Los Altos Hills City Council
January 15, 2026

Management’s Discussion and Analysis
Fund Highlights:
• Governmental Funds – The Town’s governmental funds reported a combined fund balance of $21.0 million, an increase of $232,997, or 1.1%, from the prior year. Of this amount, $4.3 million was unassigned and available for spending at the Town’s discretion. • General Fund – General Fund unassigned fund balance was $4.4 million, an increase of $1.8 million, or 71.8%, over the previous year. The increase in unassigned fund balance was primarily attributable to revenues exceeding expenditures, driven by higher property tax and investment income, along with lower net transfers to other funds compared to the prior year and a $0.3 million reduction in commitments to reserves. Additionally, $0.8 million of ARPA funds were transferred to the General Fund, which shows that only $0.7 million of the increase is due to higher revenue and lower spending and transfers. • Sewer Fund – Sewer Fund unrestricted net position was $5.1 million. Total net position was $13.9 million, reflecting an increase of $750,319 from the prior year. Charges for services totaled $3.8 million, an increase of $226,280, or 6.4%, primarily due to a 6% increase in rates and the addition of new residential connections. Expenditures increased by $287,702, or

8.8%, driven largely by higher treatment and conveyance costs charged by the City of Palo Alto and the City of Los Altos, due in part to a treatment plant upgrade. • Pension – The Town reported a net pension liability of $3.0 million, compared to $3.1 million in the prior fiscal year, a decrease of approximately $77,000. The decrease primarily reflects investment returns during the valuation period that exceeded CalPERS’ 6.9% discount rate assumption, which more than offset a slight increase in the Town’s proportionate share within the CalPERS Miscellaneous pension pool. The Town also maintains a Section 115 Pension Trust with a balance of $1.3 million to help offset future pension obligations. The Town has committed to adding $1.0 million to the Trust in FY 2025-26. The Miscellaneous CalPERS plan, which includes the First Tier (Classic), Second Tier, and PEPRA benefit tiers, was 83.5% funded as of June 30, 2024, up from 82.1% in the prior year. Additional details are provided in Note 8 to the financial statements.
• OPEB – The Town reported a net OPEB liability of $116,475, compared to $59,461 in the prior fiscal year, an increase of $57,014. The increase was primarily attributable to a required reduction in the discount rate from 6% to 5.5% under GASB 75, which increased the total OPEB liability, partially offset by favorable investment performance in the Town’s CERBT trust. Additional details are provided in Note 11 to the financial statements. • Reserves – Each year, the City Council reviews the current committed and assigned reserves and updates the balances of these reserves as necessary. Any changes are adopted by resolution of the City Council. The Council reduced the reserves in FY 2024-25 by $0.3 million and adjusted various commitment levels.

OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the Town's basic financial statements, which consist of three components: government-wide financial statements, fund financial statements, and notes to the financial statements.

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Management’s Discussion and Analysis
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the Town's finances, similar to a private-sector business.

The Statement of Net Position presents information on all of the Town of Los Altos Hills' assets and liabilities, deferred inflows and outflows of resources, with the difference reported as net position.

The Statement of Activities presents information showing how the Town's net position changed during the fiscal year. All changes in net position are reported when the underlying event occurs, regardless of the timing of related cash flows. As a result, revenues and expenses are reported for some items that will result in cash outflows in future fiscal periods, such as earned but unused vacation leave. These government-wide financial statements begin on page 26 of this report.

Fund Financial Statements
A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The Town’s funds are classified into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental Funds. Governmental funds are used to account for the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources and on balances of spendable resources available at the end of the fiscal year. This information is useful in assessing the Town’s near-term financing requirements.

Reconciliations are provided to explain the differences between the governmental fund financial statements and the government-wide financial statements.

The Town maintains seven individual governmental funds. The General Fund, Street Capital Projects Fund, and Other Capital Projects Fund are reported as major funds and are presented separately in the governmental fund financial statements. The remaining four governmental funds are combined into a single aggregated presentation, with individual fund information provided in the combining statements.

The combining statements referred to earlier in connection with Nonmajor Governmental Funds are presented immediately following the required supplementary information.

The Town adopts an annual appropriated budget for its governmental funds. A budgetary comparison statement is presented for the General Fund to demonstrate compliance with the adopted budget. The budgetary comparison schedule for the General Fund can be found on page 78.

The basic governmental fund financial statements can be found on pages 30-33 of this report.

Proprietary Funds. The Town maintains two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type Page | 7

Management’s Discussion and Analysis
activities in the government-wide financial statements. The Town uses an enterprise fund to account for its sewer operations.

Internal service funds are used to accumulate and allocate costs internally among the Town’s various functions. The Town uses an internal service fund to account for central Town services, corporation yard services, and the repair and replacement of equipment and vehicles. Because these activities primarily benefit governmental functions, the internal service fund is included within governmental activities in the government-wide financial statements.

Proprietary fund financial statements provide the same type of information as the government-wide financial statements, but in greater detail. Separate information is presented for the Town’s sewer operations.

The basic proprietary fund financial statements can be found on page 36-38 of this report.

Fiduciary Funds. Fiduciary funds are used to account for resources held by the Town in a custodial capacity for the benefit of parties outside the Town. These resources are not available to support the Town’s own programs and, accordingly, are not reported in the government-wide financial statements. Fiduciary funds are reported using the accrual basis of accounting, similar to proprietary funds.

The Town maintains a custodial fund to account for resources held on behalf of the West Loyola Special Assessment District. The fiduciary fund financial statements can be found on page 40-41 of this report.

Notes to the Financial Statements. The notes to the financial statements provide essential information that supplements and enhances the understanding of the data presented in the government-wide and fund financial statements.

The notes to the financial statements can be found on pages 43-76 of this report.

Other Information. In addition to the basic financial statements and accompanying notes, this report includes required supplementary information that presents budget-to-actual results for the Town’s General Fund and information on the Town’s progress in funding its pension and other postemployment benefit obligations. Required supplementary information can be found on page 78-83 of this report.

GOVERNMENT-WIDE OVERALL FINANCIAL ANALYSIS
Net Position
In the case of the Town of Los Altos Hills, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $65.8 million at the close of the fiscal year, an increase of $506,529 from the prior year.

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Management’s Discussion and Analysis
The largest portion of the Town's net position, $40.4 million, or 61.4%, represents the Town’s net investment in capital assets, including land, buildings, machinery, equipment, and infrastructure.

These capital assets are used to provide services to residents and are not available for future spending.

A portion of the Town’s net position, totaling $1.8 million, consists of restricted resources subject to external use restrictions. The largest component of restricted net position is the Section 115 Pension Trust, with a balance of $1.3 million. Additional restricted resources include in-lieu fees for parks, grants, and restricted donations. The remaining $23.6 million is unrestricted and available to support ongoing operational needs, including $5.1 million in the Sewer Fund.

As of June 30, 2025, the Town reported positive balances in all categories of net position for the government as a whole and for its separate governmental and business-type activities. Total net position has generally increased over the past ten years, as illustrated in the accompanying graph.

Total Total
2025 2024 2025 2024 2025 2024
ASSETS
Current and other assets $ 28,319,240 $ 26,598,260 $ 7,205,167 $ 6,662,817 $ 35,524,407 $ 33,261,077 Noncurrent assets 3,002,261 3,249,564 - 3,002,261 - 3,249,564 Capital Assets 31,545,193 32,034,584 8,807,916 8,561,915 40,353,109 40,596,499 Total assets 62,866,694 61,882,408 16,013,083 15,224,732 78,879,777 77,107,140 DEFERRED OUTFLOWS OF RESOURCES 1,777,883 2,328,829 97,719 128,000 1,875,602 2,456,829

LIABILITIES
Current liabilities 6,078,175 5,257,581 2,012,035 2,005,826 8,090,210 7,263,407 Noncurrent liabilities 3,327,319 3,142,434 181,936 176,271 3,509,255 3,318,705 Total liabilities 9,405,494 8,400,015 2,193,971 2,182,097 11,599,465 10,582,112 DEFERRED INFLOWS OF RESOURCES 3,363,688 3,692,037 31,734 35,857 3,395,422 3,727,894

NET POSITION
Net investment in capital assets 31,545,193 32,034,584 8,807,916 8,561,915 40,353,109 40,596,499 Restricted 1,839,836 2,507,573 1,839,836 2,507,573
Unrestricted 18,490,366 17,577,028 5,077,181 4,572,863 23,567,547 22,149,891 Total net position $ 51,875,395 $ 52,119,185 $ 13,885,097 $ 13,134,778 $ 65,760,492 $ 65,253,963 Governmental Activities Business-type Activities
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Management’s Discussion and Analysis
Changes in Net Position
The following schedule reflects the net changes in net position.

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Management’s Discussion and Analysis
Town of Los Altos Hills
Statement of Activities and Changes in Net Position
Governmental Activities. As discussed in the Financial Highlights, governmental activities reported a $243,790 decrease in net position.

Total governmental revenues increased by $6.0 million, or 32.6%, driven almost entirely by a $5.0 million increase in capital grants and contributions related to reimbursements for the El Monte Fire Station Rule 20A Undergrounding Project. Property tax revenue increased by $414,158, or 4.9%, and investment income increased by $418,453, or 39.3%, due to higher interest earnings. Other revenue sources remained relatively stable overall.

Total governmental expenses increased by $8.2 million, or 50.3%. Public Works expenses increased by $5.0 million, reflecting costs associated with the Rule 20A Undergrounding Project. These costs were expensed rather than capitalized because the Town will not own or maintain the completed infrastructure and will be fully reimbursed by participating utility companies. Other functional areas experienced comparatively smaller increases consistent with normal operating and inflationary cost pressures.

Governmental Business-Type Governmental Business-Type
Activities Activities Total Activities Activities Total Revenues
Program revenues
Charges for services $ 6,624,295 $ 3,760,895 $ 10,385,190 $ 6,725,097 $ 3,534,615 $ 10,259,712 Operating grants and contributions 281,810 - 281,810 219,153 - 219,153 Capital grants and contributions 5,571,854 182,857 5,754,711 506,455 154,081 660,536 Total program revenues 12,477,959 3,943,752 16,421,711 7,450,705 3,688,696 11,139,401 General revenues
Property taxes 8,945,715 8,945,715 - 8,531,557 - 8,531,557 Other taxes 787,582 - 787,582 667,742 - 667,742
Franchise fees 695,019 - 695,019 665,597 - 665,597
Investment income 1,482,060 338,833 1,820,893 1,063,607 171,190 1,234,797 Other unrestricted revenue 6,559 1,486 8,045 30,136 13,194 43,330 Gain on disposal of capital assets - -
Total general revenues 11,916,935 340,319 12,257,254 10,958,639 184,384 11,143,023 Total revenues 24,394,894 4,284,071 28,678,965 18,409,344 3,873,080 22,282,424 Expenses
General government 5,416,955 - 5,416,955 2,335,260 - 2,335,260 Public safety 3,754,412 3,754,412 - 4,038,777 - 4,038,777 Community development 5,061,940 5,061,940 - 4,800,671 - 4,800,671 Public works 8,535,262 - 8,535,262 3,522,098 - 3,522,098 Parks and recreation 1,859,663 - 1,859,663 1,683,650 - 1,683,650 Non-Departmental - - - - - -
Sewer utilities - 3,544,204 3,544,204 - 3,256,502 3,256,502 Total expenses 24,628,232 3,544,204 28,172,436 16,380,456 3,256,502 19,636,958 Increase (decrease) in net position
before transfers (233,338) 739,867 506,529 2,028,888 616,578 2,645,466 Transfers (10,452) 10,452 - (9,858) 9,858 -
Change in net position (243,790) 750,319 506,529 2,019,030 626,436 2,645,466 Net position at beginning of year 52,119,185 13,134,778 65,253,963 50,100,155 12,508,342 62,608,497 Net position at end of year $ 51,875,395 $ 13,885,097 $ 65,760,492 $ 52,119,185 $ 13,134,778 $ 65,253,963 Year Ended June 30, 2025 Year Ended June 30, 2024
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Management’s Discussion and Analysis
In FY 2024-25, the Town approved a grant agreement with Los Altos Hills Community Fiber (LAHCF) to install underground broadband fiber infrastructure at priority sites. The project is funded up to $800,000 and is scheduled for completion in FY 2025-26, with related expenditures expected to occur in FY 2025-26.

Despite the increase in capital grant revenues, expenses exceeded revenues due to the timing and scale of project expenditures. After transfers, governmental activities recorded a $0.2 million decrease in net position, compared to the prior year increase, which reflected lower capital project activity.

Overall, governmental activities continue to be influenced by the timing of large, reimbursable capital projects, resulting in year-to-year volatility in reported revenues and expenses without a corresponding impact on long-term fiscal condition.

Governmental activities expenses were primarily attributable to general government, community development, public works, public safety, and parks and recreation. Additional discussion of the drivers of General Fund revenues and expenditures is provided in the General Fund section of this MD&A.

The following graph depicts the expense and program revenues from charges for services by governmental activities.

The graph below shows the revenues by source for governmental-type activities. Property taxes comprise the largest revenue source at 36.7% of total governmental revenue. Other primary revenue sources include 27.2% for charges for services, 22.8% for capital grants and contributions, and 6.1% for investment income. The proportion of capital grants and contributions in the current year reflects reimbursements for the Rule 20A Undergrounding Project and is not indicative of the Town’s ongoing revenue structure.

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Management’s Discussion and Analysis
The table below shows the governmental activities, total costs of services and costs of net services for FY 2024-25. This table identifies the cost of these services supported by charges for services, operating grants, and capital grants.

Net Cost
Total Cost (Benefit)
of Services of Services % of
2025 2025 Total Costs
Governmental activities:

General government $ 5,416,955 $ (1,880,220) 22.0%
Public safety 3,754,412 (3,545,459) 15.2%
Community development 5,061,940 (3,090,889) 20.6%
Public works 8,535,262 (2,115,990) 34.7%
Parks and recreation 1,859,663 (1,517,715) 7.6%
Total governmental activities $ 24,628,232 $ (12,150,273) 100.0% Page | 13

Management’s Discussion and Analysis
Business-type Activities. As discussed in the Financial Highlights, business-type activities reported a $750,319 increase in net position.

The Town’s sole business-type activity consists of the sewer utility and related capital infrastructure.

During the fiscal year, charges for services were the primary revenue source, totaling $3.8 million and accounting for 87.8% of total business-type revenues. Charges for services increased by $226,280, or 6.4%, compared to the prior year, reflecting higher sewer rates. Investment income increased by $167,643, or 97.9%, due to higher interest earnings.

Additional revenue sources, including capital contributions, investment income, and other income, totaled $523,176 and accounted for the remaining 12.2% of business-type revenues. The following graph illustrates the revenue composition for the Town’s business-type activities.

The business-type activities total costs of services for FY 2024-25 was $3.5 million and the net benefits of services was $399,548. In addition, there was $10,452 transferred from the General Fund to the Sewer Fund to account for the Town use of sewer system for the past year.

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Management’s Discussion and Analysis

FUND FINANCIAL ANALYSIS
The Town uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. The Town’s governmental funds are accounted for using the modified accrual basis of accounting. The Town’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

Governmental Funds
The Town’s governmental funds focus on near-term inflows and outflows of spendable resources and on balances available at the end of the fiscal year, providing insight into the Town’s short-term financing position.

As of June 30, 2025, the Town’s governmental funds reported a combined ending fund balance of approximately $21.0 million, an increase of $232,997, or 1.1%, compared to the prior fiscal year. Of this total, $4.3 million, or 20.5%, represents unassigned fund balance available for discretionary spending. The remaining balance is restricted, committed, or assigned for designated purposes.

Committed and assigned fund balances primarily consist of reserves for future uses, which are approved annually by the City Council during the budget process. A significant portion of these funds is allocated to capital projects, also approved during the annual budget cycle. Further details on governmental funds revenues, expenditures, and changes in net position over the last ten years can be found in the Statistical Section on pages 95-118 of this report.

The General Fund, the Town’s primary operating fund, ended the fiscal year with an unassigned fund balance of $4.4 million, an increase of $1.8 million from the prior year. This unassigned balance represents 27.7% of total General Fund expenditures of $15.7 million and reflects resources available for general operations, supporting the Town’s liquidity and fiscal resilience. Total General Fund fund balance increased to $18.4 million, up $1.5 million from the prior year, primarily due to a $0.8 million transfer-in with the elimination of the ARPA fund, higher property tax revenues, and increased investment earnings.

For the year ending June 30, 2025, General Fund revenues were $17.7 million, an increase of $1.0 million, or 6.2%, from the prior year. The following table summarizes revenues in major categories with two-year comparison:

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Management’s Discussion and Analysis
Changes in General Fund revenues compared to the prior fiscal year were primarily attributable to the following factors:
• Property tax revenue increased to $8.9 million, an increase of approximately $414,000, or

4.9%, compared to the prior year. The increase reflects growth in assessed valuation from residential property transfers and annual CPI adjustments, as well as higher property tax inlieu of VLF revenues. • Taxes other than property increased to $705,338, an increase of $106,231, or 17.7%, from the prior year, primarily reflecting an increase in real property transfer tax ($97,720). • Intergovernmental revenue increased to $147,376, an increase of $97,953, or 198.2%, from the prior year, due to increased grant revenue. These revenues will fluctuate based on timing of payments and the amount of fees and recovery collected during the year. • Charges for services totaled $1.2 million, an increase of $144,852, or 13.2%, from the prior year. Charges for services fluctuate annually based on service demand and activity levels.

The increase primarily reflects higher planning, legal, and cost-recovery charges in Community Development and Public Works.
• Licenses and permits revenue decreased to $1.2 million, a decrease of $657,331, or 35.8%, compared to the prior year, reflecting lower residential development and permit activity.

Building Permit Fee revenue declined by approximately 33%, consistent with lower permit volume, with remaining differences attributable to valuation variability and changes in specific fee categories. Permit revenues fluctuate based on the volume, size, and timing of construction projects.
• Franchise fee revenues remained stable overall, with increases in water, gas, electric, and solid waste franchise fees offset by declines in cable and cellular revenues. • Fines and Forfeitures totaled $109,048, an increase of $71,040, or 186.9%, from the prior year due to two construction time limit penalties of $50,000 each. • Investment income increased to $1.3 million, an increase of $353,538, or 35.8%, from the prior year, primarily due to higher interest rates and the reinvestment of maturing securities at improved yields. The increase also reflects favorable fair-value adjustments on investments. The increase in lease income from the Purissima Hills Water lease and AT&T facilities at Purissima Park reflects normalized lease revenue recognition following the implementation of GASB 87 in FY 2023-24, rather than higher rental rates or new lease activity.
• Interfund charges increased due to higher allocated overhead department expenses.

General Fund expenditures were $15.7 million, an increase of $766,041, or 5.1%, from the prior year.

The following table summarizes expenditures by department with two-year comparison:

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Management’s Discussion and Analysis
Changes in General Fund expenditures compared to the prior fiscal year were primarily attributable to the following factors:
• General Government personnel costs increased compared to the prior year, reflecting the filling of existing authorized positions in Finance that were vacant in FY 2023-24, salary increases, and the addition of a Management Analyst position in the City Manager’s Office. • Public Safety expenditures decreased primarily due to a one-time accrual timing adjustment recorded in the prior fiscal year that did not recur. Approximately $432,877 of law enforcement contract costs related to FY 2022-23 were recorded in FY 2023-24 because the invoice and payment authorization occurred after the prior accrual period. Higher animal control costs in the current year partially offset this decrease. • Community Development expenditures increased due to higher overhead allocations and increased contract personnel and billable attorney costs. • Public Works expenditures increased due to higher personnel costs and increased overhead allocation charges.
• Parks and Recreation expenditures increased due to higher overhead allocation charges. In addition, contract services costs increased, primarily reflecting higher costs for contract personnel, landscaping, and tree maintenance at Town parks.

General Fund revenues exceeded expenditures during the year. Expenditures increased modestly compared to the prior year due to higher personnel and overhead allocation costs, while contract services costs were lower primarily because a one-time accrual of law enforcement contract costs recorded in FY 2023-24 did not reoccur.

The net difference between revenues and expenditures was $2.0 million before $0.5 million in net transfers to other funds. Net transfers decreased by $1.0 million from the prior year, primarily reflecting transfers of ARPA funds back to the General Fund and a reduced need for General Fund transfers as projects were supported by available balances and other financing sources.

The Streets Capital Project Fund is classified as a major fund for the Town. The Streets Capital Project Fund had a balance of $(31,002), a decrease of $243,186 from the prior year due to a yearend adjusting entry that reversed accrued grant revenue. 2025 2024 $ Variance % Variance
General government $ 3,252,350 $ 2,875,773 $ 376,577 13.09% Public safety 3,288,792 3,630,943 (342,151) -9.42%
Community development 4,442,592 4,193,925 248,667 5.93% Public works 3,104,945 2,783,515 321,430 11.55%
Parks and recreation 1,643,094 1,481,576 161,518 10.90% Nondepartmental - 0.00%
Total general fund expenditures $ 15,731,773 $ 14,965,732 $ 766,041 5.12% Revenue over expense $ 2,008,116 $ 1,735,342 $ 272,774 15.72% Increase(Decrease)
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Management’s Discussion and Analysis
Excluding transfers in, total revenues were $902,803, a decrease of $24,448, or 2.8%, compared to the prior year. The decrease was primarily attributable to the reversal of previously accrued VTA Measure B grant revenue, as the revenue did not meet the measurable and available recognition criteria as of June 30, 2025, and was partially offset by higher intergovernmental revenues and charges for services. Total spending was $1,371,194 for the annual street rehabilitation projects.

Proprietary Funds
The Town proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The proprietary funds currently include an enterprise fund (Sewer Fund) and an Internal Service Fund.

The Town's Sewer Fund provides sanitary sewer services to roughly 60% of the parcels within the jurisdiction. Service fees are collected annually on the property tax roll. In May 2022, the City Council approved a sewer rate of 6 percent per year adjustment for a five-year period from FY 2022-23 through FY 2026-27. The increase in revenues will help the Town provide for rising operational costs and make improvements and perform routine preventive measures on the Town’s sewer infrastructure.

Unrestricted net position for the Sewer Utilities Enterprise Fund at year-end was $5.1 million. Total net position increased by $750,319 during the fiscal year. Sewer operating revenues increased by $214,572, or 6.1%, driven primarily by growth in charges for services due to rate increases and additional connections. Sewer operating expenses increased by $287,702, or 8.8%, largely due to higher treatment and conveyance costs charged by the City of Palo Alto and the City of Los Altos, reflecting system-wide upgrades at the wastewater treatment facility. Sewer connection fee revenue increased by $28,776, or 18.7%.

The increase in operating expenses reflects increased share of treatment expenses and regional capital investment at the treatment facility. These cost pressures are being reviewed as part of the Town’s ongoing rate and long-term financial planning.
2025 2024 $ Variance % Variance
Intergovernmental
Gas Taxes $ 241,731 $ 235,913 $ 5,818 2.5%
SB1 Road Maintenance Rehab 231,302 219,429 11,873 5.4%
Measure B - 209,677 (209,677) -100.0%
Vehicle Registration 55,921 62,096 (6,175) 100.0%
Charges for Services 373,849 151,240 222,609 147.2%
Transfer In 225,204 474,651 (249,447) -52.6%
Total Revenues 1,128,007 1,353,006 (224,999) -16.6%
Less: Capital $ (1,371,194) $ (1,363,950) $ (7,244) 0.5% Net Change in Streets Capital
Improvement Fund $ (243,187) $ (10,944) $ (232,243) -16.1% Increase(Decrease)
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Management’s Discussion and Analysis
Sewer Utility Enterprise Fund
Statement of Revenues, Expenses, and Changes in Fund Net Position The unrestricted net position for the Internal Service Fund at the end of the fiscal year was $941,863.

Total increase in net position for the internal service fund was $28,458, or 0.7%. Total operating revenues consist of interfund charges for services. These operating revenues increased by $258,912, 2025 2024 $ Variance % Variance
Operating Revenues
Sewer assessment charges $ 3,760,895 $ 3,534,615 $ 226,280 6.4% Other 1,486 13,194 (11,708) 0.0%
Total Operating Revenues 3,762,381 3,547,809 214,572 6.0% Operating Expenses
Salaries and benefits 297,838 273,229 24,609 9.0%
Contract services - treatment plants 2,172,398 1,909,639 262,759 13.8% Professional services 17,314 13,470 3,844 28.5%
Support goods and services 5,456 2,174 3,282 151.0%
Repairs and maintenance 478,358 537,782 (59,424) -11.0% Utilities 13,508 12,407 1,101 8.9%
Interfund charges: 0.0%
Town center allocation 30,650 23,614 7,036 29.8%
Vehicle and equipment allocation 13,721 8,532 5,189 60.8% Corp Yard allocation 29,911 29,996 (85) -0.3%
Overhead allocation 208,867 184,741 24,126 13.1%
Machinery and equipment - 0.0%
Depreciation 276,183 260,918 15,265 5.9%
Total Operating Expenses 3,544,204 3,256,502 287,702 8.8% Earnings from operations 218,177 291,307 (73,130) -25.1% Nonoperating Revenues (Expenses)
Investment income 338,833 171,190 167,643 97.9%
Nonoperating Revene (Expenses), net 338,833 171,190 167,643 97.9% Income Before Contributions and Transfers
Capital Contributions - sewer connection fees 182,857 154,081 28,776 18.7% Transfers In 10,452 9,858 594 6.0%
Transfers out - - - 0.0%
Total Other Financing Sources and (uses) 193,309 163,939 29,370 24.7% Change in net position 750,319 626,436 123,883 19.8%
Net Position, beginning of year 13,134,778 12,508,342 626,436 5.0% Net Position, end of year $ 13,885,097 $ 13,134,778 $ 750,319 5.7% Increase (Decrease)
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Management’s Discussion and Analysis
or 28.1% as compared to the prior fiscal year. Operating expenses increased by $179,215, or 18.4%, as compared to the prior year.

Operating revenues in the Internal Service Fund increased primarily due to higher cost allocations to Town Hall and Vehicle Services, reflecting increased internal costs for new information technology systems, software support, and utilities that are charged back to operating departments.

Internal Service Fund
Statement of Revenues, Expenses, and Changes in Fund Net Position 2025 2024 $ Variance % Variance
Operating Revenues
Interfund Charges for Services
Other income $ 11,544 $ 10,689 $ 855 0.0%
Town Hall services 875,909 674,828 201,081 29.8%
Corporate Maintenance Yard services 142,075 142,482 (407) -0.3% Vehicle services 151,725 94,342 57,383 60.8%
Total Operating Revenues 1,181,253 922,341 258,912 28.1% Operating Expenses
Salaries and benefits 298,131 229,387 68,744 30.0%
Professional services 77,250 89,143 (11,893) -13.3%
Support goods and services 98,437 106,018 (7,581) -7.2% IT support and maintenance 203,648 124,697 78,951 63.3% Repairs and maintenance 125,789 128,245 (2,456) -1.9%
Utilities 138,118 86,290 51,828 60.1%
Machinery and equipment 17,163 37,668 (20,505) -54.4%
Depreciation 194,259 172,132 22,127 12.9%
Total Operating Expenses 1,152,795 973,580 179,215 18.4% Earnings (loss) from operations 28,458 (51,239) 79,697 -155.5% Nonoperating Revenues (Expenses)
Gain on disposal of capital assets - - - 0.0%
Other income - - - 0.0%
Nonoperating Revenues - - - 0.0%
Change in net position 28,458 (51,239) 79,697 -155.5%
Net Position, beginning of year 3,968,477 4,019,716 (51,239) -1.3% Net Position, end of year $ 3,996,935 $ 3,968,477 $ 28,458 0.7% Increase(Decrease)
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Management’s Discussion and Analysis

GENERAL FUND BUDGETARY HIGHLIGHTS
The Town’s budget process begins with the mid-year financial update presented to the Finance and Investment Committee and the City Council. The Finance & Administrative Services Department coordinates budget development and consolidates input from all Town departments. The proposed budget is reviewed by the City Manager and presented to the City Council and the Finance and Investment Committee during a joint budget study session. A budget is adopted by June 30 of each fiscal year.

Throughout the year, departments request City Council approval for contract awards exceeding $60,000. Each request includes verification of available budget appropriations. The Finance & Administrative Services Department monitors budget performance on an ongoing basis and prepares a mid-year financial update for the Finance and Investment Committee and the City Council. As part of this update, budget amendments may be proposed to address significant economic conditions, reflect prior City Council actions, or reallocate appropriations as necessary.

Actual General Fund revenues for FY 2024-25 totaled $17.7 million, similar to the final budget of $17.2 million.

Actual General Fund expenditures totaled $15.7 million, below the final budget of $19.4 million, reflecting the timing of certain expenditures, including project and recruitment timing, and other operational factors.

As a result, the General Fund ended the fiscal year with revenues exceeding expenditures, contributing to an increase in fund balance. The following table presents General Fund expenditures by function for FY 2024-25 compared to the final budget.

CAPITAL ASSETS AND LONG-TERM DEBT ADMINISTRATION
Capital Assets
The Town’s investment in capital assets for its governmental and business-type activities totaled $40.4 million (net of accumulated depreciation) as of June 30, 2025, representing a decrease of $243,390, or 0.6%, from the prior fiscal year. Capital assets include land, buildings, equipment, vehicles, and infrastructure.

Variance with
2025 Final BudgetOriginal Final Actual Favorable
Budget Budget Expenditures (Unfavorable)
General government 4,705,808 4,604,861 3,252,350 $ $ 1,352,511 Public safety 3,695,061 3,780,061 3,288,792 491,269
Community development 5,243,641 5,269,950 4,442,592 827,358 Public works 3,864,605 3,935,581 3,104,945 830,636
Parks and recreation 1,833,729 1,837,390 1,643,094 194,296 Total general fund expenditures $ 19,342,844 $ 19,427,844 $ 15,731,773 $ 3,696,071 Page | 21

Management’s Discussion and Analysis
During the fiscal year, capital asset additions included $1.5 million for infrastructure improvements, $103,178 for vehicles, and $522,184 for sewer-related capital assets. No changes in land were recorded during the fiscal year. The table on the following page presents summarized information on capital assets, net of accumulated depreciation, for the current and prior fiscal years. Additional information on the Town’s capital assets is provided in Note 4.

Town of Los Altos Hills
Capital Assets (Net of depreciation)
Long-Term Debt
As of June 30, 2025, the Town has no long-term bonded debt outstanding. The Town’s long-term obligations consist primarily of pension and other postemployment benefit (OPEB)–related liabilities.

The Town reported a net pension liability of $3.0 million, a decrease of approximately $77,000 from the prior fiscal year. The decrease reflects investment returns during the valuation period that exceeded the 6.9% discount rate assumption used by CalPERS, which more than offset a slight increase in the Town’s proportionate share within the CalPERS Miscellaneous pension pool.

The Town reported a net OPEB liability of $116,475, an increase of $57,014 from the prior fiscal year.

The increase was primarily attributable to a required reduction in the discount rate used to measure the liability under GASB 75, from 6.0% to 5.5%. The discount rate reduction reflects projected benefit payments exceeding available trust assets under current funding assumptions, due in part to the Town’s contribution levels being below the actuarially determined contribution (ADC) in each of the past four years. Under GASB 75, when assets set aside for retiree health benefits are not sufficient to cover all projected future benefit payments, the discount rate must be lowered to reflect a more conservative assumption. Applying a lower discount rate increases the reported liability, even if benefit levels have not changed. This impact was partially offset by better-than-expected investment earnings in the Town’s CERBT trust during the year.

After many years with a net OPEB asset, the Town first reported a net OPEB liability beginning in FY 2023–24, primarily due to updated actuarial assumptions, changes in plan experience, and investment returns that were lower than previously assumed. The Town’s OPEB liability also reflects benefit provisions adopted in prior years, including retiree health coverage for certain employees Governmental Business-Type Governmental Business-Type
Activities Activities Total Activities Activities Total Land $ 250,535 $ - $ 250,535 $ 250,535 $ - $ 250,535
Buildings 2,466,432 - 2,466,432 2,597,070 - 2,597,070
Office equipment - - - - - -
Vehicles 451,098 - 451,098 411,541 - 411,541
Sewer collection system - 8,807,916 8,807,916 8,561,915 8,561,915 SBITAs Asset (Right-to-Use) - - 4,458 4,458
Infrastructure 28,377,128 - 28,377,128 28,770,980 - 28,770,980 Total capital assets, net $ 31,545,193 $ 8,807,916 $ 40,353,109 $ 32,034,584 $ 8,561,915 $ 40,596,499 Year Ended June 30, 2025 Year Ended June 30, 2024
Page | 22

Management’s Discussion and Analysis
between ages 60 and 65 that became effective in 2022. Benefit provisions were not modified in FY 2024-25.

Economic Factors
The Town of Los Altos Hills is a primarily residential community, with General Fund revenues largely derived from property taxes and development-related permits, which are influenced by housing market conditions and development activity. While home sales volume has remained relatively flat, home prices have continued to increase year over year, contributing to growth in assessed valuation.

The Town’s assessed value increased by an average of 5.9% annually over the past ten years.

Broader economic uncertainty continues. Property tax, investment earnings, and planning and building revenues remain sensitive to changes in interest rates, market conditions, and development activity. While recent revenue trends have been favorable, future performance may vary. The Town’s reserves provide flexibility to manage volatility.

The Town continues to emphasize conservative forecasting and reserve maintenance in anticipation of potential economic softening, interest rate changes, or fluctuations in development activity.

Management will continue to monitor these factors during budget development and throughout the fiscal year.

Subsequent to June 30, 2025, the City Council authorized reimbursements related to certain building permits issued between July 1, 2020 and October 20, 2022, where applicants paid both All Projects and Mechanical, Electrical, and Plumbing (MEP) fees. The Town’s exposure associated with these reimbursements is up to approximately $1.2 million and is limited to reimbursement amounts exceeding $1,000, subject to execution of required agreements. The Town has recovered $304,359 from its plan check vendor, which will partially offset the cost of these refunds. Reimbursements will be paid and recorded in FY 2025-26. The reimbursements are not expected to materially impair the Town’s overall financial position.

REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the Town of Los Altos Hills' finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to:

Town of Los Altos Hills
Attn: Finance & Administrative Services Director
26379 Fremont Road
Los Altos Hills, CA 94022
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Basic Financial Statement
Government Wide Financial Statements
Fund Financial Statements
Notes to Basic Financial Statements
Page | 25

Governmental Business-type
Activities Activities Total
ASSETS
Current Assets:

Cash and investments 25,716,839 $ 7,195,130 $ 32,911,969 $ Restricted cash and investments 1,341,873 - 1,341,873
Accounts receivable 1,260,528 10,037 1,270,565
Total Current Assets 28,319,240 7,205,167 35,524,407
Noncurrent Assets:

Lease receivable 2,992,010 - 2,992,010
Materials, parts and supplies 10,251 - 10,251
Capital Assets:

Non-depreciable capital assets 250,535 - 250,535
Depreciable capital assets, net of depreciation 31,294,658 8,807,916 40,102,574 Total Capital Assets 31,545,193 8,807,916 40,353,109
Total Non-Current Assets 34,547,454 8,807,916 43,355,370 Total Assets 62,866,694 16,013,083 78,879,777

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 1,432,236 78,721 1,510,957
Related to OPEB 345,647 18,998 364,645
Total Deferred Outflows of Resources 1,777,883 97,719 1,875,602 Total Assets and Deferred Outflows 64,644,577 16,110,802 80,755,379

LIABILITIES
Current Liabilities:

Accounts payable 1,728,289 1,954,000 3,682,289
Other liabilities 401,516 - 401,516
Refundable deposits 3,900,929 57,239 3,958,168
Compensated absences due within one year 47,441 796 48,237 Total Current Liabilities 6,078,175 2,012,035 8,090,210 Noncurrent Liabilities:

Compensated absences due in more than one year 342,913 17,903 360,816 Collective net pension liability 2,873,999 157,965 3,031,964 Net OPEB liability 110,407 6,068 116,475
Total Noncurrent Liabilities 3,327,319 181,936 3,509,255 Total Liabilities 9,405,494 2,193,971 11,599,465

DEFERRED INFLOWS OF RESOURCES
Related to leases 2,786,332 - 2,786,332
Related to pensions 417,070 22,924 439,994
Related to OPEB 160,286 8,810 169,096
Total Deferred Inflows of Resources 3,363,688 31,734 3,395,422

NET POSITION
Net investment in capital assets 31,545,193 8,807,916 40,353,109 Restricted for:

Parks and recreation 463,490 - 463,490
Art donations 34,473 - 34,473
Pension Obligations 1,341,873 - 1,341,873
Unrestricted 18,490,366 5,077,181 23,567,547
Total Net Position 51,875,395 13,885,097 65,760,492
Total Liabilities, Deferred Inflows and Net Position $ 64,644,577 $ 16,110,802 $ 80,755,379 JUNE 30, 2025

TOWN OF LOS ALTOS HILLS

STATEMENT OF NET POSITION
See accompanying notes to financial statements
Page | 26

Operating Capital
Charges for Contributions Contributions Governmental Business-type Expenses Services and Grants and Grants Activities Activities Total Governmental Activities:

General government 5,416,955 $ 3,429,971 $ 106,764 $ - $ $ (1,880,220) $ - $ (1,880,220) Public safety 3,754,412 194,664 14,289 - (3,545,459) - (3,545,459) Community development 5,061,940 1,971,051 - - (3,090,889) - (3,090,889) Public works 8,535,262 686,661 160,757 5,571,854 (2,115,990) - (2,115,990) Parks and recreation 1,859,663 341,948 - - (1,517,715) - (1,517,715) Total Governmental Activities 24,628,232 6,624,295 281,810 5,571,854 (12,150,273) - (12,150,273) Business-type Activities:

Sewer 3,544,204 3,760,895 - 182,857 - 399,548 399,548
Total Business-type Activities 3,544,204 3,760,895 - 182,857 - 399,548 399,548 Total Primary Government $ 28,172,436 $ 10,385,190 $ 281,810 $ 5,754,711 (12,150,273) 399,548 (11,750,725) General Revenues:

Taxes:

Property taxes 8,945,715 - 8,945,715
Business license tax 227,908 - 227,908
Real property transfer tax 334,039 - 334,039
Sales and use tax 68,289 - 68,289
Public safety sales tax 70,310 - 70,310
Other taxes 87,036 - 87,036
Franchise fees 695,019 - 695,019
Investment income 1,482,060 338,833 1,820,893
Other unrestricted revenue 6,559 1,486 8,045
Transfers, net (10,452) 10,452 -
Total General Revenues and Transfers 11,906,483 350,771 12,257,254 Change in Net Position (243,790) 750,319 506,529
Net Position, Beginning of Year 52,119,185 13,134,778 65,253,963 Net Position, End of Year $ 51,875,395 $ 13,885,097 $ 65,760,492 See accompanying notes to financial statements
Program Revenues Net Revenue (Expense) and Change in Net Position

TOWN OF LOS ALTOS HILLS

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2025
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Governmental Fund Financial Statements
General Fund accounts for financial resources traditionally associated with the governmental which are not required legally or by sound financial management to be accounted for in another fund.

Street Capital Projects Fund accounts for financial resources that are necessary for the acquisition or construction of streets.

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

Non-Major Governmental Funds are the aggregate of all the non-major governmental funds.

Page | 29

Street Other Non-major
Capital Capital Governmental
General Projects Projects Funds Total
ASSETS
Cash and investments $ 21,279,540 $ - $ 2,806,351 $ 497,266 $ 24,583,157 Due from other funds 78,172 - - - 78,172
Restricted cash and investments 1,341,873 - - - 1,341,873 Receivables:

Property taxes 22,416 - - - 22,416
Taxes other than property 72,782 - - - 72,782
Intergovernmental 10,474 304,449 - - 314,923
Miscellaneous 351,890 - 335,959 697 688,546
Leases 2,249,606 - 742,404 - 2,992,010
Total Assets $ 25,406,753 $ 304,449 $ 3,884,714 $ 497,963 $ 30,093,879

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES

LIABILITIES
Accounts payable $ 977,792 $ 14,093 $ 605,964 $ - $ 1,597,849 Due to other funds - 78,172 - - 78,172
Retention liability - - 186,663 - 186,663
Refundable deposits 3,900,929 - - - 3,900,929
Total Liabilities 4,878,721 92,265 792,627 - 5,763,613

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - receivables - 243,186 333,853 - 577,039 Related to leases 2,090,888 - 695,444 - 2,786,332
Deferred Inflows of Resources 2,090,888 243,186 1,029,297 - 3,363,371

FUND BALANCES
Restricted 1,341,873 - - 497,963 1,839,836
Committed 9,619,259 - 2,062,790 - 11,682,049
Assigned 3,113,623 - - - 3,113,623
Unassigned 4,362,389 (31,002) - - 4,331,387
Total Fund Balances 18,437,144 (31,002) 2,062,790 497,963 20,966,895

TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES $ 25,406,753 $ 304,449 $ 3,884,714 $ 497,963 $ 30,093,879 JUNE 30, 2025

TOWN OF LOS ALTOS HILLS

GOVERNMENTAL FUNDS

BALANCE SHEETS
See accompanying notes to financial statements
Page | 30

Fund Balances of Governmental Funds $ 20,966,895
Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. 28,490,121 The Internal Service Fund is used by the Town to charge the cost of Town Hall, office, and corporate yard services. The assets and liabilities of the Internal Service Fund are included in the Governmental Activities in the Statement of Net Position. 3,996,935
Deferred outflows of resources are not deemed available to pay current period expenditures and therefore are not reported as governmental fund assets:

Deferred outflows related to pensions 1,432,236
Deferred outflows related to OPEB 345,647
The liabilities below are not due and payable in the current period and therefore are not reported in the governmental funds:

Compensated absences (371,716)
Net pension liability (2,873,999)
Net OPEB liability (110,407)
Deferred inflows of resources are not deemed receivable or available in the current period and therefore are not reported as governmental fund liabilities:

Deferred inflows due to unavailable receivables 577,039 Deferred inflows due to pension liabilities (417,070)
Deferred inflows due to OPEB liabilities (160,286)
Net Position of Governmental Activities $ 51,875,395
JUNE 30, 2025

TOWN OF LOS ALTOS HILLS

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE GOVERNMENT-WIDE STATEMENT OF NET POSITION
See accompanying notes to financial statements
Page | 31

Street Other Non-major
Capital Capital Governmental
General Projects Projects Funds Total

REVENUES
Property taxes $ 8,945,715 $ - $ - $ 8,945,715 - $
Taxes other than property 705,338 - - - 705,338
Intergovernmental 147,376 528,955 405,086 194,663 1,276,080 Charges for services 1,240,658 373,849 134,739 - 1,749,246 Licenses and permits 1,179,792 - - - 1,179,792
Franchise fees 695,019 - - - 695,019
Fines and forfeitures 109,048 - - - 109,048
Rental income 180,071 - 62,420 - 242,491
Interfund charges 3,189,727 - - - 3,189,727
Investment income 1,340,586 86,246 - 14,555 1,441,387
Other revenues 6,559 - 4,277,453 - 4,284,012
Total Revenues 17,739,889 902,804 4,965,944 209,218 23,817,855

EXPENDITURES
Current:

General government 3,252,350 - 1,563,399 - 4,815,749
Public safety 3,288,792 - - 3,003 3,291,795
Community development 4,442,592 - - - 4,442,592
Public works 3,104,945 - 4,903,114 - 8,008,059
Parks and recreation 1,643,094 - - 1,923 1,645,017
Capital outlay - 1,371,194 - - 1,371,194
Total Expenditures 15,731,773 1,371,194 6,466,513 23,574,406 4,926 Excess (Deficiency) of Revenues
Over Expenditures 2,008,116 (468,390) (1,500,569) 204,292 243,449

OTHER FINANCING SOURCES (USES)
Transfers in 813,742 225,204 1,134,943 2,173,889 -
Transfers out (1,330,599) - (40,000) (813,742) (2,184,341) Total Other Financing Sources (Uses) (516,857) 225,204 1,094,943 (813,742) (10,452) Net Change in Fund Balances 1,491,259 (243,186) (405,626) (609,450) 232,997 Fund Balances, Beginning of Year 16,945,885 212,184 2,468,416 1,107,413 20,733,898 Fund Balances, End of Year $ 18,437,144 $ (31,002) $ 2,062,790 $ 497,963 $ 20,966,895 See accompanying notes to financial statements
FOR THE YEAR ENDED JUNE 30, 2025

TOWN OF LOS ALTOS HILLS

GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES Page | 32

Net Change in Fund Balances - Total Governmental Funds $ 232,997 Amounts reported for governmental activities in the Statement of Activities differs from the amounts reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances because:

Governmental funds report capital outlays as expenditures but in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation and amortization expense or are allocated to the appropriate functional expense when the cost is below the capitalization threshold. This activity is reconciled as follows:

Capital outlays 1,525,665
Net retirements of capital assets (4,458)
Depreciation and amortization expense charged to governmental activities (1,919,516) Change in Compensated absences (227,248)
Government funds do not report pension expense as it does not require the use of current financial resources (431,343)
Governmental funds do not recognize revenue for receivables not currently available, but the amounts are recognized in the Statement of Activities 577,039 Government funds do not report OPEB expense as it does not require the use of current financial resources (25,384)
Internal Service Funds are used by management to charge the costs of certain activities, such as cost of Town Hall, office, and corporate yard services to individual funds.

The portion of the net revenue (expense) of these Internal Service Funds, arising out of their transactions with Governmental Funds, is reported with governmental activities, because they service those activities. 28,458
Change in Net Position of Governmental Activities $ (243,790) See accompanying notes to financial statements
FOR YEAR ENDED JUNE 30, 2025

STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION

TOWN OF LOS ALTOS HILLS

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE GOVERNMENT-WIDE Page | 33

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Proprietary Fund Financial Statements
Sewer Fund accounts for the activities of the wastewater collection and treatment system, which provides service to the residents of the Town and some neighboring cities.

Internal Service Fund is used to account for the financing of goods and services provided by one department or agency to other departments or agencies on a cost reimbursement basis.

Page | 35

Business-type
Activities
Governmental
Activities
Enterprise Internal
Fund Service
Sewer Fund
ASSETS
Current Assets:

Cash and investments 7,195,130 $ $ 1,133,682
Accounts receivable 10,037 161,861
Total Current Assets 7,205,167 1,295,543
Noncurrent Assets:

Materials, parts and supplies - 10,251
Capital assets, net of accumulated
depreciation 8,807,916 3,055,072
Total Noncurrent Assets 8,807,916 3,065,323
Total Assets 16,013,083 4,360,866

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 78,721 -
Related to OPEB 18,998 -
Total Deferred Outflows of Resources 97,719 -
Total Assets and Deferred Outflows 16,110,802 4,360,866

LIABILITIES
Current Liabilities:

Accounts payable 1,954,000 130,440
Accrued payroll and related liabilities - 214,853
Sewer reimbursement deposits 57,239 -
Compensated absences due within one year 796 388
Total Current Liabilities 2,012,035 345,681
Noncurrent liabilities:

Compensated absences due in more than one year 17,903 18,250 Collective net pension liability 157,965 -
Net OPEB liability 6,068 -
Total noncurrent liabilities 181,936 18,250
Total Liabilities 2,193,971 363,931

DEFERRED INFLOWS OF RESOURCES
Related to pensions 22,924 -
Related to OPEB 8,810 -
Total Deferred Inflows of Resources 31,734 -

NET POSITION
Net investment in Capital Assets 8,807,916 3,055,072
Unrestricted 5,077,181 941,863
Total Net Position 13,885,097 3,996,935
Total Liabilities, Deferred Inflows and Net Position $ 16,110,802 $ 4,360,866 See accompanying notes to financial statements
JUNE 30, 2025

TOWN OF LOS ALTOS HILLS

PROPRIETARY FUNDS

STATEMENT OF FUND NET POSITION
Page | 36

Business-type
Activities
Governmental
Activities
Enterprise Internal
Fund Service
Sewer Fund

OPERATING REVENUES
Charges for services 3,760,895 $ - $
Other income 1,486 11,544
Town Hall services - 875,909
Corporate yard services - 142,075
Vehicle services - 151,725
Total Operating Revenues 3,762,381 1,181,253

OPERATING EXPENSES
Salaries and benefits 297,838 298,131
Contract services - treatment plant 2,172,398 -
Professional services 17,314 77,250
Support goods and services 5,456 98,437
IT Support and maintenance - 203,648
Repairs and maintenance 478,358 125,789
Utilities 13,508 138,118
Interfund charges 283,149 -
Machinery and equipment - 17,163
Depreciation 276,183 194,259
Total Operating Expenses 3,544,204 1,152,795
Operating Income (Loss) 218,177 28,458

NONOPERATING REVENUES (EXPENSES)
Interest income 338,833 -
Nonoperating Revenues (Expenses), net 338,833 -
Net Income before Contributions and Transfers 557,010 28,458 Capital Contributions - sewer connection fees - 182,857 Transfers in - 10,452
Total Contributions and Transfers 193,309 -
Changes in Net Position 750,319 28,458
Total Net Position, Beginning of Year 3,968,477 13,134,778 Total Net Position, End of Year 13,885,097 $ 3,996,935 $ See accompanying notes to financial statements

TOWN OF LOS ALTOS HILLS

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES,
FOR THE YEAR ENDED JUNE 30, 2025

AND CHANGES IN FUND NET POSITION
Page | 37

Business-type Governmental
Activities Activities
Enterprise Fund Internal Service
Sewer Fund

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 3,818,008 $ - $
Receipts from interfund services provided - 1,161,043
Payments for interfund services used (283,149) -
Payments to suppliers (2,738,836) (553,444)
Payments to employees (265,243) (206,201)
Net Cash From Operating Activities 530,780 401,398

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Interfund receipts 10,452 -
Net Cash From Noncapital Financing Activities 10,452 -

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets (522,184) (103,177)
Capital contributions received for connection fees 182,857 - Net Cash From Capital and Related Financing Activities (339,327) (103,177)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment income 338,833 -
Net Cash From Investing Activities 338,833 -
Net Increase in Cash and Investments 540,738 298,221
Cash and Cash Equivalents, Beginning of Year 6,654,392 835,461 Cash and Cash Equivalents, End of Year $ 7,195,130 $ 1,133,682

RECONCILIATION OF OPERATING INCOME (LOSS)

TO NET CASH FROM (FOR) OPERATING ACTIVITIES
Operating income $ 218,177 $ 28,458
Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:

Depreciation 276,183 194,259
(Increase) decrease in accounts receivable (1,612) (20,210) (Increase) decrease in OPEB asset/liability 2,970 -
(Increase) decrease in materials - 40,840
(Increase) decrease in deferred outflows related to pensions 27,947 - (Increase) decrease in deferred outflows related to OPEB 2,334 - Increase (decrease) in accounts payable (51,802) 66,121 Increase (decrease) in other liabilities 57,239 83,544
increase (decrease) in compensated absences 7,492 8,386 Increase (decrease) in pension liability (4,025) -
Increase (decrease) in deferred inflows related to pensions (214) - Increase (decrease) in deferred inflows related to OPEB (3,909) -

NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES $ 530,780 $ 401,398
See accompanying notes to financial statements
FOR THE YEAR ENDED JUNE 30, 2025

TOWN OF LOS ALTOS HILLS

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS
Page | 38

Fiduciary Fund Financial Statement

CUSTODIAL FUND
West Loyola Special Assessment District #1 Custodial Fund accounts for assets that the Town is holding for the West Loyola Special Assessment District No. 01 for which the Town is acting as an agent.

Page | 39

West Loyola
Special Assessment
District #1
Custodial Fund
ASSETS
Restricted cash and investments 333,842 $
Miscellaneous receivables 2,464
Total Assets 336,306

LIABILITIES
Accrued liabilities 5,079
Total Liabilities 5,079

NET POSITION
Restricted for Bond Payments 341,385 $
JUNE 30, 2025

TOWN OF LOS ALTOS HILLS

STATEMENT OF FIDUCIARY NET POSITION
See accompanying notes to financial statements
Page | 40

West Loyola
Special Assessment
District #1
Custodial Fund

ADDITIONS
Special assessments $ 174,080
Total Additions 174,080

DEDUCTIONS
Payments to bondholders 85,663
Administrative expenses 9,501
Other 55,000
Total Deductions 150,164
Change in net position 23,916
BEGINNING NET POSITION 317,469
ENDING NET POSITION $ 341,385
See accompanying notes to financial statements

TOWN OF LOS ALTOS HILLS

STATEMENT OF CHANGES IN FIDUCIARY

NET POSITION
FOR THE YEAR ENDED JUNE 30, 2025
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Notes to Basic Financial Statements – Index
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................................................. 45 A. Reporting Entity ........................................................................................................................ 45 B. Basis of Presentation ................................................................................................................. 45 C. Basis of Accounting and Measurement Focus ........................................................................... 48 D. Cash and Cash Equivalents ....................................................................................................... 48 E. Fair Value Measurements ......................................................................................................... 48 F. Receivables................................................................................................................................ 49 G. Capital Assets ............................................................................................................................ 49 H. Deferred Inflows and Deferred Outflows of Resources ............................................................ 49 I. Property Taxes .......................................................................................................................... 50 J. Accumulated Compensated Absences ...................................................................................... 50 K. Interfund Transactions .............................................................................................................. 50 L. Use of Estimates ........................................................................................................................ 50 M. Leases ........................................................................................................................................ 51 N. Subscription-Based Information Technology Arrangements (SBITAs) ...................................... 51 O. New GASB Pronouncements .................................................................................................... 52 NOTE 2 – DEPOSITS AND INVESTMENTS ............................................................................................... 52 A. Policies ...................................................................................................................................... 52 B. Classification ............................................................................................................................. 53 C. Authorized Investments ............................................................................................................ 53 D. Interest Rate Risk and Fair Value Hierarchy .............................................................................. 54 E. Credit Risk ................................................................................................................................. 56 F. Concentration of Credit Risk ..................................................................................................... 56 NOTE 3 – INTERFUND TRANSACTIONS .................................................................................................. 56 NOTE 4 – CAPITAL ASSETS ..................................................................................................................... 57 NOTE 5 – LEASES ................................................................................................................................... 58 NOTE 6 – SPECIAL ASSESSMENT DEBT WITHOUT TOWN COMMITMENT ............................................. 59 NOTE 7 – NET POSITION/FUND BALANCES ............................................................................................ 59 A. Net Position ............................................................................................................................... 59 B. Fund Balances – Components ................................................................................................... 60

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Notes to Basic Financial Statements
NOTE 8 – PENSION PLAN .................................................................................................................... 60 A. General Information About the Pension Plan ........................................................................ 60 B. Net Pension Liability ............................................................................................................... 62 C. Changes in the Net Pension Liability ...................................................................................... 64 D. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension ............. 65 E. Payable to Pension Plan ......................................................................................................... 65 NOTE 9 – RISK MANAGEMENT ........................................................................................................... 66 A. Risk Pool ................................................................................................................................. 66 NOTE 10 – COMMITMENTS AND CONTINGENCIES ............................................................................ 67 A. Commitments and Contingencies .......................................................................................... 67 B. Service Concession Arrangements (SCA) ................................................................................ 67 C. El Monte Rule 20A Project ..................................................................................................... 67 D. Refund of Building Permit Fees Overcharged in Previous Years ............................................ 67 NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) .................................................................. 68 A. General Information About the OPEB Plan ............................................................................ 68 B. Plan Description ..................................................................................................................... 68 C. Benefits Provided ................................................................................................................... 68 D. Employees Covered by Benefit Terms .................................................................................... 69 E. Contributions ......................................................................................................................... 69 F. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB ..................... 71 G. Net OPEB Liability (Asset) ....................................................................................................... 72 H. Changes in Net OPEB Liability (Asset) .................................................................................... 74 I. Discount Rate ......................................................................................................................... 74 J. OPEB Liabilities, OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPEB .................................................................................................................. 75 NOTE 12 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY ...................................................... 76 A. Excess of Expenditures Over Appropriations ......................................................................... 76 B. Deficit Fund Balances ............................................................................................................. 76 Page | 44

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

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 used to account for assets held by the Town as a custodian for individuals, private organizations or other governments. Custodial funds use the economic resources measurement focus method of accounting.

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, 2025, accounts receivable are shown at $457,562 in the General Fund, $304,449 in the Street Capital Projects Fund, $335,959 in the Other Capital Projects Fund and $10,037 in the Sewer Fund. Non-major funds have $697 of receivables as of year-end.

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 $25,000.

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, comp time, administrative leave and portions of sick leave expected to be utilized) 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.

All compensated absences for governmental activities are paid out of the general fund. Compensated absences as of June 30, 2025 are as follows:

Governmental
Activities
Business-Type
Activities Total
Beginning Balance 154,720 $ 11,207 $ 165,927 $
Net change 235,634 7,492 243,126
Ending Balance 390,354 $ 18,699 $ 409,053 $
Current Portion 47,441 $ 796 $ 48,237 $
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. Subscription-Based Information Technology Arrangements (SBITAs) A SBITA is a contract that conveys control of the right to use another party’s (a SBITA vendor’s) IT software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction.

At the commencement of a SBITA, the Town initially measures the subscription liability at the present value of payments expected to be made during the contract term. Subsequently, the subscription liability is reduced by the principal portion of payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for payments made at or before the SBITA commencement date, plus certain initial direct costs. Subsequently, the subscription asset is amortized on a straight-line basis over shorter of the subscription term or the useful life of the underlying IT assets.

Key estimates and judgments related to SBITAs include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments as follows:
• The Town uses the interest rate charged by the IT vendor as the discount rate. When the interest rate charged by the IT vendor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for subscription liabilities.
• The subscription term includes the noncancellable period of the subscription. • Subscription payments included in the measurement of the subscription liability are composed of fixed payments and purchase option price that the Town is reasonably certain to exercise.

The Town monitors changes in circumstances that would require a remeasurement of its subscription and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability.

Subscription assets are reported with other capital assets and subscription liabilities are reported as longterm obligations on the statement of net position. The Town does not have a separate policy related to SBITAs and therefore follows its capitalization policy which requires capitalization of any assets that go beyond 36 months and exceed $15,000. As of June 30, 2025, the Town does not have any SBITAs that meet this criteria.

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Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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, 2025.

GASB Statement No. 101 – In June 2022, the GASB issued GASB Statement No. 101, Compensated Absences.

The unified recognition and measurement model in this Statement will result in a liability for compensated absences that more appropriately reflects when a government incurs an obligation. In addition, the model can be applied consistently to any type of compensated absence and will eliminate potential comparability issues between governments that offer different types of leave. The model also will result in a more robust estimate of the amount of compensated absences that a government will pay or settle, which will enhance the relevance and reliability of information about the liability for compensated absences. This Statement is effective for the fiscal year ending June 30, 2025 and had the effect of increasing the compensated absences liability due to the inclusion of payroll related items in the calculation of the liability, such as portions of sick leave and administrative leave. The change was not significant, and there, did not require a restatement of beginning net position.

GASB Statement No. 102 – In December 2023, the GASB issued GASB Statement No. 102, Certain Risk Disclosures. The requirements of this Statement will improve financial reporting by providing users of financial statements with essential information that currently is not often provided. The disclosures will provide users with timely information regarding certain concentrations or constraints and related events that have occurred or have begun to occur that make a government vulnerable to a substantial impact. As a result, users will have better information with which to understand and anticipate certain risks to a government’s financial condition. This Statement is effective for the fiscal year ending June 30, 2025 and did not have any impact on the Town’s financial statements for the current fiscal year.

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.

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Notes to Basic Financial Statements
NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
A. Policies (Continued)
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, 2025.

B. Classification
As of June 30, 2025, cash and investments consist of the following:

Statement of Net Position:

Cash and investments 32,911,969 $
Restricted cash and investments 1,341,873
Fiduciary funds:

Cash and investments - West Loyola 333,842
Total Cash and Investments $ 34,587,684
As of June 30, 2025, cash and investments are classified in the accompanying financial statements as follows:

Cash on hand $ 1,002
Deposits with financial institutions 8,051,068
Investments 25,028,050
Investments with fiscal agent 165,691
Investments held in pension trust 1,341,873
Total Cash and Investments $ 34,587,684
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% No limit
State Treasury Notes/Bonds 5 years 30% No limit
Bankers' Acceptances 180 days 40% 30%
Commercial Paper 270 days 25% 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 No limit Money market mutual funds registered with SEC 5 years 20% 10% California Asset Management Program (CAMP) 5 years No limit No limit Medium-term corporate notes with A or better rating 5 years 30% 5% Supranationals 5 years 30% No limit
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Notes to Basic Financial Statements
NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
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, 2025, the Town had the following investments:
12 Months 13 to 25 to
or less 24 Months 60 Months Total
U.S. Treasury Bonds/Notes $ 1,025,499 $ 2,721,613 $ 9,119,208 $12,866,320 Federal Agency Collateralized
Mortgage Obligation - 3,400,550 3,400,550 -
Municipal Bonds - 48,730 - 48,730
Certificates of Deposit 406,124 - 406,124 -
LAIF Investment Pool 2,168,400 - 2,168,400 -
Money Market Mutual Funds 1,507,564 - 1,507,564 -
Corporate Notes 177,078 2,519,601 3,338,918 6,035,597
CAMP Investment Pool 102,329 - 102,329 -
Total Investments $ 4,980,870 $ 5,696,068 $ 15,858,676 $ 26,535,614 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 12,866,320 $ - $ 12,866,320 $ Federal Agency Collateralized
Mortgage Obligation - 3,400,550 3,400,550
Municipal Bonds - 48,730 48,730
Certificates of Deposit 406,124 406,124 -
Corporate Notes 6,035,597 6,035,597 -
CAMP Investment Pool 102,329 102,329 -
Sub-total $ 12,866,320 $ 9,993,330 22,859,650
Investments Measured at Amortized Cost:

Money Market Mutual Funds 1,507,564
Local Agency Investment Fund 2,168,400
Total Investments $ 26,535,614
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Notes to Basic Financial Statements
NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
D. Interest Rate Risk and Fair Value Hierarchy (Continued) 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, 2025, these investments matured in an average of 254 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.

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, 2025, the CAMP pool had an average maturity of 41 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, 2025, these investments have an average maturity of 967 days.

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Notes to Basic Financial Statements
NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
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- AAAm BBB+ Total
Federal Agency Collateralized
Mortgage Obligation $ 3,400,550 - $ $ - $ - $ - $ - $ - $ - $ 3,400,550 - $ Municipal Bonds - 48,730 - - - - - - - 48,730
Certificates of Deposit - - - 406,124 - - - - 406,124 - Money Market Mutual Fund - - - - - - 165,691 - 165,691 - CAMP Investment Pool - - - - - - 102,329 - 102,329 -
Corporate Notes 30,503 287,728 - 950,724 1,579,845 1,264,619 1,581,280 340,898 - 6,035,597 Totals $ 30,503 $ 3,400,550 $ 336,458 $ 950,724 $ 1,985,969 $ 1,264,619 $ 1,581,280 $ 268,020 $ 340,898 10,159,021 Not Rated:

Money Market Mutual Funds 1,341,873
U.S. Treasury Bonds/Notes 12,866,320
Local Agency Investment Fund (LAIF) 2,168,400
Total Investments $ 26,535,614
Bank balances are insured up to $250,000 per bank by the Federal Deposit Insurance Company ("FDIC"). As of June 30, 2025, the Town’s cash in bank exceeded the insured limit by $8,678,104. None of the Town’s deposits with financial institutions in excess of FDIC limits were held in uncollateralized accounts.

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, 2025, there are no investments, other than U.S. Treasury securities, US Agency securities, and authorized pools such as Local Agency Investment Fund (LAIF), that represent five percent or more of total investments at the Entity-wide level or in individual funds.

NOTE 3 – INTERFUND TRANSACTIONS
Current interfund balances arise in the normal course of business and are expected to be repaid shortly after the end of the fiscal year. At June 30, 2025, current interfund balances are as follows:

Fund Making Loan Fund Receiving Loan Amount
General Fund Streets Capital Projects Fund $ 78,172
The following schedule summarizes the Town's transfer activity for the fiscal year ended June 30, 2025:

Amount
Fund Receiving Transfers Fund Making Transfers Transferred General Fund COPS Special Revenue Fund 637 $ (A)
General Fund ARPA Special Revenue Fund 813,105 (A)
Street Capital Projects Fund General Fund 185,204 (A)
Street Capital Projects Fund Other Capital Projects Fund 40,000 (A) Other Capital Projects Fund General Fund 1,134,943 (A)
Sewer Enterprise Fund General Fund 10,452 (B)
Total Interfund Transfers 2,184,341 $
(A) To fund capital projects.
(B) To reimburse the Sewer fund for costs incurred for the Town's use of the sewer system for the past year.

Page | 56

Notes to Basic Financial Statements
NOTE 4 – CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2025, was as follows:

Balance at Balance at
June 30, 2024 Additions Deletions June 30, 2025
Governmental activities
Capital assets not being depreciated and amortized:

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

SBITAs Asset (Right-to-Use) 23,429 - (23,429) -
Infrastructure 99,425,221 1,525,664 100,950,885 -
Buildings 5,152,825 - 5,152,825 -
Vehicles 918,689 103,178 (17,696) 1,004,171
Office Equipment 465,307 - 465,307 -
Total capital assets being depreciated and amortized 105,985,471 1,628,842 (41,125) 107,573,188 Less accumulated depreciation and amortization for:

SBITAs Asset (Right-to-Use) (18,971) (4,458) 23,429 -
Infrastructure (70,654,241) (1,919,516) (72,573,757) -
Buildings (2,555,755) (130,638) (2,686,393) -
Vehicles (507,148) (63,621) 17,696 (553,073)
Office Equipment (465,307) (465,307) -
Total accumulated depreciation and amortization (74,201,422) (2,118,233) 41,125 (76,278,530) Net governmental-type activities
Capital assets being depreciated and amortized 31,784,049 (489,391) 31,294,658 - Governmental activities capital assets, net $ 32,034,584 $ (489,391) $ 31,545,193 - $ Balance at Balance at
June 30, 2024 Additions June 30, 2025
Business-type activities
Capital assets being depreciated:

Sewer collection system $ 12,871,163 $ 522,184 $ 13,393,347 Office equipment 1,509 - 1,509
Total capital assets being depreciated 12,872,672 522,184 13,394,856 Less accumulated depreciation for:

Sewer collection system (4,309,248) (276,183) (4,585,431) Office equipment (1,509) - (1,509)
Total accumulated depreciation (4,310,757) (276,183) (4,586,940) Net capital assets being depreciated 8,561,915 246,001 8,807,916 Business-type activities capital assets, net $ 8,561,915 $ 246,001 $ 8,807,916 Page | 57

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

Governmental Activities Amount
General Government $ 402,272
Public safety 463,124
Community development 525,821
Parks and recreation 182,486
Public works 350,271
Internal service funds 194,259
Total $ 2,118,233
Business-Type Activities Amount
Sewer $ 276,183
Total $ 276,183
NOTE 5 – LEASES
The Town is a lessor for 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 | 58

Notes to Basic Financial Statements
NOTE 5 – LEASES (CONTINUED)
A summary of lease activities for the year ended June 30, 2025 are as follows:

Governmental Activities:

Lessor
Original Lease
Date
Expiration Date
Including Options
Monthly Revenue
as of June 30,
2025
Lease Receivable
Balance at
June 30, 2025
Deferred Inflow of
Resources at June 30,
2025
General Fund:

Purissima Hills Water 4/1/2005 3/31/2050 $ 3,039 $ 1,205,352 $ 1,126,054 Crown Castle 3/23/2006 2/23/2031 3,272 239,339 222,976
AT&T 7/18/2013 6/18/2033 3,602 370,416 336,995
Verizon Wireless 2/18/2011 2/28/2032 2,186 187,858 175,040 AT&T 6/18/2013 5/18/2033 2,307 246,641 229,823
Other Capital Projects Fund:

American Tower 3/23/2006 8/31/2036 4,816 742,404 695,444 $ 19,222 $ 2,992,010 $ 2,786,332
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, 2025, 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, 2025 West Loyola Sewer Assessment District No. 1 2009 2.25% - 6.15% $35,000 - $775,000 2010-2040 1,370,000 $ 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 | 59

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, 2025, the following represents the components of fund balance:

Street Other Non-major
General Capital Projects Capital Projects Governmental Total Fund Balance Classifications Fund Fund Fund Funds Governmental Restricted for:

Parks and Recreation $ - $ - $ - $ 463,490 $ 463,490
Art donations - - - 34,473 34,473
Pension Trust 1,341,873 - - 1,341,873 -
Total Restricted Fund Balances 1,341,873 - - 497,963 1,839,836 Committed for:

Disaster Contingency Reserve 1,250,000 - - 1,250,000 -
Pension Contributions Reserve 1,535,439 - - 1,535,439 - Facilities Replacement Reserve 3,017,081 - - 3,017,081 - Equipment Relacement Reserve 409,000 - - - 409,000
Street & Road Repairs - - - - -
All other Capital Projects 3,407,739 2,062,790 - 5,470,529 - Total Committed Fund Balances 9,619,259 2,062,790 - 11,682,049 - Assigned for:

Capital Fund Stabilization Reserve 3,113,623 - - 3,113,623 - Total Assigned Fund Balances 3,113,623 - - 3,113,623 -
Unassigned: 4,399,721 (31,002) - 4,368,719 -
Total Unassigned Fund Balances 4,399,721 (31,002) - 4,368,719 - Total Fund Balances $ 18,474,476 $ (31,002) $ 2,062,790 $ 497,963 $ 21,004,227 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.

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.

Page | 60

Notes to Basic Financial Statements
NOTE 8 – PENSION PLAN (CONTINUED)
A. General Information about the Pension Plan (Continued) Plan Descriptions – All qualified permanent employees are eligible to participate in the Town’s Employee Miscellaneous Employee Pension Rate Plans. The City’s Miscellaneous Plans are part of the public agency cost-sharing multiple-employer defined pension plan (PERF C), which is administered by the California Public Employee’s Retirement System (CalPERS). PERF C consists of a miscellaneous pool (also referred to as “risk pool”, which are comprised of individual employer miscellaneous rate plans. Individual employers may sponsor more than one miscellaneous rate plan. They employer participates in one cost-sharing multiple employer defined pension plan regardless of the number of rate plans the employer sponsors. 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. Benefit provisions under the Plan are established by State statute and Town resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided – CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees, and 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 1957 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.

The plans’ provisions and benefits in effect at June 30, 2025, 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% 8.25%
Required employer contribution rates 12.67% 10.93% 8.18% 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 $261,629 in fiscal year 2025.

Page | 61

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. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions.

For the year ended June 30, 2025, the contribution recognized as part of pension expense for the Plans were as follows:

Miscellaneous Plans
Contributions - employer 543,921 $
B. Net Pension Liability
The Town’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2024, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 using standard update procedures. The Town’s proportion of the net pension liability was based on a projection of the Town’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined.

Actuarial Methods and Assumptions – For the measurement period ended at June 30, 2024, the total pension liability was determined by rolling forward the June 30, 2023 total pension liability. The June 30, 2023 pension liabilities were based on the following actuarial methods and assumptions for all benefit tiers:

Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Payroll Growth
Projected Salary Increase
Investment Rate of Return
Mortality Rate Table
Post Retirement Benefit Increase
(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 2021 CalPERS Experience Study and Review of Actuarial Assumptions.

Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS website.

All CalPERS Plans
June 30, 2023
June 30, 2024
Entry-Age Normal Cost Method

6.90%

2.30%
(1)
Varies by Entry Age and Service

6.90% (2)
Derived using CalPERS Membership Data for all Funds (3) The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter
Page | 62

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 6.90%. 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. Using historical returns of all the funds’ asset classes, expected compound expected compound (geometric) returns were calculated using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points.

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

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

Page | 63

Notes to Basic Financial Statements
NOTE 8 – PENSION PLAN (CONTINUED)
C. Changes in the Net Pension Liability
As of June 30, 2025, the Town’s Miscellaneous Plans reported a net pension liability for its proportionate share of the net pension liability of the Miscellaneous Plan as follows:

Proportionate Share
of Net Pension Liability
Miscellaneous Plans 3,031,964 $
Total Net Pension Liability 3,031,964 $
The Town’s proportionate share of the net pension liability for each Miscellaneous Plan as of June 30, 2023 and 2024 is as follows:

Miscellaneous Plans
Proportion - June 30, 2023 0.06218%
Proportion - June 30, 2024 0.06269%
Change - Increase (Decrease) 0.00051%
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 5.90%
Net Pension Liability 6,007,145 $
Current Discount Rate 6.90%
Net Pension Liability 3,031,964 $
1% Increase 7.90%
Net Pension Liability 582,951 $
Pension Plan Fiduciary Net Position – Detailed information about the pension plans’ fiduciary net position is available in the separately issued CalPERS financial reports.

Page | 64

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, 2025, the Town’s recognized pension expense of $431,343 for the Miscellaneous Plans. At June 30, 2025, 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 543,921 $ - $ Differences between actual and expected experience 262,141 (10,229) Changes in assumptions 77,928 -
Difference between proportional and actual contributions - (429,765) Net differences between projected and actual earnings
on plan investments 174,546 -
Adjustment due to differences in proportion 452,421 -
Total $ 1,510,957 $ (439,994)
The $543,921 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Years Ending June 30
2026 281,150 $
2027 326,091
2028 (20,383)
2029 (59,816)
$ 527,042
E. Payable to Pension Plan
As of June 30, 2025, the Town reported a payable of $14,506 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2025.

Page | 65

Notes to Basic Financial Statements
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 $35 million per year. The Town's property claims are insured for up to $35 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, 2025, the Town contributed $383,545 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 $0 in insurance recoveries during fiscal year 2025. 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, 2025, the Town contributed $110,387 for current year coverage.

As of June 30, 2025, the Town does not have earthquake insurance. • 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.

Page | 66

Notes to Basic Financial Statements
NOTE 10 – COMMITMENTS AND CONTINGENCIES
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)
Since February 2014, the Town has partnered with Victoria Dye Equestrian, LLC (VDE) to operate the Westwind Community Barn, offering equestrian programs, horse boarding, and related services. Under the renewed 2023 agreement, VDE remits 20% of camp and lesson revenues to the Town, with the lesson rate decreasing to 18% once gross lesson revenues exceed $300,000. Key changes from the previous agreement include a reduction in the Town’s revenue share (from 25%), full coverage of the annual audit cost by the Town, reduced maintenance support hours (from 172 to 120 annually), and clarified responsibilities for routine maintenance (handled by VDE) and major capital improvements (retained by the Town). The Town also now funds professional janitorial services and increased contract services for tree maintenance and drain flushing. Westwind operations remain part of the Town’s General Fund.

C. El Monte Rule 20A Project
In April 2021, the Town entered into an agreement with the County of Mariposa, City of Willows and County of Trinity to purchase a combined total of 4,323,712 Rule 20A work credits, which are funded by PG&E ratepayers), for the El Monte Fire Station Undergrounding Project for a total amount of $2,012,240. Back in 2019, PG&E provided a preliminary cost estimate of $5 million to underground utilities within the Underground Utility District around the El Monte Fire Station at El Monte Road, Elena Road and Moody Road.

The Town’s role in the project is the lead trenching agent, who pays the upfront design and construction costs of the joint trench infrastructure required for participating utility companies to pull and install their respective overhead facilities underground. As the lead trenching agency, the Town is responsible for the construction of the joint trench for participating utility companies (PG&E, AT&T and Comcast). The Town is not one of the participating utility occupants of the joint trench. PG&E, AT&T and Comcast will reimburse the Town entirely for the design and construction of the joint trench.

The current cost estimate for the joint trench work is $4,751,000. Significant work was completed during fiscal 2024-25, and expected completion is in fiscal 2025-26. The Town will not own or maintain the underground infrastructure, therefore, project costs are recorded as expenditures in the Capital Improvement Projects Fund, and reimbursements from the participating utility companies are recorded as revenues. As of June 30, 2025, the Town has recorded approximately $4.3 million in revenues and expenditures related to this project.

D. Refund of Building Permit Fees Overcharged in Previous Years In July 2020, the Town had adopted a new fee schedule including building permits. A fee study was later conducted that determined residents had been overcharged for certain fees from 2020-2022. In November 2025, the Town Council voted to voluntarily refund residents approximately $1.2 million in permit fees that had been overcharged in previous years. Residents will be notified in January 2026 to begin the process for the refunds.

Page | 67

Notes to Basic Financial Statements
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.

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, 2025.

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.
• Employees hired on or after October 11, 2007, who retire on or after April 2022 may qualify for a temporarily higher benefit between age 60 to 65. This higher benefit is 100% of the single premium up to but not more than the Kaiser Region 1 rate multiplied by a vesting percentage. The vesting percentage applied to determine the temporary higher benefits is: 50% after 10 years of CalPERS service (at least 5 years of Town service); increasing by 5% of each additional year; and to a maximum of 100% for 20 or more CalPERS years of service.

Page | 68

Notes to Basic Financial Statements
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) D. Employees Covered by Benefit Terms
Membership in the plan consisted of the following at the measurement date of June 30, 2025:

Count
Inactive employees or beneficiaries currently receiving benefits 15 Inactive employees entitled to but not yet receiving benefits 4 Active employees 25
Total 44
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 measurement period but prior to the end of the fiscal year are shown below. For fiscal year ending June 30, 2025, Town contributions totaled $154,792.

Page | 69

Notes to Basic Financial Statements
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) E. Contributions (Continued)
Benefits Paid by Trust $ -
Benefits Paid by Employer 130,709
Implicit benefit payments 24,083
Total Benefit Payments During the Measurement Period $ 154,792 Employer Contributions to the Trust $ -
-
Implicit Contributions 24,083
Total Employer Contributions During the Measurement Date $ 24,083 Employer Contributions to the Trust $ -
-
Implicit Contributions 31,832
Total Employer Contributions Subsequent to the Measurement Date $ 31,832 Benefit Payments during the Measurement Period
(July 1, 2023 through June 30, 2024)
Employer Contributions During the Measurement Period
(July 1, 2023 through June 30, 2024)
Employer Contributions in the Form of Direct Benefit Payments (not reimbursed by the Trust)
Employer Contributions Subsequent to the Measurement Period (July 1, 2024 through June 30, 2025)
Employer Contributions in the Form of Direct Benefit Payments (not reimbursed by the Trust)
The Town prefunds its 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, 2025:
• The amounts attributed to service performed in the current fiscal year (the normal cost); and • Amortization of the unfunded actuarial accrued liability (UAAL).

Page | 70

Notes to Basic Financial Statements
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) E. Contributions (Continued)
Expected contributions, relative to the ADC, for the fiscal year ending June 30, 2025 are as follows:

Actuarially determined contribution $ 88,243
Contributions in relation to the
actuarially determined contributions (31,832)
Contribution deficiency (excess) $ 56,411
Covered payroll $ 3,480,617
F. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ending June 30, 2025, the Town recognized OPEB expense of $58,611. At June 30, 2025, 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 $ 31,832 $ - Changes of assumptions 230,211 (32,122)
Differences between expected and
actual experience 87,554 (136,974)
Net difference between projected and actual earnings on OPEB plan investments 15,048 -
Total $ 364,645 $ (169,096)
The $31,832 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Years Ending June 30
2026 (44,152) $
2027 72,316
2028 (5,285)
2029 23,777
2030 50,176
Thereafter 66,885
Total $ 163,717
Page | 71

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, 2024 and the total OPEB liability used to calculate the net OPEB liability (asset) was determined by an actuarial valuation dated June 30, 2023 that was rolled forward using standard update procedures to determine the total OPEB liability as of June 30, 2025, based on the following actuarial methods and assumptions:

Actuarial Assumptions:

Actuarial Valuation Date June 30, 2023
Measurement Date June 30, 2024
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%
Discount Rate 5.55%
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 Actual premiums in 2025 (9.0%/22.0%), declining each year to 4.9% in 2075 and 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, 2023 valuation were based on the 2021 experience study of the CalPERS system using data from 1997 to 2019, 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.

Change in Assumptions - The discount rate decreased from 6.0% at June 30, 2023 to 5.55% at June 30, 2024.

Page | 72

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. The balance in the Town’s CERBT account as of June 30, 2025 was $2,958,971.

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 Index 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 | 73

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, 2024
(Measurement Date 6/30/2023) $ 2,600,556 2,660,017 $ 59,461 $ Changes for the year:

Service Cost 82,340 - 82,340
Interest on the Total OPEB Liability 159,898 - 159,898
Changes of benefit terms - - -
Differences between Expected and Actual Experience - - - Contributions:

Employer - 24,083 (24,083)
Expected Investment Income - - -
Investment Experience - 284,082 (284,082)
Benefit payments, including Refunds of
Employee Contributions (154,792) (154,792) -
Administrative Expense - (848) 848
Changes of assumptions 122,093 - 122,093
Net changes 209,539 152,525 57,014
Balance at June 30, 2025
(Measurement Date 6/30/2024) $ 2,869,556 $ 2,753,081 $ 116,475 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 5.55%. 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.

Page | 74

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 (4.55%) or 1-percentage-point higher (6.55%) than the current discount rate:
1% Decrease 4.55%
Net OPEB Liability (Asset) $ 421,460
Current Discount Rate 5.55%
Net OPEB Liability (Asset) 116,475 $
1% Increase 6.55%
Net OPEB Liability (Asset) $ (143,513)
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 Current -1.0%
Net OPEB Liability (Asset) $ (156,190)
Trend Rate Current
Net OPEB Liability (Asset) 116,475 $
1% Increase Current + 1.0%
Net OPEB Liability (Asset) $ 439,208
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 | 75

Notes to Basic Financial Statements
NOTE 12 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Excess of Expenditures Over Appropriations
The Other Capital Projects Fund had expenditures of $89,555,739 at June 30, 2025.

The COPS Special Revenue Fund had expenditures over appropriations of $3,003 at June 30, 2025.

Expenditures were directly paid from the COPS fund, resulting in an equivalent reduction in the transfer from the COPS Fund to the General Fund.

B. Deficit Fund Balance
As of June 30, 2025, the Town had a fund balance deficit in the Street Capital Projects Fund in the amount of $31,002.

Remainder of this page left intentionally blank.

Page | 76

Required
Supplemental Information
Page | 77

Variance with
Final BudgetActual Positive
Original Final Amounts (Negative)

REVENUES
Property taxes $ 8,914,040 $ 8,914,040 8,945,715 $ 31,675 Taxes other than property 610,750 610,750 705,338 94,588 Franchise fees 589,000 589,000 695,019 106,019
Licenses and permits 1,647,896 1,647,896 1,179,792 (468,104) Intergovernmental 36,000 36,000 147,376 111,376
Use of money and property 925,000 925,000 1,340,586 415,586 Charges for services 939,800 939,800 1,240,658 300,858
Rental income 202,000 202,000 180,071 (21,929)
Fines and forfeitures 105,000 105,000 109,048 4,048
Interfund charges 3,711,885 3,711,885 3,189,727 (522,158) Miscellaneous 10,000 10,000 6,559 (3,441)
Total Revenues 17,691,371 17,691,371 17,739,889 48,518

EXPENDITURES
Current:

General government 3,753,648 3,652,701 3,252,350 400,351 Public safety 3,695,061 3,780,061 3,288,792 491,269
Community development 5,243,641 5,269,950 4,442,592 827,358 Public works 3,550,836 3,590,902 3,104,945 485,957
Parks and recreation 1,833,729 1,837,390 1,643,094 194,296 Total Expenditures 18,076,915 18,131,004 15,731,773 2,399,231 Excess (Deficiency) of Revenues
Over Expenditures (385,544) (439,633) 2,008,116 2,447,749

OTHER FINANCING SOURCES (USES)
Transfers in 38,976 38,976 813,742 (774,766)
Transfers out (2,253,250) (2,423,362) (1,330,599) 1,092,763 Total Other Financing Sources (Uses) (2,214,274) (2,384,386) (516,857) 317,997 Net Change in Fund Balances (2,599,818) (2,824,019) 1,491,259 2,765,746 Fund Balances, Beginning of Year 16,945,885 16,945,885 16,945,885 - Fund Balances, End of Year $ 14,346,067 $ 14,121,866 $ 18,437,144 $ 2,765,746

TOWN OF LOS ALTOS HILLS

SCHEDULE OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2025

GENERAL FUND
Budgeted Amounts
Page | 78
$

Required Supplemental Information
Cost-Sharing Multiple-Employer Defined Pension Plan
Last 10 Years

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Measurement Date 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 Plan's Proportion of the Net Pension Liability
(Asset) 0.07776% 0.08293% 0.08630% 0.05018% 0.05502%
Plan's Proportionate Share of the Net Pension
Liability (Asset) $ 2,133,424 $ 2,881,005 $ 3,400,941 $ 1,891,026 $ 2,203,151 Plan's Covered Payroll $ 1,624,334 $ 1,641,880 $ 1,786,436 $ 1,877,689 $ 2,381,293 Plan's Proportionate Share of the Net Pension
Liability (Asset) as a Percentage of it's Covered
Payroll 131.34% 175.47% 190.38% 100.71% 92.52%
Plan’s Fiduciary Net Position as a Percentage of
the Total Pension Liability 78.40% 74.06% 73.31% 77.69% 77.73% Miscellaneous Plan
Measurement Date 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 Plan's Proportion of the Net Pension Liability
(Asset) 0.05917% -0.01126% 0.05707% 0.06218% 0.06269%
Plan's Proportionate Share of the Net Pension
Liability (Asset) $ 2,495,780 $ (213,880) $ 2,670,482 $ 3,109,217 $ 3,031,964 Plan's Covered Payroll $ 2,603,667 $ 2,696,540 $ 2,691,890 $ 2,909,838 $ 2,974,754 Plan's Proportionate Share of the Net Pension
Liability (Asset) as a Percentage of it's Covered
Payroll 95.86% -7.93% 99.20% 106.85% 101.92%
Plan’s Fiduciary Net Position as a Percentage of
the Total Pension Liability 77.71% 90.49% 78.19% 77.97% 78.08% Miscellaneous Plan
Page | 79

Required Supplemental Information
Fiscal Year 2016 2017 2018 2019 2020
Actuarially determined contribution $ 221,507 $ 250,340 $ 1,640,692 $ 345,118 $ 397,870 Contributions in relation to the actuarially
determined contributions (221,507) (250,340) (1,640,692) (345,118) (397,870) Contribution deficiency (excess) $ - $ - $ - $ - $ -
Covered payroll $ 1,641,880 $ 1,786,436 $ 1,877,689 $ 2,381,293 $ 2,603,667 Contributions as a percentage of covered
payroll 13.49% 14.01% 87.38% 14.49% 15.28%
Valuation date: 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Miscellaneous Plan
Fiscal Year 2021 2022 2023 2024 2025
Actuarially determined contribution $ 949,129 $ 439,202 $ 446,339 $ 432,018 $ 543,921 Contributions in relation to the actuarially
determined contributions (949,129) (439,202) (446,339) (432,018) (543,921) Contribution deficiency (excess) $ - $ - $ - $ - $ -
Covered payroll $ 2,696,540 $ 2,691,890 $ 2,909,838 $ 2,974,754 $ 3,292,837 Contributions as a percentage of covered
payroll 35.20% 16.32% 15.34% 14.52% 16.52%
Valuation date: 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 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 28 years
Asset valuation method 5-year smoothed market
Inflation 2.30%
Salary increases Varies by Entry Age and Service
Investment rate of return 6.90%, 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 Tier 1 -The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 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 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 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 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS website.

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

SCHEDULE OF CONTRIBUTIONS
Miscellaneous Plan
Page | 80

Required Supplemental Information
Measurement Date 2017 2018 2019 2020 2021 2022 2023 2024 Total OPEB Liability
Service Cost $ 59,133 57,272 $ 61,054 $ 66,829 $ 68,834 $ 57,067 $ 75,074 $ 82,340 $ Interest on the total OPEB Liability 148,769 145,306 152,261 134,496 137,420 128,654 139,296 159,898 Changes in benefit terms - - - - - 120,003 - -
Differences between expected and actual experience - - (346,011) - (130,843) - 116,594 - Changes of assumptions - - (25,019) - (61,901) - 164,225 122,093 Benefit Payments (157,788) (135,645) (145,442) (142,864) (166,338) (129,326) (163,404) (154,792) Net change in total OPEB liability 50,114 66,933 (303,157) 58,461 (152,828) 176,398 331,785 209,539 Total OPEB liability - beginning 2,499,244 2,432,311 2,549,358 2,246,201 2,304,662 2,151,834 2,328,232 2,660,017 Total OPEB liability - ending (a) $ 2,549,358 2,499,244 $ 2,246,201 $ 2,304,662 $ 2,151,834 $ 2,328,232 $ 2,660,017 $ 2,869,556 $ Plan fiduciary net position
Contributions - employer-Town's contribution 403,645 $ 157,788 $ 145,442 $ 59,226 $ 60,918 $ - $ 38,773 $ 24,083 $ Contributions - employer-implicit subsidy - - - - - - - - Net investment income 200,657 174,834 146,116 89,421 694,774 (414,716) 164,661 284,082 Benefit payments (135,645) (157,788) (145,442) (142,864) (166,338) (129,326) (163,404) (154,792) Implicit rate subsidy fulfilled - - - - - - - -
Administrative expense (1,019) (1,171) (507) (1,219) (954) (788) (745) (848) Other Expenses - (2,906) - - - - - -
Net change in plan fiduciary net position 170,757 467,638 145,609 4,564 588,400 (544,830) 39,285 152,525 Plan fiduciary net position - beginning 2,196,771 1,729,133 2,367,528 2,513,137 2,517,701 3,106,101 2,561,271 2,600,556 Plan fiduciary net position - ending (b) $ 2,367,528 2,196,771 $ 2,513,137 $ 2,517,701 $ 3,106,101 $ 2,561,271 $ 2,600,556 $ 2,753,081 $ Net OPEB liability/(Asset) - ending (a) - (b) $ 181,830 302,473 $ (266,936) $ (213,039) $ (954,267) $ (233,039) $ 59,461 $ 116,475 $ Town's covered payroll $ 2,082,980 1,856,292 $ 2,364,255 $ 2,829,032 $ 2,929,250 $ 2,528,304 $ 3,025,814 $ 3,268,961 $ 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% -9.22% 1.97% 3.56% 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.

SCHEDULE OF CHANGES IN THE TOWN'S NET OPEB LIABILITY AND RELATED RATIOS Last 10 Years*
For the measurement year ending June 30
Prepared for Town of Los Altos Hills
Page | 81

Required Supplemental Information
Fiscal Year Ending 2018 2019 2020 2021 2022 2023 2024 2025 Actuarially determined contribution $ 103,483 $ 100,051 $ 59,226 $ 60,918 $ 20,926 $ 39,694 $ 34,933 $ 88,243 Contributions in relation to the actuarially
determined contributions (157,788) (145,442) (59,226) (60,918) (38,773) - (24,083) (31,832) Contribution deficiency (excess) $ (54,305) $ (45,391) $ - $ - $ 20,926 $ 921 $ 10,850 $ 56,411 Covered payroll $ 1,856,292 $ 2,082,980 $ 2,364,255 $ 2,929,250 $ 2,528,304 $ 3,025,814 $ 3,268,961 $ 3,480,617 Contributions as a percentage of covered payroll 8.50% 6.98% 2.51% 2.08% 0.00% 1.28% 0.74% 0.91% Percent of ADC Contributed 152.48% 145.37% 100.00% 100.00% 0.00% 97.68% 68.94% 36.07% Notes to Schedule
Valuation date: 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 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
Mortality Improvement
* - Fiscal year 2018 was the 1st year of implementation.

Prepared for Town of Los Altos Hills
Age 50 and 5 years of service
CalPERS 2021 Experience Study
MacLeod Watts Scale 2022
Market value of assets

2.50%

3.00%
9%/22% pre/post 65 in 2025, decreasing until
ultimate rate of 3.90% in 2075

5.55%
Entry age normal, level percent of pay

SCHEDULE OF OPEB CONTRIBUTIONS
Last 10 Years*
For the fiscal year ending June 30
Page | 82

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 Town Manager submits to the Town 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 Town 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 Town Council. Expenditures may not legally exceed budgeted appropriations at the fund level without Town 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 Town Council. The Town adopts budgets for all funds except the Parks and Recreation In-Lieu Fee and Special Donations Special Revenue Funds.

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 | 83

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Supplemental Information
Page | 85

Variance with
Final BudgetActual Positive
Original Final Amounts (Negative)

REVENUES
Intergovernmental $ 523,080 $ 523,080 $ 528,955 $ 5,875 Charges for services 102,000 102,000 373,849 271,849
Total Revenues 625,080 625,080 902,804 277,724

EXPENDITURES
Capital outlay 1,385,000 1,415,000 1,371,194 43,806
Total Expenditures 1,385,000 1,415,000 1,371,194 43,806 Excess (Deficiency) of Revenues
Over Expenditures (759,920) (789,920) (468,390) 321,530

OTHER FINANCING SOURCES (USES)
Transfers in 563,919 563,919 225,204 (338,715)
Total Other Financing Sources (Uses) 563,919 563,919 225,204 (338,715) Net Change in Fund Balances (196,001) (226,001) (243,186) (17,185) Fund Balances, Beginning of Year 212,184 212,184 212,184 - Fund Balances, End of Year $ 16,183 $ (13,817) $ (31,002) $ (17,185)

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, 2025
Budgeted Amounts
Page | 86

Variance with
Final BudgetActual Positive
Original Final Amounts (Negative)

REVENUES
Intergovernmental $ 180,000 $ 180,000 $ 405,086 $ 225,086 Charges for services - 134,739 - 134,739
Rental income 62,000 62,000 62,420 420
Investment Income - 86,246 - 86,246
Other revenues - 4,277,453 - 4,277,453
Total Revenues 242,000 242,000 4,965,944 4,723,944

EXPENDITURES
General government 320,000 320,000 1,563,399 (1,883,399) Public works 2,769,226 2,769,226 4,903,114 (7,672,340)
Total Expenditures 3,089,226 3,089,226 6,466,513 (9,555,739) Excess (Deficiency) of Revenues
Over Expenditures (2,847,226) (2,847,226) (1,500,569) 1,346,657

OTHER FINANCING SOURCES (USES)
Transfers in 2,136,548 2,712,548 1,134,943 (1,577,605)
Transfers (out) (40,000) - (40,000) -
Total Other Financing Sources (Uses) 2,136,548 2,672,548 1,094,943 (1,577,605) Net Change in Fund Balances (710,678) (174,678) (405,626) (230,948) Fund Balances, Beginning of Year 2,468,416 2,468,416 2,468,416 - Fund Balances, End of Year $ 1,757,738 $ 2,293,738 $ 2,062,790 $ (230,948)

TOWN OF LOS ALTOS HILLS

SCHEDULE OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCE - BUDGET AND ACTUAL

OTHER CAPITAL PROJECTS FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2025
Budgeted Amounts
Page | 87

Variance with
Final BudgetActual Positive
Original Final Amounts (Negative)

OPERATING REVENUES
Charges for services $ 3,715,880 $ 3,715,880 $ 3,760,895 $ 45,015 Other income - - 1,486 1,486
Total Operating Revenues 3,715,880 3,715,880 3,762,381 46,501

OPERATING EXPENSES
Salaries and benefits 309,808 309,808 297,838 11,970
Contract services - treatment plant 3,141,121 3,141,121 2,172,398 968,723 Professional services 25,500 25,500 17,314 8,186
Support goods and services 10,000 10,000 5,456 4,544
Repairs and maintenance - - 478,358 (478,358)
Utilities 8,600 8,600 13,508 (4,908)
Interfund charges 320,073 320,073 283,149 36,924
Depreciation - - 276,183 (276,183)
Total Operating Expenditures 3,815,102 3,815,102 3,544,204 270,898 Operating income (99,222) (99,222) 218,177 317,399

NONOPERATING REVENUES (EXPENSES)
Capital Contributions - sewer connection fees 125,660 125,660 182,857 57,197 Interest income - - 338,833 338,833
Nonoperating Revenues (Expenses), net 125,660 125,660 521,690 396,030

NET INCOME (LOSS) BEFORE TRANSFERS
Transfers in - - 10,452 10,452
Changes in Net Position 26,438 26,438 750,319 723,881
Fund Balances, Beginning of Year 13,134,778 13,134,778 13,134,778 - Fund Balances, End of Year $ 13,161,216 $ 13,161,216 $ 13,885,097 $ 723,881

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, 2025
Budgeted Amounts
Page | 88

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.

Page | 89

Total
Parks and Nonmajor
Recreation Special Governmental
In-Lieu Fee COPS Donations ARPA Funds
ASSETS
Cash and investments 462,793 $ $ 34,473 - $ $ 497,266 - $ Accounts receivable 697 - - - 697
Total Assets 463,490 $ - $ 34,473 $ - $ 497,963 $

LIABILITIES
Accounts payable - $ $ - $ - $ - $ -
Due to other funds - - - - -
Total Liabilities - - - - -

FUND BALANCES
Restricted 463,490 - 34,473 - 497,963

Total Fund Balances 463,490 - 34,473 - 497,963

TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES $ - 463,490 $ 34,473 $ - $ 497,963 $

SPECIAL REVENUE FUNDS

TOWN OF LOS ALTOS HILLS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS
JUNE 30, 2025
Page | 90

TOWN OF LOS ALTOS HILLS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2025
Total
Parks and Nonmajor
Recreation Special Governmental
In-Lieu Fund COPS Donations ARPA Funds

REVENUES
Intergovernmental $ 194,663 - $ $ - $ - $ 194,663
Investment income 14,555 - - - 14,555
Total Revenues 14,555 194,663 - - 209,218

EXPENDITURES
Current:

Public safety - 3,003 - - 3,003
Park and recreation 1,923 - - - 1,923
Total Expenditures 1,923 3,003 - - 4,926

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 12,632 191,660 - - 204,292

OTHER FINANCING SOURCES (USES)
Transfers out - (637) - (813,105) (813,742)
Total Other Financing Sources (Uses) - (637) - (813,105) (813,742) NET CHANGE IN FUND BALANCES 12,632 191,023 - (813,105) (609,450) BEGINNING FUND BALANCES (DEFICITS) 450,858 (191,023) 34,473 813,105 1,107,413 ENDING FUND BALANCES (DEFICITS) $ 463,490 $ 34,473 - $ $ - $ 497,963

SPECIAL REVENUE FUNDS
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, 2025
Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)

GOVERNMENTAL REVENUES
Charges for services $ - $ - $ - $ - $ - $ -
Intergovernmental 115,000 194,663 79,663 - - -
Rental income - - - - - -
Investment income - - - - - -
Other revenues - - - - - -
Total Revenues 115,000 194,663 79,663 - - -

EXPENDITURES
Current:

General government - - - - - -
Public safety - 3,003 (3,003) - - -
Park and recreation - - - - - -
Capital outlay - - - - - -
Total Expenditures - 3,003 (3,003) - - -

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 115,000 191,660 82,666 - - -

OTHER FINANCING SOURCES (USES)
Transfers in - - - - - -
Transfers out (38,976) (637) 38,339 (813,105) (813,105) - Total Other Financing Sources (Uses) (38,976) (637) 38,339 (813,105) (813,105) - NET CHANGES IN FUND BALANCES 76,024$ 191,023 $ 121,005 $ (813,105) (813,105) $ - BEGINNING FUND BALANCES (DEFICITS) (191,023) 813,105
ENDING FUND BALANCES (DEFICITS) $ - $ -

COPS ARPA

SPECIAL REVENUE FUNDS
Page | 92

STATISTICAL

SECTION
Page | 93

This page intentionally left blank

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. 96 Revenue Capacity - These schedules contain information to help the reader assess one of the Town’s most significant local revenue source, the property tax. 106
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.
110
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.
113
Operating Information - These schedules contain service and infrastructure data to help the reader understand how the information in the Town’s ACFR relates to the services the Town provides and activities it performs.
116
Statistical Section
This part of the Town of Los Altos Hills Comprehensive Annual 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 | 95

Statistical Section
Net Position by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2016 2017 2018 2019
Governmental activities:

Invested in capital assets, net $ 24,700,834 $ 24,739,048 $ 25,898,305 $ 26,305,865 Restricted 1,706,954 115,275 192,287 1,229,812
Unrestricted 9,687,552 13,377,599 13,052,174 14,219,604 Total governmental activities net position $ 36,095,340 $ 38,231,922 $ 39,142,766 $ 41,755,281 Business-type activities:

Invested in capital assets, net $ 5,244,525 $ 5,831,322 $ 6,704,180 $ 7,264,306 Restricted - - - -
Unrestricted 2,582,858 2,607,749 2,647,350 3,205,406
Total business-type activities net position $ 7,827,383 $ 8,439,071 $ 9,351,530 $ 10,469,712 Primary government:

Invested in capital assets, net $ 29,945,359 $ 30,570,370 $ 32,602,485 $ 33,570,171 Restricted 1,706,954 115,275 192,287 1,229,812
Unrestricted 12,270,410 15,985,348 15,699,524 17,425,010 Total net position $ 43,922,723 $ 46,670,993 $ 48,494,296 $ 52,224,993 Source: Audited Financial Statements
Page | 96

Statistical Section
2020 2021 2022 2023 2024 2025
$ 26,253,419 26,511,993 $ $ 29,143,703 27,656,707 $ 32,034,584 $ 31,545,193 $ 1,354,610 1,956,700 2,187,276 2,816,853 2,507,573 1,839,836 17,365,028 17,760,957 21,316,254 18,139,599 17,577,028 18,490,366 $ 45,971,076 45,231,631 $ $ 50,100,155 51,160,237 $ 52,119,185 $ 51,875,395 $ $ 7,717,735 7,574,231 $ $ 8,212,247 7,865,497 $ 8,561,915 $ 8,807,916 $ - - - 12,141 -
3,291,370 3,830,656 4,177,070 4,283,954 4,572,863 5,077,181 $ 10,865,601 $ 11,548,391 $ 12,042,567 $ 12,508,342 $ 13,134,778 $ 13,885,097 $ 34,086,224 $ 33,971,154 $ 35,522,204 $ 37,355,950 $ 40,596,499 $ 40,353,109 1,354,610 1,956,700 2,187,276 2,828,994 2,507,573 1,839,836 20,656,398 21,591,613 25,493,324 22,423,553 22,149,891 23,567,547 $ 56,097,232 $ 57,519,467 $ 63,202,804 $ 62,608,497 $ 65,253,963 $ 65,760,492 Page | 97

Statistical Section
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2016 2017 2018 2019
Governmental activities:

Expenses:

General government $ 2,339,474 $ 2,119,990 $ 2,459,576 $ 2,477,572 Public safety 1,601,654 1,817,299 2,194,391 2,388,908
Community development 2,167,702 2,210,748 2,894,119 2,768,476 Parks and recreation 738,495 680,522 1,157,213 851,096
Drainage and street operations - - - -
Public works 1,252,271 1,461,155 1,669,907 2,001,602
Non-Departmental - - - -
Interest on long-term debt 1,492 - - -
Total governmental activities expenses 8,101,088 8,289,714 10,375,206 10,487,654 Program revenues:

Charges for services:

General government 72,566 27,615 1,804,216 1,970,336
Public safety - - 156,083 132,138
Community development 2,217,874 2,219,769 1,792,025 1,546,016 Parks and recreation 199,241 222,834 394,729 255,128
Drainage and street operations - - - -
Public works 388,931 549,729 513,771 476,146
Operating contributions and grants 303,292 343,107 194,053 230,351 Capital contributions and grants 398,990 69,635 94,031 185,744 Total governmental activities program revenues 3,580,894 3,432,689 4,948,908 4,795,859 Total governmental activities net program expenses (4,520,194) (4,857,025) (5,426,298) (5,691,795) General revenues and other changes in net position:

Governmental revenues:

Taxes
Property taxes 4,960,016 5,302,028 5,721,224 6,385,652
Taxes other than property 565,055 666,631 724,609 522,946 Franchise taxes 474,732 573,336 579,333 530,991
Use of money and property 356,479 222,688 - -
Rental income * - - 218,816 -
Investment Income * - - 32,349 530,582
Other unrestricted revenue 4,538 13,747 39,051 334,139
Sale of Capital Assets-net - 5,500 5,885 -
Other intergovernmental revenue - - -
Transfers 153,419 209,677 - -
Total governmental activities general revenues
and other changes in net position 6,514,239 6,993,607 7,321,267 8,304,310 Total governmental activities changes in net position 1,994,045 2,136,582 1,894,969 2,612,515 * 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 | 98

Statistical Section
2020 2021 2022 2023 2024 2025
$ 2,639,241 $ 4,701,506 $ 2,523,787 $ 4,781,296 $ 2,335,260 $ 5,416,955 2,388,202 2,331,814 2,575,786 3,026,838 4,038,777 3,754,412 3,408,027 3,441,398 3,490,984 4,575,519 4,800,671 5,061,940 770,495 1,061,879 790,853 1,736,231 1,683,650 1,859,663 - - - - -
2,086,121 2,235,212 2,695,189 3,571,203 3,522,098 8,535,262 - 1,106,626 279,754 106,697 -
- - - -
11,292,086 14,878,435 12,356,353 17,797,784 16,380,456 24,628,232 tied to ACFR final tied to ACFR Draft, Page 3 Statement 2,557,408 2,108,477 3,229,670 3,183,113 3,223,304 3,429,971 185,743 165,271 161,285 186,159 194,664
2,533,045 2,028,933 1,989,196 3,189,907 2,434,952 1,971,051 290,637 224,853 334,340 695,299 385,323 341,948
- - - -
592,434 471,259 554,423 270,281 495,359 686,661
347,577 294,139 1,097,126 950,243 219,153 281,810
591,956 374,296 605,866 445,174 506,455 5,571,854
6,079,973 6,520,784 9,487,019 7,384,175 7,450,705 12,477,959 (5,212,113) (8,357,651) (2,869,334) (10,413,609) (8,929,751) (12,150,273) tied to ACFR Draft, Page 3 Statement
7,315,637 6,834,083 8,153,743 7,592,741 8,531,557 8,945,715 1,038,680 603,657 583,726 922,490 667,742 787,582
350,952 340,268 391,130 414,154 665,597 695,019
- - - -
- - - -
897,996 59,912 (888,572) 180,170 1,063,607 1,482,060
42,885 631,290 26,984 54,058 30,136 6,559
- - - -
- - - -
(30,426) (299,376) (9,300) (9,300) (9,858) (10,452)
8,688,463 9,097,095 8,058,497 9,353,527 10,948,781 11,906,483 3,476,350 739,444 5,189,163 (1,060,082) 2,019,030 (243,790) tied to ACFR Draft, Page 3 Statement
Page | 99

Statistical Section
Changes in Net Position (continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2016 2017 2018
Business-type activities:

Expenses:

Sewer $ 1,997,399 $ 2,129,895 $ 2,114,609
Total business-type activities expenses 1,997,399 2,129,895 2,114,609 Program revenues:

Charges for services:

Sewer 1,925,636 2,759,287 2,917,428
Operating contributions and grants - - -
Capital contributions and grants 221,010 185,369 130,930 Total business-type activities program revenues 2,146,646 2,944,656 3,048,358 Total business-type activities net program revenue (expenses) 149,247 814,761 933,749 General revenues and other changes in net position:

Use of money and property 32,557 4,134 -
Investment Income * - - 6,642
Other unrestricted revenue 2,829 2,470 3,220
Transfers (153,419) (209,677) -
Total business-type activities general revenues - - -
and other changes in net position (118,033) (203,073) 9,862 Total business-type activities changes in net position 31,214 611,688 943,611 Total primary government change in net position $ 2,025,259 $ 2,748,270 $ 2,838,580 * 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 cosistent 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
2019 2020 2021 2022 2023 2024 2025
$ 2,061,261 $ 3,005,538 $ 2,750,983 $ 2,643,741 $ 2,926,892 $ 3,256,502 $ 3,544,204 2,061,261 3,005,538 2,750,983 2,643,741 2,926,892 3,256,502 3,544,204 3,005,050 3,104,059 3,035,410 3,070,792 3,263,652 3,534,615 3,760,895 - - - - - -
98,183 85,595 88,908 236,512 97,754 154,081 182,857
3,103,233 3,189,654 3,124,318 3,307,304 3,361,406 3,688,696 3,943,752 1,041,972 184,116 373,335 663,563 434,514 432,194 399,548 - - - - -
76,210 172,060 10,079 (186,156) 21,481 171,190 338,833
- 9,287 - 7,469 480 13,194 1,486
- 30,426 299,376 9,300 9,300 9,858 10,452
- - - - -
76,210 211,773 309,455 (169,387) 31,261 194,242 350,771 1,118,182 395,889 682,790 494,176 465,775 626,436 750,319 $ 3,730,697 $ 3,872,239 $ 1,422,234 $ 5,683,339 $ (594,307) $ 2,645,466 $ 506,529 Page | 101

Statistical Section
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2016 2017 2018 2019
General Fund
Restricted $ - $ - $ - $ 528,723
Committed 1,765,000 1,840,000 3,125,000 3,155,000
Assigned 350,000 350,000 350,000 350,000
Unassigned 7,606,176 10,267,874 8,254,294 8,841,955
Total General Fund $ 9,721,176 $ 12,457,874 $ 11,729,294 $ 12,875,678 All other governmental funds
Restricted $ 1,706,954 $ 115,275 $ 192,287 $ 701,089
Committed 1,086,413 2,050,545 2,041,192 2,449,411
Unassigned - - - -
Total all other governmental funds $ 2,793,367 $ 2,165,820 $ 2,233,479 $ 3,150,500 Source: Audited Financial Statements
Page | 102

Statistical Section
2020 2021 2022 2023 2024 2025
$ 550,215 $ 1,178,398 $ 1,040,671 $ 1,103,320 $ 1,209,137 $ 1,341,873 6,371,700 6,371,700 6,371,700 10,868,004 10,868,004 9,619,259 2,071,500 2,071,500 2,071,500 2,328,858 2,328,858 3,113,623 7,174,940 7,338,881 8,599,777 2,458,243 2,539,886 4,362,389 $ 16,168,355 $ 16,960,479 $ 18,083,648 $ 16,758,425 $ 16,945,885 $ 18,437,144 tied to ACFR draft page 5
$ 804,395 $ 778,302 $ 1,146,605 $ 1,492,635 $ 1,298,436 $ 497,963 2,666,028 2,686,754 2,701,679 2,846,683 2,680,600 2,062,790 - - - (191,024) (191,023) (31,002)
$ 3,470,423 $ 3,465,056 $ 3,848,284 $ 4,148,294 $ 3,788,013 $ 2,529,751 G.Total FB = $20,458,839, tied to
Page | 103

Statistical Section
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2016 2017 2018 2019 2020
Revenues:

Property taxes $ 4,960,016 $ 5,302,028 $ 5,721,224 $ 6,385,652 $ 6,834,083 Taxes other than property 511,091 610,337 667,037 466,062 537,836 Franchise fees 474,732 573,336 579,333 530,991 340,268
Licenses and permits 1,334,953 1,544,996 1,246,623 1,060,772 990,768 Intergovernmental 752,717 412,855 489,392 574,257 894,577 Use of money and property 356,479 222,688 - - -
Investment Income * - - 32,349 530,582 897,996
Charges for services 1,449,127 1,482,830 1,625,306 1,282,436 1,878,256 Interfund charges - - 1,632,812 1,748,699 1,858,142
Rental income - - 218,816 155,719 222,534
Fines and forfeitures - - 381 - 4,797
Miscellaneous 102,599 62,048 56,902 364,999 339,605
Total revenues 9,941,714 10,211,118 12,270,175 13,100,169 14,798,862 Expenditures
Current:

General government 1,859,492 1,813,551 1,983,939 2,113,083 2,127,557 Public safety 1,255,198 1,560,295 1,781,425 1,974,021 2,084,618 Community development 1,641,631 1,833,654 2,540,121 2,642,159 2,860,410 Parks and recreation 565,440 575,594 722,696 742,986 652,562 Drainage and street operation - - - - -
Public works 951,786 1,214,072 1,678,516 1,632,329 1,724,318 Non-Departmental - - - - -
Debt service: - - - - -
Principal 81,360 - - - -
Interest 1,492 - - - -
Additional pension and OPEB payments - - 1,660,209 - -
Capital outlay 1,259,010 1,314,478 2,564,189 1,932,186 1,706,371 Total expenditures 7,615,409 8,311,644 12,931,095 11,036,764 11,155,836 Excess (deficiency) of revenues
over (under) expenditures 2,326,305 1,899,474 (660,920) 2,063,405 3,643,026 Other financing sources (uses)
Transfers in 2,299,774 2,988,073 2,215,434 2,113,748 781,527 Transfers out (2,146,355) (2,778,396) (2,215,434) (2,113,748) (811,953) Sale of assets - - - - -
Proceeds from debt - - - - -
Other financing sources (uses) 153,419 209,677 0 0 (30,426) Net change in fund balances $ 2,479,724 $ 2,109,151 $ (660,920) $ 2,063,405 $ 3,612,600 Debt service as a percentage of
noncapital expenditures 1.3% 0.0% 0.0% 0.0% 0.0%
* 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 201-15 numbers is the treatment of overhead 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. 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 | 104

Statistical Section
2021 2022 2023 2024 2025
$ 7,315,637 $ 7,592,741 $ 8,153,743 $ 8,531,557 $ 8,945,715 978,527 813,072 575,010 599,107 705,338
350,952 414,154 391,130 665,597 695,019
1,830,032 2,529,635 1,366,066 1,837,123 1,179,792
1,019,418 2,161,832 1,847,035 1,146,081 1,276,080
- - -
59,912 (888,572) 180,170 1,055,397 1,441,387
1,514,977 1,933,466 1,279,666 1,550,681 1,749,246
1,898,349 2,603,083 2,625,959 2,741,390 3,189,727
200,584 273,474 245,472 191,503 242,491
1,680 32,400 24,461 38,008 109,048
747,187 89,531 58,290 52,900 4,284,012
15,917,255 17,554,816 16,747,002 18,409,344 23,817,855
4,415,774 3,439,713 3,512,265 3,436,047 4,815,749
2,035,269 2,300,095 2,704,971 3,639,614 3,291,795
3,045,611 3,746,154 3,613,069 4,193,925 4,442,592
940,742 1,263,679 1,496,577 1,483,277 1,645,017
- - -
1,968,848 2,416,468 2,835,138 2,783,515 3,104,945
1,106,626 279,754 95,268 -
- - -
- - -
- - -
- - -
1,318,252 2,593,256 3,505,627 3,035,929 6,274,308
14,831,122 16,039,119 17,762,915 18,572,307 23,574,406
1,086,133 1,515,697 (1,015,913) (162,963) 243,449
2,356,279 2,426,102 2,600,000 1,933,000 2,173,889
(2,655,655) (2,435,402) (2,609,300) (1,942,858) (2,184,341) - - -
- - -
(299,376) (9,300) (9,300) (9,858) (10,452)
$ 786,757 $ 1,506,397 $ (1,025,213) $ (172,821) $ 232,997

0.0% 0.0% 0.0% 0.0% 0.0%
Page | 105

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 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 $ 2023 9,966,835,884 $ $ 4,292,201 $ 37,221,968 $ 9,933,906,117 0.082% 6.52% 8,153,743 $ 2024 10,537,795,056 $ $ 5,558,829 $ 36,986,174 $ 10,506,367,711 0.081% 5.76% 8,531,557 $ 2025 $ 11,100,403,789 $ 4,780,461 $ 56,404,541 $ 11,048,779,709 0.081% 5.16% 8,945,715 $ 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: HDL report - FY 2024-25, ACFR
Page | 106

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 2015 1.0000 0.00910 0.1784 0.0065 0.0503 - 1.2443 0.05589 2016 1.0000 0.01290 0.1704 0.0057 0.0500 0.0008 1.2398 0.05583 2017 1.0000 0.01290 0.1618 0.0086 0.0498 0.0006 1.2337 0.05792 2018 1.0000 0.01000 0.1583 0.0062 0.0621 0.0009 1.2375 0.05894 2019 1.0000 0.01000 0.1895 0.0042 0.0589 0.0018 1.2644 0.05995 2020 1.0000 0.01000 0.1940 0.0082 0.0581 0.0032 1.2735 0.06034 2021 1.0000 0.01000 0.2280 0.0037 0.0481 0.0015 1.2913 0.06004 2022 1.0000 0.01000 0.1959 0.0051 0.0600 0.0015 1.2725 0.06020 2023 1.0000 0.00900 0.1770 0.0044 0.0583 0.0013 1.2500 0.06028 2024 1.0000 0.00500 0.0388 0.0041 0.0024 0.0012 1.0515 0.06058 2025 1.0000 0.00200 0.1610 0.0041 0.0024 0.0013 1.1708 0.06060 Source: Santa Clara County Assessor 2015/16 - 2024/25 Tax Rate Table Page | 107

Statistical Section
Principal Taxpayers
Current Year And Ten Years Ago
Percentage Percentage
of Net of Net
Assessed Assessed Assessed Assessed
Taxpayer Type of Property Value Valuation Value Valuation LaPaloma Property LLC Single family residential $64,463,081.00 0.58% $54,709,270 0.82% Douglas M Leone Trustee and Et Al Single family residential $44,798,540.00 0.41% $26,634,131.00 0.40% Campo Vista Lane Single family residential $40,485,224.00 0.37% - - Northfork Vineyards LLC Single family residential $29,283,224.00 0.27% - - Westwind LAH LLC Vacant $27,887,971.00 0.25% - -
Homa Natoma LLC Single family residential $27,464,468.00 0.25% $25,563,005.00 0.38% Weijin Dai Trustee Single family residential $41,997,933.00 0.38% - - Amit Singh Trustee and Et Al Single family residential $23,558,919.00 0.21% - - Kumar Malavalli Trustee and Et Al Single family residential $21,814,502.00 0.20% $18,513,780.00 0.28% New Height Way California LLC Single family residential $21,640,320.00 0.20% - - David Hitz Trustee Single family residential - - $17,236,981.00 0.26% Charles F Perrell Trustee Single family residential - - $16,580,140.00 0.25% Even Stride LLC Single family residential - - $16,300,000.00 0.24% SSWD Trust Single family residential - - $15,586,722.00 0.23% Book Shelf LLC Vacant - - $15,211,764.00 0.23%
Old Trace LLC Single family residential - - $14,600,701.00 0.22% Totals $343,394,182.00 3.11% $220,936,494.00 3.32%
Source: Santa Clara County Assessor 2024/25 Combined Tax Rolls and the SBE Non Unitary Tax Roll 2025 2016
Page | 108

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
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 $ 2023 8,153,743 $ 7% 8,153,743 $ 100% 8,153,743 $ 100% 9,933,906,117 $ 2024 8,531,557 $ 5% 8,531,557 $ 100% 8,531,557 $ 100% 10,506,367,711 $ 2025 8,945,715 $ 5% 8,945,715 $ 100% 8,945,715 $ 100% 11,048,779,709 $ 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 2024-25 Combined Tax Rolls Town of Los Altos Hills financial reports
Collected within FY Total Collections
Page | 109

Statistical Section
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Total Governmental Debt to Debt
Fiscal Capital Activities and Personal per Personal
Year Lease Loan Primary Government Income Capita Income Population 2016 - - - - 1,015,063 - $ 8,658
2017 - - - - 1,028,190 - $ 8,634
2018 - - - - 1,214,396 - $ 8,580
2019 - - - - 1,211,424 - $ 8,559
2020 - - - - 1,234,482 - $ 8,413
2021 - - - - 1,302,757 - $ 8,390
2022 - - - - 1,299,447 - $ 8,400
2023 - - - - 1,319,005 - $ 8,380
2024 - - - - 1,441,731 - $ 8,476
2025 - - - - 1,485,959 - $ 8,548
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 | 110

Statistical Section
Direct and Overlapping Debt
For the Year Ended June 30, 2025

TOWN OF LOS ALTOS HILLS
2024-25 Assessed Valuation: $11,048,779,709
Total Debt Town’s Share of
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/2025 % Applicable (1) Debt 6/30/25 Santa Clara County 1,217,905,000 $ 1.59% 19,352,510 $
Foothill-DeAnza Community College District 592,800,578 4.47% 26,468,546 Palo Alto Unified School District 384,840,483 6.90% 26,534,751 Mountain View-Los Altos Union High School District 245,162,900 8.93% 21,893,047 Los Altos School District 128,450,000 20.24% 26,003,418 El Camino Hospital District 98,789,066 7.34% 7,246,178
Midpeninsula Regional Open Space District 114,920,000 2.58% 2,969,533 Santa Clara Valley Water District Benefit Assessment District 24,940,000 1.59% 396,297 Santa Clara Valley Water District Parcel Tax Obligation Bonds 119,365,000 1.59% 1,896,710 Town of Los Altos Hills 0 100 0
Town of Los Altos Hills 1915 Act Bonds 1,370,000 100 1,370,000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ 134,130,990 OVERLAPPING GENERAL FUND DEBT:

Santa Clara County General Fund Obligations $ 1,002,458,930 1.59% $ 15,929,072 Santa Clara County Pension Obligation Bonds 317,654,990 1.59% 5,047,538 Santa Clara County Board of Education Certificates of Participation 12,072,417 1.59% 191,831 Mountain View-Los Altos Union High School District General Fund Obligations 1,085,000 8.93% 96,891 Los Altos School District Certificates of Participation 911,776 20.24% 184,580 Midpeninsula Regional Open Space District General Fund Obligations 74,065,600 2.58% 1,913,855 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $ 23,363,767
Less: Santa Clara County supported obligations 38,454
TOTAL NET OVERLAPPING GENERAL FUND DEBT $ 23,325,313
TOTAL DIRECT DEBT $ -
TOTAL GROSS OVERLAPPING DEBT $ 157,494,757
TOTAL NET OVERLAPPING DEBT $ 157,456,303
GROSS COMBINED TOTAL DEBT $ 157,494,757
NET COMBINED TOTAL DEBT $ 157,456,303
(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 2023-24 Assessed Valuation:

Direct Debt 0.00%
Total Direct and Overlapping Tax and Assessment Debt 1.21% Gross Combined Total Debt 1.43%
Net Combined Total Debt 1.43%
KD:($600)
Source: California Municipal Statistics
Page | 111

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
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
2023 $ 9,933,906,117 $ 1,490,085,918 - $ 1,490,085,918
2024 $ 10,506,367,711 $ 1,575,955,157 - $ 1,575,955,157 2025 $ 11,048,779,709 $ 1,657,316,956 - $ 1,657,316,956 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 2024/25 Combined Tax Rolls Page | 112

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 2015 8,658 $ 117,239 1,015,063 $ 2.7% 50.3 98.1% 82.8%
2016 8,634 $ 119,086 1,028,190 $ 2.4% 51.1 98.0% 83.7%
2017 8,580 $ 141,538 1,214,396 $ 2.2% 51.4 97.1% 83.5%
2018 8,559 $ 141,538 1,211,424 $ 2.6% 51.4 97.1% 83.5%
2019 8,413 $ 146,735 1,234,482 $ 14.9% 52.3 97.3% 84.3% 2020 8,390 $ 155,274 1,302,757 $ 4.2% 51.1 97.3% 85.3%
2021 8,400 $ 154,696 1,299,447 $ 3.4% 52.2 98.5% 87.6%
2022 8,380 $ 157,399 1,319,005 $ 2.3% 53.2 98.7% 86.3%
2023 8,476 $ 170,095 1,441,731 $ 3.4% 53.5 99.1% 86.3%
2024 8,548 $ 173,837 1,485,959 $ 2.8% 53.5 99.2% 85.6%
Source: Santa Clara County Assessor 2024/25 Combined Tax Rolls Page | 113

Statistical Section
Principal Employers
Current Year And Ten Years Ago
Percent of Percent of
Number of Total Number of Total
Employer Employees Employment Employees Employment
Foothill Community College 842 71.17% 985 77.05%
Pinewood School* 65 5.49% 58 4.54%
Saint Nicholas School 36 3.04% 31 2.42%
Fremont Hills Country Club 31 2.62% 32 2.50%
Congregation Beth Am 55 4.65% 109 8.53%
Town of Los Altos Hills 27 2.28% 29.4 2.30%
Los Altos School District 40 3.38% 20 1.56%
Daughters of Charity 73 6.17% 0.00%
Purissima Hills Water District 14 1.18% 14 1.10%
Totals 1,183 100.00% 1,278 100.00%
*2024 and 2015 employee counts included staff from across all Pinewood campuses, not just LAH campus The agencies listed above have operated in the Town during the past ten years.

There are no commercial or industrial employers in the Town. 2025 2016
Page | 114

Statistical Section
Full Time Equivalent City Government Employees by Function Last Ten Fiscal Years
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Administration 6.12 6.32 6.32 6.32 6.79 8.43 9.08 9.66 9.55 10.25 Public safety - - - - 0.18 0.29 0.20 0.20 0.22 -
Community development 7.61 7.61 7.61 7.61 7.88 7.25 7.40 7.12 7.88 6.70 Town center and corpyard 0.85 0.85 0.85 0.85 0.94 1.23 1.27 1.55 1.40 1.24 Parks and recreation 0.60 1.65 1.65 1.65 1.45 2.65 2.35 2.20 2.35 1.66 Pathways 1.39 1.69 1.69 1.69 1.95 2.07 2.70 2.30 2.40 2.80 Drainage and street 1.70 2.15 2.15 2.15 4.41 2.91 2.87 2.40 2.80 3.05 Sewer 1.93 1.93 2.93 2.93 1.00 1.42 1.38 1.62 1.40 1.30

22.20 23.20 23.20 24.60 26.25 20.20 27.25 28.00 27.00 27.05 Source: Town of Los Altos Hills Personnel Records
Page | 115

Statistical Section
Operating Indicators by Function
Last Ten Fiscal Years
2016 2017 2018 2019
Building permits issued:

New homes 39 33 20 17
Valuation $ 27,158,677 $ 27,718,202 $ 22,404,203 $ 20,854,456 Additions and remodels 109 113 254 249
Valuation $ 10,014,195 $ 17,247,476 $ 19,960,217 - $
Planning permits approved 159 152 74 54
Streets resurfaced/rehabilitated 8.50 6.30 6.30 5.08
Recreation classes and activities offered 100 133 116 157 Source: Town of Los Altos Hills
Page | 116

Statistical Section
2020 2021 2022 2023 2024 2025
10 15 15 11 12 11
$ 12,451,026 $ 18,835,335 $ 35,732,232 $ 28,618,401 $ 38,416,894 $ 30,723,000 20 17 21 8 94 91
$ 7,628,104 $ 6,178,882 $ 12,127,302 $ 4,426,950 $ 24,757,180 $ 13,287,578 168 199 142 175 141 157

4.30 2.50 4.66 4.40 4.10 4.50
154 129 134 97 76 77
Page | 117

Statistical Section
Capital Asset Statistics By Function
Last Ten Fiscal Years
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
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 86 86 86 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 60 65 65 65 65 65 65 65 62.27 62.3 Storm drains - miles 20 20 20 20 20 20 20 20 20 20
Sewer Operations
Sanitary sewers - miles 56 56 56 56 57 57 58 56.7 56.7 58 Source: Town of Los Altos Hills
*Pending review of OSR Acreage source
**None of the streetlights are maintained by the Town
Page | 118

ITEM 5L
TOWN OF LOS ALTOS HILLS January 15, 2026
Staff Report to the City Council
SUBJECT: AFFIRMATION OF MAYOR’S APPOINTMENT OF COUNCIL

MEMBER TYSON TO THE ALTERNATIVE SITES AD HOC

COMMITTEE PURSUANT TO GOVERNMENT CODE SECTION
54960.1.

FROM: Steve Mattas, City Attorney

RECOMMENDATION
That the City Council, by motion, affirm the appointment of Councilmember Tyson to the Alternative Sites ad hoc committee as previously made by former Mayor Tankha due to Councilmember Mok previously resigning from the committee, pursuant to Government Code section 54960.1.

BACKGROUND
At its October 16, 2025, meeting, the City Council considered a study session item regarding alternate multi-family housing sites (Agenda Item No. 11). During the item, the City Council voted to form an ad hoc committee on alternative sites (the Alternative Sites ad hoc committee), the purpose of which is to identify alternative housing sites and report back to the Council. The Council did not include any other scope for the committee or for it to have continuing long-term jurisdiction and did not establish any committee meeting schedule. The City Council then opened and heard public comments about the study session item.

The Council voted to create the ad hoc committee with then-Vice Mayor Bhateja and Councilmember Mok as its members. Shortly thereafter, Councilmember Mok resigned from the committee due to a potential conflict. Subsequently, then-Mayor Tankha designated Councilmember Tyson to be on the committee through direct communication in her role as presiding officer of the City Council. The Alternative Sites ad hoc committee thus consists of two members- current Mayor Bhateja and Councilmember Tyson. Councilmember Mok never participated in any activities or meetings of the ad hoc committee.

On December 16, 2025, the Town received some correspondence from Safran Law, PC alleging that the Town violated the Brown Act. Among other claims, the letter asserts that the Alternative Sites ad hoc committee consists of 3 members and thus its meetings should have been agendized under the Brown Act. The letter demands that the Town respond to the alleged violations pursuant to Government Code section 54960.1, as explained below.

DISCUSSION
Under the Brown Act, before filing a court action alleging a violation and seeking invalidation of action taken, a person who believes that a violation has occurred must send a written demand to

City Council Staff Report
Ratification of Alternative Sites Committee Appointment January 15, 2026
the legislative body.
1 In response, Government Code Section 54960.1(c) provides that “Within 30 days of receipt of the demand, the legislative body shall cure or correct the challenged action and inform the demanding party in writing of its actions to cure or correct or inform the demanding party in writing of its decision not to cure or correct the challenged action.” 2 If a lawsuit is filed by the person alleging the violation and the court finds that the legislative body has taken action pursuant to Section 54960.1 with respect to the alleged violation, the lawsuit will be dismissed with prejudice (i.e. cannot be refiled). The fact that a legislative body takes a subsequent action pursuant to Section 54960.1, as proposed in this staff report, is not considered by the courts as an admission or evidence that a violation has occurred. 3
The Brown Act is clear that advisory committees composed solely of less than a quorum of City Council members is not subject to the Brown Act. Since the ad hoc committee was created as a part of the study session on alternative sites with a single, narrow purpose of limited duration, and has only two councilmembers serving on it based on the background narrative above, it is not subject to the Brown Act and there is no violation. However, to provide greater clarity regarding the Alternative Sites committee membership, and out of an abundance of caution, the City Council is requested to affirm that Councilmember Mok has stepped down from the ad hoc committee and Councilmember Tyson is appointed to serve on the committee with Mayor Bhateja.

Under state law and as set forth above, the action to affirm Councilmember Tyson’s appointment under Section 54960.1 is not an admission or evidence that any Brown Act violation has previously occurred. This action is also consistent with the Town and City Council’s practice and continued commitment to promoting public participation and transparency.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
Affirmation of the appointment is not a project subject to CEQA, and thus no environmental analysis is required.

FISCAL IMPACT
No impact.
1 Gov. Code section 54960.1(b).
2 Gov. Code section 54960.1(c)(2) (italics added). 3 Gov. Code section 54960.1(f).

ITEM 6A
TOWN OF LOS ALTOS HILLS January 15, 2026
Staff Report to the City Council
SUBJECT: DISCUSSION AND POSSIBLE DIRECTION ON TERMINATING AGREEMENT WITH FLOCK SAFETY FOR THE TOWN’S

AUTOMATIC LICENSE PLATE READER SYSTEM
FROM: Cody Einfalt, Acting City Manager
RECOMMENDATION: That the City Council should:

Engage in a discussion about the Town’s Automatic License Plate Reader (ALPR) system with Flock Safety and provide staff direction on how to manage the contract moving forward.

Possible options for the Council to consider:

1. No change, continue on with the service.

2. Reduce the number of cameras in Town

3. Do not renew the cameras into the next fiscal year (only have service for the time period that is already paid)

4. Cancel the contract immediately/Turn off cameras now

5. Support residents to install their own Flock cameras or other similar devices on private property
BACKGROUND:

The initial contract with Flock Safety was for 40 cameras at $110,000 for the first year, with subsequent years at $100,000 and price increases capped at 10% (Attachment 1). Each camera costs $2,500 per year, with a $250 installation fee.

In 2025, due to a price increase from Flock Safety as well as a decrease in crime rates in Town, the City Council reduced the number of cameras from 40 to 31 and negotiated a new five-year agreement at $93,000 per year, locking in pricing and maintaining full coverage by only removing interior ALPR cameras. This adjustment was made to manage costs while continuing to prioritize public safety.

Below is a table summarizing the events with ALPR system in Town:

Date Milestone/Event
Mar 18, 2021 Council adopts ALPR policy
Apr 15, 2021 Council approves contract with Flock Safety (40 cameras, $110,000 first year)
Sep 29, 2021 Agreement with Flock signed; installation and pilot preparations begin Feb-Mar 2022 60-day no-cost pilot program conducted

Staff Report to City Council Page 2
ALPR Agreement with Flock Safety
January 15, 2026
Date Milestone/Event
Mar 17, 2022 Council approves continued use, extends pilot for full year Feb 16, 2023 One-year review presented; Council confirms system’s benefit and continues use
Feb 20, 2025 Council reduces cameras to 31, enters new 5-year agreement at $93,000/year
The current contract with Flock Safety is set to expire on June 30, 2030. The agreement can be reviewed in Attachment 2.

DISCUSSION:

Data Privacy Concerns
Recently, there have been news stories coming out about Flock’s data privacy controls. Below is a brief synopsis of the allegations from around the Country that have sparked the discussion for the Council.

A core issue is federal access to ALPR data in ways that may effectively aid U.S. Immigration and Customs Enforcement (ICE). Investigations have shown that ICE and its enforcement arms have indirectly accessed ALPR data by having local and state police run searches on their behalf through the Flock network, despite there being no direct formal contract between ICE and Flock Safety. In some states, audit logs showed thousands of searches tagged with immigration-related reasons, even where such data use for immigration enforcement would violate state laws.

These incidents have sparked privacy and civil rights pushback. Cities across the nation have paused Flock deployments and usage amid community concern around ICE access (i.e. Redmond, Washington & Denver, Colorado); civil liberties organizations (including the ACLU) have demanded moratoriums or legislative safeguards; and some officials have ordered Flock to terminate federal access after finding state law violations.

Flock maintains that local agencies control their own data and that the technology supports public safety, but critics argue that the combination of massive data collection, cross-jurisdictional sharing, and insufficient oversight turns what was pitched as a crime-fighting tool into a surveillance network vulnerable to use by powerful federal actors — including for immigration enforcement — with serious implications for privacy and civil liberties.

Neighboring Cities
Two cities closer to Los Altos Hills recently agendized a discussion of renewing their own ALPR camera system with Flock Safety:
• East Palo Alto – In December of 2025, the East Palo Alto City Council held a discussion regarding privacy concerns and the use of Flock ALPR cameras in their city. There was

Staff Report to City Council Page 3
ALPR Agreement with Flock Safety
January 15, 2026
lengthy discussion addressing the claims of ICE, but in the end the City Council approved to renew the agreement with Flock with the standard terms. Agreement can be seen in Attachment 3.
• Oakland – A similar discussion occurred in December 2025 for the Okland City Council.

Their City Council also moved to renew their agreement with Flock, but added new provisions in the contract to control access. The final agreement is still being processed by Okland City staff, but a summary of the draft provisions are summarized below:
o Flock shall not ever enable a “National Look-Up” feature capability for the City to access or be enabled by any law enforcement entity
o Flock will not enable the sharing or accessing of data across state lines o Flock will provide Real-Time Alerts, automatically notifying the City if:
 The vendor grants any new agency access
 The vendor changes sharing settings
 Any unauthorized agency attempts to run a query
o Flock to conduct Quarterly Certification, signing under penalty of perjury, attesting that
 No federal or out-of-state user accessed or attempted to access Oakland’s data
 Oakland data is not discoverable in any national or multi-state system  All access logs delivered to the City are complete and unaltered Town Committee Input
The Technology Committee is tentatively scheduled to have a discussion on the Flock system at their January 14th Regular meeting. The Committee will be forwarding a recommendation to the City Council for the discussion happening with the Council on January 15th.

Cancelling the Contract
The Town pays annually for its Flock subscription upfront, in whole, at the start of each fiscal year. In July 2025 the Town submitted payment of $93,000 to Flock for 31 cameras for the July 1, 2025 – June 30, 2026 time frame.

Should the Council decide to terminate the contract with Flock at the January 15, 2025 meeting, cameras would stop operating this month, and the Town would not get any funds back from the remaining time in the current fiscal year.

Flock would then work in partnership with the Town to remove the cameras and poles throughout the Town.

Current Crime Rate in Town
The Town experienced significantly less residential burglaries in 2025 as compared to 2023 and 2024. Attachment #4 is the November 2025 monthly Sheriff’s Report. December 2025 data is still being compiled by the Sheriff’s Office and was not finalized in time to be included in this staff report.

Staff Report to City Council Page 2
ALPR Agreement with Flock Safety
January 15, 2026
Below is an overview of the 2025 year through November. However, we know that there were 3 residential burglaries in December 2025, bringing the year end total to 16.

ENVIRONMENTAL REVIEW:

This action does not qualify as a “Project” as defined in California Government Code Section 15378(b) of the Guidelines for California Environmental Quality Act.

CITY COUNCIL WORKPLAN:

This item was not identified in the City Council Work Plan, but was agenized by the Council for the January 15th meeting.

FISCAL IMPACT:

The Town has an existing agreement with Flock Safety for $93,000 per year for the 31 cameras installed around Town. The Town is billed annual for the services of the ALPR system at the start of every fiscal year. The Town submitted payment in whole in July 2025 for the July 1, 2025 – June 30, 2026 time frame.

Should the Council provide staff direction to terminate the contact with Flock, no reimbursement would happen for the remaining time in the current fiscal year, and ongoing the Town would not have to make any additional payments to Flock.

ATTACHMENTS:

1. 2022 Agreement with Flock

2. 2025 Renewal Agreement with Flock

3. East Palo Alto Renewal Agreement

4. November 2025 Monthly Crime Reports from Santa Clara County Sheriff

flock safety
FLOCK GROUP INC.

SERVICES AGREEMENT

ORDER FORM
This Order Form together with the Terms ( as defined herein) describe the relationship between Flock Group Inc. (" Flock") and the customer identified below (" Customer") ( each of Flock and Customer, a " Party"). This order form (" Order Form") hereby incorporates and includes the " GOVERNMENT AGENCY CUSTOMER AGREEMENT" attached ( the " Terms") which describe and set forth the general legal terms governing the relationship ( collectively, the " Agreement" ). The Terms contain, among other things, warranty disclaimers, liability limitations and use limitations.

The Agreement will become effective when this Order Form is executed by both Parties ( the " Effective Date").

Customer: The Town of Los Altos Hills
Address:
26379 Fremont Road
Los Altos Hills, CA 94022
Expected Payment Method:

Initial Term: 12 Months
Renewal Term: 24 Months
Name
Includes one- time fees)
Flock Falcon Camera
Implementation Fee ( Public)
Contact Name: Cody Einfalt
Phone: 650- 941- 7222
E - Mail: ceinfalt@losaltoshills. ca. gov
Billing Contact:
if different than above)
Pilot period: First 60 days of Initial Term; option to cancel contract at no cost. Initial Term invoice due after Pilot period.

Billing Term: Annual payment due Net 30 per terms and
conditions
Price QTY Subtotal
2, 500. 00 40 $ 100, 000. 00
250. 00 40 $ 10, 000. 00
Year 1 Total $ 110, 000. 00
Flock Group Inc. Order Form
Today' s Date - Apr 01, 2021 CA - Las Altos Hills
This proposal expires in 30 days.

Document Ref: CQ2U4- SPJYB- FGMWW- AYSJD
0064v00001r1sZLAAY

ITEM 6A Attachment 1

flock safety
Recurring Total:

Special terms:

N/ A
100000
By executing this Order Form, Customer represents and warrants that it has read and agrees all of the terms and conditions contained in the Terms attached. The Parties have executed this Agreement as of the dates set forth below.

Flock Group Inc
By:

Name: Alex Latraverse
Title: _ CRO
Date: 09/28/2021
Customer:

By: C¢.•.%l, t
Name: C a,- l Cc, h II
Title: _ C i } J 1unc+ q f
Date:'
Flock Group Inc. Order Form
Today' s Date - Apr 01, 2021 CA - Las Altos Hills
This proposal expires in 30 days.
0064v00001 rl sZLAAY
Document Ref CO2U4- SPJYB- FGMWW- AYSJD Page 2 of 21 Page 449 of 678 ftock safety

EXHIBIT A
Statement of Work
Installation of Flock Camera on existing. pgle or Plock -supplied pole if required Flock Group Inc.

Today' s Date - Apr 01, 2021
This proposal expires in 30 days.

Order Form
CA - Las Altos Hills
0064v00001 rI sZLAAY
Document Ref: CO2U4-BPJYB-FGMWW-AYSJD Page 3 of 21 Page 450 of 678 flock safety

GOVERNMENT AGENCY CUSTOMER AGREEMENT
This Government Agency Agreement (this "Agreement") is entered into by and between Flock Group, Inc. with a place of business at 1170 Howell Mill Rd NW Suite 210, Atlanta, GA 30318 (" Flock") and the government agency identified in the signature block below (" Agency") ( each a " Party," and together, the Parties").

RECITALS
WHEREAS, Flock offers a software and hardware solution for automatic license plate detection through Flock' s technology platform ( the " Flock Service"), and upon detection, the Flock Service creates images and recordings of suspect vehicles (" Footage") and can provide notifications to Agency upon the instructions of Non -Agency End User (" Notifications");
WHEREAS, Agency desires to purchase, use and/ or have installed access to the Flock Service in order to create, view, search and archive Footage and receive Notifications, including, when applicable, those from non -Agency users of the Flock System ( where there is an investigative purpose) such as schools, neighborhood homeowners associations, businesses, and individual users, by authorized personnel including local sheriff' s office personnel with whom Agency has contracted for law enforcement services ( identified below); WHEREAS, because Footage is stored for no longer than (thirty) 30 days in compliance with Flock' s records retention policy, Agency is responsible for extracting, downloading and archiving Footage from the Flock System on its own storage devices for auditing for prosecutorial/ administrative purposes; and WHEREAS, Flock desires to provide Agency the Flock Service and any access thereto, subject to the terms and conditions ofthis Agreement, solely for the purpose of crime awareness and prevention by police departments and archiving for evidence gathering (" Purpose").

AGREEMENT
NOW, THEREFORE, Flock and Agency agree as follows and further agree to incorporate the Recitals into this Agreement.

1. DEFINITIONS
Certain capitalized terms, not otherwise defined herein, have the meanings set forth or cross- referenced in this Section 1.

1. 1 " Authorized End User" shall mean any individual employees of the Santa Clara County Sheriff Office, agents, or contractors of Agency accessing or using the Flock Services through the Web Interface, under the rights granted to Agency pursuant to this Agreement.

1. 2 " Agency Data" will mean the data, media and content provided by Agency through the Flock Services. For the avoidance of doubt, the Agency Data will include the Footage and geolocation information and environmental data collected by sensors built into the Units.

1. 3 " Documentation" will mean text and/ or graphical documentation, whether in electronic or printed format, that describe the features, functions and operation of the Flock Services which are provided by Flock to Agency in accordance with the terms of this Agreement.

1. 4 " Embedded Software" will mean the software and/ or firmware embedded or preinstalled on the Hardware.

1. 5 " Flock IP" will mean the Flock Services, the Documentation, the Hardware, the Embedded Software, the Installation Services, and any and all intellectual property therein or otherwise provided to Agency and/ or its Authorized End Users in connection with the foregoing.

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1. 6 " Footage" means still images and/ or video captured by the Hardware in the course of and provided via the Flock Services.

1. 7 " Hardware" shall mean the Flock cameras and any other physical elements that interact with the Embedded Software and the Web Interface to provide the Flock Services. The term " Hardware" excludes the Embedded Software.

1. 8 " Implementation Fee(s)" means the monetary fees associated with the Installation Services, as defined in Section 1. 9 below.

1. 9 " Installation Services" means the services provided by Flock regarding the installation, placements and configuration of the Hardware, pursuant to the Statement of Work attached hereto.

1. 10 " Flock Services or Services" means the provision, via the Web Interface, of Flock' s software application for automatic license plate detection, searching image records, and sharing Footage.

1. 11 " NonAgency End User" means a Flock' s non -Agency customer that has elected to give Agency access to its data in the Flock system.

1. 12 " NonAgency End User Data" means the Footage, geolocation data, environmental data and/ or notifications of a Non -Agency End User.

1. 13 " Unit( s)" shall mean the Hardware together with the Embedded Software.

1. 14 " Usage Fee" means the subscription fees to be paid by the Agency for ongoing access to Flock Services and Hardware.

1. 15 " Support Services" shall mean On- site Services and Monitoring Services, as defined in Section 2. 9 below.

1. 16 " Web Interface" means the website( s) or application( s) through which Agency and its Authorized End Users can access the Flock Services in accordance with the terms of this Agreement.

2. FLOCK SERVICES AND SUPPORT

2. 1 Provision of Access. Subject to the terms of this Agreement, Flock hereby grants to Agency a non- exclusive, non -transferable right to access the features and functions of the Flock Services via the Web Interface during the Service Term ( as defined in Section 6. 1) and No -Fee Term, solely for the Authorized End Users. The Footage will be available for Agency' s designated administrator, listed on the Order Form, and any Authorized End Users to access via the Web Interface for thirty (30) days. Authorized End Users will be required to sign up for an account, and select a password and username (" User H)"). Flock will also provide Agency the Documentation to be used in accessing and using the Flock Services. Agency shall be responsible for all acts and omissions ofAuthorized End Users, and any act or omission by an Authorized End User which, if undertaken by Agency, would constitute a breach ofthis Agreement, shall be deemed a breach ofthis Agreement by Agency. Agency shall undertake reasonable efforts to make all Authorized End Users aware of the provisions of this Agreement as applicable to such Authorized End User' s use of the Flock Services and shall cause Authorized End Users to comply with such provisions. Flock may use the services of one or more third parties to deliver any part of the Flock Services, including without limitation using a third party to host the Web Interface which the Flock Services makes available to Agency and Authorized End Users WARRANTIES

PROVIDED BY SUCH THIRD PARTIES, ARE THE AGENCY' S SOLE AND EXCLUSIVE REMEDY AND

FLOCK' S SOLE AND EXCLUSIVE LIABILITY WITH REGARD TO SUCH THIRD -PARTY SERVICES, INCLUDING WITHOUT LIMITATION HOSTING THE WEB INTERFACE. To the extent practicable, Agency agrees to comply with any acceptable use policies and other terms of any third -party service provider that are provided or otherwise made available to Agency from time to time.

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2.2 Embedded Software License. Subject to all terms ofthis Agreement, Flock grants Agency a limited, non- exclusive, non -transferable, non -sub licensable ( except to the Authorized End Users), revocable right to use the Embedded Software as installed on the Hardware by Flock; in each case, solely as necessary for Agency to use the Flock Services.

2. 3 Documentation License. Subject to the terms of this Agreement, Flock hereby grants to Agency a non- exclusive, non -transferable right and license to use the Documentation during the Service Term in connection with its use of the Flock Services as contemplated herein, and under Section 2.4, below.

2.4 Usage Restrictions. The purpose for usage of the Hardware, Documentation, Services, support, and the Flock IP is solely to facilitate gathering evidence that could be used in a lawful criminal investigation by the appropriate government agency and not for tracking activities that the system is not designed to capture (" Permitted Purpose").

Agency will not, and will not permit any Authorized End Users to, ( i) copy or duplicate any of the Flock IP; ( ii) decompile, disassemble, reverse engineer or otherwise attempt to obtain or perceive the source code from which any software component of any of the Flock IP is compiled or interpreted, or apply any other process or procedure to derive the source code of any software included in the Flock IP, or attempt to do any of the foregoing, and Agency acknowledges that nothing in this Agreement will be construed to grant Agency any right to obtain or use such source code; ( iii) modify, alter, tamper with or repair any ofthe Flock IP, or create any derivative product from any of the foregoing, or attempt to do any of the foregoing, except with the prior written consent ofFlock; ( iv) interfere or attempt to interfere in any manner with the functionality or proper working of any of the Flock IP; ( v) remove, obscure, or alter any notice of any intellectual property or proprietary right appearing on or contained within any of the Flock Services or Flock IP; ( vi) use the Services, support, Hardware, Documentation or the Flock IP for anything other than the Permitted Purpose; or (vii) assign, sublicense, sell, resell, lease, rent or otherwise transfer or convey, or pledge as security or otherwise encumber, Agency' s rights under Sections 2. 1, 2. 2, or 2. 3.

2. 5 Retained Rights; Ownership. As between the Parties, subject to the rights granted in this Agreement, Flock and its licensors retain all right, title and interest in and to the Flock IP and its components, and Agency acknowledges that it neither owns nor acquires any additional rights in and to the foregoing not expressly granted by this Agreement. Agency further acknowledges that Flock retains the right to use the foregoing for any purpose in Flock' s sole discretion. There are no implied rights.

2. 6 Suspension. Notwithstanding anything to the contrary in this Agreement, Flock may temporarily suspend Agency' s and any Authorized End User' s access to any portion or all of the Flock IP if (i) Flock reasonably determines that ( a) there is a threat or attack on any ofthe Flock IP; ( b) Agency' s or any Authorized End User' s use of the Flock Service disrupts or poses a security risk to the Flock Service or any other customer or vendor of Flock; c) Agency or any Authorized End User is/ are using the Flock IP for fraudulent or illegal activities; ( d) Flock' s provision of the Flock Services to Agency or any Authorized End User is prohibited by applicable law; ( e) any vendor ofFlock has suspended or terminated Flock' s access to or use of any third party services or products required to enable Agency to access the Flock 1P; or (f) Agency has violated any term ofthis provision, including, but not limited to, utilizing the Flock Services for anything other than the Permitted Purpose ( each such suspension, in accordance with this Section 2. 6, a " Service Suspension"). Flock will make commercially reasonable efforts, circumstances permitting, to provide written notice of any Service Suspension to Agency (including notices sent to Flock' s registered email address) and to provide updates regarding resumption of access to the Flock IP following any Service Suspension. Flock will use commercially reasonable efforts to resume providing access to the Flock Service as soon as reasonably possible after the event giving rise to the Service Suspension is cured. Flock will have no liability for any damage, liabilities, losses ( including any loss of data or profits) or any other consequences that Agency or any Authorized End User may incur as a result of a Service Suspension. To the extent that the Service Suspension is not caused by Agency' s direct actions or by the actions of parties associated with the Agency, the expiration ofthe Term will be tolled by the duration of any suspension ( for any continuous suspension lasting at least one full day).

2. 7 Installation Services.

2. 7. 1 Designated Locations. Prior to performing the physical installation of the Units, Flock shall advise Agency on the location and positioning of the Units for optimal license plate image capture, as conditions and Document Ref: CO2U4- BPJYB- FGMWW- AYSJD Page 6 of 21 Page 453 of 678 flock safety
location allow. Flock and Agency must mutually agree on the location (mounting site or pole), position and angle of the Units ( each Unit location so designated by Agency, a " Designated Location"). Flock shall have no liability to Agency resulting from any poor performance, functionality or Footage resulting from or otherwise relating to the Designated Locations or delay in installation due to Agency' s delay in identifying the choices for the Designated Locations, in ordering and/ or having the Designated Location ready for installation including having all electrical work preinstalled and permits ready. Designated Locations that are suggested by Flock and accepted by Agency without alteration will be known as Flock Designated Locations. After a deployment plan with Designated Locations and equipment has been agreed upon by both Flock and the Agency, any subsequent changes to the deployment plan (" Reinstalls") driven by Agency's request will incur a charge for Flock' s then -current list price for Reinstalls, as listed in the then - current Reinstall Policy ( available at https:// www.flocksafety. com/ reinstall- fee- schedule) and any equipment charges. These changes include but are not limited to camera re -positioning, adjusting of camera mounting, re -angling, removing foliage, camera replacement, changes to heights of poles, regardless of whether the need for Reinstalls related to vandalism, weather, theft, lack of criminal activity in view, and the like.

2. 7. 2 Agency's Installation Obligations. Agency agrees to allow Flock and its agents reasonable access in and near the Designated Locations at all reasonable times upon reasonable notice for the purpose of performing the installation work, The " Agency Installation Obligations" include, to the extent required by the deployment plan, but are not limited to electrical work to provide a reliable source of 120V AC power that follow Flock guidelines and comply with local regulations if adequate solar exposure is not available. Agency is solely responsible for ( i) any permits or associated costs, and managing the permitting process; ( ii) any federal, state or local taxes including property, license, privilege, sales, use, excise, gross receipts or other similar taxes which may now or hereafter become applicable to, measured by or imposed upon or with respect to the installation of the Hardware, its use, or iii) any other services performed in connection with installation of the Hardware. Flock will provide options to supply power at each Designated Location. If Agency refuses alternative power supply options, Agency agrees and understands that Agency will not be subject to any reimbursement, tolling, or credit for any suspension period of Flock Services due to low solar. Flock will make all reasonable efforts within their control to minimize suspension of Flock Services. Any fees payable to Flock exclude the foregoing. Without being obligated or taking any responsibility for the foregoing, Flock may pay and invoice related costs to Agency if Agency did not address thein prior to the execution of this Agreement or a third party requires Flock to pay. Agency represents and warrants that it has all necessary right title and authority and hereby authorizes Flock to install the Hardware at the Designated Locations and to make any necessary inspections or tests in connection with such installation.

2. 7. 3 Flocks Installation Obligations. The Hardware shall be installed in a workmanlike manner in accordance with Flock' s standard installation procedures, and the installation will be completed within a reasonable time from the time that the Designated Locations are selected by Agency. Following the initial installation of the Hardware and any subsequent Reinstalls or maintenance operations, Flock' s obligation to perform installation work shall cease; however, Flock will continue to monitor the performance of the Units for the length of the Term and will receive access to the Footage for a period of three ( 3) business days after the initial installation in order to monitor performance and provide any necessary maintenance solely as a measure of quality control. Agency can opt out of Flock' s access to Footage after the initial installation which would waive Flock' s responsibility to ensure such action was successful. Agency understands and agrees that the Flock Services will not function without the Hardware.

Labor may be provided by Flock or a third party.

2.7.4 Security Interest. The Hardware shall remain the personal property of Flock and will be removed upon the termination or expiration of this Agreement. Agency agrees to perform all acts which may be necessary to assure the retention of title of the Hardware by Flock. Should Agency default in any payment for the Flock Services or any part thereof or offer to sell or auction the Hardware, then Agency authorizes and empowers Flock to remove the Hardware or any part thereof. Such removal, if made by Flock, shall not be deemed a waiver of Flock' s rights to any damages Flock may sustain as a result of Agency' s default and Flock shall have the right to enforce any other legal remedy or right.

2. 8 Hazardous Conditions. Unless otherwise stated in the Agreement, Flock' s price for its services under this Agreement does not contemplate work in any areas that contain hazardous materials, or other hazardous conditions, including, without limit, asbestos, lead, toxic or flammable substances. In the event any such hazardous materials are discovered in the designated locations in which Flock is to perform services under this Agreement, Flock shall have the right to cease work immediately in the area affected until such materials are removed or rendered harmless.

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Any additional expenses incurred by Flock as a result of the discovery or presence of hazardous material or hazardous conditions shall be the responsibility of Agency and shall be paid promptly upon billing.

2. 9 Support Services. Subject to the payment offees, Flock shall monitor the performance and functionality of Flock Services and may, from time to time, advise Agency on changes to the Flock Services, Installation Services, or the Designated Locations which may improve the performance or functionality ofthe Services or may improve the quality ofthe Footage. The work, its timing, and the fees payable relating to such work shall be agreed by the Parties prior to any alterations to or changes of the Services or the Designated Locations (" Monitoring Services").

Subject to the terms hereof, Flock will provide Agency with reasonable technical and on- site support and maintenance services (" On -Site Services") in- person or by email at hello@flocksafety. com. Flock will use commercially reasonable efforts to respond to requests for support.

2. 10 Special Terms. From time to time, Flock may offer certain " Special Terms" related to guarantees, service and support which are indicated in the proposal and on the order form and will become part of this Agreement. To the extent that any terms of this agreement are inconsistent or conflict with the Special Terms, the Special Terms shall control.

2. 11 Changes to Platform. Flock Safety may, in its sole discretion, make any changes to any system or platform that it deems necessary or useful to ( i) maintain or enhance ( a) the quality or delivery ofFlock Safety' s products or services to its customers, ( b) the competitive strength of, or market for, Flock Safety' s products or services, ( c) such platform or system' s cost efficiency or performance, or ( ii) to comply with applicable law.

3. AGENCY RESTRICTIONS AND RESPONSIBILITIES

3. 1 Agency Obligations. Upon creation of a User ID, Agency agrees to provide Flock with accurate, complete, and updated registration information. Agency may not select as its User ID a name that Agency does not have the right to use, or another person' s name with the intent to impersonate that person. Agency may not transfer its account to anyone else without prior written permission of Flock. Agency will not share its account or password with anyone, and must protect the security of its account and password. Agency is responsible for any activity associated with its account. Agency shall be responsible for obtaining and maintaining any equipment and ancillary services needed to connect to, access or otherwise use the Services. Agency will, at its own expense, provide assistance to Flock, including, but not limited to, by means of access to, and use of, Agency facilities, as well as by means of assistance from Agency personnel, to the limited extent any of the foregoing may be reasonably necessary to enable Flock to perform its obligations hereunder, including, without limitation, any obligations with respect to Support Services or any Installation Services.

3. 2 Agency Representations and Warranties. Agency represents, covenants, and warrants that Agency will use the Services only in compliance with this Agreement and all applicable laws and regulations, including but not limited to any laws relating to the recording or sharing of video, photo, or audio content and retention thereof. To the extent allowed by the governing law of the state mentioned in Section 10. 6, or if no state is mentioned in Section

10. 6, by the law ofthe State of Georgia, Agency hereby agrees to indemnify and hold harmless Flock against any damages, losses, liabilities, settlements and expenses, including without limitation costs and attorneys' fees, in connection with any claim or action that arises from an alleged violation of the foregoing, Agency' s Installation Obligations, or otherwise from Agency' s use ofthe Services, Hardware and any Embedded Software, including any claim that such actions violate any applicable law or third party right. Although Flock has no obligation to monitor Agency' s use of the Services, Flock may do so and may prohibit any use of the Services it believes may be ( or alleged to be) in violation ofthe foregoing.

4. CONFIDENTIALITY; AGENCY DATA; NON -AGENCY DATA

4. 1 Confidentiality. Each Party ( the " Receiving Party") understands that the other Party ( the " Disclosing Party") has disclosed or may disclose business, technical or financial information relating to the Disclosing Party' s business Document Ref: CQ2U4-BPJYB-FGMWW-AYSJD

flock safety
hereinafter referred to as " Propriettuy Information" ofthe Disclosing Party). Proprietary Information of Flock is non-public information including but not limited to features, functionality, designs, user interfaces, trade secrets, intellectual property, business plans, marketing plans, works of authorship, hardware, customer lists and requirements, and performance ofthe Flock Services. Proprietary Information of Agency includes non-public Agency Data, Non -Agency End User Data, and data provided by Agency or a Non -Agency End User to Flock or collected by Flock via the Unit, including the Footage, to enable the provision of the Services. The Receiving Party shall not disclose, use, transmit, inform or make available to any entity, person or body any of the Proprietary Information, except as a necessary part of performing its obligations hereunder, and shall take all such actions as are reasonably necessary and appropriate to preserve and protect the Proprietary Information and the parties' respective rights therein, at all times exercising at least a reasonable level of care. Each party agrees to restrict access to the Proprietary Information of the other party to those employees or agents who require access in order to perform hereunder. The Receiving Party agrees: ( i) to take the same security precautions to protect against disclosure or unauthorized use of such Proprietary Information that the party takes with its own proprietary information, but in no event will a party apply less than reasonable precautions to protect such Proprietary Information, and ( ii) not to use except in performance of the Services or as otherwise permitted herein) or divulge to any third person any such Proprietary Information. Flock' s use of the Proprietary Information may include processing the Proprietary Information to send Agency Notifications or alerts, such as when a car exits Agency' s neighborhood, or to analyze the data collected to identify motion or other events.

The Disclosing Party agrees that the foregoing shall not apply with respect to any information that the Receiving Party can document ( a) is or becomes generally available to the public, or ( b) was in its possession or known by Receiving Party prior to receipt from the Disclosing Party, or ( c) was rightfully disclosed to Receiving Party without restriction by a third party, or ( d) was independently developed without use of any Proprietary Information of the Disclosing Party.

Nothing in this Agreement will prevent the Receiving Party from disclosing the Proprietary Information pursuant to any subpoena, summons, judicial order or other judicial or governmental process, provided that the Receiving Party gives the Disclosing Party reasonable prior notice of such disclosure to obtain a protective order or otherwise oppose the disclosure. For clarity, Flock may access, use, preserve and/ or disclose the Footage to law enforcement authorities, government officials, and/ or third parties in the following instances: ( 1) to comply with a court order, subpoena, or another form of valid legal process request, or when otherwise required by law or legal order to do so; 2) to enforce this Agreement, including investigation of any potential violation thereof; ( 3) to detect, prevent or otherwise address security, fraud or technical issues relating to the provision of services under this Agreement; or ( d) protect the rights, property or safety of Flock, its users, a third party, or the public, including respond to an emergency situation, as required or permitted by law. Prior to any access, use, preservation and/ or disclosure in the foregoing instances, Flock shall provide Agency with advance written notice in a reasonably timely manner in order to provide Agency with an opportunity to object or seek injunctive or other forms ofjudicial relief against the request for data and/ or proposed disclosure. Having received notice prior to data being deleted, Flock may store Footage in order to comply with a valid court order but such retained Footage will not be retrievable without a valid court order.

4. 2 Agency and Non -Agency End User Data. As between Flock and Agency, all right, title and interest in the Agency Data and Non -Agency End User Data, belong to and are retained solely by Agency. Agency hereby grants to Flock a limited, non-exclusive, royalty -free, worldwide license to use the Agency Data and Non -Agency End User Data and perform all acts with respect to the Agency Data and Non -Agency End User Data as may be necessary for Flock to provide the Flock Services to Agency, including without limitation the Support Services set forth in Section 2. 9 above, and a non- exclusive, perpetual, irrevocable, worldwide, royalty -free, fully paid license to use, reproduce, modify and distribute the Agency Data and Non -Agency End User Data as a part ofthe Aggregated Data ( as defined in Section 4. 4 below). As between Flock and Agency, Agency is solely responsible for the accuracy, quality, integrity, legality, reliability, and appropriateness of all Agency Data and Non -Agency End User Data. As between Agency and Non -Agency End Users that have prescribed access of Footage to Agency, each of Agency and Non -Agency End Users will share all right, title and interest in the Non -Agency End User Data. This Agreement does not by itself make any Non -Agency End User Data the sole property or the Proprietary Information of Agency. Flock will automatically delete Footage older than thirty ( 30) days. Agency has a thirty ( 30) day window to view, save and/ or transmit Footage to the relevant government agency prior to its deletion.

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4. 3 Feedback. If Agency provides any suggestions, ideas, enhancement requests, feedback, recommendations or other information relating to the subject matter hereunder, Agency hereby assigns ( and will cause its agents and representatives to assign) to Flock all right, title and interest (including intellectual property rights) with respect to or resulting from any of the foregoing.

4. 4 Aggregated Data. Notwithstanding anything in this Agreement to the contrary, Flock shall have the right to collect and analyze data that does not refer to or identify Agency or any individuals or de -identifies such data and other information relating to the provision, use and performance of various aspects of the Services and related systems and technologies ( including, without limitation, information concerning Agency Data and data derived therefrom). For the salve of clarity, Aggregated Data is compiled anonymous data which has been stripped of any personal identifying information. Agency acknowledges that Flock will be compiling anonymized and/ or aggregated data based on Agency Data and Non -Agency End User Data input into the Services ( the " Aggregated Data"). Agency hereby grants Flock a non- exclusive, worldwide, perpetual, royalty -free right and license ( during and after the Service Term hereof) to ( i) use and distribute such Aggregated Data to improve and enhance the Services and for other marketing, development, diagnostic and corrective purposes, other Flock offerings, and crime prevention efforts, and ( ii) disclose the Agency Data and Non -Agency End User Data ( both inclusive of any Footage) to enable law enforcement monitoring against law enforcement hotlists as well as provide Footage search access to law enforcement for investigative purposes only. No rights or licenses are granted except as expressly set forth herein.

5. PAYMENT OF FEES

5. 1 Fees. Agency will pay Flock the first Usage Fee, the Implementation Fee and any fee for Hardware ( as described on the Order Form, together the " Initial Fees") as set forth on the Order Form on or before the 7th day following the Effective Date of this Agreement. Flock is not obligated to commence the Installation Services unless and until the Initial Fees have been made and shall have no liability resulting from any delay related thereto. Agency shall pay the ongoing Usage Fees set forth on the Order Form with such Usage Fees due and payable thirty ( 30) days in advance of each payment period. All payments will be made by either ACH, check, or credit card. The first month ofFlock Services corresponding to the first Usage Fee payment will begin upon the first installation of Hardware.

For Agencies who purchase ten ( 10) or more Units, in the event that only a portion of the Units are installed at the first installation with additional Units to be installed at a later date, Usage Fees shall be calculated on a pro rata basis corresponding to the then -installed Units. Agencies will be invoiced for the additional Units immediately upon installation of the remaining Units.

5. 2 Changes to Fees. Flock reserves the right to change the Fees or applicable charges and to institute new charges and Fees at the end ofthe Initial Term or any Renewal Term, upon sixty ( 60) days' notice prior to the end of such Initial Term or Renewal Term ( as applicable) to Agency ( which may be sent by email). Agency believes that Flock has billed Agency incorrectly, Agency must contact Flock no later than sixty ( 60) days after the closing date on the first billing statement in which the error or problem appeared, in order to receive an adjustment or credit. Inquiries should be directed to Flock' s customer support department. Agency acknowledges and agrees that a failure to contact Flock within this sixty ( 60) day period will serve as a waiver of any claim Agency may have had as a result of such billing error.

5. 3 Invoicing, Late Fees; Taxes. Flock may choose to bill through an invoice, in which case, full payment for invoices issued in any given month must be received by Flock thirty ( 30) days after the mailing date of the invoice.

Unpaid amounts are subject to a finance charge of 1. 5% per month on any outstanding balance, or the maximum permitted by law, whichever is lower, plus all expenses of collection, and may result in immediate termination of Service. To the extent allowable by law or Agency regulations pertaining to tax-exempt entities, Agency shall be responsible for all taxes associated with Services other than U. S. taxes based on Flock' s net income.

5. 4 No -Fee Term Access. Subject to Flock' s record retention policy, Flock offers complimentary access to the Flock System for thirty (30) days (" No Fee Term") to Agency when Non -Agency End Users intentionally prescribe access or judicial orders mandate access to Non -Agency End User Data. Agency agrees to pay the Initial Fees and Usage Fees according to Section 5. 1 and will receive Flock' s complimentary access to the Flock Service and Footage for Document Ref: 002U4- BPJYB- FGMWW- AYSJD Page 10 of 21 Page 457 of 678 flock safety
no additional cost. Should such access cause Flock to incur internal or out- of-pocket costs that are solely the result of the access, Flock reserves the right to invoice these costs to Agency under Section 5. 3 and Agency agrees to pay them. The complimentary No -Fee Term access to Flock Services shall survive the expiration or termination of this Agreement for five ( 5) years unless Agency provides written notice of the intent to cancel access to Flock Services.

6. TERM AND TERMINATION

6. 1 Term. Subject to earlier termination as provided below, the initial term of this Agreement shall be for the period of time set forth on the Order Form ( the " Initial Term"). Following the Initial Term, unless otherwise indicated on the Order Form, this Agreement will automatically renew for successive renewal terms for the greater of one year and the length set forth on the Order Form ( each, a " Renewal Term", and together with the Initial Term, the Service Term") unless either party gives the other party notice of non -renewal at least thirty ( 30) days prior to the end of the then - current term.

6. 2 Agency Satisfaction Guarantee. At any time during the agreed upon term, an Agency not fully satisfied with the service or solution may self -elect to terminate their contract. Self -elected termination will result in a one- time fee of actual cost of removal and labor, said cost not to exceed $ 500 per camera. Upon self -elected termination, a refund will be provided, prorated for any fees paid for the remaining Term length set forth previously. Self -termination of the contract by the Agency will be effective immediately. Flock will remove all equipment at Flock' s own convenience, within a commercially reasonable period upon termination. Advance notice will be provided.

6. 3 Termination. In the event of any material breach of this Agreement, the non -breaching party may terminate this Agreement prior to the end of the Service Term by giving thirty ( 30) days prior written notice to the breaching party; provided, however, that this Agreement will not terminate ifthe breaching party has cured the breach prior to the expiration of such thirty -day period. Either party may terminate this Agreement, without notice, ( i) upon the institution by or against the other party of insolvency, receivership or bankruptcy proceedings, ( ii) upon the other party' s making an assignment for the benefit of creditors, or ( iii) upon the other party' s dissolution or ceasing to do business. Upon termination for Flock' s material breach, Flock will refund to Agency a pro -rata portion of the pre -paid Fees for Services not received due to such termination.

6. 4 Effect of Termination. Upon any termination of the Service Term, Flock will collect all Units, delete all Agency Data, terminate Agency' s right to access or use any Services, and all licenses granted by Flock hereunder will immediately cease. Agency shall ensure that Flock is granted access to collect all Units and shall ensure that Flock personnel does not encounter Hazardous Conditions in the collection of such units. Upon termination of this Agreement, Agency will immediately cease all use of Flock Services,

6. 5 No -Fee Term. The initial No -Fee Term will extend, after entering into this Agreement, for thirty ( 30) days from the date a Non -Agency End User grants access to their Footage and/ or Notifications. In expectation of repeated non -continuous No -Fee Terms, Flock may in its sole discretion leave access open for Agency' s Authorized End Users despite there not being any current Non -Agency End User authorizations. Such access and successive No -Fee Terms are deemed to be part of the No -Fee Term. Flock, in its sole discretion, can determine not to provide additional No -Fee Terms or can impose a price per No -Fee Term upon thirty ( 30) days' notice. Agency may terminate any No -Fee Term or access to future No -Fee Terms upon 30 days' notice.

6. 6 Survival. The following Sections will survive termination: 2. 4, 2. 5, 3, 4, 5 ( with respect to any accrued rights to payment), 5. 4, 6. 5, 7. 4, 8. 1, 8. 2, 8. 3, 8. 4, 9. 1 and 10. 5.

7. REMEDY; WARRANTY AND DISCLAIMER

7. 1 Remedy. Upon a malfunction or failure of Hardware or Embedded Software ( a " Defect"), Agency must first make commercially reasonable efforts to address the problem by contacting Flock' s technical support as described in Section 2. 9 above. If such efforts do not correct the Defect, Flock shall, or shall instruct one of its contractors to repair or replace the Hardware or Embedded Software suffering from the Defect. Flock reserves the right in their sole discretion to refuse or delay replacement or its choice of remedy for a Defect until after it has inspected and Document Ref: CO2U4-BPJYB- FGMWW-AYSJD Page 11 of 21 Page 458 of 678 flock safety
tested the affected Unit provided that such inspection and test shall occur within seventy-two (72) hours after Agency notifies the Flock of a Defect. In the event of a Defect, Flock will repair or replace the defective Unit at no additional cost. In the event that a Unit is lost, stolen, or damaged, Flock agrees to replace the Unit at a fee according to the then -current Reinstall Policy ( https:// www.flocksafety. com/ reinstall- fee- schedule). Agency shall not be required to replace subsequently lost, damaged or stolen Units, however, Agency understands and agrees that functionality, including Footage, will be materially affected due to such subsequently lost, damaged or stolen units and that Flock will have no liability to Agency regarding such affected functionality nor shall the Usage Fee or Implementation Fees owed be impacted.

7.2 Exclusions. Flock will not provide the remedy described in Section 7. 1 above if any ofthe following exclusions apply: ( a) misuse of the Hardware or Embedded Software in any manner, including operation of the Hardware or Embedded Software in any way that does not strictly comply with any applicable specifications, documentation, or other restrictions on use provided by Flock; ( b) damage, alteration, or modification ofthe Hardware or Embedded Software in any way; or ( c) combination of the Hardware or Embedded Software with software, hardware or other technology that was not expressly authorized by Flock.

7. 3 Warranty. Flock shall use reasonable efforts consistent with prevailing industry standards to maintain the Services in a manner which minimizes errors and interruptions in the Services and shall perform the Installation Services in a professional and workmanlike manner. Upon completion of any installation or repair, Flock shall clean and leave the area in good condition. Services may be temporarily unavailable for scheduled maintenance or for unscheduled emergency maintenance, either by Flock or by third -party providers, or because of other causes beyond Flock' s reasonable control, but Flock shall use reasonable efforts to provide advance notice in writing or by e-mail of any scheduled service disruption.

7. 4 Disclaimer. THE REMEDY DESCRIBED IN SECTION 7. 1 ABOVE IS AGENCY' S SOLE REMEDY, AND

FLOCK' S SOLE LIABILITY, WITH RESPECT TO DEFECTIVE HARDWARE AND/ OR EMBEDDED SOFTWARE. THE FLOCK DOES NOT WARRANT THAT THE SERVICES WILL BE UNINTERRUPTED OR ERROR FREE; NOR DOES IT MAKE ANY WARRANTY AS TO THE RESULTS THAT MAY BE OBTAINED FROM USE OF THE SERVICES. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION, THE SERVICES AND INSTALLATION SERVICES ARE PROVIDED " AS IS" AND FLOCK DISCLAIMS ALL WARRANTIES,

EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND NON -INFRINGEMENT .THIS DISCLAIMER OF SECTION 7.4 ONLY APPLIES TO THE EXTENT ALLOWED BY THE GOVERNING LAW OF THE STATE MENTIONED IN SECTION 10. 6, OR IF NO STATE IS MENTIONED IN SECTION 10. 6, BY THE LAW OF THE STATE OF GEORGIA.

7. 5 Insurance. Flock and Agency will each maintain commercial general liability policies with policy limits reasonably commensurate with the magnitude of their business risk. Certificates of Insurance will be provided upon request.

7. 6 Force Majeure. Flock Safety is not responsible nor liable for any delays or failures in performance from any cause beyond its control, including, but not limited to acts of God, changes to law or regulations, embargoes, war, terrorist acts, acts or omissions of third -party technology providers, riots, fres, earthquakes, floods, power blackouts, strikes, weather conditions or acts of hackers, internet service providers or any other third party or acts or omissions of Agency or any Authorized End User.

8. LIMITATION OF LIABILITY AND INDEMNITY

8. 1 Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY, FLOCK AND ITS

SUPPLIERS ( INCLUDING BUT NOT LIMITED TO ALL HARDWARE AND TECHNOLOGY SUPPLIERS),

OFFICERS, AFFILIATES, REPRESENTATIVES, CONTRACTORS AND EMPLOYEES SHALL NOT BE

RESPONSIBLE OR LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT OR

TERMS AND CONDITIONS RELATED THERETO UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCT LIABILITY, OR OTHER THEORY. ( A) FOR ERROR OR INTERRUPTION OF USE Document Ref: GQ2U4- BPJYB+ GMWW- AYSJD Page 12 of 21 Page 459 of 678 flock safety

OR FOR LOSS OR INACCURACY, INCOMPLETENESS OR CORRUPTION OF DATA OR FOOTAGE OR

COST OF PROCUREMENT OF SUBSTITUTE GOODS, SERVICES OR TECHNOLOGY OR LOSS OF BUSINESS; ( B) FOR ANY INDIRECT, EXEMPLARY, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES; ( C) FOR ANY MATTER BEYOND FLOCK' S ACTUAL KNOWLEDGE OR REASONABLE

CONTROL INCLUDING REPEAT CRIMINAL ACTIVITY OR INABILITY TO CAPTURE FOOTAGE OR IDENTIFY AND/ OR CORRELATE A LICENSE PLATE WITH THE FBI DATABASE; ( D) FOR ANY PUBLIC DISCLOSURE OF PROPRIETARY INFORMATION MADE IN GOOD FAITH; ( E) FOR CRIME PREVENTION;

OR ( F) FOR ANY AMOUNTS THAT, TOGETHER WITH AMOUNTS ASSOCIATED WITH ALL OTHER

CLAIMS, EXCEED THE FEES PAID AND/ OR PAYABLE BY AGENCY TO FLOCK FOR THE SERVICES UNDER THIS AGREEMENT IN THE TWELVE ( 12) MONTHS PRIOR TO THE ACT OR OMISSION THAT

GAVE RISE TO THE LIABILITY, IN EACH CASE, WHETHER OR NOT FLOCK HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN THE EVENT OF AN EMERGENCY, AGENCY SHOULD CONTACT 911 AND SHOULD NOT RELY ON THE SERVICES. THIS LIMITATION OF LIABILITY OF SECTION 8 ONLY APPLIES TO THE EXTENT ALLOWED BY THE GOVERNING LAW OF THE STATE MENTIONED IN SECTION 10. 6, OR IF NO STATE IS MENTIONED IN SECTION 10. 6, BY THE LAW OF THE STATE OF GEORGIA.

8. 2 Additional No -Fee Term Requirements. IN NO EVENT SHALL FLOCK' S AGGREGATE LIABILITY, IF

ANY, ARISING OUT OF OR IN ANY WAY RELATED TO THE COMPLIMENTARY NO -FEE TERM AS DESCRIBED IN SECTION 6. 5 EXCEED $ 100, WITHOUT REGARD TO WHETHER SUCH CLAIM IS BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY OR OTHERWISE. Except for Flock' s willful acts, Agency agrees to pay for Flock' s attorneys' fees to defend Flock for any alleged or actual claims arising out of or in any way related to the No -Fee Term.

8. 3 Responsibility. Each Party to this Agreement shall assume the responsibility and liability for the acts and omissions of its own employees, deputies, officers, or agents, in connection with the performance of their official duties under this Agreement. Each Party to this Agreement shall be liable (if at all) only for the torts ofits own officers, agents, or employees that occur within the scope oftheir official duties. Agency will not pursue any claims or actions against Flock' s suppliers.

8. 4 Indemnity. Agency hereby agrees to indemnify and hold harmless Flock against any damages, losses, liabilities, settlements and expenses ( including without limitation costs and attorneys' fees) in connection with any claim or action that arises from an alleged violation of Section 3. 2, a breach ofthis Agreement, Agency' s Installation Obligations, Agency' s sharing of any data in connection with the Flock system, Flock employees or agent or Non -Agency End Users, or otherwise from Agency' s use of the Services, Hardware and any Software, including any claim that such actions violate any applicable law or third party right. Although Flock has no obligation to monitor Agency' s use of the Services, Flock may do so and may prohibit any use ofthe Services it believes may be ( or alleged to be) in violation of Section 3. 2 or this Agreement.

9. RECORD RETENTION

9. 1 Data Preservation. The Agency agrees to store Agency Data and Non -Agency End User Data in compliance with all applicable local, state and federal laws, regulations, policies and ordinances and their associated record retention schedules. As part of Agency' s consideration for paid access and no -fee access to the Flock System, to the extent that Flock is required by local, state or federal law to store the Agency Data or the Non -Agency End User Data, Agency agrees to preserve and securely store this data on Flock' s behalf so that Flock can delete the data from its servers and, should Flock be legally compelled by judicial or government order, Flock may retrieve the data from Agency upon demand.

10. MISCELLANEOUS

10. 1 Severability. If any provision ofthis Agreement is found to be unenforceable or invalid, that provision will be limited or eliminated to the minimum extent necessary so that this Agreement will otherwise remain in full force and effect and enforceable.

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10. 2 Assignment. This Agreement is not assignable, transferable or sublicensable by Agency except with Flock' s prior written consent. Flock may transfer and assign any of its rights and obligations, in whole or in part, under this Agreement without consent.

10. 3 Entire Agreement. This Agreement, together with the Addendum, Order Form( s), the then -current Reinstall Policy (https:// www.flocksafety.com/reinstall-fee- schedule), and Deployment Plan( s), are the complete and exclusive statement of the mutual understanding of the parties and supersedes and cancels all previous written and oral agreements, communications and other understandings relating to the subject matter of this Agreement, and that all waivers and modifications must be in a writing signed by both parties, except as otherwise provided herein.

None of Agency' s purchase orders, authorizations or similar documents will alter the terms of this Agreement, and any such conflicting terms are expressly rejected.

10. 4 Relationship. No agency, partnership, joint venture, or employment is created as a result of this Agreement and Agency does not have any authority of any kind to bind Flock in any respect whatsoever.

10. 5 Costs and Attorneys' fees. In any action or proceeding to enforce rights under this Agreement, the prevailing party will be entitled to recover costs and attorneys' fees.

10. 6 Governing Law; Venue. This Agreement shall be governed by the laws of the State of California without regard to its conflict of laws provisions. In the event that any dispute rises under or either party brings any action against the other under this Agreement, the parties agree that jurisdiction for such dispute or action shall be vested exclusively in the state courts of California in the County Santa Clara or in the United States District Court for the Northern District of California. The parties agree that the United Nations Convention for the International Sale of Goods is excluded in its entirety from this Agreement.

10. 7 Publicity. Unless otherwise indicated on the Order Form, Flock has the right to reference and use Agency' s name and trademarks and disclose the nature of the Services provided hereunder in each case in business and development and marketing efforts, including without limitation on Flock' s website.

10. 8 Export. Agency may not remove or export from the United States or allow the export or re- export ofthe Flock IP or anything related thereto, or any direct product thereof in violation of any restrictions, laws or regulations of the United States Department of Commerce, the United States Department of Treasury Office of Foreign Assets Control, or any other United States or foreign agency or authority. As defined in FAR section 2. 101, the Services, the Hardware, the Embedded Software and Documentation are " commercial items" and according to DFAR section 252. 2277014( a)( 1) and ( 5) are deemed to be " commercial computer software" and " commercial computer software documentation." Consistent with DFAR section 227. 7202 and FAR section 12. 212, any use, modification, reproduction, release, performance, display, or disclosure of such commercial software or commercial software documentation by the U. S. Government will be governed solely by the terms of this Agreement and will be prohibited except to the extent expressly permitted by the terms of this Agreement.

10. 9 Headings. The headings are merely for organization and should not be construed as adding meaning to the Agreement or interpreting the associated Sections.

10. 10 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

10. 11 Authority. Each of the below signers of this Agreement represent that they understand this Agreement and have the authority to sign on behalf of and bind the organizations and individuals they are representing.

10. 12 Notices. All notices under this Agreement will be in writing and will be deemed to have been duly given when received, if personally delivered; when receipt is electronically confirmed, iftransmitted by facsimile or e- mail; the day after it is sent, if sent for next day delivery by recognized overnight delivery service; and upon receipt, if sent by certified or registered mail, return receipt requested.

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ADDENDUM

DATA PROCESSING

AGREEMENT
THIS DATA PROCESSING AGREEMENT (" DPA") is between Town of Los Altos Hills (" LAH"), on its behalf and on behalf of its subsidiaries and affiliates ( each subsidiary a " data exporter"), and < ALPR Vendor> (" Vendor"),

1. 0 Purpose of the DPA. This DPA is intended to satisfy the requirement for an obligatory contract between the processor and controller for the onward transfer of personal data from the European Union ( or the United Kingdom) to the United States provided by LAH to Vendor as well as to reflect the Parties' agreement with regard to the Processing of data, including Personal Data, in accordance with the requirements of Applicable Laws. Vendor agrees to comply with the provisions of this DPA when processing Personal Data in connection with the provision of services (" Services") pursuant to the Services Agreement/ GOVERNMENT AGENCY CUSTOMER AGREEMENT entered into by and between the parties hereto on the the " Master Agreement") to LAH. In the event that a term, provision, requirement or obligation of this DPA is inconsistent with or contradicts a term, provision, requirement or obligation of the Master Agreement, the parties specifically intend that the DPA will control.

2. 0 Definitions. For the purpose of this DPA, these terms shall mean the following:

2. 1 " Applicable Laws" means all federal, state and foreign data protection, privacy and data security laws including, without limitation, the General Data Protection Regulation ( Regulation ( EU) 2016/ 679) (" GDPR"), and the California Consumer Privacy Act of 2018, Cal. Civ. Code § 1798. 100-. 199 (" CCPA").

2. 2 " Authorized Personnel" means ( a) Vendor employees who have a need to know or otherwise access Personal Data for the purposes of performing applicable Services; and ( b) Vendor' s contractors, agents, and auditors who have a need to know or otherwise access Personal Data to enable Vendor to perform its obligations under this DPA, and who are bound in writing by confidentiality and other obligations sufficient to protect Personal Data in accordance with the terms and conditions of this DPA.

2. 3 " Customers" means the legal entity with to whom LAH has entered into agreement to provide product or services.

2. 4 " Personal Data" means any non - production data relating to an identified or identifiable person that is submitted to, or collected by, Vendor in connection with the Services or in connection with the provision of the Services to LAH, or a LAH affiliate, when such data is protected as " personal data" or " personally identifiable information" or a similar term under Applicable Laws.

Notwithstanding anything set forth in the Master Agreement, Personal Data is never excluded from Vendor' s obligations of confidentiality with respect to Confidential Information as set forth in the Master Agreement, or otherwise.

2. 5 " Process" or " Processing" means any operation or set of operations which is performed upon Personal Data, whether or not by automatic means, such as collection, recording, organization, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction.

2. 6 " Security Breach" means ( a) any act or omission by Vendor that compromises either the security, confidentiality, or Integrity of Personal Data or the physical, technical, administrative, or organizational safeguards put in place by Vendor ( or any Authorized Personnel), or ( b) a breach or alleged breach of this DPA relating to such privacy and data security practices. Without limiting the foregoing, a compromise shall include any unauthorized access to or disclosure or acquisition of Personal Data.

2.7 " Sell" means the exchange of Personal Data for monetary or other valuable consideration, or as otherwise defined in the CCPA or U. S, federal law.

2. 8 " Standard Contractual Clauses" means the those clauses for the transfer of Personal Data from the EEA to Processors established in non -EEA countries that do not provide an adequate level of data protection approved by EC Commission Decision of 5 February 2010, as currently set out at: htti):// ec. euroga. eu/ justice/ data- protection/ international- transfers/ transfer/ index en htm.

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fftck safety

3. 0 Processing Personal Data.

3. 1 General. Vendor shall process Personal Data in accordance with LAN' s written instructions ( unless expressly waived in a written requirement) provided during the term of this DPA. In the event Vendor reasonably believes there is a conflict with any Applicable Law and LAH' s instructions, Vendor will inform LAH immediately and the Parties shall cooperate in good faith to resolve the conflict and achieve the goals of such instruction. Vendor will not Sell Personal Data, and will not collect, retain, use, disclose or otherwise Process Personal Data for any purpose other than for the specific purpose of performing the Services, obligations, or actions for the benefit of the Town as specified in the Master Agreement.

3. 2 GDPR.
a) To the extent that Vendor will process any Personal Data that is subject to GDPR, Vendor shall process such Personal Data ( a) In the EEA or in a country considered by GDPR as providing adequate data privacy protection, or ( b) outside the EEA, pursuant to the Standard Contractual Clauses, which are hereby incorporated by reference into this DPA, and Vendor represents and warrants that it will comply with the Standard Contractual Clauses. For the purposes of the Standard Contractual Clauses, the following shall apply:

I. ' Data exporter' is LAH
ii. ' Data importer' is Vendor
iii. ' Data subjects' are employees of Customer
iv. ' Categories of data' are name, and email address, and phone numbers of Data subjects V. ' Special categories of data' is ' none;' and
vi. ' Processing operations' are the performance of the Services under the Agreement.

For the purposes of Appendix 2 of the Standard Contractual Clauses, the description of the technical and organizational security measures are those described in Attachment 1 hereto. b) Without limiting the foregoing, Vendor shall: ( 1) assist, to a reasonable extent, the fulfilment of LAN' s obligations to respond to requests for exercising a data subject' s rights with respect to Personal Data under Chapter III of the GDPR; ( ii) assist, to a reasonable extent, LAH in complying with its obligations with respect to Personal Data pursuant to Articles 32 to 36 of the GDPR; ( iii) make available to LAH all information necessary to demonstrate compliance with its obligations as a processor specified in Article 28 of the GDPR; ( iv) maintain a record of all categories of processing activities carried out on behalf of LAH in accordance with Article 30( 2) of the GDPR; and ( v) cooperate, on request, with an EU supervisory authority in the performance of the services under the Master Agreement.

3. 3 Compliance with Applicable Laws. Without prejudice to any of the other terms in this DPA Vendor will ensure that the Personal Data will be provided with a standard of protection that is comparable to the protection under Applicable Law and any requirements set out in advisory or other written guidelines issued from time to time by LAH, including specifically Vendor shall:
a) Not use or disclose Personal Data for any purpose other than those purposes instructed as specified in the DPA; b) Not Sell Personal Data;
c) Only use and disclose Personal Data in a manner and to the extent permitted in this DPA or as otherwise agreed between the Parties in writing and observe all limitations as to such use or disclosure as LAH may notify to Vendor; d) Make a reasonable effort to ensure that Personal Data is accurate and complete if Personal Data is likely to be ( 1) used by Vendor to make a decision that affects the individual to whom Personal Data relates; or ( 11) disclosed by Vendor to another organization ( if permitted by LAH in writing);
e) Employ reasonable administrative, physical and technical safeguards ( including safeguards against worms, Trojan horses, and other disabling or damaging codes) to ensure that Personal Data is afforded protection in accordance with Applicable Law as would be appropriate based on the nature of the Personal Data; f) Ensure that Personal Data is kept secure and in an encrypted form, and shall use the standard industry security practices and systems applicable to the use of Personal Data to prevent, and take prompt and proper remedial action against unauthorized access, copying, modification, storage, reproduction, display or distribution of Personal Data; Document Ref: CQ2U4- BPJYB- FGMWW- AYSJD Page 16 of 21 Page 463 of 678 flock safety
g) Cease to retain documents containing Personal Data, or remove the means by which Personal Data can be associated with particular individuals as soon as it is reasonable to assume that ( i) the specified purposes are no longer being served by the Vendor' s retention of Personal Data; and ( ii) retention is no longer necessary for legal or business purposes; h) If applicable, ensure that its Authorized Personnel are aware of the obligations specified under this DPA and agree to abide by the same.

3. 4 Authorized Personnel: Subprocessors. Vendor shall ensure that Authorized Personnel have committed themselves to confidentiality or are under an appropriate statutory obligation of confidentiality. During the term of each Authorized Personnel' s employment by Vendor, Vendor shall at all times cause such Authorized Personnel to abide by Vendor' s obligations under this DPA.

In addition, Vendor is authorized to use subprocessors provided that Vendor shall enter into an agreement with the subprocessor containing data protection obligations that are at least as restrictive as the obligations under this DPA. Vendor shall remain liable for any act or omission of a subprocessor that does not comply with the requirements of this DPA. Vendor hereby represents and warrants that in the performance of Services it employs the use of only those subprocessors set forth in Attachment 2, and will provide sixty ( 60) days' advance written notice of its intent to remove, add or otherwise change any such subprocessors.

3. 5 Security Bre._ achea. Vendor will promptly, but no later than forty- eight ( 48) hours, after becoming aware of a Security Breach ( a) notify LAH of the Security Breach; ( b) investigate the Security Breach; ( c) provide LAH with details about the Security Breach; and ( d) make best efforts to prevent a recurrence of the Security Breach. Vendor agrees to cooperate in LAN' s handling of the matter by: ( 1) providing reasonable assistance with LAH' s Investigation; and ( ii) making available relevant records, logs, files, data reporting, and other materials related to the Security Breach' s effects on LAH, as required to comply with Applicable Law.

3. 6 CJIS Compliance. Please provide a statement that confirms the Vendor shall provide an ALPR System that shall adhere to all guidelines set forth by the Criminal Justice Information Services (" CJIS") Agency. These guidelines were established by the U. S. Department of Justice, Federal Bureau of Investigation and can be found utilizing the following link:
https:// www. fbi. gov/ services/ cjis/ cjis- security- policy- resource- center. This shall include all data in transit and at rest.

4. 0 Audits and Certifications. Within thirty ( 30) days of LAH' s written request, and no more than once annually and subject to the confidentiality obligations set forth in the Master Agreement ( unless such information is reasonably required to be disclosed as a response to a data subject' s Inquiries under Applicable Law), Vendor shall make available to LAH ( or a mutually agreed upon third -party auditor) Information regarding Vendor' s compliance with the obligations set forth in this DPA, including reasonable documentation. Upon Vendor's reasonable written request, Vendor will promptly, and in no event more than thirty (30) days from the date of the written request, provide reasonable assistance to LAH to explain these certifications and audits.

5. 0 Miscellaneous.

5. 1
In the event of any conflict or inconsistency between this DPA and Applicable Law, Applicable Law shall prevail, provided LAH has notified Vendor of new changes that are applicable. In the event of any conflict or inconsistency between this DPA and the Master Agreement, the terms of this DPA shall prevail.

5. 2 In the event any provision of this DPA, in whole or in part, is invalid, unenforceable or in conflict with the applicable laws or regulations of any jurisdiction, such provision will be replaced, to the extent possible, with a provision which accomplishes the original business purposes of the provision in a valid and enforceable manner, and the remainder of this DPA will remain unaffected and in full force.

5. 3 Limitation of Liability. Each party and each of their Affiliates' liability, taken in aggregate, arising out of or related to this DPA and the Standard Contractual Clauses ( where applicable), whether in contract, tort or under any other theory of liability, shall be subject to the limitations and exclusions of liability set out in the section of the Master Services Agreement, entitled ' Limitation of Liability' and any reference in such section to the liability of a party means aggregate liability of that party and all of its Affiliates under the Master Agreement ( including this DPA).

5. 4 This DPA may be executed in several counterparts, each of which shall be deemed and original and all of which shall constitute one and the same instrument, and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Parties; it being understood that all Parties need not sign the same counterparts. Signatures of the Parties transmitted via facsimile or other electronic means shall be deemed to be their original signatures for all purposes.

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IN WITNESS WHEREOF, the parties hereto have caused this DPA to be executed by their authorized representatives as of the day and year written below.

LAH Vendor
By: By:

Carl CAN Name: Name:

Title: _ `' I_ 1GnU -
Title:

Date:
q/ 29/ 2021
Alex Latraverse
CRO
09/ 28/ 2021
Date:

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ATTACHMENT 1
APPENDIX 2
to the Standard Contractual Clauses

1. 0 Purpose; Confidential Information; Order of Precedence. This Appendix shall apply to Vendor' s provision of Services generally pursuant to the Master Agreement, as defined in the DPA. To the extent not already defined in the Master Agreement the term " Confidential Information," as used in this Appendix shall mean all Information communicated to it by the other in connection with the Master Agreement and Identified as " Confidential," or a similar phrase, ( b) all information communicated to Vendor that reasonably should have been understood, because of confidentiality, descriptions or similar legends, the circumstances of disclosure or the nature of the information Itself, to be confidential to LAH, and ( d) Personal Data, as defined in the DPA. To the extent this Appendix conflicts with any previously agreed upon security standards or requirements in the Master Agreement or otherwise, in relation to Vendor' s performance of Services for LAH, the stricter standards or requirements shall apply.

2. 0 Vendor Data Security Program. Vendor agrees that it engages in the handling or transmission of LAH' s Confidential Information, and will therefore maintain a data security program that meets or exceeds the expectations defined in this Appendix 2. Vendor agrees to allow LAH to perform one information security audit annually, upon at least thirty ( 30) days' prior written notice, that consists of a review of Vendor' s: ( a) information security policies, ( b) information security incident response plan, ( c) vulnerability management procedures, ( d) disaster recovery documentation, ( e) network perimeter vulnerability scans, ( f) web application vulnerability scans, ( g) and location( s) where LAH Confidential Information is processed.

3. 0
Information Handling, Protection, and Disposal. Vendor represents and warrants that any medium and/ or media that contain LAH Confidential Information for the purposes of delivery or transfer between LAH and Vendor are sufficiently secured and protected to prevent disclosure or examination by any unauthorized party. LAH acknowledges that neither Vendor nor the Software is a primary system of record of LAH Data, and LAH shall regularly backup any files for which it intends as such.

3. 1 Vendor will immediately revoke access privileges to LAH Confidential Information for separated ( either voluntarily or involuntarily) Vendor personnel following such separation.

3. 2 Vendor will ensure that LAH Confidential Information will be encrypted in transit and at rest using a method or tool which encrypts the LAH Confidential Information using an encryption algorithm of sufficient strength to render the LAH Confidential Information unreadable and unintelligible.

3. 3 Vendor will properly dispose of any LAH Confidential Information, as well as any documents and/ or media that contain any LAH Confidential Information. Vendor defines " properly dispose of LAH Confidential Information" as being in the state that is beyond recognition and beyond reconstruction. Specifically, Vendor will destroy data utilizing one of the following methods:

3. 3. 1 Format and overwrite the media with meaningless data ( either with some fixed pattern ( e. g. binary zeroes) or random data; there are numerous software utilities that are designed to securely remove files from disks)

3. 3. 2 Degauss the media ( degaussing equipment is available for magnetic tapes and hard disks).

3. 3. 3 Destroy the media by crushing, incinerating, cross -cut shredding, or melting.

3. 4 Upon request and within seventy- two ( 72) hours of destruction, Vendor will notify LAH that the LAH Confidential Information has been destroyed. Further, LAH shall maintain the right to request proof of data destruction after receipt of the destruction notification from Vendor. Vendor will provide LAH with proof of data destruction within seventy- two ( 72) hours of LAH's request.

3. 5 After the termination or expiration of the Master Agreement, Vendor shall continue to protect any LAH Confidential Information In Vendor' s possession in accordance with the Master Agreement, the Clauses, and this Appendix 2.

4. 0 Security Awareness and Compliance, Vendor provides annual information security awareness training to its personnel assigned to provide Services to LAH. Vendor shall make the documentation available for review by LAH upon request.

5. 0 Personnel Security and Suitability. Before assigning any Vendor agent, or employee to perform Services, a background check will be conducted. If, at any time, it is discovered that a current or prospective Vendor agent, or employee being considered for assignment to perform Services has a criminal record that includes a felony, Vendor will be responsible for determining whether assigning that current or prospective Vendor agent, employee or subcontractor would be consistent with the safe and efficient performance of the Services, taking into consideration any and all appropriate factors, such as: ( 1) the number, nature, and gravity of Document Ref: CO2U4- BPJYB- FGMWW-AYSJD Page 19 of 21