYSIS:

Considering JVSV’s findings and recommendations, staff recommends that the Town use the following approach when responding to permit requests for backup generators for telecom poles:

Staff Report to City Council Page 3
Generator Sets for Telecom Poles in Town
November 17, 2022
• Provide administerial approval for back-up generators building permits for telecom poles; however, ask if applicant can accommodate clean diesel/biodiesel alternatives rather than using plain diesel
o IF YES  increase rent by 10 % in the lease agreement o IF NO  increase rent by 25% in the lease agreement
Notes: No change will be made to the term of the lease agreement for either option • Request that the telecom poles receive their power from Silicon Valley Clean Energy in normal times of use
• Inquire about the Town having space on the pole for their own antennas • Update Town’s noise ordinance to exempt back-up generators On October 27, 2022 staff attended the regular meeting of the Environmental Initiatives Committee (EIC) to present this approach and ask for any guidance for alternatives staff did not consider. The EIC discussed the JVSV report and passed the following motion approving of the approach being recommended for the Town by staff with three changes: (Attachment 4). i. Increase penalty if they don’t use renewable diesel
ii. Encourage telecom companies to use SVCE energy during non-emergencies iii. Ask companies to avoid turning off 3G on their poles ENVIRONMENTAL REVIEW:

Administering permits for backup generators is exempt from California Environmental Quality Act (CEQA) due to this work not being defined as a “project” under CEQA. 2022 CITY COUNCIL STRATEGIC PRIORITIES:

This was not one of our Council Strategic Priorities and instead falls in the category of day-to-day operations.

FISCAL IMPACT:

For telecom companies pursuing back-up generator permits on Town property, implementing this change would increase the revenue the Town receives form these locations by either 10% or 25% annually for the remaining duration of the specific lease.

ATTACHMENTS:

1. Resolution

2. Green House Gas Plan by the Town

3. Telecom Backup Power: Regional Survey and Analysis from JVSV

4. Draft Minutes from the October 27, 2022 EIC Meeting

Resolution __ -22 Page 1
RESOLUTION __ -22

RESOLUTION PROVIDING DIRECTION ON HOW STAFF SHALL

NEGOTIATE GENERATOR PERMIT REQUESTS FOR TELECOM

POLES IN TOWN
WHEREAS, in response to PG&E’s Public Safety Power Shut Off events and the stay-at-home orders that were put in place throughout the state, telecommunication companies responded by evaluating their leases for telecom poles in municipalities; and WHEREAS, telecom companies soon realized that many of their telecom poles did not have backup power in the event that the power supply was lost from the main grid; and WHEREAS, the Town is receiving requests to install back-up diesel generators for telecom poles on Town-owned properties; and
WHEREAS, the Town partnered with Joint Venture Silicon Valley (JVSV), a telecom consultant, to research these requests and provide a recommendation on how the Town move forward; and WHEREAS, based on the JVSV’s findings, the Town shall use the following approach:

1. Provide administerial approval for back-up generators building permits for telecom poles; however, ask if applicant can accommodate clean diesel/biodiesel alternatives rather than using plain diesel
a. IF YES  increase rent by 10 % in the lease agreement b. IF NO  increase rent by 25% in the lease agreement
Notes: No change will be made to the term of the lease agreement for either option

2. Request that the telecom poles receive their power from Silicon Valley Clean Energy in normal times of use

3. Inquire about the Town having space on the pole for their own antennas

4. Update Town’s noise ordinance to exempt back-up generators NOW THEREFORE, the City Council of the Town of Los Altos Hills hereby provide direction on how staff shall negotiate generator permit requests for telecom poles in Town.

The above and foregoing Resolution was passed and adopted by the City Council of the Town of Los Altos Hills at a regular meeting held on 17th of November 2022 by the following vote:

AYES:

NOES:

ABSENT:

Attachment 1

Resolution __ -22 Page 2
ABSTAIN:

By:

George Tyson, Mayor
ATTEST:
_____
Deborah L. Padovan, City Clerk

Attachment 2

Climate Action Plan Presented by EIC - October 2021
Los Altos Hills
2021
Climate Action Plan
Environmental Initiatives Committee • October .2021

Climate Action Plan Presented by EIC - October 2021
Why Climate
Action Plan
● Climate change is real
● It is our moral imperative to act
now and act decisively
● Los Altos Hills prides itself in
nurturing the natural
environment--let us make it a
priority to preserve it
If not us who ?
2 Time to act is now!

Climate Action Plan Presented by EIC - October 2021
Why?
California Targets
California has adopted
SB 32
Overall greenhouse gas emissions to 1990 levels by
2020
40% below 1990 levels by 2030,
SB100
Double the energy efficiency of existing buildings;
Allow greater electric utility investment in electric
vehicle charging infrastructure.

SB 55
Achieve Carbon Neutrality no later than 2045
3

Climate Action Plan Presented by EIC - October 2021
Inventory
Emissions
Leadership
commitment
Establish
Targets
Develop
CAP
First completed
in 2009
Implement
CAP
Monitor
Progress
First loop in 2015
Next in 2021
Climate Action Plan-- Step 2 & 3 - ICLEI 5 step process Ideally done every year
4

Climate Action Plan Presented by EIC - October 2021
Who? 1. EIC, EIC CAP subcommittee
Vrinda, Steve, Srini, Anand, (Peter)

2. Staff
Carl, Oscar, Cody

3. Contractors CSG Consultants
5

Climate Action Plan Presented by EIC - October 2021
What?
The CAP is a strategy to achieve
our target GHG reductions.

1. This is the town’s third CAP

2. This plan is based on the new GHG
Inventory approved last month

3. It describes a high level strategy;
many details are TBD
6

Climate Action Plan Presented by EIC - October 2021 7
How?
Reduction in natural gas use
through electrifying homes
● Major contributors of GHG in LAH
○ Natural gas use
○ Air Travel
● Hard to influence Air Travel

Climate Action Plan Presented by EIC - October 2021
What it includes
● This CAP recommends measures
that are feasible and achievable
● Measures will reduce GHG
emissions
○ For the Government operations
○ For the Community
● EIC proposes a minimum reduction
of 49% in GHG emissions by 2030
8

Climate Action Plan Presented by EIC - October 2021
CAP Scenarios
9 Description Base year Target year
Target
Reduction
Community
Cost thru 2030
State Requirement (SB 32) 1990 2030 40%
SB 32 using 2005 Baseline 2005 2030 49%
Executive Order B-55-18 2045 100%
LAH Business as Usual 2005 2030 36% $0
EIC Proposal 2005 2030 49% $800,000
Aggressive Plan 2005 2030 52% $1,200,000

Climate Action Plan Presented by EIC - October 2021 10
Strategic Options
Incentives Electrification
Regulations/
mandates
● Replace on burnout ordinance (Menlo Park
and Half Moon Bay)
● All-electric reach code covering remodels
(current code is only for new buildings)
● Houses sold have to be electrified within
one year of purchase
● Increased local tax on natural gas (e.g.

Utility Users Tax)
● Increased permits/fees on gas appliances
Limited & Slow
Now
For a comprehensive
response

Climate Action Plan Presented by EIC - October 2021
Recommendations
Government operations to migrate
off fossil fuels
● town staff
● buildings
● service fleets
Community to phase out the natural
gas use by 2045
● resident education
● incentives & planning to
migrate off natural gas
11

Climate Action Plan Presented by EIC - October 2021
Measures for Government Operations
-- to demonstrate solutions
12 Name Description Estimated GHG Savings
Battery
Storage
Install Storage to match PV Production to Town
Hall loads
Minimal, but demonstrates critical new technologies.

Town Hall
Electrification
Convert the natural gas loads at town hall to
electric
32 MT reduction (17% below BAU)
V2G Town Vehicle To Grid for resiliency pilot Minimal, but demonstrates critical new technologies.

Green Fleet
Green Fleet Program with “EV First”
commitment
13 MT reduction (7% below BAU)
EV Charging Free EV charging for town staff 19 MT reduction (10% below BAU) Renewable
Diesel
Town Government and Fire District shift to
renewable diesel
54 MT reduction (29% below BAU)

Climate Action Plan Presented by EIC -October 2021
Community Measures
13 ● For residents: NUDGE
○ A combination of measures to maximize savings
■ Assist with migration off natural gas
■ Educate
● on emissions (e.g. air travel) and solutions
● available technologies and funding sources to
help with the migration
■ Provide firm long term guidance to nudge laggards
● For Foothill, SVCE and PG&E : COLLABORATE
○ Encourage policies & programs for electrification

Climate Action Plan Presented by EIC - October 2021
Community Measures
14 Name Description Estimated GHG Savings
Assessments
Town funded walkthrough electrification
consultant (low cost or free)
High. Reduction of 7,200 MT CO2e in 2030
(7% below BAU)
Streamline
Simplify city permitting processes and
reduce fees for electrification conversions
Medium. Reduction of 2,500 MT CO2e in
2030 (3% below BAU)
Financing
Join in promoting the “BE Smart” program
(tariff on-bill financing) to SVCE
Small. Reduction of 1,200 MT CO2e in
2030 (1% below BAU)
Incentives
Provide incentives & programs to eliminate
natural gas use in buildings by 2045
High. Reduction of 9,500 MT CO2e in 2030
(9% below BAU)

Climate Action Plan Presented by EIC -October 2021
High level timeline
● 2021 through 2030:
○ Educate residents on electrification
○ Fund home assessments to identify low hanging fruit
○ Reduce friction throughout the electrification process ○ Leverage other programs from PG&E, SVCE, BayREN, etc. ○ Identify barriers specific to LAH homes
○ Work with PG&E to avoid gas line replacements/upgrades ● 2031 to 2045:
○ Develop plans for electrifying the toughest cases
○ Accelerate work with PG&E on branch pruning opportunities ○ Assess remaining GHG emissions to get to net zero
15 NOW
2045

Climate Action Plan Presented by EIC - October 2021 16
49% reduction in GHG -Community Cost $820K over 10 years

Climate Action Plan Presented by EIC - October 2021 17
52% reduction in GHG -Community Cost $1.2M over 10 years

Climate Action Plan Presented by EIC - October 2021
CAP Projections: Government
18

Climate Action Plan Presented by EIC - October 2021
CAP Projections: Community
19

Climate Action Plan Presented by EIC - October 2021
Keeping up with our neighbors
20

Climate Action Plan Presented by EIC - October 2021
Next Steps

1. Discuss and select Community
Target & Budget

2. Accept CAP & Pass Resolution

3. Direct Staff and EIC to develop
detailed plan

4. Support initiatives as needed
with SVCE, Foothill, PG&E
21

Climate Action Plan Presented by EIC - October 2021
Thank You
22

Climate Action Plan Presented by EIC - October 2021
Snow making equipment fighting Tahoe fires
23

Climate Action Plan Presented by EIC - October 2021
Background slides
24

Climate Action Plan Presented by EIC - October 2021
Measure Cost by Year (49% option)
25 ID\Year: FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 Totals Assessments $0 $11,100 $22,200 $33,300 $44,400 $55,500 $66,600 $77,700 $88,800 $100,000 $500,000 Streamline $0 $1,100 $2,200 $3,300 $4,400 $5,500 $6,600 $7,700 $8,800 $10,000 $50,000 Financing $0 $0
Incentives $0 $5,600 $11,200 $16,800 $22,400 $28,000 $33,600 $39,200 $44,800 $50,000 $250,000 Battery Storage $0 $0
Town Hall
Electrification $10,000 $20,000 $20,000 $50,000
V2G $0 $10,000 $10,000
Green Fleet $4,000 $3,200 $2,800 $2,400 $2,000 $1,600 $1,200 $800 $400 $0 $20,000 EV Charging $0 $1,100 $2,200 $3,300 $4,400 $5,500 $6,600 $7,700 $8,800 $10,000 $50,000 Renewable
Diesel $0 $400 $800 $1,200 $1,600 $2,000 $2,400 $2,800 $3,200 $4,000 $20,000 Totals: $14,000 $52,500 $61,400 $60,300 $79,200 $98,100 $117,000 $135,900 $154,800 $174,000

$950,000
Climate Action Plan Presented by EIC - October 2021
Community Measure costs for Aggressive
case (52% reduction by 2030)
26 ID\Year: FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 Totals Assessments $0 $11,100 $22,200 $33,300 $44,400 $55,500 $66,600 $77,700 $88,800 $100,000 $500,000 Streamline $0 $1,100 $2,200 $3,300 $4,400 $5,500 $6,600 $7,700 $8,800 $10,000 $50,000 Financing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Incentives $0 $14,400 $28,800 $43,200 $57,600 $72,000 $86,400 $100,800 $115,200 $130,000 $650,000 $1,200,000

Climate Action Plan Presented by EIC - October 2021
Alternate visualization of Gov’t Ops targets
27

Climate Action Plan Presented by EIC - October 2021
Alternate visualization of Community targets
28

Climate Action Plan Presented by EIC - October 2021
CAP Projections: Community (-air travel)
29

Climate Action Plan Presented by EIC - October 2021
Alternate visualization of Community targets
30

Los Altos Hills Environmental Initiatives Committee
2021 CAP Subcommittee
2021 CAP Measure Descriptions
October 2021

OVERVIEW
This document describes the measures in the LAH 2021 Climate Action Plan.

The Los Altos Hills Environmental Initiatives Committee (EIC) is recommending that the town adopt CAP targets of reducing our town’s emissions by 49% below 2005 levels by 2030. Council may also approve a more aggressive option that would increase reductions to 52%.

Our target recommendation comes from the Greenhouse Gas Inventory that was completed by the town-appointed contractors in 2020.

EIC expects that if the town continues Business As Usual, town emissions will be 36% below 2005 levels, below state mandates and IPCC recommendations. As a town we should do our part to reduce global warming.

We outline nine measures that we believe are cheap, easy and will get us to the goal. The measures that we are recommending come in two sets: Four town-wide measures and Six measures for municipal operations.

CAP TARGETS

1. Reduce town-wide emissions 49% (or 52% -- see measure 4) below 2005 levels by 2030.

2. Reduce municipal emissions 88% below 2005 levels by 2030.

To put this in context, California law requires that the state reduce its greenhouse gas emissions to 40% below 1990 levels by 2030 (equivalent to 49% below 2005 levels). Our neighboring town of Palo Alto has a far more aggressive goal of reducing their emissions to 80% below 1990 levels by 2030. Menlo Park intends to reduce all their emissions to 0 by 2030. San Francisco recently decided to cut their emissions to 0 by 2035. Our goals are more modest, but take into account our town’s unique features as a small town of limited resources.

TOWN-WIDE MEASURES
These four measures apply to the entire town.
(1) Assessments: Town funded walkthrough electrification consultant (low cost or free)
Description
Similar to the HIZ (Home Ignition Zone) wildfire inspections now being discussed, this measure would subsidize "electrification walkthroughs" by experts, to inform homeowners on their specific opportunities for electrifying their existing gas appliances. Note this service may be possible to do virtually, similar to Palo Alto’s Home Genie program (run by CLEAResult and described here:
https://www.cityofpaloalto.org/News-Articles/Utilities/The-Home-Efficiency-Genie-is-Now-Virtual) Specific tasks could include:
● Recording the age and expected replacement date for existing gas appliances. ● Identifying problems with the existing gas appliances that could be mitigated with electric replacements.
● Identifying any home-specific challenges related to electrification. ● Analyzing the home's current heating and cooling systems, in order to identify any updates needed before electrification.
● Assessing the home's electrical system, and whether panel upgrades would be required. ● Development of a plan for electrification of all natural gas appliances in the home.

Analysis
● Our BAU analysis indicates that heat pump water heaters (HPWHs) and heat pump space conditioners (HPSCs) will achieve 22.5% penetration in LAH homes by 2030. This implies a total of 675 homes will use heat pumps for heating and cooling by 2030. ● We estimate successful implementation of this measure will increase that penetration by 13% (to 35.8%) by 2030, resulting in an additional 400 homes electrified. ● This would decrease our GHG emissions in the residential natural gas sector from 32,210 to 27,617 MT CO2e in 2030, a savings of 4,593 MT CO2e.
● Estimated cost of $500,000 between 2021 and 2030. Costs will start at zero and are expected to increase until 2030. Using an estimated total measure cost of $100,000 in 2030, this measure would result in a cost of $22 per MT of CO2e eliminated. ● See Scenario #3 in the "HP Forecast" sheet of the attached "LAH CAP" spreadsheet for details.

(2) Streamline: Simplify city permitting processes and reduce permit fee for electrification conversions
Description
The town has adopted an ordinance requiring electric (heat pump) space and water heating in new construction to reduce GHG emissions from natural gas combustion. However, existing homes presently represent the vast majority of such emissions. The goal of this measure is to facilitate conversion of space and water heating devices from natural gas to electric (heat pump).

Per the town’s July 6, 2020 Building Department Fee Schedule (https://www.losaltoshills.ca.gov/DocumentCenter/View/3611/Fee-Schedule---Building-PDF?bidId=) , a like-for-like furnace or water heater replacement requires an $82 building permit. An electrification conversion almost certainly involves both plumbing and electrical work, and would require a MEP (mechanical, electrical, and plumbing) permit with a base fee of $180 plus 0.9% of the project cost. It is not clear if separate permits are required for the plumbing work and the electrical work.

This measure proposes a new “electrification conversion” permit for furnace and/or water heater replacement from natural gas to electric. This permit would affirmatively include both plumbing and electrical work associated with the project, simplifying the process for the applicant. The permit fee would be fixed at, say, the $180 base MEP permit fee, with no project value escalator, to avoid creating an additional barrier for complex projects.

Analysis
● We estimate a heat pump water heater (HPWH) conversion to save 1.9 MT CO2e/year in GHG emissions and a heat pump space conditioner (HPSC) conversion to save 3.5 MT CO2e/year in GHG emissions (these involve some assumptions for usage, efficiency, etc.). ● Every 10% of LAH homes that complete both conversions represents 1,620 MT CO2e/year in reduced GHG emissions (based on 300 homes).
● These conversions have a high up-front cost. We estimate a HPWH conversion to cost $2,500 and a HPSC conversion to cost $13,000. If a main panel upgrade is required this could be an additional $5,000.
○ Incremental conversion costs relative to a like-for-like replacement are much lower and pay for themselves in energy savings in a few years ○ Value-based permit fees are based on the upfront cost. These would represent a small but real disincentive for these conversions

(3) Financing: Join in promoting the “BE Smart” program (tariff on-bill financing) to SVCE
Description
The town has adopted an ordinance requiring electric (heat pump) space and water heating in new construction to reduce GHG emissions from natural gas combustion. However, existing homes presently represent the vast majority of such emissions. The goal of this measure is to facilitate conversion of space and water heating devices from natural gas to electric (heat pump).

An electrification conversion almost certainly involves both plumbing and electrical work. In some instances the new load will require an upgrade to the home’s main electrical panel. So incremental costs relative to a like-for-like natural gas device replacement can run into the thousands of dollars. Even though these incremental costs pay for themselves through energy savings in a few years, they represent a significant barrier to such conversions.

Carbon Free Palo Alto (CFPA) takes the position that it is unrealistic to cover these costs with rebates. They propose what is called tariffed on-bill financing (TOB). The electricity retailer or utility uses its access to low-cost, long-term capital to finance the up-front cost of the electrification conversion, and the customer pays off the financing as an additional tariff on their bill (that is, not personal debt) over the lifetime of the device. Possibly the tariff can be applied to the new customer if the home changes hands. CFPA says this approach has been shown to have very high adoption rates when applied to energy efficiency upgrades. See:
https://docs.google.com/document/d/1sFzdJTbf2LvkbbupuCuCcwpGXxxfFvBYvV5WWQM0p90/e dit
The Town of Los Altos Hills is a participant in Silicon Valley Clean Energy in large part to facilitate such utility programs for its residents.

This measure proposes that the town use its influence through the SVCE board to make the establishment of TOB financing for SVCE customers a priority, to facilitate electrification conversions in the immediate term, such as being enabled by GoodLeap.com. For our goals we need this in place basically right away. We believe our residents will be much more open to electrification conversions if they are told that there is no incremental cost that must be paid upfront, even if in the end they choose not to use this financing.

Analysis
● We estimate a heat pump water heater (HPWH) conversion to save 1.9 MT CO2e/year in GHG emissions and a heat pump space conditioner (HPSC) conversion to save 3.5 MT CO2e/year in GHG emissions (these involve some assumptions for usage, efficiency, etc.).

● Every 10% of LAH homes that complete both conversions represents 1,620 MT CO2e/year in reduced GHG emissions (based on 300 homes).
● These conversions have higher costs than like-for-like natural gas device replacements.

We estimate a HPWH conversion to cost an incremental $1,000 and a HPSC conversion to cost $1,200. If a main panel upgrade is required this could be an additional $5,000. ● These incremental costs represent a significant disincentive for these conversions, so access to low- or zero-interest loans would help reduce barriers, whether or not the loans were actually used..
(4) Incentives: Provide path to eliminate natural gas use in buildings by 2045
Description
LAH Council will adopt a resolution to phase out all natural gas use in LAH by 2045, sending a clear signal to residents that our town has embraced electrification to take full advantage of SVCE’s clean electricity. Examples of similar forward looking mandates cover gasoline cars in California by 2035, gas boilers in the UK by 2025, and the 2010 SmartRegs in Boulder to make rental properties more efficient). The Council will direct Staff and the EIC to design and implement a number of low-cost policies over the coming years to assist all residents achieve this goal as quickly and efficiently as possible.

Precedence: Related forward-looking policies:
● 2020 ban on gasoline cars in California by 2035
● Ban on gas boilers in the UK by 2025
● The 2010 SmartRegs in Boulder mandating efficient rental properties by 2018 ● Oakland’s 2020 CAP includes getting off natural gas by 2040 ● Half Moon Bay’s draft ordinance targets capping all natural gas lines by 2045.

Policies to be considered by Staff and EIC could include:
● Town-wide education webinars on electrification, with local examples ● Award additional development area (500 sf?) to all-electric homes ● Offer incremental incentives on heat pumps, induction cooktops, dryers, and other electric devices (supplementing similar incentives from SVCE, BayREN and others) ● Organize volume discounts offered by local electrification contractors ● Help identify homes that are most appropriate for electrification early, deferring more challenging cases as technologies improve
● Recommend electrification tools & services (both online and in-home) ● Consider electrification requirements at time of sale ● Adopt ordinance requiring that no later than January 1, 2045, all buildings within the town shall be converted to All-Electric Buildings and all Fuel Gas plumbing lines shall be capped and/or decommissioned

● Establish procedures for conversion of remaining buildings no later than January 1, 2044 ● Prohibit reconnection to gas service, once a home is fully electrified, allowing PG&E to promote neighborhood branch pruning
● Adopt "Replace on Burnout" ordinance for gas appliances, if adopted by other local cities Analysis
● Our BAU analysis indicates that heat pump water heaters (HPWHs) and heat pump space conditioners (HPSCs) will achieve 22.5% penetration in LAH homes by 2030. This implies a total of 675 homes will use heat pumps for heating and cooling by 2030. ● We estimate successful implementation of this measure would increase that penetration to 42.5% by 2030, resulting in an additional 600 homes electrified. ● This would decrease our GHG emissions in the residential natural gas sector from 32,210 to 25,340 MT CO2e in 2030, a savings of 6,870 MT CO2e.
● Estimated cost of $250,000 between 2021 and 2030. Costs will start at zero and are expected to increase linearly until 2030. Using an estimated total measure cost of $50,000 in 2030, this measure would result in a cost of $7.28 per MT of CO2e eliminated. ● This is the only measure that would change as a result of the council selecting the more “aggressive” option of 52% reductions. If selected, the figures above would change as follows:
○ From 42.5% penetration to 50.9% (from 600 homes to 850 homes) ○ Savings would increase from 6,870 to 9,800 MT CO2e
○ Total cost would increase from $250,000 to $650,000. ($130,000 spent in 2030.) ○ Cost per MT of CO2e would increase from $7.28 to $13.27. ● See Scenario #2 (recommended) or #9 (aggressive) in the "HP Forecast" sheet of the attached "LAH CAP" spreadsheet for details.

MEASURES FOR MUNICIPAL OPERATIONS
These five measures apply to Town Hall, Town Staff, and other Municipal Operations only. (a) Battery Storage: Install storage to match PV production to Town Hall loads
Description
Town Hall produces solar energy from its 50 (?) kW PV system. The surplus solar energy produced during the day is fed into the Grid. Given the degree of curtailment of solar in the state of CA, it is quite likely that the surplus solar energy from Town Hall is not helpful to balancing the grid.

Town Hall should update its PV Solar system by combining it with a Battery Storage system so that the excess ‘clean’ solar energy can be stored for use later in the day when the Town Hall’s load will otherwise draw on ‘dirty’ energy that is delivered through the Grid.

Analysis
● Town Hall consumed 103 MWh of electricity in 2018; 67 MWh came from the Town Hall PV and 37 additional MWh was grid electricity provided by SVCE ● Need data to understand Rated capacity of current PV system and the split between Daytime and Nighttime loads in Town Hall to size the storage requirement for night loads ● The Town Hall is implementing a resiliency solution using storage for back-up purposes; storage should be sized instead to support ongoing night load in additions to supporting emergency back-up needs; daytime load can be supported primarily by SVCE which ensures that the energy sources are clean
● If Town Hall put together an integrated solution for sustaining its entire load with clean energy using PV and Storage, it will serve as a useful model for LAH residents to replicate the design and results; LAH already has one of the highest adoption rates in CA for rooftop PV and integrating storage would represent an upgrade that the residents will gladly pursue.
(b) Town Hall Electrification: Convert the natural gas loads at town hall to electric
Description
Town Hall has continued to depend on natural gas burners for water heating and space heating.

With a view to inspiring total electrification of the town, the town must first show that it can

eliminate the need for gas powered appliances within our town’s own facilities, including Town Hall. Additionally, when Town Hall converts its load to be all-electric, it can demonstrate that the gas supply to Town Hall could be permanently turned off and thus obviate the need for expensive gas pipe maintenance.

Analysis

1. In 2018, the last year for which it was estimated, Natural gas usage by Town Hall was 2,332 Therms and that equates to over 29,000 lbs of equivalent CO2 emissions

2. While the details of the load profile driving the natural gas load are yet to be determined, it seems safe to assume that switching the gas furnaces for space and water heating with Electric Heat Pump alternatives would potentially eliminate the entire GHG emissions resulting in a further 4.5% contribution towards CAP goals for GHG reduction

3. Elimination of gas appliances and upgrading to their electrical equivalents is not merely an environmentally cleaner choice but can also be cost effective (E3 report here; see page 49)

4. The knowledge base developed through Town Hall electrification can be used to educate the residents and provide them the contacts with contractors that can be helpful in their pursuit of electrification of their own homes - greater and quicker adoption of electrification and renunciation of natural gas can create the economies of scale and thus power a virtuous cycle of total electrification

5. An additional long term benefit of total electrification of the Town Hall load is that the gas line serving the Town Hall can be capped off thus pre-empting expensive and impending maintenance

6. Finally, it would send a clear message to town that we are serious about getting Government-driven CO2 emissions down to zero.
(c) V2G: Town V2G for resiliency pilot
Description
Town designs and installs a V2G system at town hall. Town already owns one battery electric vehicle. Included elsewhere among the recommendations is that town always purchase an electric vehicle where such an option is available. The effect of these will be that town will have substantial energy stored in its vehicles when they are charged (almost certainly by the town’s solar array). This gives the town the ability to smooth the load on the grid by drawing stored energy from its vehicles. It will also provide resiliency in case of a power outage.

V2G technology is developing quickly these days. Nissan vehicles already have the ability to power the grid. The upcoming electric Ford F-150 will also support bi-directional charging. Tesla is believed to be developing such technology for its vehicles also.

Analysis
The V2G would not save much in terms of CO2. There are two small sources of savings:
● To the extent that it will replace electricity consumption during hours when clean electricity is unavailable on the grid.
● In case of a power outage, it would make the (carbon-powered) generator a stand-by option to the battery.

More importantly, however, just as the solar panels next to town hall set a great example for town residents on moving to PV, a V2G grid would set a great example on the next frontier. Town residents are already leading the world in conversion to electric vehicles. We can also lead the world in V2G installations. LAH town government should lead the way.

Cost might be around $10,000 beyond the cost of a V2G-capable EV, like the Ford F150. (d) Green Fleet: Green fleet program with “EV First” commitment Description
Consistent with the direction pursued by the Federal and State Governments, Los Altos Hills should pursue the complete electrification of its fleet of vehicles. It may not be economically feasible in the short term to replace perfectly serviceable vehicles in the fleet with EVs. In some instances the EV is not even available to perform the functions required of its gas / diesel powered counterpart.

This recommendation suggests that the Town Hall should emphatically adopt the policy to convert its fleet to electric and as such should consider the EV alternative first, when replacing an existing vehicle or acquiring a new vehicle. The recommendation also says that the EV alternative for replacing a gas vehicle may be more expensive in the near term but should be preferred if the cost differential can be offset by the benefits of reduced GHG and attainment of CAP goals.

Analysis
● Town Hall currently owns one EV out of a fleet of 20 vehicles 7 of which are powered by gasoline and 12 by diesel
● The estimated GHG emission is 24 MT CO2e in 2018, the last year for which it was estimated. This represents a 29% reduction in GHG from the baseline of 2005 (34 MT) and is at 97% towards accomplishing the target for GHG reduction by 2025 of 30% set in 2015

● However, the fleet is quite old - the typical age of a fleet vehicle is 15 years - and it would suggest that given the general life expectancy of a vehicle, most of these 19 vehicles will be coming up for replacement within 2 - 5 years
● A token deposit of $100 ea for a few Ford Electric trucks to replace the existing gasoline Ford trucks may be a good way to initiate this process at a relatively low up-front cost ● Finally, it sets a great example to all the residents and other towns in the Valley. (e) EV Charging: Free EV charging for town staff
Description
Town provides free EV charging for town staff to charge their vehicles while they are at work in town hall. Employee commutes contributed 39 metric tons of CO2 in 2018. This is 13% of our Government's Carbon footprint.

Town staff commute a long distance to work, on average 26 miles a day, 7 of them 40 or more miles every day (per 2018 inventory). With increasing gas prices, providing staff with free charging would be a great incentive that encourages them to switch to electric vehicles.

Analysis
● Eliminating CO2 from employee commutes would cut 13% of the town government’s carbon footprint.
● Town staff commutes consumed over 4,000 gallons of gasoline in 2018. Providing free charging would provide a benefit of at least $16,000 to town staff, quite a bit more since there might be other errands that they run during their commutes. ● The 125,000 total miles traveled annually by town staff during their commutes would use about 50,000 kWh of electricity. This represents an annual cost of about $10,000 to town. ● If town were to build a V2G system at town hall, all the electric vehicles owned by town staff would be a part of it thus strengthening the town hall V2G. ● This would send a clear message to town that we are serious about getting Government-driven CO2 emissions down to 0.
● Finally, it sets a great example to all other employers, including other towns in the Valley. (f) Renewable Diesel: Town government and fire district shift to biodiesel Description
Biodiesel is a drop-in replacement for conventional diesel. It is the same chemical, except that it is manufactured from renewable sources rather than dug out of the ground. It is thus a renewable resource, and its carbon footprint is about 90% lower than that of conventional diesel. It is slightly more expensive than conventional diesel, but not overly so. Being chemically identical to diesel it

can be used with no changes to existing equipment, and can also be switched out should an emergency require us to go back to using conventional diesel.

GreenWaste already uses biodiesel (Propel HPR) in all their trucks that serve Los Altos Hills.

There is no reason for both the town government and the fire district not to immediately switch over to biodiesel for all the diesel vehicles in their fleet. Town Hall also has a diesel generator on standby for power outages which should also be switched over to biodiesel.

Analysis
● Eliminating diesel from the town fleet would cut our municipal CO2 emissions by 3%.

Eliminating diesel from the fire district’s fleet would cut our municipal CO2 emissions by a further 27%. Taken together there is a 30% saving available for the taking. ● Town municipal equipment consumed 720 gallons of diesel in 2018, the peak was in 2015 when it consumed 1,135 gallons. At a conservative $0.50 premium per gallon, the financial impact on the town is in the hundreds of dollars annually. ● Fire district equipment consumed 5,733 gallons of diesel in 2018, the peak was in 2016 when the district consumed 6,180 gallons of diesel. The financial impact on the district would be in the region of $3,000 annually.
● For an expenditure of less than $4,000 annually, and no upfront capital costs, our town government can reduce its CO2 emissions by about 30% with immediate effect. [END]

OFFICERS

NICOLE TAYLOR
Co-Chair
Silicon Valley Community Foundation

DAVE WEHNER
Co-Chair
Facebook

RUSSELL HANCOCK
President & CEO
Joint Venture Silicon Valley

DIRECTORS

JOHN AITKEN
Mineta San Jose Int’l Airport

DAVID BINI
Santa Clara & San Benito County
Building Trades Council

TED BOJORQUEZ
Union Bank of California

DAN BOXWELL
Accenture

RAHUL CHANDHOK
San Francisco 49ers

RAKESH CHAUDHARY
Kaiser Permanente Santa Clara

MARK DANAJ
City of Fremont

GARY DILLABOUGH
Urban Community

MAX DUGANNE
Boys & Girls Clubs of Silicon Valley
HON. SUSAN ELLENBERG
Santa Clara County Board of
Supervisors

DAVID ENTWISTLE
Stanford Health Care

JAVIER GONZALEZ
Google

RAQUEL GONZALEZ
Bank of America

ERIC HOUSER
Wells Fargo

MICHAEL ISIP
KQED
HON. RO KHANNA
United States Congress

JOHN AITKEN
Mineta San Jose Int’l Airport

BEN KOCHALSKI
TMG Partners

MITRA MAHDAVIAN
McKinsey & Company
JEAN McCOWN
Stanford University

CURTIS MO
DLA Piper

MAIRTINI NI DHOMHNAILL
Countsy
FR. KEVIN O’BRIEN, S.J.

Santa Clara University

MARY PAPAZIAN
San Jose State University
MARK G. PARNES
Wilson Sonsini Goodrich & Rosati
HON. DAVE PINE
San Mateo County

DAVID SACARELOS
Seiler, LLP
SHERRI R. SAGER
Lucile Packard Children’s Hospital

JARED SHAWLEE
San Jose Earthquakes

ED SHIKADA
City of Palo Alto
JOHN A. SOBRATO
The Sobrato Organization

NEERAJ VADHAN
Accenture

JOHN VARELA
Santa Clara Valley Water District

VICTORIA VIRASINGH
Palantir Technologies

DANIEL YOST
Orrick, Herrington & Sutcliffe, LLP
Town of Los Altos Hills
Telecom Backup Power: Regional Survey and Analysis
Discussion and Analysis
Prepared for: Dr. Peter Pirnejad, Town of Los Altos Hills Date: September 12th, 2022
Purpose
Town of Los Altos Hills is seeking to refine their approach to engagement with the telecommunications industry regarding emergency backup power. The town has wireless carriers requesting to install generators, fuel tanks, and associated electrical equipment (collectively, “gensets”). The town requested consultant support to help refine their understanding of the regulatory environment by surveying other cities and helping the town define options.

Background
In recent years, wildfires sparked by electrical infrastructure devastated communities across California. In response, the investor-owned utility that serves Northern California implemented Public Safety Power Shutoffs (PSPS) where the utility turns off electrical power in areas forecasted for high heat and wind events.i PSPS events in October 2019 affected over 2 million residents and caused widespread outages of the cellular networks — at its peak, affecting nearly 50% of cellular sites in Marin County.ii This occurred during a wildfire evacuation in Sonoma County, leaving thousands of evacuees without cellular coverage as they left the area seeking shelter to the south. iii

Figure 1 – Source: FCC DIRS, 27-Oct-2019
Attachment 3

84 W Santa Clara Street • Suite 800 • San Jose, California 95113 In response, the California Legislature introduced SB-431 (McGuire) and AB-2421 (Quirk), AB-2421 passed and was signed by the Governor.iv The bill’s text (emphasis ours) is:

Under existing law, a wireless telecommunications collocation facility, as specified, is subject to a city or county discretionary permit and is required to comply with specified criteria, but a collocation facility, which is the placement or installation of wireless facilities, including antennas and related equipment, on or immediately adjacent to that wireless telecommunications collocation facility, is a permitted use not subject to a city or county discretionary permit. Existing law defines various terms for these purposes.

This bill would, until January 1, 2024, require local agencies to make the installation of an emergency standby generator to serve a macro cell tower site, as defined, that meets specified requirements a permitted use and require a local agency to review an application for installation on an administrative, nondiscretionary basis. The bill would specify procedures for the processing of permit applications by a local agency and would authorize a local agency to impose a fee to cover costs associated with administering the bill’s provisions.

Because the bill would impose new duties on local agencies, it would impose a state-mandated local program.

The bill would define terms for purposes of these provisions and provide legislative findings and declarations in support of these provisions in order to maintain cellular communications during implemented power shutoffs.

Existing law, the California Environmental Quality Act (CEQA) requires a local agency to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that might have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA does not apply to ministerial approval of projects.

By requiring administrative approval of the installation of emergency standby generators, this bill would expand the CEQA ministerial approval exemption.

The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

In parallel with AB-2421 (Quirk), the California Public Utilities Commission issued two quasi-legislative decisions; one for wireline telecommunications, and one for wireless

84 W Santa Clara Street • Suite 800 • San Jose, California 95113 telecommunications.v CPUC Decision 20-07-011 (the “Decision”) requires, in pertinent part, that wireless providers “demonstrate their ability to meet the 72-hour backup power requirement” and file emergency operations plans on an annual basis.vi The Decision affects communities whose boundaries intersect with CPUC-defined Tier 2 and Tier 3 Fire Threat Zones (the “Zones”).
vii
The Decision also allows wireless providers to identify, in their Communications Resiliency Plans (the “Plans”), “facilities that do not need backup power, are unable to support backup power due to a safety risk, or that are objectively impossible or infeasible to deploy backup power, and to require a discussion of actions being taken by the wireless providers to mitigate service loss resulting from the lack of backup power at those locations pursuant to this section of today’s decision.”viii Further, the Decision addresses the question of petroleum-based versus “clean” power generation technologies in that it “recommends that the wireless providers use clean energy backup power (i.e., solar, wind, fuel cell, etc.) as reasonably practicable, before using diesel generators to meet the backup power and resiliency needs. The Proposal also requires the wireless providers to identify the number and specific types of generators they will use, develop cooperative agreements with other utilities, make clean generation feasible, and identify annual targets for the reduction of fossil fuel generation.”
ix
Lack of Lease Rate Guidance
Neither legislative nor regulatory actions on the topic of backup power for wireless communication facilities defined a cost framework for implementation. AB-2421 simply states that the bill will “would authorize a local agency to impose a fee to cover costs associated with administering the bill’s provisions.” The CPUC Decision simply asserts that “Nor is a backup power requirement tantamount to rate regulation.” Lease Rate Data Collection Process
In an attempt to reach a conclusion about rates for implementation of backup power for wireless communication facilities (WCFs), we initially looked at cities and towns in Santa Clara and San Mateo counties based on a suggested list from the Town of Los Altos Hills.

We extended the list to include nearby cities and towns whose borders intersect with the CPUC Zones. On 01-August-2022, we reached out to these entities via email, asking the following questions to each:

1. Has your city/town been contacted about adding backup power systems to wireless communication facilities sited on municipal property?

2. If the answer is yes to #1, has your city/town received any permit applications for backup power systems?

3. If the answer is yes to either #1 or #2, has your city/town adjusted the site lease rate charged to the carrier or site owner/operator?
We received a small number of responses, and not enough to draw meaningful conclusions. We attribute this lack of response to city/town staff being away for summer

84 W Santa Clara Street • Suite 800 • San Jose, California 95113 vacation. We also received a response from County of Santa Clara, based on a conversation we had with members of our Wireless Communications Initiative.

On 12-August-2022, we expanded our search to include additional entities in Alameda, Contra Costa, and Monterey counties whose borders intersect with the CPUC Zones. In all, we reached out to seventeen entities. We followed up on various dates seeking to obtain more responses. As of this writing, we have obtained thirteen responses. The list of entities we queried is:
 City of Benicia
 City of Cupertino
 City of Half Moon Bay
 City of Los Altos
 City of Monte Sereno
 City of Monterey
 City of Morgan Hill
 City of Pacifica
 City of Pleasanton
 City of San Bruno
 City of San Jose
 City of Saratoga
 County of Santa Clara
 Town of Atherton
 Town of Hillsborough
 Town of Los Gatos
 Town of Portola Valley
Material Review
We reviewed copies of the construction drawings and associated material for the proposed gensets. We also spoke with Crown Castle, American Tower, and AT&T to clarify specifics on their submitted material. We also reviewed documents from the Town related to their generator permitting process and noise ordinances.

Response Summaries
Of the thirteen responses, five entities (City of Cupertino, City of Los Altos, City of Monte Sereno, City of Pleasanton, Town of Portola Valley, and Town of Los Gatos) stated that they’ve either received no requests for gensets or that they do not have WCFs on public properties. City of Monte Sereno noted that they had permitted gensets for WCFs on private property. City of Pleasanton noted that they’d received a referral from the County of Alameda for a WCF in unincorporated Alameda County, but not a planning application.

From the entities that have received applications for WCF gensets, we learned the following:

84 W Santa Clara Street • Suite 800 • San Jose, California 95113  City of Morgan Hill noted that they have six WCFs and most already have gensets. One new WCF is going through and upgrade process that triggered a new lease, and the upgrade triggered a lease rate increase based on an increase in the number of antennas. Notably, they did not increase the lease rates based on genset inclusion in the project.  City of San Jose provided their lease rate schedule, which defines a cost matrix based on volumetric measurement of the genset equipment and cabinet.x The city noted that they have “several” locations where wireless providers would like to install gensets, and that they’ve received at least one permit.
 City of Benicia noted that their WCFs are located on public properties at water tower sites, and that wireless providers have proposed gensets for WCFs at those sites. Public Works is requesting that the wireless providers perform road and erosion control upgrades (estimated cost for this work is just under $250,000 not including permits and engineering) as a condition of approval.
 Town of Hillsborough noted that they have received inquiries about gensets for WCFs on public properties. As of 09-Aug, the town's consulting attorney had not yet finalized a lease rate adjustment recommendation.
 Town of Atherton noted that the WCF located at the Town Center is being relocated, and that there is no space at the new location for a permanent genset. The town is asking wireless providers to include batteries for backup power, but that it recognizes batteries will not provide 72-hour backup mandated by the state.
 County of Santa Clara noted that they plan to approve gensets for WCFs at the county fairgrounds without lease rate increases.

Analysis of Responses
Looking at the responses, it is clear that there is no consistent approach in local government to gensets for WCFs, and that the wireless industry is in the early stages of what will be an ongoing process. As of 12-Sept-2022, the City of Hillsborough is still working up a lease rate policy. On one hand, the City of Morgan Hill and County of Santa Clara are not charging lease rates for gensets. (City of Morgan Hill structures their lease rates based on the number of antennas, so WCF gensets do not trigger additional lease fees.) On the other hand, the City of San Jose charges relatively high lease rates based on equipment and cabinet volumes, and the City of Benicia is asking for capital improvements to the site.

Town of Atherton does not have space at their relocation site for gensets.

The most consistent response was that respondents have not yet received queries about genset applications.

Discussion
In the aftermath of the CPUC’s Decision, and AB-2421, local governments will have to balance several factors in making decisions on requests to install telecom backup power generators on public properties.

84 W Santa Clara Street • Suite 800 • San Jose, California 95113 In some cases, a local government might want to encourage genset installations by keeping lease rates low (or non-existent) as a way to help support ensuring connectivity for their residents. The Wireless Substitution Report (a bi-annual publication of results from the National Health Interview Survey at the Centers for Disease Control) notes that, nationally, the percentages of wireless-only adults and of children living in households with only wireless telephone service, by age group, ranges from 40.8% (ages 65 and over) to 86.1% (ages 30-34).xi Underlying data in the WSR show that these rates are higher in western portions of the country.xii NENA, the 9-1-1 Association estimates that 80% of calls to 9-1-1- emergency service originate from cellular phones.xiii These metrics echo estimates from groups like the California Office of Emergency Services, and the CPUC cited them in their decision to mandate backup power for WCFs. With the shift towards IP-based telephony using xDSL copper pairs, DOCSIS cable, or GPON fiber and the rapid decline of analog (aka “Plain Old Telephone Service” or “POTS”) telephone service, the burden of providing power for telephones is increasingly on residents, and most have not installed backup power devices to sustain telephony during outages.xiv
On the other hand, gensets may be politically challenging for local governments. They take up space, can have unacceptable visual aesthetics, require the storage and use of fuels to operate, and generate sound when in operation. Even the best gensets inside soundattenuated cabinets typically generate sound levels in the 55 – 65 dBA range, which is below the normal level of human speech (~ 65 dBA) but still might be objectionable to residents when it’s occurring 24/7 over the course of several days.

The CPUC Decision asks wireless providers to use clean technologies if possible, but this presents an engineering and physics challenge. Volumetric energy density of petroleum fuel is about 100x greater than the best current battery technology. A liter of diesel fuel contains 38.6 Mega-joules of energy.xv Lithium-Ion batteries contain about 0.4 Mega-joules per liter.xvi Refueling a diesel generator with truck and fuel pump is easy. Recharging a battery requires another electrical power source such as solar, wind, etc. and these sources take up a lot of space. Hydrogen fuel cells are an alternative to petroleum-fueled gensets, but they require hydrogen storage tanks that take up space, and storage tanks for hydrogen will require approximately more space given that the volumetric energy density of hydrogen is 8 Mega-joules per liter.xvii
Absent a willingness on the part of local governments to allow installation of solar panel arrays, wind turbines, and battery banks, it is unlikely that wireless providers will be able to meet the mandated 72-hour requirement using clean technologies.

While the CPUC declined to create a waiver process, wireless providers may identify in their Communication Resiliency Plans (the “Plans”) facilities where backup power is “impossible or infeasible”, and this effectively creates a waiver process. In cases where “conditions make it objectively impossible or infeasible to deploy backup power” the wireless provider must “identify the basis for that determination” in their Plans and include

84 W Santa Clara Street • Suite 800 • San Jose, California 95113 “a discussion of actions being taken by the wireless provider to mitigate service loss resulting from the lack of backup power at those locations”. xviii

Wireless providers will likely assert that backup power projects in a given jurisdiction are impossible or infeasible if local governments impose unreasonable lease costs, onerous permitting requirements, lengthy permitting and community hearings, unreasonable requests for capital improvements at WCF sites, etc.

In the event wireless providers deems gensets at a site or in a locality impossible or infeasible, wireless providers will have to note their plans for mitigating service disruptions for those sites in the event of a power outage. This might involve bringing in generator trucks or trailer-mounted generators. We note that the security of temporary generators (both against vandalism and theft) is a concern. During the 2019 wildfire/PSPS events, generator theft was a major problem for homes and businesses.xix Speaking to colleague who works with wireless providers to deliver and refuel trailer generators, he noted that both generator theft and fuel theft are major issues during emergency power deployments.
xx
Also, unless the outage event is known in advance, wireless providers cannot pre-stage generators, and the delay to bring in generators ranges from 24 – 48 hours if equipment is available. It’s likely that generators will not be available for all WCFs in a region affected by power outages, planned or unplanned. If persistence of cellular coverage is important to a jurisdiction, installation of a permanent genset with sufficient fuel to last 72 hours is the best option, and local governments should do what they can to remove barriers to deployment of those systems.

We also noted in our review of the town’s noise code an issue that would, if left unaddressed, preclude the use of petroleum-fueled gensets. The town’s noise code defines maximum noise levels in dBA (“A-weighted unit of sound pressure level”) for various noise sources, with lower levels specified during nighttime. Generators are not specifically listed in the code’s table of noise sources, but the closest fit would be either “Fixed noise source” or “Machines, tools or appliances” — both of which specify a daytime maximum of 50 dBA and a nighttime maximum of 40 dBA.xxi As mentioned above, the best gensets inside soundattenuated cabinets typically generate sound levels in the 55 – 65 dBA range, and during an extended outage they will run 24 hours per day at constant sound levels. In order to allow WCF gensets compliant with the noise code, the town will have to revise their noise code to add generators and set both daytime and nighttime sound levels above the level of the gensets proposed by the wireless providers. Of course, the town could also choose to override the noise code via an emergency declaration or other means.

Recommendations
Based on the available data, survey responses, and our analysis we offer the following recommendations:

A. Town of Los Altos Hills should seek to keep genset lease rates low, and if possible eliminate them entirely. Reasoning:

84 W Santa Clara Street • Suite 800 • San Jose, California 95113 a. The U.S. population is rapidly shifting towards the use of cellular technologies as a primary means of for personal, business, and safety communications. Likewise, governments are shifting towards wireless emergency alerts. It follows therefore that in emergency or power-outage situations, your residents will want the town’s cellular network to remain operational. Thus you want to encourage the carriers to move forward with gensets.
b. Governing CPUC regulations allow wireless carriers to request waivers for backup power gensets if the installation of gensets is “objectively impossible or infeasible”.

Demands for high lease rates could lead a carrier (or carriers) to waiver out and not install gensets.
c. Only one of the municipalities we surveyed (San Jose) is increasing their lease rates for gensets.

B. Town of Los Altos Hills should not request that carriers bring in generators or “Cells on Wheels” (COWs) in lieu of installed gensets. Reasoning:
a. Carriers maintain very few COWs. There is no guarantee a carrier will have COWs available for the Town. It’s very unlikely all three major carriers (AT&T, T-Mobile, and Verizon) will have COWs available for the Town in an emergency. b. Even for planned outages (PSPS events) there is a time delay to get portable gensets moved in and fueled. The Town will almost certainly experience a gap in service between the time of shutoff, and the time three portable gensets are set up and started.
c. Portable gensets are subject to theft.

C. Town of Los Altos Hills should not request that telecom backup power systems be built with clean technologies like solar and batteries. Reasoning:
a. The volumetric energy density of the best-available battery technology is 100x lower than the volumetric energy density of diesel fuel. A clean backup power system will require a lot more volume for batteries, and will also require large amounts of ground area for solar panels.
b. Absent a few minutes of monthly auto-testing, a diesel generator will only run a few days (if that) every year, and thus the system will not create a large carbon footprint. The cost and effort needed to install a solar and battery backup system may cause the wireless carriers to submit a CPUC waiver based on infeasibility.

D. Town of Los Altos Hills should inquire if biodiesel fuel is an option. Reasoning:
a. The volumetric energy density of biodiesel is only 7% lower than standard low-sulfur diesel.
b. It’s likely that the proposed generators (per plans we reviewed) can function on biodiesel.
c. If during an emergency biodiesel fuel stocks are not available, standard diesel can be easily substituted.

E. Town of Los Altos Hills should update noise ordinances/codes to account for telecom backup power using gensets. Reasoning:
a. The current noise code limits to 50 dBA during daylight hours, and 40 dBA at night.

Gensets in the submitted plans will emit 55 – 65 dBA at all hours during an outage.

84 W Santa Clara Street • Suite 800 • San Jose, California 95113 Respectfully,
David Witkowski
Executive Director, Civic Technologies Program
Joint Venture Silicon Valley
[email protected]
408-625-7399

84 W Santa Clara Street • Suite 800 • San Jose, California 95113 Endnotes & Citations
i https://www.wsj.com/articles/wildfire-season-pg-e-warns-it-may-black-out-customers-to-reduce-californiarisks-11629216000?st=sf6zq19pg2mpm4s&reflink=desktopwebshare_permalink ii https://www.nytimes.com/2019/10/28/business/energy-environment/california-cellular-blackout.html iii https://www.nytimes.com/2019/10/26/us/california-fires-sonoma-kincade.html iv https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB2421 v CPUC Decision 20-07-011 (July 16, 2020), Rulemaking 18-03-011 vi ibid
vii https://www.cpuc.ca.gov/industries-and-topics/wildfires/fire-threat-maps-and-fire-safety-rulemaking viii ibid
ix ibid
x https://www.sanjoseca.gov/home/showdocument?id=61860
xi Latest WSR, January-June 2021, https://www.cdc.gov/nchs/nhis/erwirelesssubs.htm xii ibid
xiii https://www.nena.org/page/911Statistics
xiv The HayWired Scenario—Telecommunications and Information Communication Technology By Anne M.

Wein, David T. Witkowski, Jamie L. Jones, Keith A. Porter, Laurel R. Ballanti, and Sara K. McBride, https://doi.org/10.3133/sir20175013v3 — Chapter S
xv https://www.eia.gov/energyexplained/units-and-calculators/energy-conversion-calculators.php xvi https://www.aps.org/publications/apsnews/201208/backpage.cfm xvii https://www.energy.gov/eere/fuelcells/hydrogen-storage xviii ibid, @ v above
xix https://www.sonomanews.com/article/news/generator-theft-on-the-rise-in-sonoma-during-outages/ xx Wilson Hines, Hines Enterprises, oral communications, 17-August-2022 xxi https://library.qcode.us/lib/los_altos_hills_ca/pub/municipal_code/item/title_5-chapter_2

8/9/22, 8:38 AM Chapter 2 NOISE
https://library.qcode.us/lib/los_altos_hills_ca/pub/municipal_code/item/title_5-chapter_2?view=all 1/4 Los Altos Hills, California Municipal Code
Title 5 PUBLIC WELFARE, MORALS AND CONDUCT
Chapter 2 NOISE
Note
5-2.01 Definitions.
5-2.02 Standards.
5-2.03 Conflicts with other laws.
5-2.04 Public nuisances.
5-2.05 Emergency exemption.

Note
* Prior ordinance history: Ords. 181, 249 and 254.
5-2.01 Definitions.

For the purposes of this chapter, unless otherwise apparent from the context, certain words and phrases used in this chapter are defined as follows:

Animal means any mammal, bird, reptile, fish or any other creature or any live vertebrae creature other than a human being.

A-weighted sound level or sound level means the sound pressure level in decibels as measured on a sound level meter using the A-weighted network. The A-weighting filter de-emphasizes the very low and very high frequency components of the sound in a manner similar to the response of the human ear and gives a good correlation with subjective reactions to noise. dBA means the A-weighted unit of sound pressure level.

Decibel (dB) means the unit of measurement for sound pressure level.

Emergency means any occurrence or set of circumstances involving actual or imminent physical trauma or property damage which demands immediate actions.

8/9/22, 8:38 AM Chapter 2 NOISE
https://library.qcode.us/lib/los_altos_hills_ca/pub/municipal_code/item/title_5-chapter_2?view=all 2/4 Farm equipment means a device which is used exclusively in the conduct of agricultural operations, including devices such as power saws, lawn mowers, pump motors, air compressors, or similar power-driven devices used in connection with agricultural operations, but not including vehicles which are designed primarily for the transportation of persons or property on a highway.

Farm tractor means a tractor which may be used on a highway to draw a farm trailer carrying product or carrying other implements of husbandry between farms or to a processing or handling point and returning with or without the trailer, but which otherwise is itself an implement of husbandry.

Fixed noise source means a stationary device which creates sound while fixed or motionless, including, but not limited to pumps, fans, compressors, air-conditioners, pool equipment, generators, and refrigeration equipment.

Machine, tool, or appliance means every machine, motor, device, or equipment, powered or unpowered, including, without limitation, such normally employed to fabricate, clean, or modify other items, and including any device (other than farm equipment and on permitted construction sites), such as power saws, routers, drills, hoists, mixers, sanders, cleaners, grinders, jacks, pumps, generators, and the like.

Motor vehicle means a vehicle which is self-propelled (including motorcycles, motor-assisted bicycles, motor-driven cycles, and powered motor vehicles) as defined in the California Vehicle Code, including all on-highway type motor vehicles subject to registration under said Code and all off-highway type motor vehicle subject to identification under said Code.

Person means and includes every human being, whether adult, minor, or infant. When a group of persons acts in unison to create noise, each individual shall be deemed as responsible as though solely the principal producing the resultant noise.

Powered model vehicle means any self-propelled, airborne, waterborne, or land borne plane, vessel, or vehicle which is not designed to carry persons, including but not limited to any model airplane, boat, car or rocket.

Sound-producing or amplifying device means any device for the creation or amplification of the human voice, music, or any other sound. Examples include, without limitation, public address systems, music amplifiers, horns, sirens, whistles, bells, and drums. (§ 1, Ord. 527, eff. May 21, 2011) 5-2.02 Standards.

The following standards are established to be applicable to the classifications indicated when measured as follows:
(a) Use a standard noise level meter as prescribed by ANSI-S1.4. All measurements will be taken with the meter switched to the weighting network labeled “A” and “Slow” time averaging. (b) When the source is on private property, measurements shall be made at any location on or beyond the property boundary.

8/9/22, 8:38 AM Chapter 2 NOISE
https://library.qcode.us/lib/los_altos_hills_ca/pub/municipal_code/item/title_5-chapter_2?view=all 3/4 (c) When the source is on public property, measurements shall be made fifty (50) feet from the source or at the private property line, whichever is closer. (d) Vehicles on public streets and highways within the Town shall conform to the noise emission standards prescribed for them by the Vehicle Code of the State. (e) Fixed noise source installations shall conform to applicable setback standards. Additional noise attenuation such as enclosure, baffling or housing may be required for roof mounted installations to meet the standards in subsection (g) of this section. (f) Equipment defined in Title 5, Chapter 6 is not regulated by this chapter. (g) Noise sources shall be regulated by the following table:

Noise Sources Exterior Noise Level
Standard (dBA)
Daytime Nighttime
Animals 50 40
Farm tractor 82 40
Farm equipment 65 40
Fixed noise source 50 40
Machines, tools or appliances 50 40
Motor vehicle repairing,
rebuilding, modernizing and
testing
82 40
Persons 50 40
Powered model vehicle 60 40
Sound-producing or amplifying
device
50 40
For the purposes of enforcing the provisions of this chapter, “daytime” shall be the period from 8:00 a.m. on weekdays, and 9:00 a.m. on weekends and Town Holidays, to 7:00 p.m., and “nighttime” shall be the period from 7:00 p.m. to the beginning of “daytime,” Pacific Standard Time or Daylight Saving Time. “Nighttime” shall begin at 10:00 p.m. for persons and sound-producing or amplifying devices. (§ 1, Ord. 527, eff. May 21, 2011)
5-2.03 Conflicts with other laws.

The provisions of this chapter shall not be deemed to supersede or repeal other existing laws which are designed to control public nuisances or disturbances, such as noise. (§ 1, Ord. 527, eff. May 21, 2011)

8/9/22, 8:38 AM Chapter 2 NOISE
https://library.qcode.us/lib/los_altos_hills_ca/pub/municipal_code/item/title_5-chapter_2?view=all 4/4 5-2.04 Public nuisances.

Each violation of the provisions of this chapter shall constitute a public nuisance and shall be subject to abatement as such. (§ 1, Ord. 527, eff. May 21, 2011) 5-2.05 Emergency exemption.

The provisions of this chapter shall not apply to:
(a) The emission of sound for the purpose of alerting persons to the existence of an emergency; or
(b) The emission of sound in the performance of emergency work. (c) Noise from equipment used during emergencies. (§ 1, Ord. 527, eff. May 21, 2011) Contact:

City Clerk: 650-941-7222
Published by Quality Code Publishing, Seattle, WA. By using this site, you agree to the terms of use.

Page | 1 2021-04-19

TOWN OF LOS ALTOS HILLS
26379 Fremont Road
Los Altos Hills, CA 94022
Phone: (650) 941-7222
Fax: (650) 941-3160
www.losaltoshills.ca.gov
Generator Permits

PLANS & PERMITS

1. A completed building permit application.

2. Three (3) completed, securely bounded sets of plans; (4) sets for propane generators.

Site Survey Drawing:
• Indicate generator and fuel tank locations. Planning Department approval necessary. • Indicate location of all operable windows and operable doors near generator exhaust (Generator spacing from the building shall meet manufacturer’s specifications from all openings and operable doors). The location of the generator shall be on side or rear of property with a minimum setback of 30 feet from property line.

Slab Drawing:

Provide applicable structural plans. These plans shall indicate, as a minimum:
• Provide the size and depth of the slab and type of reinforcement use • Provide generator anchoring details
Electrical Riser Diagram:
• Provide electrical riser diagram. These plans shall indicate the service, panel(s), transfer switch(s), main disconnect(s), generator installation, over-current protection, grounding, conduit sizes, and wire sizes.

Generator:
• Provide information for the generator showing KW rating, ampacity, voltage, phase, and fuel source (container dimensions, capacity, and location).
• All loads connected to the generator shall be identified. • Provide load calculations for the generator. All loads shall be identified. NEC Article 220 shall be used to calculate existing loads. Where the generator is connected to the load through a cord and-plug (Exposed metal parts shall be non-current carrying.), the receptacle shall be sized for the corresponding overcurrent protection at the generator or other over-current protection at the generator or other over-current protection device in front of the receptacle.
a) Where an automatic transfer switch is used, provide automatic load shedding to reduce total load imposed on generator.
b) Generator shall be sized for the load served. NEC Article 220 shall be used to calculate the existing load.
c) Provide dBA sound ratings as required per local ordinances Sec. 5-2.02. (50 dBA) Note: The Town of Los Altos Hills has adopted the 2019 California Electrical Code (CEC), based on the 2017 NEC.

Page | 2 2021-04-19

INSPECTIONS

1. Underground conduit trench.

2. Slab rebar.

3. One final inspection by Building is required after receiving any Planning, Engineering, or Fire final inspections and after all work has been completed.

OTHER REQUIREMENTS
Transfer Switch:
• All generators shall be rated for the connected load. • Manual Transfer Switch: (Options)
Sized for the intended load on the electrical service OR Sized for optional standby panel(s), which may be built into the panel(s) and transfer switch(s).
• Automatic Transfer Switch: (Options)
Size to transfer the entire load on the electrical service OR pre-select the loads to be served with an optional standby panel(s) and transfer switch(s)
Sign:
• A permanent sign shall be placed at the electrical service entrance equipment that indicates the location of on-site optional standby power sources, and where to disconnect. • A permanent sigh shall be placed at the transfer switch location indicating the sequence of operation to start the generator and transfer the electrical loads.

Fire Department Requirements:
• Check with the Fire Marshall for any other requirements. (408) 378-4010 (i.e. hazardous materials, setbacks, etc.)

A3284 Journal of The Electrochemical Society, 165 (14) A3284-A3291 (2018) Energy Density of Cylindrical Li-Ion Cells: A Comparison of Commercial 18650 to the 21700 Cells
Jason B. Quinn, ∗ Thomas Waldmann, z Karsten Richter,∗∗ Michael Kasper, and Margret Wohlfahrt-Mehrens
ZSW - Zentrum fur Sonnenenergie- und Wasserstoff-Forschung Baden-W ¨ urttemberg, D-89081 Ulm, Germany ¨ The standard format for cylindrical Li-ion cells is about to change from 18650-type cells (18mm diameter, 65mm height) to 21700- type cells (21mm diameter, 70mm height). We investigated the properties of five 18650 cells, three of the first commercially available 21700, and three types of the similar 20700 cells in detail. In particular, the (i) specific energy/energy density and electrode thickness, (ii) electrode area and cell resistance, (iii) specific energy as a function of discharge C-rate, as well as (iv) heating behavior due to current flow are analyzed. Finally, the production effort for cells and packs are roughly estimated for 21700 cells compared to 18650 cells.
© The Author(s) 2018. Published by ECS. This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 License (CC BY, http://creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse of the work in any medium, provided the original work is properly cited. [DOI: 10.1149/2.0281814jes] Manuscript submitted August 20, 2018; revised manuscript received October 5, 2018. Published October 19, 2018.

The lithium ion battery was first released commercially by Sony in 1991,1,2 featuring significantly longer life-time and energy density compared to nickel-cadmium rechargeable batteries. In 1994, Panasonic debuted the first 18650 sized cell,3 which quickly became the most popular cylindrical format. Besides cylindrical cells (e.g. 18650, 26650), Lithium ion technology is implemented in a variety of formats depending on their application: coin (e.g. CR2032, CR2016), pouch, and prismatic. The majority of electric vehicle (EV) manufacturers elect to use larger prismatic cells,4 whereas Tesla had adopted 18650-type cells, which were produced in billions per year worldwide.

Today, Panasonic supplies Tesla with cells for the Model S, 3, and X. The companies initially worked to establish the 20700 cell format as a new standard for use in electric vehicles, however, it was abandoned in favor of the 21700 format. An increase in cell size allows for a larger jellyroll, in both width and increased number of windings, therefore increasing electrode area (see Figure 1 for size comparison).

The larger 21700 format was adopted by other manufacturers and has since become a new modern standard.5
Currently, a few different types of 20700 and 21700 cells are available commercially, however, to best of our knowledge there are no published scientific investigations on these cells. Furthermore, in different discussions, we found that there is a controversy on an increase of energy density by the cell format and a need to clarify this topic on a scientific basis. Therefore, in this work we wish to shed some light on the new format and its potential impact. To do this, we compared several commercial 18650, 20700, and 21700 cells (see Table I).

In this paper, energy content, specific energy, cell performance, internal resistance, and heating behavior during current flow will be measured and correlated to electrode thickness and area. Based on the results and in first approximation, we will also briefly discuss possible production benefits of 21700 format over 18650.

Experimental
The various cell types evaluated in this study are shown with respective energy, energy density, specific energy, dimensional data, and voltage range in Table I. In order to identify cells we use a naming scheme structured as [cell size]-[letter assigned to manufacturer][cell type]. For example, 20700-E1 and 21700-E1 are different cells from the same manufacturer. Energy density values are based on nominal dimensions according to each cell’s data sheet. Please note that the cell dimensions are not exactly the same as expected for the different cell formats. For instance, the mean diameter of 18650 and 21700 cells is 18.08 mm and 21.19 mm instead of 18.0 mm and 21.0 mm, respectively.
∗Electrochemical Society Member. ∗∗Electrochemical Society Student Member. zE-mail: [email protected]
All cells were first of all tested as delivered regarding their mass, voltage, and internal resistance (Hioki 3554, 1 kHz). Table IIshows the mean values and the standard deviations. The low standard deviations indicate that all cells are suitable for further tests.

In order to yield the coating thicknesses shown in Figure 2, the cells were discharged to their respective end-of-discharge voltages before disassembly in a fume hood. The electrodes were separated and washed three times for 1 minute in DMC. After drying, the thicknesses of the coatings were measured by a micrometer gauge. The mean value of ten positions per cell were used in Figure 2. The X-ray computed tomography image shown in Figure 3 was obtained for cell type 21700- G1 with a v|tome|x 300. We note that cell types 18650-A2 (1.2Ah) and 18650-A3 (2.2 Ah) were only used in Figure 2 and Figure 5.

For Figure 5a, two cells of each type were discharged and charged three times at 0.5C (CC-CV until I<C/10), and their resistances were measured twice after a break (>30min) in the charged state at room temperature. Pouch cells with different electrode numbers (Figures 5b and 5c), were built from NMC cathodes, graphite anodes, a Celgard Separator (2325), and EC:EMC = 3:7 (wt-%), 2% VC, 1M LiPF6 as electrolyte.

All electrochemical tests were performed by a BaSyTec XCTS equipped with 25A channels at 25◦C in climate chambers (Votsch). ¨ Rate capability tests were performed by CC-CV charging at 0.5C to

4.2V, ending when I < C/10, and CC discharge ending at the respective cutoff voltage. A 30 minute pause was placed between each step to allow for voltage relaxation. Discharge rates of 0.5C, 1.0C, 1.5C,

2.0C, 2.5C, 3.0C, 3.5C, and 3.75C were used for all cells. Repetition of all tests with a second cell showed very good reproducibility. Those which exhibited great rate capability and lower heating (high power Figure 1. Size comparison of 18650 cells (h = 65mm, d = 18mm), 20700 cells (h = 70mm, d = 20mm), and 21700 cells (h = 70mm, d = 21mm). a) side view, 20700 cells are not shown since their side view is very similar to 21700 cells. b) Comparison of cell diameter, (b) not in scale with (a).

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Journal of The Electrochemical Society, 165 (14) A3284-A3291 (2018) A3285 Table I. Overview on investigated cells.

Cell type Energy per cell/Wh Energy density/Wh/l Specific energy/Wh/kg h/mm d/mm Cutoff Voltage/V Charge Voltage/V 18650-A1 5.13 314.4 114.0 64.99 17.88 2.0 4.2
18650-B1 9.13 538.7 206.2 65.02 18.22 2.0 4.2
18650-C1 11.23 670.0 231.5 65.14 18.14 2.5 4.2
20700-D1 14.54 663.5 237.5 70.04 19.96 2.5 4.2
20700-E1 10.55 466.8 169.9 69.96 20.28 2.5 4.2
20700-F1 14.65 668.4 232.6 70.06 19.96 2.5 4.2
21700-E1 13.15 519.1 207.1 70.27 21.43 2.5 4.2
21700-G1 16.77 684.2 239.5 69.71 21.16 2.0 4.2
21700-H1 16.32 672.1 236.5 70.25 20.98 2.5 4.2
Figure 2. Correlation of specific energy of commercial cylindrical cells as a function of anode coating thickness measured after Post-Mortem analysis. The fit was forced through the origin. Values were obtained at 0.5C discharge rate and 25◦C.

Table II. Measured specifications of investigated cells. Data are mean values and standard deviations. In case of cell 21700-G1 only 2 cells were available, therefore the errors from the measurement devices were taken instead of the standard deviation.

Cell Cell Capacity/
Count Type Ah m/g U/V Ri/m
100 18650-A1 1.50 42.23 ± 0.10 3.77 ± 0.01 16.2 ± 0.3
30 18650-B1 2.50 48.79 ± 0.07 3.47 ± 0.01 10.4 ± 0.2
20 18650-C1 3.40 46.29 ± 0.06 3.53 ± 0.01 10.4 ± 0.2
20 20700-D1 4.25 62.16 ± 0.06 3.50 ± 0.01 14.8 ± 0.2
20 20700-E1 3.03 58.06 ± 0.31 3.64 ± 0.02 11.5 ± 0.4
40 20700-F1 4.25 62.06 ± 0.07 3.65 ± 0.01 14.8 ± 0.1
20 21700-E1 3.75 70.45 ± 0.62 3.87 ± 0.02 13.6 ± 0.3
2 21700-G1 5.00 68.46 ± 0.06 3.45 ± 0.01 14.0 ± 0.2
20 21700-H1 4.80 67.57 ± 0.09 3.58 ± 0.01 15.0 ± 0.2
cells) were subject to discharge rates up to 12C, and the maximum channel current of 25A. Cell surface temperature was measured by taping an NTC-type temperature sensor (error: ±1◦C) on the middle of the cell can, where a ∼1.5 × 2.0 cm2 piece of plastic mantle was removed.

Results and Discussion
Energy density and electrode thickness.—Figure 2 shows a clear correlation between anode coating thickness from Post-Mortem analysis with specific energy on cell level. The anode was chosen for this analysis since the material (graphite) is expected to be more similar in the different cells from different manufacturers, while the cathode materials may vary (different types of NMC, NCA, . . . ). In particular, for cell types 18650-A1, 18650-A2, 18650-A3, and Figure 3. a) 2D CT cross-section at mid-height of cell type 21700-G1, b) 1D CT cross-section along the broken line in (a). The dotted circle shows the diameter of a 18650-type cell for comparison. White/grey/black in (a) correspond to high/mid/low gray scale values in (b).
18650C1, the cathode chemistry is NMC111/LMO,6,7 LMO,7
NMC532,7 and NCA,7,8 respectively, which obviously does not change the trend for the anode in Figure 2.

The data points in Figure 2 for both, the 18650 and 21700 cells show a similar correlation and scatter around a linear fit with R2 = 0.98. We note that this fit is forced through the origin which is physically meaningful, since a hypothetical cell with no anode coating has a specific energy of 0. In contrast to the cells with high specific energy (right upper corner of Figure 2), the cells with lower specific energy are typically high-power cells (left lower corner). Please note that the trend for energy density is similar.

The scattering in Figure 2 originates from various factors, which are summarized in Table III. Differences in cell design9–11 (tab design, cap), separator12 (thickness, material, porosity, tortuosity), electrodes13,14 (loading, porosity, tortuosity, collector foil material/thickness, N/P ratio), materials14,15 (active materials type, stoichiometry, electrolyte/additives, conductive salt, SEI, binder, particle size distribution) which are likely to be present in the different commercial cell types. For example, more than one tab is Downloaded on 2018-10-19 to IP 139.81.111.146 address. Redistribution subject to ECS terms of use (see ecsdl.org/site/terms_use) unless CC License in place (see abstract).

A3286 Journal of The Electrochemical Society, 165 (14) A3284-A3291 (2018) Table III. Possible influences on specific energy of a Li-ion cell.

Group Influence parameter
cell design tab design
current collectors
cap
separator thickness
material
porosity
tortuosity
electrodes loading
porosity
tortuosity
collector foil material/thickness
N/P ratio
materials active materials type
stoichiometry
electrolyte/additives
conductive salt
SEI
binder
particle size distribution
favorable for the electrical homogeneity,10 internal resistance,9 discharge capacity,11 and heating behavior9,11 of high-power cells. Additionally, uncertainties in the measurement of the anode thicknesses must be taken into account.

Please note that the anode coating thicknesses in Figure 2 were obtained from Post-Mortem analysis of commercial cells discharged to their respective end-of-discharge voltage (see Table I). In this process, the cell housing is removed and therefore potential pressure on the jellyroll is released. Consequently, the measured thicknesses are not exactly the same as in the closed cells since they might have slightly expanded. Furthermore, during washing of the electrodes with DMC, material might have been removed which would lead to a lower thickness. However, a comparison with a 2D CT cross-section of cell type 21700-G1 (Figure 3a) showed a reasonable agreement. From 50 measurements of the periodical distance from the CT image, a mean value of 371 ± 13 μm was obtained. Additionally, Figure 3b shows a 1D CT cross-section where 22 windings (22 maxima) can be counted. The mean periodical distance between each winding was calculated to be 376 ± 23 μm and an inner cell diameter of 20.7 mm was determined using the local minima adjacent to each housing peak. This is in the same range as the sum of the thickness of anode, cathode, and 2x separator obtained for the same cell type from Post-Mortem analysis (366 μm).

It is noted that the 2D CT cross-section in Figure 3a looks similar to that of 18650 cells.7,16–20 The dotted circle in Figure 3a shows the diameter of a 18650 cell for comparison. It can directly be seen that for the same thickness of anode, cathode, and separator, less windings could be achieved. In this case (366 μm periodic distance) the 21700 cell can accommodate ∼4 more windings. This is based on the assumption that the space utilization at inner and outermost electrode ranges is always optimized in the same manner. For thinner electrodes the number of additional windings will be higher. Additionally, please note that the extra outer windings of the 21700 cells contribute more to the energy content of the cells compared to the inner windings which would be also present an a similar 18650 cell. According to the Archimedean spiral21 the increase of lengths of the electrodes is disproportionately higher for outer windings.

It also has to be considered that the measured anode coating thicknesses in this paper are not the same as for the coated and calendared electrodes in the production process before being built into the cells, since soaking with electrolyte and cell formation are likely to lead to a thickness increase.

Nevertheless, the high R2-value for the linear fit in Figure 2 shows that in spite of the differences in the cells discussed above, the main trend for higher specific energy is higher electrode thickness. This trend holds for all three cell formats – 18560, 20700, and 21700 – Figure 4. Cylinder volumes used for the estimation of energy densities for 18650 and 21700 cells.
and from different manufacturers. I.e. the specific energy of cells with comparable electrode thickness is similar for all three cell formats.

This implies, that for similar anode coating thicknesses, the main changing parameter when going from 18650 to 21700 will be the energy content of the cells and not specific energy or energy density.

Indeed, a straightforward calculation based on reasonable cylinder volumes for 18650 and 21700 shows that the energy content is increased by ∼49%, whereas the energy density increases by only ∼2%.

In this very basic calculation the volume of the jelly roll (excluding the empty volume in the core) is used as a measure for the energy content and compared with the total outer volume of the cells (energy density) which are treated as mathematically perfect cylinders (for measures see Figure 4). We note that this is a rough estimation which is only valid if usage of volume inside cells is not enhanced by changing the cell format.

The estimation of energy content was cross-checked by measuring the lengths of the windings in the CT image (Figure 3a). Comparison of the length of all windings (21700 cell) with the inner windings (18650 cell) and correction by a factor taking the heights of the cell types into accounts yielded again 49% of energy increase and is therefore in total agreement with the estimation by cylinder volumes. Considering the fact that the outer windings contribute strongly to the cell capacity it is not surprising that the outer diameters given in Table I are in some cases higher than expected from the numbers in the cell format.

The anode thickness in cylindrical cells with common materials can be estimated by the slope of Figure 2 as
d [μm] = specific energy [Wh/kg]

2.81 ± 0.12 [1]
Recently, Muenzel et al. tested five different types of 18650 cells which had charge capacities in the range of 3.07Ah to 4.9Ah.22 Three of these 18650 cells rated below 3.35Ah were produced by major manufacturers and performed above 93% of their rated capacity.22 In contrast, two cheaper cell types which were rated with unusually high values of 4.2Ah and 4.9Ah performed very poorly with only 18% and 12% of their rated capacity, respectively.22 From our results it is likely that these cheaper cells investigated by Muenzel et al.22 were built to have theoretically increased capacities by thicker electrode coatings. By using Eq. 1 we roughly estimate a coating thicknesses for the anode of ∼166 ± 10 μm (based on 469.0 Wh/kg = 4.2Ah × 3.6V/32.24g and 464.4 Wh/kg = 4.9Ah × 3.6V/37.98g,22 with the assumption of 3.6V as nominal voltage). Our estimation of the high coating thicknesses in the 4.2Ah and 4.9Ah cells reported by Downloaded on 2018-10-19 to IP 139.81.111.146 address. Redistribution subject to ECS terms of use (see ecsdl.org/site/terms_use) unless CC License in place (see abstract).

Journal of The Electrochemical Society, 165 (14) A3284-A3291 (2018) A3287 Muenzel et al. are in accordance with high ohmic cell resistances22 and short electrode lengths23 of these cells. It is likely that the coating thicknesses of the electrodes in these cells exceed a critical limit leading to effectively lower specific energies, i.e. a decrease of the practically usable capacity.24
Therefore, it is very likely that the correlation in Figure 2 should become non-linear (more flat) with a transition above ∼90μm (∼240Wh/kg), which is in accordance with simulations by Du et al. who calculated such a curve shape25 and with results by others who investigated thick electrodes.22,24,26 It was also reported that the curve shape depends on the discharge C-rate.24,25 I.e. Singh et al. reported that the capacity increases with electrode thickness up to 305 μm for C/10, however there are maxima e.g. for C/5 and C/2 at 255μm and 205μm, respectively.24 Therefore, Eq. 1 describes only the relation for anode coating thicknesses up to ∼90μm and the corresponding practical specific energies for 18650, 20700, and 21700-type cells with common materials at 0.5C/25◦C.

The reason for this deviation at anode coating thicknesses above ∼90μm is most likely that the inner part of the active material in the coating (near the current collector) is underutilized at very high electrode loadings.25,26 Danner et al. presented experiments and simulations on the performance of Li-ion cells with electrodes of different thickness with discharge rates in the range of C/10 to C/2.26 In that study, cells with coating thicknesses of 70μm showed a significantly better performance than cells with 320 μm coating thickness.26 This fits to the trend discussed above. Danner et al. attributed this performance loss for thicker NMC electrodes to a strong limitation of the transport of Li ions in the electrolyte, which was expressed in a vanishing of the Li ion concentration in the cathode near to the current collector.26 Du et al. came to the same conclusion for NCA cathodes.25
The higher specific energy as a function of thicker anode coating in Figure 2 originates from a better ratio of active/inactive materials and is likely to be the most important factor for conventional electrodes.

Obviously, this trend in Figure 2 is the same for 18650, 20700, and 21700 cells. Therefore, the 20700 and 21700 cells do not show a significant increase of specific energy compared to 18650 cells which would originate from the size difference. A stronger difference is observed between cells of the same format which are optimized either for high energy or for high power.

Influences on cell resistance.—Figure 5a shows the cell resistance for different commercial cylindrical cells as a function of capacity. It can be seen that the data points of the 18650 cells mostly form one group and those of the 20700 and 21700 cells form a second group.

We note that one of the points (18650-B1) is an outlier cell. We are currently investigating the reason the lower resistance of this cell type.

The resistances of the 18650 cells are systematically higher compared to the 20700 and 21700 cells. Within both groups, the cell resistance rises as a function of discharge energy. The reason is that higher discharge energies are achieved by thicker electrode coatings (see Figure 2 and Eq. 1), which lead to shorter electrodes and consequently to smaller total electrochemically usable electrode areas at a given cell diameter. An additional contribution is related to the resistance rise due to higher electrode thickness,27 however, this cannot be directly seen from Figure 5a. Unfortunately, the resistance values given in literature cannot be directly compared with our results, since they were not measured with the same method.

Again, we observed clear trends including some scattering of the data. The reason for the deviations from the trend are based on electrolyte, electrode porosity, active materials, binder, and particle size distributions as summarized in Table III.

The trend of the lower resistances for the larger 20700 and 21700 cells can be explained by the larger electrode areas due to larger cell diameters. Figure 5b shows the cell resistances of stacked lab pouch cells (<1.5Ah) as a function of the number n of cathodes in the stack. It can clearly be seen that the cell resistance decreases with n and therefore with the total cathode area in the cell. The decrease fits very well to a hyperbola (see inset of Figure 5b) in analogy to Figure 5. a) Cell resistance of cylindrical cells with different formats as a function of cell capacity. b) Cell resistance as a function of the number of electrodes in stacked lab pouch cells. The inset shows the analogy to resistors connected in parallel. c) Cell resistance as a function of total cathode area in different types of lab and commercial cells.
resistors connected in parallel. This resistive behavior of a cell with electrode areas connected in parallel is very similar to cells connected in parallel.28
Figure 5c shows the resistances of the stacked lab pouch cells together with very different types of commercial cells as a function of coated cathode area. The cathode area was chosen in this evaluation since it is limiting the cell capacity. It can clearly be seen that the resistances of all these very different types of cells (small lab pouch cells, 18650, 20700, 21700, large pouch cells) follow a similar rule as in Figure 5b. One difference between these cell formats are the positive temperature coefficient (PTC) resistors which are usually only implemented in cylindrical cells. However, the effect of the coated cathode areas seems to be much stronger than the resistance of the PTCs.

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A3288 Journal of The Electrochemical Society, 165 (14) A3284-A3291 (2018) Figure 6. Discharge voltage curves for 21700 a) high power: 21700-E1, b) high energy: 21700-H1, and 18650 c) high power: 18650-A1, and d) high energy: 18650-C1 cells, with anode thicknesses of 65μm, 91μm, 34μm, and 101μm, respectively.

Rate capability tests.—Figures 6a–6d shows exemplarily the discharge curves at high C-rates for 21700 high power, high energy, and 18650 high power, and high energy cells, with anode thicknesses of 65 μm, 91 μm, 34 μm, and 101 μm, respectively. The longer path for e− to travel through the conductivity network (graphite, conductive carbon) as well as the diffusion path for Li+ through of the pores of a thicker electrode in Figure 6b) and Figure 6d) result in faster energy loss and lower average voltage at high C-rates than in Figure 6a) or Figure 6c). Our experimental results with commercial cells are in accordance with simulations of 18650 cells by Du et al. who investigated cathode thicknesses ranging from 60 μm to 240μm.25 Different thicknesses showed little to no capacity loss up to C/2, but saw marked differences at higher rates.25 240μm showed nearly 50% lower discharge energy than 60μm at 1C, and just over

12.5% of the capacity at 2C in simulations.25 This is exemplified in our experimental results at 3.75C where the cell in Figure 6d) reaches ∼33% of its original discharge energy, and the cell in Figure 6c) still retains ∼93%. Singh et al. also studied the effects of electrode thickness of single layer NMC pouch cells, increasing anode and cathode thickness from 70μm to 305μm.29 At C/5 virtually no capacity loss was observed, however, noticeable increase was seen in overpotential with increasing electrode thickness in both charging and discharging curves.29
Ohmic losses due to electron conductivity and lithium transport through the pores become more prominent in thicker electrodes.29 Indeed we also observe an increased overpotential for cells with thicker electrodes. At higher discharge rates, the initial voltage drops of the cells in Figure 6b) and Figure 6d) become more significant than for the high power cells.

To better visualize rate capability, Figure 7a plots the total discharge energy of all cells as a function of discharge C-rate. Cells having higher initial discharge capacity within the same format show a steeper decline in available capacity with increasing discharge rate.

Cell 18650-C1 has the highest anode coating thickness at 101μm, and shows by far the worst rate capability, with available energy dropping off sharply around 2.5C. We suspect that his behavior is related to very low porosity of the anodes from this cell.

From Figure 7a, the clear trend of an upper limit for the rate capability can be seen. This trend can be fit by line (broken line, slope = –0.35, R2 = 0.96). Here is has to be discussed that cells with higher energy content can deliver higher absolute currents. Therefore, Figure 7b shows the same data plotted against absolute currents. It can be seen that the higher energy contents compensate the rate capability only partly.

Figures 7a and 7b are superimposed with data with the temperatures at the end of discharging. Near the broken lines in Figures 7a and 7b, a rise of the cell surface temperature can be observed. Therefore, the temperature rise of the cells due to current flow are a limiting factor for rate capability. This limit is valid for all tested cells in this study, independent from the cell format.

Heating of cells due to current flow.—Figure 8 shows exemplarily the rate-dependent surface heating of 21700 a) high power, b) high energy, and 18650 c) high power, and d) high energy cells, with anode thicknesses of 65 μm, 91 μm, 34 μm, an 101 μm. High energy cells with thicker anodes show substantially increased heating during discharge. Ohmic resistances as well as polarization and reaction heat in the cells30 cause a loss of power as waste heat, and in turn, lower discharge energy. We note that discharge tests were automatically stopped if the cell surface temperature reached 65◦C, which is higher than the manufacturer’s stated maximum (typically 60◦C). For example, the cell in Figure 8b) was unable to safely complete discharging past 2C due to excessive heat generation.

Zhao et al. performed simulations of LMO/graphite cells to study thermal and electrochemical effects of varying electrode thickness.27 In accordance with our results, the authors found that cells with thicker electrodes experienced more intensive and uneven temperature responses mostly due to ohmic heat generation.27 Thicker electrodes showed lower power output due to longer diffusion distances and concentration polarization, and diffusion limitation in thicker cells resulted in underutilized active materials.25,26
Figure 7. Discharged capacity for different 18650, 20700, and 21700 cells superimposed with temperatures at the end of discharge as a function of a) discharging C-rate and b) absolute discharge current.

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Journal of The Electrochemical Society, 165 (14) A3284-A3291 (2018) A3289 Figure 8. Temperature rise of selected 18650 and 21700 cells during current flow at an ambient temperature of 25◦C. a) 21700-E1, b) 21700-H1, C) 18650-A1, d) 18650-C1.

In Figure 9a, the maximum surface temperature reached for each cell as a function of C-rate demonstrates the heating behavior of the different tested cells. The slope becomes steeper with larger cell size and higher capacity in the same format. This trend was analyzed and is shown in Figure 9b. Larger cells take longer to dissipate heat, due to the lower surface to volume ratio (∼88% for 21700 compared to 18650 cells). Cells with the same format and higher capacity have a higher ratio of active to non-active material, also making them denser and slower to dissipate heat. These physical attributes are the reason we observe a 21700 cell with 91μm anode thickness showing ∼130% of the heating rate compared to an 18650 cell at 101μm.

The ranges for the different cell formats are shown in Figure 9c for the tested cells. The regions between the high energy and high power cells of each format were shaded to represent the temperature and rate limits for each. The ranges only reflect tests performed at 25◦C.

Predictably, 21700 is somewhat close to 20700, and 18650 is further below.

Estimation of production effort – 21700 vs. 18650.—Analysis of industrial manufacturing processes is often difficult due to proprietary processes of competing companies. Models such as BatPac31 attempt to calculate production costs. A cost model adopted from BatPac comparing cylindrical 18650 and 20720 cells found that cell housings contribute significantly to the total cost of production.4 Initial SEI formation was identified as a costly step per kWh of 18650 cells due to its long time needed.4,32
Figure 10 shows the major production steps of cylindrical cells from materials to a pack. In a first approximation, we compare 21700 and 18650 cells regarding production effort. The basis for this rough estimation is the energy content per 21700 cell which is ∼150% compared to an 18650 cell with comparable energy density and specific energy, e.g. 18650-C (3.2 Ah, 101μm anode) and 21700-H (4.8 Ah, 91μm anode). Furthermore, very similar production equipment is taken into account, e.g. a coater, cutter, and calander that can adapt to widths of 18650 and 21700 cells. Since economy of scale was calculated to be reached above ∼1 GWh per annum,4 a larger factory above this value was considered where scaling effects become negligible.

Cell level.—In order to produce an energy storage capability of one Wh in 18650 and 21700 cells,
1) A similar amount of electrode active materials/binder/ conductive carbon black, current collectors, and separators are needed.
2) However, the number of cell housings is reduced by 33% per Wh.

Therefore, from the materials side the production cost per Wh is most likely reduced.

The following steps have to be considered in the production process:
3) Additional jellyroll windings are needed, however, less time is needed per additional winding in case the rotation speed stays the same. We note that this is likely to be a minor effect when comparing 18650 and 21700 cells. The difference would be stronger when different electrode thicknesses are compared for the same jellyroll diameter.
4) In kind with fewer cell housings, 33% fewer jellyroll insertions, electrolyte fillings, and cell closings per Wh are needed. 5) In case of a similar formation procedure, the electrical energy needed for formation per Wh will be similar. However, formation is the slowest step in the production process.4,32 Assuming available electrical infrastructure, 33% fewer cells would undergo formation per Wh, and therefore an increase in energy output when maintaining the same number of formation stations can be expected.

Pack level.—At pack level, effort, and therefore costs, are also likely to shrink due to a lower number of cells needed to store equivalent amounts of energy:
1) 33% fewer cells are required per pack (moving cell into array, welding) in order to get the same total energy content. Pack design and module configuration should be taken into consideration, as more factors affect the number of cells needed than simply energy content at cell level. For certain applications it might even be possible to replace a pack consisting of two 18650-type cells by only one 21700 cell.
2) Fewer cells means less overhead for the BMS in case of individual cell monitoring.

Figure 9. a) Maximum cell surface temperature reached during, or after, completion of discharge step for different commercial 18650, 20700, and 21700 cells and b) correlation of the slope in (a) with anode coating thickness. C) Observed operational temperature range for different C-rates in commercial 18650, 20700, and 21700 cells.

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A3290 Journal of The Electrochemical Society, 165 (14) A3284-A3291 (2018) Figure 10. Material and time saving steps when changing the production from 18650 to 21700 type cells. 3) In case of a close-packed arrangement of cylindrical cells, the percentage of voids between the cells does not decrease from 18650 to 21700. Therefore, the total pack volume per Wh and the amount of cooling liquid in the voids will be similar. It is important to note a pack height increase of at least 5mm, particularly when retrofitting into existing applications.

Production line level.—On the production line level, investments are necessary to go from 18650 to 21700 cells. These investments comprise of updating the coating/cutting width, adapting/adjusting equipment for larger cell housings, including jellyroll insertion, closing, and formation stations (e.g. size and maximum current). Furthermore, it is very likely that development of electrodes fitting the new cell format will be necessary. However, adaptation of an existing line is likely to be significantly less expensive than its initial investment cost. Ideally, once production begins, up to 50% higher energy content would be produced with 21700 as for the same number of cells as 18650. We note that the numbers given above are rough estimates.

Less optimistic results should be anticipated due to any number of circumstances not accounted for here.

Conclusions
We investigated several commercial types of 18650, 20700, and 21700 cells. It was found that
1) The energy content per cell can be higher by ∼50% for 21700 compared to 18650. Therefore, for certain applications, less cells have to be built and used to deliver the same amount of energy. 2) The higher energy content on cell level leads to potentially lower effort and costs in the production of 21700 compared to 18650 type cells and their packs. The benefit of lower cell hardware costs is likely to be caused mainly by less cell housings, fewer jellyroll insertions/closings/tab welding, and less cell formations per Wh. More produced Wh per existing station might also have a trickledown effect on the cost.
3) The energy density does not increase significantly by changing the cell format from 18650 to 21700 type. Instead, for state-ofthe-art cells, the energy density is mainly a function of the anode coating thickness, i.e. high energy cells with current material combinations usually have thicker electrodes. The study showed that it is very important to use comparable coating thicknesses or electrode loadings when comparing different active materials or at least give the coating thickness for later comparison. 4) The cell resistance is negatively influenced by the electrode thickness and positively by the electrode area. For cylindrical cells these parameters correlate with each other. This contributes to the lower performance of high energy cells. Going from the 18650 to the 21700 format, the cell resistance decreases noticeably and shows a relatively flatter correlation to anode coating thickness.

The reason is the larger usable coated cathode area in the larger 21700-type cells, especially due to the outer windings of the jelly roll.
5) Increasing electrode thickness in commercial cells has a negative impact on the discharge rate capability. Cells with thicker electrodes experience higher losses by limited transport, resulting in lower discharge energy and underutilized electrode active material. The general trend for all tested cell types was found that the rate-capability is limited by the temperature on the cell surface due to current flow.

Extensive data evaluation in the present study lead to valuable new insights regarding energy density, energy content, internal resistance, and heating behavior of 21700 compared to 18650 cells. State-of-theart 18650, 20700, and 21700 type cells are similar in their specific energy and energy density.

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Journal of The Electrochemical Society, 165 (14) A3284-A3291 (2018) A3291 Our results emphasize that specific energy and energy density can mostly be enhanced on the level of materials and electrodes, i.e. new energy storage materials for future battery generations are needed.

Additionally, an optimization of the electrode structure, electrolyte, formation, and cell design is necessary for each individual cell type.

A direct comparison by building 18650 and 21700 cells with the same types of electrodes is underway in our lab.

Acknowledgment
The research leading to these results has been performed within the FAB4LIB project and received funding from the German Federal Ministry of Education and Research (BMBF) under contract n◦ 03XP0142D. The authors thank the Project Management Agency Forschungszentrum Julich (PTJ), Dr. R. Scurtu (ZSW) for helpful dis- ¨ cussions, A. Fechter (ZSW) for building the pouch cells, R. Heduschka (ZSW) for conducting the CT measurement, and C. Debes (BMZ) for providing cells of type 21700-G1. J.B. Quinn and T. Waldmann contributed equally to this paper.

ORCID
Jason B. Quinn https://orcid.org/0000-0002-4478-5685
Thomas Waldmann https://orcid.org/0000-0003-3761-1668
References

1. A. Yoshino, Angew. Chem. Int. Ed., 51, 5798 (2012).

2. G. E. Blomgren, J. Electrochem. Soc., 164, A5019 (2017).

3. Panasonic, Corp. Hist., accessed: 2018-05-25, https://www.panasonic.com/global/ corporate/history/chronicle/1994.html.

4. R. E. Ciez and J. F. Whitacre, J. Power Sources, 340, 273 (2017).

5. Samsung SDI, SDI News, (2017), accessed: 2018-05-25, http://www.samsungsdi. com/sdi-news/1761.html.

6. T. Waldmann, M. Wilka, M. Kasper, M. Fleischhammer, and M. Wohlfahrt-Mehrens, J. Power Sources, 262, 129 (2014).

7. T. Waldmann et al., J. Electrochem. Soc., 161, A1742 (2014).

8. T. Waldmann, M. Kasper, and M. Wohlfahrt-Mehrens, Electrochimica Acta, 178, 525 (2015).

9. P. J. Osswald, S. V. Erhard, J. Wilhelm, H. E. Hoster, and A. Jossen, J. Electrochem.

Soc., 162, A2099 (2015).

10. P. J. Osswald et al., J. Power Sources, 329, 546 (2016).

11. T. Waldmann, G. Geramifard, and M. Wohlfahrt-Mehrens, J. Energy Storage, 5, 163 (2016).

12. S. S. Zhang, J. Power Sources, 164, 351 (2007).

13. P. Arora, M. Doyle, and Ralph E. White, J. Electrochem. Soc., 146, 3543 (1999).

14. S. Muller et al., ¨ J. Electrochem. Soc., 165, A339 (2018).

15. S. S. Zhang, J. Power Sources, 162, 1379 (2006).

16. S. Gorse et al., Pract. Metallogr., 51, 829 (2014).

17. D. P. Finegan et al., Nat. Commun., 6, 6924 (2015).

18. T. C. Bach et al., J. Energy Storage, 5, 212 (2016).

19. A. Pfrang et al., J. Power Sources, 392, 168 (2018).

20. X. Fleury et al., J. Energy Storage, 16, 21 (2018).

21. D. A. H. McCleary, J. P. Meyers, and B. Kim, J. Electrochem. Soc., 160, A1931 (2013).

22. V. Muenzel et al., J. Electrochem. Soc., 162, A1592 (2015).

23. V. Muenzel et al., J. Electrochem. Soc., 162, Y11 (2015).

24. M. Singh, J. Kaiser, and H. Hahn, J. Electroanal. Chem., 782, 245 (2016).

25. Z. Du, D. L. Wood, C. Daniel, S. Kalnaus, and J. Li, J. Appl. Electrochem., 47, 405 (2017).

26. T. Danner et al., J. Power Sources, 334, 191 (2016).

27. R. Zhao, J. Liu, and J. Gu, Appl. Energy, 139, 220 (2015).

28. Y. Troxler et al., J. Power Sources, 247, 1018 (2014).

29. M. Singh, J. Kaiser, and H. Hahn, J. Electroanal. Chem., 782, 245 (2016).

30. X. Zhang, Electrochimica Acta, 56, 1246 (2011).

31. P. A. Nelson, K. G. Gallagher, I. Bloom, and D. W. Dees, Gener. Energy Storage Conf., 116 (2017).

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* The rates noted below are for Fiscal Year 2020-2021 ending June 30, 2021; rates increase annually by the greater of four percent (4%) or the change in the Consumer Price Index (All Items, Base 1982-84 = 100) as published by the United States Department of Labor, Bureau of Labor Statistics for All Consumers for the San Francisco-Oakland-San Jose Metropolitan area (hereinafter “CPI”). The CPI rose less than 4% for the 12-month period ending April 2020.

RATE SCHEDULE FOR ATTACHMENT OF TELECOMMUNICATION
ANTENNAE/EQUIPMENT TO CITY OF SAN JOSE OWNED PROPERTIES * 1 to 4 antennae and/or foundation/surface area
containing equipment or cabinet is less than 150
square feet
$ 41,460.00 per annum
5 to 8 antennae and/or foundation/surface area
containing equipment or cabinet is 150 to 499 square
feet
$ 49,755.00 per annum
9 or more antennae and/or foundation/surface area
containing equipment or cabinet is 500+ square feet
but not more than 16 antennas and 2,000 square feet
$ 59,701.00 per annum
Requests for facilities containing more than 16 antennae and/or foundation/surface area containing equipment in excess of 2,000 square feet shall be reviewed and priced on a case-by-case basis
• Lessees which choose to pay for 5 years upon commencement of the contract shall be charged at a 20% discount based upon the base rate x 5 without factor for inflation.

* The rates noted below are for Fiscal Year 2020-2021 ending June 30, 2021; rates increase annually by the greater of four percent (4%) or the change in the Consumer Price Index (All Items, Base 1982-84 = 100) as published by the United States Department of Labor, Bureau of Labor Statistics for All Consumers for the San Francisco-Oakland-San Jose Metropolitan area (hereinafter “CPI”). The CPI rose less than 4% for the 12-month period ending April 2020.

ANNUAL PAYMENTS
(number of sites)
SITE DESCRIPTION* STANDARD USE CHARGES
(annual payment per site)
1-4
A
B
C
$ 41,460.00
$ 49,755.00
$ 59,701.00
5-8
(20% reduction from annual payments)
A
B
C
$ 33,168.00
$ 39,804.00
$ 47,761.00
9+
(30% reduction from annual payments)
A
B
C
$ 29,022.00
$ 34,829.00
$ 41,791.00
First payment is due upon agreement execution. There is a minimum yearly increase of 4% or CPI, whichever is greater.

ONETIME PAYMENT

UPFRONT
(20% discount)
(number of sites)
SITE DESCRIPTION* STANDARD USE CHARGES
(per site)
1-4
A
B
C
$ 165,838.00
$ 199,019.00
$ 238,805.00
5-8
(20% reduction of onetime payment)
A
B
C
$ 132,672.00
$ 159,216.00
$ 191,043.00
9+
(30% reduction of onetime payment)
A
B
C
$ 116,088.00
$ 139,314.00
$ 167,163.00
Payment for first five years is due upon lease execution. Optional 5-year term lease rate will be charged at the greater increase of CPI or 4% per year from original execution date.
*A 1-4 antennae and/or foundation/surface area containing equipment or cabinet is less than 150 square feet.
*B 5-8 antennae and/or foundation/surface area containing equipment or cabinet is 150 to 499 square feet.
*C 9 or more antennae and/or foundation/surface area containing equipment or cabinet is 500+ square feet, but not more than 16 antennas and 2,000 square feet.

344021480 - 1 -
COM/MBL/avs Date of Issuance 7/20/2020
Decision 20-07-011 July 16, 2020

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Rulemaking
Regarding Emergency Disaster Relief
Program. Rulemaking 18-03-011

DECISION ADOPTING WIRELESS PROVIDER

RESILIENCY STRATEGIES

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TABLE OF CONTENTS
Title Page
DECISION ADOPTING WIRELESS PROVIDER RESILIENCY STRATEGIES.......2 Summary............................................................................................................................2

1. Background.................................................................................................................3

1.1. Phase I Factual Background.............................................................................3

1.2. Phase II Factual Background............................................................................6

1.3. Phase II Procedural Background.....................................................................7

1.4. Historical Background ......................................................................................8

2. Jurisdiction ................................................................................................................12

2.1. The Commission Has Jurisdiction Over Wireless Providers, And Authority to Ensure the Reliability of
Communications Networks in Emergencies ...............................................12

2.1.1. The Commission Has Jurisdiction Over Wireless Telephone Corporations and Other Communications Utilities ........................13

2.2. Police Power Authority over Matters Related to Public Health and Safety is Traditionally Reserved to the States ....................................16

2.3. The Federal Communications Act Does Not Preempt the Commission from Exercising Public Safety Regulation of Wireless Facilities .............20

2.3.1. The 1993 Amendments to the Federal Communications Act Ushered in an Era of Shared Jurisdiction ........................................20

2.3.2. In Providing a Role for States, Congress Explicitly Declined to Occupy the Field ............................................................22

2.3.3. Congress Did Not Expressly (or Otherwise)
Preempt State Health & Safety Rules. ..............................................23

2.3.4. There is No Conflict Preemption ......................................................26

2.4. Requiring Backup Power at Cell Sites Is Entirely
Consistent with State Law. ...........................................................................31

3. Proposal Summary...................................................................................................32

3.1. Parties’ Response to Proposal.......................................................................34

4. Issues Before the Commission................................................................................36

5. COVID 19 and Compliance with Executive Orders............................................37

5.1. Party Positions ................................................................................................37

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5.2. Should a Statewide Shelter-in-Place Order Remain in Effect, the Wireless Providers Shall Give Notice If Service Coverage Cannot Be Maintained ......................................................................................................39

6. Discussion .................................................................................................................41

6.1. Application of Requirements: Covered Services ......................................48

6.1.1. Parties’ Positions .................................................................................49

6.1.2. Facilities-Based Wireless Providers Are Subject
to this Decision’s Applicability Requirements................................50

6.2. Resiliency Definition......................................................................................51

6.2.1. Parties’ Positions .................................................................................51

6.2.2. Resiliency is the Ability to Recover from or Adjust to Adversity or Change Through an Array of Strategies...................54

6.3. Outage Definition...........................................................................................59

6.3.1. Parties’ Positions ................................................................................59

6.3.2. Outage Shall Be Defined as a Period That a Generating Unit, Transmission Line, or Other Facility is Out of Service.................59

6.4. Backup Power Requirement ..........................................................................60

6.4.1. Parties’ Positions ................................................................................60

6.4.2. There is a Public Need to Adopt a Narrowly Tailored and Reasonable Backup Power Requirement........................................63

6.4.3. Parties’ Positions: Backup Power Time Duration ........................72

6.4.4. 72-Hours of Backup Power, with Flexible Procurement and Deployment, is a Reasonable Duration of Time to
Fulfill the Backup Power Requirement ..........................................76

6.4.5. Parties’ Positions: Level of Service for
Backup Power Requirement.............................................................81

6.4.6. Maintaining a Minimum Level of Service is Critical for the Public and Emergency Personnel During
Disasters and PSPS Events ...............................................................83

6.5. Communications Resiliency Plans...............................................................85

6.5.1. Parties’ Positions .................................................................................85

6.5.2. The Wireless Providers Shall File a Communications Resiliency Plan That Describes Their Ability to Maintain Minimum Service Coverage During a Disaster or Power Outage ...............................87

6.6. Waivers ............................................................................................................94

R.18-03-011 COM/MBL/avs
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6.6.1. Parties’ Positions .................................................................................95

6.6.2. Wireless Providers Must Identify Facilities that Do Not Need Backup Power, are Unable to Support Backup Power Due to a Safety Risk, or are Objectively Impossible or
Infeasible to Deploy Backup Power .................................................96

6.7. Clean Generation ...........................................................................................100

6.7.1. Parties’ Positions ...............................................................................100

6.7.2. Near-Term Use of Diesel Generation as a Primary Backup Power Resource is Reasonable, but the Wireless Providers Shall Transition to a Future of Renewable Backup Generation ...........101

6.8. Emergency Operations Plans......................................................................103

6.8.1. Parties’ Positions ...............................................................................103

6.8.2. The Wireless Providers Shall Submit Annual Emergency Operations Plans that Among Other Things, Provide
Implementation Procedures to Ensure Substantive Engagement with the Commission and CalOES During Emergencies............105

7. Conclusion................................................................................................................109

8. Comments on Proposed Decision.........................................................................110

9. Assignment of Proceeding....................................................................................111 Findings of Fact.............................................................................................................111 Conclusions of Law ......................................................................................................120 ORDER ...........................................................................................................................130

R.18-03-011 COM/MBL/avs
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DECISION ADOPTING WIRELESS PROVIDER

RESILIENCY STRATEGIES
Summary
This decision requires California’s facilities-based wireless providers (wireless providers) to develop comprehensive resiliency strategies to prepare for catastrophic disasters and power outages. First, this decision defines resiliency, in the context of emergency services management by the wireless providers, as the ability to recover from or adjust to adversity or change through an array of strategies including, but not limited to: backup power, redundancy, network hardening, temporary facilities, communication and coordination with other utilities, emergency responders, the public and finally, preparedness planning.

Second, this decision adopts a 72-hour backup power requirement for the wireless providers’ facilities, to ensure minimum service coverage is maintained during disasters or commercial grid outages, consistent with our mandates under the California Constitution and the California Public Utilities Code. The wireless providers have twelve (12) months from the effective date of this decision to implement this requirement.

Third, this decision requires the wireless providers to file Communications Resiliency Plans with the Commission that detail their ability to maintain a minimum level of service and coverage during a disaster or a commercial power grid outage.

Fourth, the decision permits the near-term use of diesel generation as a primary backup power resource. However, the decision directs the wireless

R.18-03-011 COM/MBL/avs
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providers to explore ways to transition to renewable generation for backup power.

Finally, this decision directs the wireless providers to submit annual emergency operations plans. Generally, the emergency operations plan requires the wireless providers to demonstrate their procedures to collaborate with both the California Public Utilities Commission and the California Governor’s Office of Emergency Services during a disaster or commercial grid outage.

This decision promulgates resiliency requirements for the facilities-based wireless providers for their facilities in Tier 2 and Tier 3 High Fire Threat Districts only. In a forthcoming decision, we will consider promulgating resiliency requirements for other telecommunications providers.

This proceeding remains open.

1. Background

1.1. Phase I Factual Background
The California Public Utilities Commission (Commission or CPUC) established Rulemaking (R.) 18-03-011 to adopt an emergency disaster relief program for customers of electric, natural gas, water and sewer, and communications service providers under this Commission’s jurisdiction. With respect to the communications service providers, we adopted Decision (D.) 19-08-025 in Phase I of R.18-03-011.

Decision 19-08-025 adopted a series of customer protection requirements for California customers of communications service providers.1 In D.19-08-025, 1 D.19-08-025 at 33-35.

R.18-03-011 COM/MBL/avs
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we found that the wildfires of 2017, 2018, and 2019 as well as the Public Safety Power Shutoffs (PSPS) initiated by Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E) revealed the failures in California’s communications network. The failure of California’s communications network during prior wildfire seasons and PSPS events resulted in a loss of service to customers and endangered the lives of customers and first responders. This is especially troubling for the public, given that, emphasized by officials from the Governor’s Office of Emergency Services (CalOES), “when you are responding into an emergency, communications are your lifeline.”2
At the November 1, 2018 joint CPUC and CalOES workshop, held in this proceeding, CalOES officials stated that 80 percent of calls to 9-1-1 came from wireless devices. 3 This reflects the fact that consumers and first responders rely heavily on communication services – especially, data and wireless communications.4 First responders’ and the public’s dependence on data and wireless communications were highlighted when emergency communications were throttled in 2018, adversely impacting the Santa Clara County Fire 2 R.18-03-011 November 1, 2018 Workshop Transcript at 12, Lines 25-27. Statement of Mark Ghilarducci, Director of the Governor’s Office of Emergency Services. 3 Id. at 15, “In the October [2017] wildfires, approximately 80 percent of 9-1-1 calls came from cellular devices…” Statement of Mark Ghilarducci, Director of the Governor’s Office of Emergency Services.
4 Id.

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Department control and command unit deployed to support relief efforts during the Mendocino Complex Fire.5
Wireless service is transforming how people do business, communicate, and carry out essential services, such as health care. Californians rely on their phones and the internet, whether using wireline or wireless technologies, to receive emergency notifications, contact family and friends, and to reach first responders. California’s communications customers have a reasonable expectation that these critical communications services will be operational, even during a power outage.

In addition to the November 1, 2018 CPUC-CalOES joint workshop, the Commission convened several forums to improve coordination between communications service providers and emergency response agencies. On April 8, 2019 in this proceeding, the Commission released for stakeholders guidance regarding safety principles for communication service providers that identified gaps in California’s communications network that, if addressed, would significantly enhance public safety.
6 Then on May 20, 2019, the Commission held
an en banc public hearing titled, The Future of California’s Communications Grid, 5 Public Advocates Office Motion for an Immediate Order Requiring California’s Communications Service Providers to Complete Calls and Delver Data Traffic and Provide Other Post-Disaster Consumer Protection Relief, May 21, 2019. Available at:
http://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=292932622; and Declaration of Anthony Bowden filed in the U.S. Court of Appeals, D.C. Circuit Case No. 18-1051, August 17, 2018. Available at:
https://assets.documentcloud.org/documents/4780226/VerizonFireDeclaration.pdf 6 Joint ALJ Ruling Entering Safety Principles for Communications Service Providers into the records of R.18-03-011 and R.18-12-005.

R.18-03-011 COM/MBL/avs
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where the discussion included the importance of communications services before, during, and after a wildfire.7
During disasters, when people are trying to escape from a threatened area or communicating with 9-1-1 centers, the communication link is critical for life-saving operations.
8 We determined in D.19-08-025 that Phase II of this
rulemaking, which is the subject of this decision, would focus on having a resilient and dependable communications network that aids first responders and communicates with the public in a timely manner.

1.2. Phase II Factual Background
The record before the Commission exposes the lack of a uniform and structured approach to ensuring that the communications providers are addressing their responsibility to provide safe and reliable service during emergency events. For example, on August 9, 2019, the assigned Commissioner to this proceeding issued a ruling asking communications service providers to describe actions taken to harden their networks.9 In this proceeding, the communications service providers responded to the assigned Commissioner’s ruling, generally asserting they are sufficiently prepared to maintain service during upcoming emergency events.
10 7 Communications Division En Banc, available at: https://www.cpuc.ca.gov/CDenbanc/ 8 D.19-08-025 at 47.
9 Assigned Commissioner’s Ruling requesting information on hardening communications infrastructure and to ensure customer access to 911 at all times, August 9, 2019. Available at:
http://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=310226482 10 See R.18-03-011 docket card, response of communications service providers to August 9, 2019 Assigned Commissioner’s Ruling.

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Yet, despite claims of preparedness, during the October and November 2019 wildfire and PSPS events, widespread reports of communications outages across all sectors were reported. Significant outages occurred on the networks supporting mobile, cable, Voice-over-Internet-Protocol (VoIP) communications, and internet traffic.11 According to the Federal Communications Commission’s (FCC) disaster report, 57 percent of cell sites in Marin County alone were out of service between October 26-27, 2019. 12 Without
access to 911 and the ability to reach first responders, Californians cannot access needed services, be safe, or even function in an emergency.

In response, on November 13, 2019, Phase II of this proceeding was initiated through the assigned Commissioner and assigned Administrative Law Judge’s Ruling Setting Prehearing Conference.
13 1.3. Phase II Procedural Background
On November 20, 2019, a Phase II prehearing conference (PHC) was held to discuss the issues of law and fact, determine the need for hearing, and the schedule for resolving the matter. Specifically, communications service providers 11 R. 18-03-011 November 20, 2019 Prehearing Conference Transcript at 130, lines 12-17.18-03-011 Phase II Transcript, Page 4 at Lines 12-28; Page 5 Lines 1-28; Page 6 Lines 1-28; Page 7 Lines 1-19.
12 Pursuant to Rule 13.9 of the Commission’s Rule of Practice and Procedure, the Commission takes official notice of the FCC’s Communications Status Report for Areas Impacted by California PSPS Events, October 27, 2019, available at:
https://docs.fcc.gov/public/attachments/DOC-360454A1.pdf 13 Assigned Commissioner and Assigned Administrative Law Judge’s Ruling Setting Prehearing Conference, November 13, 2019. Available at:
http://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=319752877

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including Verizon Wireless Cellco Partnership, Sprint Communications and Sprint Spectrum, T-Mobile USA, AT&T Mobility, AT&T California/Pacific Bell and AT&T Corporation, Frontier Communications, Time Warner/Charter Fiberlink/Brighthouse Networks, Comcast Phone of California, Cox California Telecom, representatives of local officials, consumer advocates, and residents appeared to discuss and address failures in the communications network infrastructure during the 2019 wildfires and PSPS events.

Following the PHC, on December 18, 2019,14 the assigned Commissioner and the assigned Administrative Law Judge (ALJ) issued a ruling soliciting from parties’ additional issues for consideration in Phase II.

On January 21, 2020, the assigned Commissioner’s Scoping Memo and Ruling15 was issued, adopting a schedule for this proceeding, with the goal of adopting communications service provider resiliency and disaster response requirements in advance of the 2020 wildfire season.16
On March 6, 2020, the assigned Commissioner set forth an Assigned Commissioner’s Proposal (Proposal)17 for maintaining resilient and dependable 14 Assigned Administrative Law Judge’s Ruling, December 18, 2019. Available at:
http://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=322133527 15 Assigned Commissioner’s Scoping Memo and Ruling, January 21, 2020. Available at:
http://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=324941921 16 R. 18-03-011 November 20, 2019 Prehearing Conference Transcript at 130, lines 12-17. 17 Assigned Commissioner’s Ruling and Proposal, March 6, 2020. Available at:
http://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=328685793

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communications networks that aid first responders and to allow the public to communicate reliably during catastrophes like wildfires or during PSPS events.

1.4. Historical Background
In the 1920s, the Commission found that a central battery system was deployed by telecommunications service providers to improve network operations, performance, and reliability. At that time, batteries and generators located in the provider’s central office were able to power both the central office and the customer’s telephone in the event of a power outage, assuming the telephone system was otherwise intact. As our telecommunications systems have evolved to the networks we rely on today, it has become a relatively new experience that communications services are not available during a power outage.18
In January 2006, the FCC established the Katrina Panel to review the impact of Hurricane Katrina on the telecommunications infrastructure to improve disaster preparedness, network reliability and communications among first responders. The Katrina Panel released its report on June 12, 2006, and among numerous other findings, found that power outages contributed heavily to the failure of wireless network operations. On June 19, 2006, the FCC issued a Notice of Proposed Rulemaking inviting comments on what actions it should take regarding the Katrina Panel’s recommendations.

In light of the Hurricane Katrina telecommunications outages, on September 29, 2006, Governor Arnold Schwarzenegger signed into law 18 Decision 08-09-014 at 6.

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Assembly Bill (AB) 2393, which directed the Commission to consider the need for backup power for facilities-based telecommunications services. On June 8, 2007, the FCC released the Panel Order, implementing several of the panel’s recommendations. As a result, the FCC adopted a backup power rule in Order 07-177.19 The rule required both wireline and wireless service providers to have emergency backup power for all assets normally powered by the electric utilities.20 Providers were required to have 24 hours of emergency backup power for central offices and eight hours for cell sites, remote switches and digital loop carrier system remote terminals.21 The wireless industry immediately challenged these rules in the D.C. Circuit Court of Appeal, and the Court held the appeal was not ripe and held it “in abeyance” because the Office of Management and Budget had not yet “approved the information collection provisions contained in the rule's extensive reporting mechanism.”22
On May 9, 2008, after holding three technical workshops and developing a thorough analysis, the Commission’s Communications Division provided a detailed 300-page report to the Legislature on Reliability Standards for Telecommunications Emergency Backup Power Systems and Emergency Notification 19 See In the Matter of Recommendations of the Independent Panel Reviewing the Impact of Hurricane Katrina on Communications Networks, EB Docket No. 06-119, WC Docket No. 06-63, Order on Reconsideration, 22 FCC Rcd 18013, 18035, App. B (2007). 20 Id.
21 Id.
22 CTIA – the Wireless Assn. v FCC, 530 F.3d 984, 986 (D.C. Cir., 2008.)