Los Gatos City Council
December 19, 2023

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

underlying asset. Intangible right-to-use subscription assets are amortized over the shorter of the subscription term or the useful life of the underlying IT asset.

The Town has assigned the useful lives listed below to capital assets:

Buildings 25-40 years
Improvements 25-40 years
Machinery and equipment 2-20 years
Furniture and fixtures 5-12 years
Software 5-7 years
Infrastructure 20-40 years
Major capital outlay for capital assets and improvements are capitalized as projects are constructed.

Capital assets may be acquired using federal and state grants, contributions from developers, and contributions or grants from other governments. GASB 34 requires that these contributed assets be accounted for as revenue at the time they are contributed.

Leases Receivable - The Town’s leases receivable are measured at the present value of lease payments expected to be received during the lease terms. The present value, net of accumulated amortization, is reported as deferred inflows of resources is recorded for leases. Deferred inflows of resources are recorded at the initiation of the leases in an amount equal to the initial recording of the leases receivable, plus incentive payments received. Amounts recorded as deferred inflows of resources from the leases are amortized on a straight-line basis over the term of the lease.

Deferred Compensation Plan - The Town established a deferred compensation plan created in accordance with California Government Code Section 53212 and Internal Revenue Code Section 457. The plan, available to all Town employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Deferred compensation plans are not reported as part of the Town’s assets or liabilities, as the deferred compensation plan trustees hold those funds in trust on behalf of employees until the employees are eligible to receive the benefits.

Compensated Absences - Accumulated Vacation, Sick Pay, and Other Employee Benefits are accrued as earned. Upon termination, employees are paid for all unused vacation at their current hourly rates. Sick leave earned is cashed out based on the following schedule for employees with at least 150 hours accrued and up to a maximum amount as specified under labor contract provisions:

For employees under contract 1-59 months 25.0%
For employees under contract 60-119 months 37.5%
For employees under contract 120 months or more 50.0%
The Town’s liability for compensated absences is determined annually. For all governmental funds, amounts expected to be paid out of current financial resources are recorded as liabilities of each fund; DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

the long-term portion is recorded in the Statement of Net Position. The changes of the compensated absences were as follows:

Compensated absences are liquidated by the fund that has recorded the liability. The long-term portion of governmental activities compensated absences is liquidated primarily by the General Fund. Only compensated absences related to terminated employees are reported in the fund financial statements.

Unearned Revenue - Unearned revenue arises when assets are received before revenue recognition criteria have been satisfied. Grants and entitlements received before eligibility requirements are met are recorded as deferred inflows from unearned revenue. In the governmental fund financial statements, receivables associated with non-exchange transactions that will not be collected within the availability period have been recorded as deferred inflows from unavailable revenue.

Long-Term Liabilities - In the government-wide financial statements and private-purpose trust funds long-term debt and other long-term obligations are reported as liabilities in the applicable statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.

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

Subscription Based Information Technology Arrangements - The Town recognizes subscription liabilities with an initial, individual value of $100,000 or more. The Town uses its estimated incremental borrowing rate to measure subscription liabilities unless it can readily determine the interest rate in the arrangement. The Town's estimated incremental borrowing rate is calculated as described above. The Town’s estimated incremental borrowing rate is based on its most recent public debt issuance.

Deferred Outflows/Deferred Inflows of Resources - Deferred outflows of resources is a consumption of net assets by the Town that is applicable to a future reporting period, for example, contributions to pension and OPEB plans that are after the actuarial measurement date.

Beginning Balance $ 3,038,293
Additions 1,118,885
Payments (995,931)
Ending Balance $ 3,161,247
Compensated Absences Current Portion $ 292,795
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Deferred inflows of resources is an acquisition of net assets by the Town that is applicable to a future reporting period, for example, unavailable revenue.

Net Position - In the government-wide financial statements, net position is classified in the following categories:

Net Investment in Capital Assets - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. In addition, deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt also are included in the net investment in capital assets component of net position.

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

Unrestricted Net Position - This amount is all net position that does not meet the definition of "net investment in capital assets" or "restricted net position." Fund Balances - The Town does not have a policy identifying a minimum unassigned fund balance.

Because amounts in the nonspendable, restricted, committed, and assigned categories are subject to varying constraints on their use, the remaining fund balances are otherwise unassigned.

In accordance with Government Accounting Standards Board 54, Fund Balance Reporting and Governmental Fund Type Definitions, the Town classifies governmental fund balances as follows:

Nonspendable includes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual constraints.

Restricted includes fund balance amounts that are constrained for specific purposes which are externally imposed by providers, such as creditors or amounts constrained due to constitutional provisions or enabling legislation.

Committed includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority and does not lapse at year-end. Committed fund balances are imposed by the Town Council.

Assigned includes fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. Fund balance may be assigned by the Town Manager or the Finance Director.

Unassigned includes fund balances within the funds which have not been classified within the above-mentioned categories. The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds it is not appropriate to report a positive DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

unassigned fund balance amount. However, in governmental funds other than the General Fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

The Town uses restricted/committed amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as a grant agreement requiring dollar for dollar spending. Additionally, the Town would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made.

Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asset and liabilities at the dates of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting periods. Actual results could differ from those estimates.

Subsequent Events - Management has considered subsequent events through November 27, 2023, the date which the financial statements were available to be issued. The financial statements include all events or transactions, including estimates, required to be recognized in accordance with generally accepted accounting principles. Management has determined that there are no non-recognized subsequent events that require disclosure.

Property Tax Levy, Collection and Maximum Rates - State of California Constitution Article XIII A provides that the combined maximum property tax rate on any given property may not exceed 1% of its assessed value unless an additional amount for general obligation debt has been approved by voters. Assessed value is calculated at 100% of market value as defined by Article XIII A and may be adjusted by no more than 2% per year unless the property is sold, transferred, or substantially improved. The State Legislature has determined the method of distribution of receipts from a 1% tax levy among the counties, cities, school districts and other districts.

The County of Santa Clara assesses properties, bills for and collects property taxes on the following schedule:

Secured Unsecured
Valuation/lien dates January 1 January 1
Levy dates January 1 January 1
Due dates (delinquent as of) 50% on November 1 (December 10) March 1 (August 31) 50% on February 1 (April 10)
The term "unsecured" refers to taxes on personal property other than land and buildings. These taxes are secured by liens on the property being taxed. Property taxes levied are recorded as revenue and receivables when they are collected during the fiscal year of levy or within 60 days of year-end.

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Budgets and Budgetary Accounting - The Town follows the procedures below when establishing the budgetary data reflected in the financial statements:

1. The Town Manager submits to the Town Council a proposed operating and capital improvement budget for the fiscal year commencing the following July 1. The budgets include the proposed expenditures and the means of financing them.

2. Public hearings are conducted to obtain taxpayer comments.

3. The budget is legally enacted through adoption of Town resolution by Council.

4. The Town Manager is authorized to implement the programs as approved in the adopted budget.

Within a specific fund, the Town Manager may transfer appropriations between categories, departments, projects and programs as needed to implement the adopted budget, whereas the Town Council must authorize budget increases and decreases, and transfers between funds.

5. Budgets are adopted on a basis consistent with generally accepted accounting principles except for proprietary funds which budget for capital outlays but not depreciation. Budgets were adopted for the General Fund, Special Revenue Funds, Internal Service Funds, and Capital Projects Funds.

6. Budgeted amounts are as originally adopted or as amended by Town Council. Individual amendments were not material in relation to original appropriations.

Excess of Expenditures over Appropriations - There were no significant expenditures in excess of budget during for the year ended June 30, 2023.

Encumbrances - Under encumbrance accounting, purchase orders, contract and other commitments for expenditures are recorded in order to reserve that portion of the applicable appropriation.

Encumbrance accounting is employed as an extension of formal budgetary integration in all funds.

Encumbrances outstanding at year-end are reported as commitments or assignments of fund balances since they do not constitute expenditures or liabilities; unexpended and unencumbered appropriations lapse at year end in all funds. Encumbered appropriations are carried forward to the following year.

Reclassifications - Certain accounts in the prior-year financial statements have been reclassified for the presentation in the current-year financial statements.

G. Accounting and Reporting Changes
GASB Statement No. 96, Subscription-based Information Technology Arrangements.

During the year, the Town implemented GASB Statement No. 96, Subscription-based Information Technology Arrangements. GASB Statement No. 96 is an accounting pronouncement issued by the Governmental Accounting Standards Board (GASB) that provides guidance on how the costs and investments for subscription-based information technology arrangements (SBITAs) are accounted for and disclosed by governmental entities. This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Statement No. 87, Leases, as amended. As a result, the Town recorded intangible right of use subscription assets of $915,860 and corresponding subscription lease liabilities of $653,681. The details of the related assets and liabilities can be found in Notes 6 and 8.

H. Upcoming Accounting and Reporting Changes
The Town is currently analyzing its accounting practices to determine the potential impact on the financial statements of the following recent GASB Statements:

GASB Statement No. 100, Accounting Changes and Error Corrections—an amendment of GASB Statement No. 62
This Statement defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes. This Statement also prescribes the accounting and financial reporting for (1) each type of accounting change and (2) error corrections in previously issued financial statements. The requirements of this Statement are effective for accounting changes and error corrections made in fiscal years beginning after June 15, 2023, and all reporting periods thereafter.

GASB Statement No. 101, Compensated Absences
This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already rendered when an employee has performed the services required to earn the leave.

Leave that accumulates is carried forward from the reporting period in which it is earned to a future reporting period during which it may be used for time off or otherwise paid or settled. In estimating the leave that is more likely than not to be used or otherwise paid or settled, a government should consider relevant factors such as employment policies related to compensated absences and historical information about the use or payment of compensated absences. However, leave that is more likely than not to be settled through conversion to defined benefit postemployment benefits should not be included in a liability for compensated absences.

This Statement requires that a liability for certain types of compensated absences—including parental leave, military leave, and jury duty leave—not be recognized until the leave commences.

This Statement also requires that a liability for specific types of compensated absences not be recognized until the leave is used.

This Statement also establishes guidance for measuring a liability for leave that has not been used, generally using an employee’s pay rate as of the date of the financial statements. A liability for leave that has been used but not yet paid or settled should be measured at the amount of the cash payment DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

or noncash settlement to be made. Certain salary-related payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities.

With respect to financial statements prepared using the current financial resources measurement focus, this Statement requires that expenditures be recognized for the amount that normally would be liquidated with expendable available financial resources. The requirements of this Statement are effective for fiscal years beginning after December 15, 2023, and all reporting periods thereafter.

NOTE 2 - CASH AND INVESTMENTS
The Town pools cash from all sources and all funds except Restricted Cash and Investments so that it can be invested at the maximum yield, consistent with safety and liquidity, while existing funds have cash available for expenditures.

Cash and Investments Defined
The Town includes only cash deposits in banks as cash. Investments in LAIF and government securities mutual funds are net in the order of liquidity, since they may be withdrawn without penalty. U.S.

Treasuries, U.S. Agencies and Certificates of Deposit are the Town’s least liquid investments, since they must be held to maturity.

Cash Deposits with Banks and Custodial Credit Risk
California Law requires banks and savings and loan institutions to pledge government securities with a fair value of 110% of the Town’s cash on deposit, first trust deed mortgage notes with a value of 150% of the deposit, or letters of credit issued by the Federal Home Loan Bank of San Francisco with a value of 100% of the deposit as collateral. Under California Law this collateral is held in the Town’s name and places the Town ahead of general creditors of the institution. The Town’s cash deposits are collateralized under this law.

The bank balance of the Town’s cash deposits was $14,306,396 and the carrying amount was $14,200,094 as of June 30, 2023. The bank balance and the carrying amount differed due to deposits in transit and outstanding checks.

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Investments
The Town and its fiscal agent invest in individual investments and in investment pools. Individual investments are evidenced by specific identifiable pieces of paper called “securities instruments,” or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system. In order to maximize security, the Town employs the Trust department of a bank as the custodian of all its investments, regardless of their form.

Fair Value Measurements
GASB 72 established a hierarchy of inputs to the valuation techniques above. This hierarchy has three levels:
• Level 1 inputs are quoted prices in active markets for identical assets or liabilities. • Level 2 inputs are quoted market prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other than quoted prices that are not observable
• Level 3 inputs are unobservable inputs, such as a property valuation or an appraisal.

Local Agency Investment Fund (LAIF)
The Town invests in the California State Treasurer’s Local Agency Investment Fund. LAIF, established in 1977, is regulated by California Government Code Section 16429 and under the day to day administration of the State Treasurer. As of June 30, 2023, LAIF had approximately $180 billion in investments that were fully invested in non-derivative financial products. These investments are described as follows:

1. Structured Notes are debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and / or that have embedded forwards or options.

2. Asset-Backed Securities, the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables.

Risk Disclosures
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 the changes in market interest rates. One of the ways that the Town manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the Town's investments to market interest rate fluctuations is provided in the summary of cash and investments table on the following page that shows the distribution of the Town's investments by maturity.

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Credit Risk is the risk of loss due to the failure of the security issuer. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The summary of cash and investments table on the following page shows the minimum rating under the actual rating of the Town’s investments at year end.

Custodial Credit Risk is the risk that in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The Town’s investment in money market fund and LAIF is not categorized as to custodial credit risk. Its U.S. Government Agency Securities investment is held by a third-party financial institution under the third party’s trust department’s name and thus not exposed to custodial credit risk.

Concentration of Credit Risk is the risk that the Town’s investments are exposed because the types of investments have been too limited. The Town’s Policy states that, with the exception of US Treasury securities and LAIF, no more than 50% of the Town’s total investment portfolio will be invested in one single security type or with a single financial institution. The Town was in compliance with this policy as of June 30, 2023.

The following table summarizes the Towns policy related to maturities and concentration of investments:

Maximum
Maximum Portfolio
Investment Type Maturity Percentage
US Treasury Obligations 5 years None
US Agency Obligations 5 years None
Bankers Acceptances 180 days 30%
Commercial Paper 270 days 25%
Medium Term Notes 5 years 30%
Collateralized CD's 5 years 30%
CA LAIF NA $65 million
Money Market Funds
DRAFT
NA 20%

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

The following is a summary of the Town’s Cash and Investments (stated at fair value) as of June 30, 2023:

Cash and investments are classified in the financial statements as shown below, based on whether or not their use is restricted by Town debt or Agency agreements.

NOTE 3 - LONG-TERM NOTES RECEIVABLE
The Town had the following long-term notes receivable as of June 30, 2023:

BMP Loans - The purpose of the Below Market Price (BMP) Housing Program is to provide adequate housing for Los Gatos residents, regardless of age, income, race, or ethnic background. As required by the State, the Town plans and facilitates the construction of housing adequate for future populations Available Concentration Time to Weighted
for of Credit Input Mature Average
Operations Restricted Total Risk Rating Level (Years) Maturity Government Bonds 17,124,763 - 17,124,763 27.35% n/a 2 0-3 1.16 Government Agencies 15,611,400 - 15,611,400 24.93% n/a 2 0-4 1.90 Corporate Bonds 13,042,387 - 13,042,387 20.83% A3 2 0-3 1.54 Mutual Funds 56,542 - 56,542 0.09% Not Rated 2 n/a n/a
LAIF 16,775,794 - 16,775,794 26.79% Not Rated n/a n/a n/a Total Investments 62,610,886 - 62,610,886 100.00%
Cash Deposits with Banks 14,182,701 2,197,510 16,380,211 Money Market Accounts 17,393 - 17,393
Pension Trust 1,400,163 1,400,163 -
Cash on Hand at Town 2,400 - 2,400
Total Cash and Investments 76,813,380 3,597,673 80,411,053 Description
Fiduciary
Description Total Town Funds Totals
Cash and Investments Available for Operations $ 74,859,048 $ 1,954,332 $ 76,813,380 Restricted Cash and Investments 1,574,488 2,023,185 3,597,673 Total Cash and Investments $ 76,433,536 $ 3,977,517 $ 80,411,053 Interest
Rate Maturity Balance
General Fund:

Rehab Loan to Charities Various Various 159,000 $
BMP Loans Various Various 900,000
Total General Fund 1,059,000
Housing Conservation 0-5% Various 78,752
Total CDBG 78,752
Total Long-Term Notes Receivable - Government-Wide Statement of Net Position 1,137,752 Project Match Various Various 622,082
Total Long-Term Notes Receivable $ 1,759,834
Community Development Block Grant Fund (CDBG):

Description
Successor Agency Affordable Housing:

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

consistent with environmental limitations and in a proper relationship to community facilities, open space, transportation, and small-town character.

Active Home Loans and Housing Conservation Loans - The Town used CDBG Funds (funded through federal grants) to assist low- and moderate-income homeowners to improve their homes and to fund low-income housing rental properties acquisition and rehabilitation. These loans are secured by deeds of trust.

Project Match - The Successor Agency has a loan agreement with Project Match, a nonprofit benefit corporation, to acquire and rehabilitate four- or five-bedroom single family homes. The property is to provide affordable housing rental to very low-income senior households. The loan receivable is evidenced by a promissory note and secured by a deed of trust. From inception of the loan through June 30, 2023, no interest or principal payments have been made.

NOTE 4 - LEASES RECEIVABLE
In March of 2021, the Town entered into a five-year lease with Tesla Motor Cars (Tesla) allowing Tesla to use Town property at the North Lot for charging stations. Under the lease, Tesla pays the Town $96,000 per year during the term of the lease. The lease receivable is measured as the present value of the future minimum rent payments expected to be received during the lease term at a discount rate of 2%. The outstanding balance on the lease at year end was $241,506.

In January of 2010, the Town entered into a twenty-year lease with the Los Gatos Saratoga Recreation (LGS) allowing LGS to use the property at 123 East Main Street. Under the lease, LGS paid the Town $19,950 per year at the beginning of the lease. After cumulative CPI adjustments, the payment in the final year of the lease will be $30,216. The lease receivable is measured as the present value of the future minimum rent payments expected to be received during the lease term at a discount rate of 6.6%.

The outstanding balance on the lease at year end was $148,858.

In January of 2010, the Town entered into a twenty-year lease with the Los Gatos Saratoga Recreation (LGS) allowing LGS to use the property at 208 East Main Street. Under the lease, LGS paid the Town $90,000 per year at the beginning of the lease. After cumulative CPI adjustments, the payment in the final year of the lease will be $243,435. The lease receivable is measured as the present value of the future minimum rent payments expected to be received during the lease term at a discount rate of 6.6%.

The outstanding balance on the lease at year end was $1,199,297.

In December of 2022, the Town entered into a fifty-five-month lease with CineLux Theaters allowing CineLux Theaters to use the Los Gatos Threatre building. Under the lease, CineLux Theaters pays the Town up to $120,000 per year during the term of the lease. The lease receivable is measured as the present value of the future minimum rent payments expected to be received during the lease term at a discount rate of 5.99%. The outstanding balance on the lease at year end was $319,957.

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

The following summarizes the leases as of June 30, 2023:

NOTE 5 - INTERFUND TRANSACTIONS
Transfers - With Council approval resources may be transferred from one fund to another. Transfers routinely reimburse funds that have made an expenditure on behalf of another fund. Transfers may also be made to pay for capital projects or capital outlays, lease or debt service payments, operating expenses and low and moderate-income housing projects. Transfers between funds during the fiscal year ended June 30, 2023 were as follows:

Deferred Deferred Deferred
Lease Inflows Lease Inflows Lease Inflows
Description Receivable of Resources Receivable of Resources Receivable of Resources Beginning Balance $ 331,696 $ 327,100 $ 165,056 $ 96,396 $ 1,329,665 $ 732,916 Additions - - - - - -
Current Amortization - (91,284) - (12,997) - (98,820)
Current Principal Payments (90,190) - (16,198) - (130,368) - Ending Balance $ 241,506 $ 235,816 $ 148,858 $ 83,399 $ 1,199,297 $ 634,096 Deferred Deferred
Lease Inflows Lease Inflows
Description Receivable of Resources Receivable of Resources Beginning Balance $ - $ - $ 1,826,417 $ 1,156,412
Additions 319,957 308,997 319,957 308,997
Current Amortization - (39,327) - (242,428)
Current Principal Payments - - (236,756) -
Ending Balance $ 319,957 $ 269,670 $ 1,909,618 $ 1,222,981 Tesla LGS 123 E. Main St LGS 208 E. Main St
Los Gatos Threatre Totals
Opinion Unit Program Title Amount Opinion Unit Program Title Description General Fund Non-Departmental $ 3,006,978 Appropriated Reserves GFAR Adopted Budget Support General Fund Non-Departmental 463,572 Appropriated Reserves Downtown Revitilization Parklets General Fund Non-Departmental 243,325 Internal Service Facilities Rent Waivers General Fund Non-Departmental 2,900,000 Appropriated Reserves GFAR Capital projects General Fund Measure G Program 629,064 Appropriated Reserves GFAR Capital projects Nonmajor Blackwell District 460 General Non-Departmental Admin Support Nonmajor Kennedy Meadows 1,510 General Non-Departmental Admin Support Nonmajor Gemini Court 610 General Non-Departmental Admin Support Nonmajor Santa Rosa Heights 660 General Non-Departmental Admin Support Nonmajor Vasona Heights 1,430 General Non-Departmental Admin Support Nonmajor Hillbrook Drive 250 General Non-Departmental Admin Support ARPA ARPA 3,614,872 General Patrol Revenue loss, public safety Appropriated Reserves GFAR 102,000 General Non-Departmental Admin Support Appropriated Reserves GFAR 97,808 General Town Engineering Engineering Support Appropriated Reserves GFAR 217,808 General PPW Admin Engineering Support Appropriated Reserves Traffic Mitigation 10,000 General Non-Departmental Admin Support Nonmajor Gas Tax 106,000 General Non-Departmental Admin Support Internal Service Information Technology 700,000 Appropriated Reserves GFAR Ent. Res. Planning Software Update Internal Service Information Technology 33,000 Appropriated Reserves ERP Upgrade Ent. Res. Planning Software Update Total Transfers $ 12,129,347
Transfers Out
DRAFT
Transfers In

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Inter-fund Receivables and Payables - Amounts due to or due from other funds reflect inter-fund balances for services rendered or short-term loans expected to be repaid in the next fiscal year. Advances to or from other funds are long-term loans between funds that are to be repaid in their entirety over several years.

NOTE 6 - CAPITAL ASSETS
Changes in the Town’s capital assets during the fiscal year are shown as follows:

Depreciation/amortization expense is charged to functions and programs based on their usage of the related assets. The amount allocated to each function or program is as follows:

Balance at June
30, 2022 Additions Retirements
Balance at June
30, 2023
Nondepreciable/Amortizable Capital Assets:

Land $ 26,066,103 $ - $ 26,066,103 - $
Construction in Progress 7,778,075 - (264,927) 7,513,148 Total Nondepreciable/Amortizable 33,844,178 - (264,927) 33,579,251 Depreciable/Amortizable Capital Assets:

Subscription Right of Use Assets - 915,860 - 915,860
Buildings and Improvements 39,613,623 313,377 (24,225) 39,902,775 Equipment & Vehicle 12,555,617 592,001 (195,324) 12,952,294 Infrastructure 108,726,852 7,958,361 (385,255) 116,299,958 Total Depreciable/Amortizable 160,896,092 9,779,599 (604,804) 170,070,887 Less Accumulated Depreciation/Amortization for:

Subscription Right of Use Assets - 202,422 - 202,422
Buildings and Improvements 10,131,701 924,468 11,056,169 - Equipment & Vehicle 10,044,744 596,816 (151,960) 10,489,600 Infrastructure 46,793,259 2,428,915 49,222,174 -
Total Acccumulated Depreciation/Amortization 66,969,704 4,152,621 (151,960) 70,970,365 Net Depreciable/Amortizable Capital Assets 93,926,388 5,626,978 (452,844) 99,100,522 Capital Assets, Net $ 127,770,566 $ 5,626,978 $ (717,771) $ 132,679,773 Depreciation/
Amortization
Expense
General Government $ 473,698
Public Safety 498,187
Parks & Public Works 2,704,539
Community Development 76,379
Library 398,642
Sanitation 1,176
Total Governmental Activities $ 4,152,621
Governmental Activities
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Changes in the RDA Successor Agency trust fund capital assets during the fiscal year are shown as follows:

NOTE 7 - LONG-TERM OBLIGATIONS
The Town generally incurs long-term debt to finance projects or purchase assets, which will have useful lives equal to or greater than the related debt.

The following summarizes the changes in long-term debt in the Town during the fiscal year ended June 30, 2023:

Future debt service requirements of the PG&E loan were as follows:

Balance at June
30, 2022
Adjustments and
Additions Retirements
Balance at June
30, 2023
Depreciable/Amortizable Capital Assets:

Buildings and Improvements $ 4,067,708 $ - $ 4,067,708 - $ Less Accumulated Depreciation/Amortization for:

Buildings and Improvements 2,847,392 101,693 2,949,085 - Net Depreciable/Amortizable Capital Assets 1,220,316 (101,693) 1,118,623 - Capital Assets, Net $ 1,220,316 $ (101,693) $ 1,118,623 - $ Interest Maturity Original Beginning Additions/ Ending
Long-Term Debt Rate Date Issue Balance Adjustments Deletions Balance Direct Borrowings:

PG& Loan 0% 2031 1,560,336 $ $ 1,352,291 -$ 156,034 $ $ 1,196,257 Due Within One Year 156,034
Due in More Than One Year $ 1,040,223
For the Year
Ending June 30, Principal Interest Total
2024 $ 156,034 -$ $ 156,034
2025 156,034 - 156,034
2026 156,034 - 156,034
2027 156,034 - 156,034
2028 156,034 - 156,034
2029-2033 416,087 - 416,087
Total Debt Service $ 1,196,257 -$ 1,196,257 $
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

The following summarizes the changes in long-term debt in the Successor Agency trust fund during the fiscal year ended June 30, 2023:
2002 Certificates of Participation (2002 COPs) - On July 18, 2002, the Town and the Los Gatos Redevelopment Agency issued $10,725,000 in 2002 COPs, Series A, to finance the acquisition, construction, rehabilitation, equipping, and improvement of several capital improvement projects. The Town had pledged lease payments of real property and facilities comprised of the Parks and Public Works Service Center and Baseball Field, as well as Parking Lot No. 1, 2, and 3, as collateral for the repayment of the Certificates. Principal payments are due annually on August 1st, with interest payments due semi-annually on February 1st and August 1st.
2010 Certificates of Participation (2010 COPs) - On June 1, 2010, $15,675,000 of 2010 COPs were issued to finance the acquisition, construction, and improvement of a library on the Town’s Civic Center campus, to be owned and operated by the Town. Principal payments are due annually on August 1, with interest payments due semi-annually on February 1 and August 1.

To assist the Town in paying the cost of acquisition and construction of various projects, the Town and its Redevelopment Agency entered into lease and reimbursement agreements in 2002 and 2010. Under the agreements, the Agency will use available net tax increment revenues resulting from the projects’ effect on land values to repay the Town for all lease payments made by the Town to the Agency under the lease agreements for the projects. Net tax increment revenues are all taxes allocated to and paid into the Successor Agency private-purpose trust fund.

Future debt service requirements of the Certificates of Participation were as follows:

Interest Maturity Original Beginning Ending
Long-Term Debt Rate Date Issue Balance Deletions Balance 2002 COP 2.5-5% 2031 10,725,000 $ $ 5,280,000 $ 420,000 $ 4,860,000 2010 COP 2.5-4.25% 2028 15,675,000 7,505,000 935,000 6,570,000 Subtotal COP's 26,400,000 12,785,000 1,355,000 11,430,000 Premiums 753,095 301,235 37,655 263,580
Total Long-Term Debt $ 27,153,095 $ 13,086,235 $ 1,392,655 $ 11,693,580 Due Within One Year 1,415,000
Due in More Than One Year $ 10,278,580
For the Year
Ending June 30, Principal Interest Total
2024 $ 1,415,000 $ 479,550 $ 1,894,550
2025 1,485,000 417,300 1,902,300
2026 1,550,000 351,850 1,901,850
2027 1,625,000 283,375 1,908,375
2028 1,705,000 210,819 1,915,819
2029-2033 3,650,000 275,656 3,925,656
Total Debt Service $ 11,430,000 $ 2,018,550 $ 13,448,550 DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

The Successor Agency must maintain a required amount of cash and investments with the trustee under the terms of the COPs issues. These funds are pledged as reserves to be used if the Successor Agency fails to meet its obligations under the COPs issue and totaled $2,023,185 as of June 30, 2023. The California Government Code requires these funds to be invested in accordance with Town ordinance, bond indentures or State statues. All these funds have been invested as permitted under the Code.

NOTE 8 - SUBSCRIPTION-BASED INFORMATION TECHNOLOGY AGREEMENTS The following summarizes the terms of the Town’s subscription-based information technology agreements as of June 30, 2023:

The following summarizes the Town’s subscription right of use assets as of June 30, 2023:

The following summarizes the Town’s subscription liabilities as of June 30, 2023:

Terms Accela Microsoft
Start 7/1/2021 7/1/2022
End 6/30/2026 7/1/2025
Annual Rate 4.66% 4.92%
Prepayments $ 227,179 $ -
Implementation Cost $ 35,000 $ -
Principal Paid $ - $ 58,747
Interest Paid $ 15,957 $ 13,264
Lease Amortization $ 149,337 $ 53,085
Subscription Right of Use Assets Accela Microsoft Total Beginning $ - $ - $ -
Additions 597,350 318,510 915,860
Deletions - - -
Ending 597,350 318,510 915,860
Accumulated Amortization (149,337) (53,085) (202,422)
Subscription ROA, Net $ 448,013 $ 265,425 $ 713,438
Subscription Liabilities Accela Microsoft Total
Beginning $ - $ - $ -
Additions 335,172 318,509 653,681
Deletions - (58,747) (58,747)
Ending 335,172 259,762 594,934
Due Within One Year 102,174 46,980 149,154
Due in More Than One Year $ 232,998 $ 212,782 $ 445,780 DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

NOTE 9 - SPECIAL ASSESSMENT DISTRICT DEBT WITHOUT 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 over the term of the debt issued to finance the improvements and are used to pay debt service on debt issued to fund the improvements. The Town is acting only as an agent and has no legal liability with respect to the payment of any indebtedness of the Downtown Parking Assessment District. There was no non-obligated debt outstanding as of June 30, 2023.

NOTE 10 - FUND BALANCES
Fund balance for governmental funds is reported in classifications (nonspendable, restricted, committed, assigned, and unassigned) that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. As of June 30, 2023, fund balances were classified as follows:

Beginning Ending
Balance Additions Deletions Balance
Nonspendable
Loans Receivable $ 159,000 $ - $ - $ 159,000
Leases - 146,167 (90,190) 55,977
Total Nonspendable 159,000 146,167 (90,190) 214,977
Restricted:

Library 555,253 86,459 (111,538) 530,174
Capital projects 8,357,393 1,971,621 (2,000,442) 8,328,572 Land held for resale - 344,338 - 344,338
Repairs and maintenance 174,239 41,219 (38,492) 176,966 Pensions 690,000 711,618 (1,455) 1,400,163
VTA 296,598 596,607 (398,379) 494,826
Total Restricted 10,073,483 3,751,862 (2,550,306) 11,275,039 Committed:

Budget stabilization and catastrophes 5,991,566 138,208 - 6,129,774 Catastrophic 5,991,566 138,209 - 6,129,775
Pension/OPEB Reserve 300,000 - - 300,000
Measure G 2018 District Sales Tax - Residual - 590,581 - 590,581 Measure G 2018 District Sales Tax - Capital - 1,769,057 - 1,769,057 Special revenue funds 637,711 382,382 (198,893) 821,200 Total Committed 12,920,843 3,018,437 (198,893) 15,740,387 Assigned:

Open Space 562,000 - - 562,000
Parking 100,000 - - 100,000
Sustainability 140,553 - - 140,553
Capital/Special projects 24,713,386 14,231,906 (9,707,263) 29,238,029 Carryover encumbrances 33,145 4,553 - 37,698
Comcast PEG 50,000 - - 50,000
ERAF Risk - 2,298,692 (1,609,084) 689,608
Economic recovery - 1,556,614 - 1,556,614
Compensated Absences 1,519,147 61,476 - 1,580,623
Measure G 2018 District Sales Tax - Residual 590,581 - (590,581) - Total Assigned 27,708,812 18,153,241 (11,906,928) 33,955,125 Total Fund Balance - Gov't Funds $ 50,862,138 $ 25,069,707 $ (14,746,317) $ 61,185,528 DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Nonspendable
Loans receivable nonspendable fund balance reflects long-term loans that are offset by unearned and deferred amounts.

Leases nonspendable fund balance reflects leases receivable that are offset by unearned and deferred amounts.

Restricted
Library reflects fund balance from donations and bequests held in trust for the benefit of the Town’s library.

Capital Outlay funded from storm drain fees, construction taxes and debt proceeds are legally restricted for major capital projects.

Repairs and Maintenance reflects legally restricted balances for repairs and maintenance of lighting and landscape property and open space property that are financed with special tax assessments on the benefiting property.

Pension restricted are amounts paid into a separate legal trust for the Town's Miscellaneous and Safety pension plans administered by CALPERS.

VTA are funds provided by the Valley Transportation Authority’s Measure B restricted for the pavement/crack seal rehabilitation project.

Committed
Budget Stabilization and Catastrophic fund balance has been committed per Town Council resolution.

The Town Council has established by resolution the budget stabilization arrangement and the catastrophe arrangement. The total balances in these arrangements are to be maintained at 25% of annual General Fund ongoing, operating expenditures, excluding one-time expenditures, divided equally between both arrangements. When either arrangement is used, Town Council will develop a 1 to 5-year reserve replenishment plan to meet the minimum threshold of 25% of General Fund ongoing, operating expenditures, excluding onetime expenditures.

The arrangements can be used when:
• Unforeseen emergencies, such as a disaster or catastrophic event occur. • Significant decrease in property or sales tax, or other economically sensitive revenues. • Loss of businesses considered to be significant sales tax generators. • Reductions in revenue due to actions by the state /federal government. • Workflow/technical system improvements to reduce ongoing personnel costs and enhance customer service.
• One-time maintenance of service levels due to significant economic budget constraints • One-time transitional costs associated with organizational restructuring to secure long-term personnel cost savings.

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Should any of the events listed above occur that require the expenditure of Town resources beyond those provided for in the annual budget, the Town Manager or designee shall have authority to approve catastrophic or budget stabilization arrangement appropriations. The Town Manager or designee shall then present to the Town Council a budget amendment confirming the nature of the event and authorizing the appropriation of reserve funds.

Pension/OPEB Reserve committed fund balance will be used to fund net pension liabilities for the Town's Miscellaneous and Safety pension plans administered by CALPERS. Town policy provides, to the extent possible, that additional annual deposits be calculated committed with the goal of moving the payment of the unfunded pension liability from a 29-year to a 20-year amortization period.

Special Revenue Fund committed fund balance will be used for the activities of the respective special revenue funds.

Assigned
Open Space assigned fund balance will be used to make selective open space acquisitions.

Parking assigned fund balance will be used to mitigate parking issues within the Town.

Sustainability assigned fund balance will be used to fund ongoing sustainability initiatives and programs.

Capital/Special Projects assigned fund balance will be used for the acquisition and construction of capital facilities as well as special projects or activities as directed by the Town Council.

Carryover Encumbrances assigned fund balance are unspent commitments carried through to future periods.

Comcast PEG assigned fund balance will be used to fund capital improvements linked to the televising of Council and Planning Commission meetings.

Education Realignment Augmentation Fund (ERAF) assigned fund balance has been established to setaside thirty percent of the anticipated ERAF proceeds from FY 2022/23 until a lawsuit between the State and the School Districts concludes.

Economic Recovery assigned fund balance has been established, after utilizing ARPA replacement revenues, to account for General Fund revenues set-aside for essential government services, economic recovery and business support, enhanced senior services, capital program augmentations, and other onetime uses.

Compensated Absences assigned fund balance will be used for vacation and sick-pay benefits owed to employees as of June 30, 2023 that were not an obligation of the General Fund because of their longterm nature.

Measure G 2018 District Sales Tax assigned fund balances for operational and capital will be used to track receipt and use of the 1/8 cents District tax funds collected by the Town for operational and capital expenditures.

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

NOTE 11 - EMPLOYEES' RETIREMENT PLAN
The following summarizes the pension balances as of year-end:

Plan Descriptions
All qualified employees are eligible to participate in the Town’s pooled Safety Plan, a cost-sharing multiple-employer defined benefit pension plan and the Town’s Miscellaneous (all other) Plan, an agent Multiple-employer defined benefit pension plan administered by the California Public Employees' Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and Town resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. Audited financial statements of CalPERS can be obtained from its website https://www.calpers.ca.gov/page/formspublications. The Town relies upon actuarial and investment data provided by CalPERS for inclusion and analysis in this report.

Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for nonduty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, Lump Sum, or the 1959 Survivor 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, 2023, are summarized as follows:

Misc Safety Total
Deferred outflows of resources $ 10,459,160 $ 14,761,072 $ 25,220,232 Deferred inflows of resources $ 160,064 $ 2,966,647 $ 3,126,711 Net pension liabilities $ 28,131,979 $ 31,734,686 $ 59,866,665 Pension expense (credit) $ 4,239,084 $ 1,630,960 $ 5,870,044 Defined Benefit Plans
Tier 1 Tier 2 PEPRA Tier 1 PEPRA
Benefit formula 2.5% @ 55 2% @ 60 2% @ 62 3.0% @ 50 2.7% @ 57 Benefit vesting schedule 5 Years 5 Years 5 Years 5 Years 5 Years Benefit payments Monthly for Life Monthly for Life Monthly for Life Monthly for Life Monthly for Life Retirement age 55 60 62 50 57
Monthly benefits as a
% of eligible compensation 2.0% to 2.5% 1% to 2.5% 1.5% to 2.5% 3.00% 2-2.70% Required employee contribution rates 8.00% 7% to 8% 7.25% 9.000% 13.75% Required employer contribution rates 10.20% 10.20% 14.43% 25.64% 13.66% Required payment of unfunded liability $2,515,583 $2,515,583 $2,515,583 $2,317,133 $19,258 Miscellaneous Safety (Police)
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Employees Covered
At June 30, 2023, the following employees were covered by the benefit terms for the Plans:

Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rates are the estimated amount necessary to finance the costs of benefits earned by employees during the year.

The Town is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. In addition, the Town is solely responsible for any annual costs associated with payments toward any unfunded accrued liability.

For the year ended June 30, 2023, pension expense contributions for each Plan was as follows:

Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions Pension Liability
As of June 30, 2023, the Town reported net pension liabilities for each plan as follows:

The Town’s net pension liability for the Safety Plan is measured as the proportionate share of the net pension liability while the Miscellaneous plan’s net pension liability is a direct calculation based on its actuarial study and is not proportionate. The net pension liability of all the Plans are measured as of June 30, 2022, and the total pension liability for the Plans used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2021. The Town’s proportion of the net pension liability for the Safety Plan was based on a projection of the Town’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially Miscellaneous Safety
Active 119 37
Transferred 101 13
Separated 91 3
Retired 255 88
Total 566 141
Miscellaneous Safety
Contributions - employer $ 3,687,213 $ 3,409,275
Miscellaneous
Safety
Total
Proportionate
Share of Net
Pension
Liability/(Asset)
$ 28,131,979
31,734,686
$ 59,866,665
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

determined. The Town’s proportionate share of the net pension liability for the Safety Plan as of June 30, 2022 and 2023 was as follows:

For the year ended June 30, 2023, the Town recognized a pension expense of $5,870,044.

The following is a summary of the changes in the total pension liability, fiduciary net position and net pension liability of the Town’s Miscellaneous Plan as of June 30, 2023:

At June 30, 2023, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

The Town reported $7,096,488 as deferred outflows of resources related to contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ended June 30, 2024.

Safety
Proportion - June 30, 2022 0.47764%
Proportion - June 30, 2023 0.46183%
Change - Increase/(Decrease) -0.01581%
Total Fiduciary Net
Pension Net Pension
Liability Position Liability
Beginning Balance $ 116,901,393 $ 106,177,804 $ 10,723,589 Service Costs 2,264,169 2,264,169 -
Interest on Total Pension Liability 8,142,881 8,142,881 - Changes of Assumptions 3,399,004 3,399,004 -
Difference Between Actual and Expected Experience (108,166) - (108,166) Employer Contributions - 3,472,727 (3,472,727)
Employee Contributions - 871,063 (871,063)
Net Investment Income - (7,988,150) 7,988,150
Employee Contribution Refunds and Benefit Payments (6,623,114) (6,623,114) - Administrative Expenses - (66,142) 66,142
Net Changes 7,074,774 (10,333,616) 17,408,390
Ending Balance $ 123,976,167 $ 95,844,188 $ 28,131,979
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of Assumptions $ 1,982,752 $ - $ 3,199,817 $ -
Differences between Expected and Actual Experience - 160,064 1,313,383 344,614 Differences between Projected and Actual Investment Earnings 4,789,195 - 5,011,351 - Differences between Employer's Contributions and
Proportionate Share of Contributions - - - 2,622,034
Change in Employer's Proportion - - 1,827,246 -
Pension Contributions Made Subsequent to Measurement Date 3,687,213 - 3,409,275 - Total $ 10,459,160 $ 160,064 $ 14,761,072 $ 2,966,647
DRAFT
Miscellaneous Safety

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

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

Actuarial Assumptions
The total pension liabilities in the June 30, 2021 actuarial valuations were determined using the following actuarial assumptions:

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2021 valuation are based on CalPERS experience studies which can found on the CalPERS website.

Miscellaneous Safety Total
$ 2,018,125 $ 2,351,878 $ 4,370,003
1,211,056 1,908,394 3,119,450
336,478 1,067,890 1,404,368
3,046,224 3,056,988 6,103,212
- - -
- - -
$ 6,611,883 $ 8,385,150 $ 14,997,033
Deferred Outflows/(Inflows) of
Fiscal Year Ending Resources
June 30:

Total
2025
2026
2027
Thereafter
2028
2024
Safety Miscellaneous
Valuation Date June 30, 2021 June 30, 2021
Measurement Date June 30, 2022 June 30, 2022
Actuarial Cost Method Entry-Age
Normal Cost
Method
Entry-Age
Normal Cost
Method
Actuarial Assumptions:

Discount Rate 6.90% 6.90%
Inflation 2.50% 2.50%
Payroll Growth 2.75% 2.75%
Projected Salary Increase (1) (1)
Investment Rate of Return 6.9% (2) 6.9% (2)
Mortality (3) (3)
(1) Varies by entry age and service
(2) Net of pension plan investment expenses, including inflation (3) Derived using CalPERS' membership data for all funds DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Discount Rate
The discount rate used to measure the total pension liability was 6.9 percent for the Plans. To determine whether the municipal bond rate should be used in the calculation of a discount rate for the Plans, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets.

Therefore, the current 6.9 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 6.9 percent will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website.

Long-Term Expected Rate of Return
The long-term expected rate of return on pension 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 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 long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and longterm returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The table below reflects the longterm expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses.

Assumed Long-Term
Asset Expected Real
Asset Class (a) Allocation Return (1)(2)
Global Equity Cap Weighted 30.00% 4.45%
Global Equity NonCap 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 2.3% used for this period. (2) Figures are based on the 2021-22 Asset Liability Study.

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the Town’s net pension liability for the Plans, calculated using the discount rate for the Plans, 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:

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

Payable to the Pension Plans
As of June 30, 2023, the Town reported a payable of $21,030 and $24,723 for the outstanding amount of contributions to the Miscellaneous Agent Multiple Employer Plan and the Safety Cost Sharing Plan.

IRS Section 115 Trust
During the fiscal year ending June 30, 2020, the Town established an IRS Section 115 Trust with the CalPERS California Employer’ Pension Prefunding Trust (CEPPT) program. In fiscal year 2023, the Town reported $1,400,163 as restricted cash with fiscal agent within the General Fund. Per GASB, amounts placed in trusts for CalPERS plans are treated as side trusts that do not directly reduce the net pension liability.

NOTE 12 - OTHER POSTEMPLOYMENT BENEFITS

Plan Description
The Town makes contributions to California Employer’s Retiree Benefit Trust (CERBT), an agent multiple-employer defined benefit healthcare plan administered by CalPERS. The purpose of the CERBT Fund is to provide California government employers with a trust through which they may prefund retiree medical costs and Other Postemployment Benefits (OPEB). The Town uses CERBT 1 as its investment vehicle and requests disbursements on an as needed basis to reimburse the Town for the cost of retiree health insurance benefits. Benefit provisions and all other requirements are established by state statute and Town ordinance. Copies of PERS' annual financial report may be obtained from their Executive Office, 400 P Street, Sacramento, CA 95814.

In accordance with the Public Employees' Medical and Hospital Care Act (PEMHCA), employees qualify for retiree health benefits upon five (5) years of service if they meet the vesting requirements as Miscellaneous Safety
1% Decrease 5.90% 5.90%
Net Pension Liability $ 44,383,072 47,026,609
Current 6.90% 6.90%
Net Pension Liability $ 28,131,979 31,734,686
1% Increase 7.90% 7.90%
Net Pension Liability $ 14,764,600 19,236,994
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

set forth by CalPERS and take a service or disability retirement from Town employment. Additionally, the employee must actually draw a CalPERS pension within ninety (90) days of separation from the Town, provided the employee remains with the Town's health plan through COBRA. For employees who retire on or after February 1, 2016, at Medicare eligibility, the Town will align contributions to the full cost of the employee’s enrollment, including enrollment of family members, in a health benefits plan or plans up to a maximum of 100% Single Party and 90% Dependents for Kaiser Bay Area Basic/Medicare/Combo per month. During negotiations in fiscal year 2018/19, the Town’s discretionary retiree medical benefit contribution was eliminated for all future hires.

Upon retirement, employees have the option to roll over their sick leave accrual into a Town managed fund. Employees can request reimbursement of medical expenses from the fund up to the value of their sick leave at retirement.

Employees Covered by Benefit Terms
At June 30, 2023 (the measurement date), the benefit terms covered the following employees:

Contributions
The contribution requirements of Plan members and the Town are established and may be amended by the Town. The required contribution is based on projected pay-as-you-go financing requirements, with additional amounts to prefund benefits as determined annually by the Town Council. For the fiscal year ended June 30, 2023, the Town contributed $1,733,337 from the General Fund. During the measurement period ended June 30, 2022, the Town contributed $1,754,922 to the Plan and benefit payments were $1,591,150. Plan members receiving benefits contributed did not make any contributions.

Active employees 148
Inactive employees - receiving benefits 149
Inactive employees - not receiving benefits 43
Total employees 340
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Actuarial Assumptions
The following summarized the actuarial assumptions for the OPEB plan included in this fiscal year:

Discount Rate
The discount rate used to measure the total OPEB liability was 6.25 percent. The projection of cash flows used to determine the discount rate assumed that Town contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Valuation Date: June 30, 2021
Measurement Date: June 30, 2022
Actuarial Cost Method: Entry-Age Normal
Amortization Period:

Asset Valuation Method:

Actuarial Assumptions:

Discount Rate 6.25%
Inflation 2.50%
Salary Increases 2.75%
Investment Rate of Return 6.25%
Healthcare Trend Rate
Mortality
Retirement
Tier 1 Actives in insurance program: 100%
Tier 1 Actives in cash allocation program: 80%
Tier 2 Actives in insurance program: 60%
Tier 2 Actives in cash allocation program:

Agency service < 3 months: 60%
Agency service >= 3 months: 40%
Waived retirees aged <65: 20%
Waived retirees aged ≥65: 0%
Assumption Changes:

None
16 year fixed period for 2022/23
Medicare (Kaiser) - 4.60% for 2023,
decreasing to an ultimate rate of 3.75% in 2076
Level percentage of payroll, closed
CalPERS 2000-2019 Experience Study
CalPERS 2000-2019 Experience Study
Non-Medicare - 6.50% for 2023,
decreasing to an ultimate rate of 3.75% in 2076
Mortality projected fully generational with Scale MP-2021 Medicare (Non-Kaiser) - 5.65% for 2023,
decreasing to an ultimate rate of 3.75% in 2076
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Net OPEB Liability
The Town's net OPEB liability was measured as of June 30, 2022 (measurement date) and was determined by an actuarial valuation as of June 30, 20221 (valuation date) for the fiscal year ended June 30, 2023 (reporting date).

Changes in the Net OPEB Liability
The following summarizes the changes in the net OPEB liability during the year ended June 30, 2023:

Deferred Inflows and Outflows of Resources
At June 30, 2023, the Town reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Fiscal Year Ended June 30, 2023
(Measurement Date June 30, 2022)
Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability
(Asset)
Balance at June 30, 2022 $ 28,720,003 $ 26,228,423 $ 2,491,580 Service cost 955,115 955,115 -
Interest in Total OPEB Liability 1,804,972 1,804,972 -
Employer contributions 1,754,922 - (1,754,922)
Net investment income (3,510,434) - 3,510,434
Administrative expenses (21,454) - 21,454
Benefit payments (1,591,150) (1,591,150) -
Net changes 1,168,937 (3,368,116) 4,537,053
Balance at June 30, 2023 $ 29,888,940 $ 22,860,307 $ 7,028,633 Covered Employee Payroll $ 16,987,042
Total OPEB Liability as a % of Covered Employee Payroll 175.95% Plan Fid. Net Position as a % of Total OPEB Liability 76.48% Service Cost as a % of Covered Employee Payroll 5.62%
Net OPEB Liability as a % of Covered Employee Payroll 41.38% Contributions as a % of Cov. Emp. Payroll 10.33%
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Difference between actual and expected experience $ 1,729,077 - $ Difference between actual and expected earnings 1,869,601 - Change in assumptions 703,092 388,845
OPEB contribution subsequent to measurement date 1,733,337 - Totals $ 4,306,030 $ 2,117,922
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Of the total amount reported as deferred outflows of resources related to OPEB, $1,733,337 were the result of Town contributions subsequent to the measurement date and before the end of the fiscal year.

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

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

Year Ended June 30,
2024 $ (95,837)
2025 (104,501)
2026 (130,350)
2027 785,459
2028 -
Thereafter -
Total $ 454,771
Asset Class
Percentage of
Portfolio
Long-Term
Expected Rate of
Return
Global Equity 49.00% 4.56%
Fixed Income 23.00% 1.56%
TIPS 5.00% -0.08%
Commodities 3.00% 1.22%
REITs 20.00% 4.06%
Total
DRAFT
100.00%

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

OPEB Expense
The following summarizes the OPEB expense by source during the year ended June 30, 2023:

The following summarizes changes in the net OPEB liability as reconciled to OPEB expense during the year ended June 30, 2023:

Sensitivity to Changes in the Discount Rate
The net OPEB liability of the Town, as well as what the Town's net OPEB liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher, is as follows:

Sensitivity to Changes in the Healthcare Cost Trend Rates The net OPEB liability of the Town, as well as what the Town's net OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than current healthcare cost trend rates, is as follows:

Service cost $ 955,115
Interest in TOL 1,804,972
Expected investment income (1,639,254)
Difference between actual and expected experience (445,555) Difference between actual and expected earnings 297,921 Change in assumptions 18,738
Administrative expenses 21,454
OPEB Expense $ 1,013,391
$ 7,028,633
(2,491,580)
4,537,053
Changes in deferred outflows (1,693,828)
Changes in deferred inflows (3,584,756)
Employer contributions and implicit subsidy 1,754,922
OPEB Expense $ 1,013,391
Net OPEB liability ending
Net OPEB liability beginning
Change in net OPEB liability
(1% Decrease ) 6.25% (1% Increase )
Net OPEB Liability (Asset) $ 10,608,076 $ 7,028,633 $ 4,038,280 Discount Rate
(1% Decrease ) Current (1% Increase )
Net OPEB Liability (Asset) $ 4,445,533 $ 7,028,633 $ 9,938,167 Trend Rate
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

NOTE 13 - RISK MANAGEMENT
The Town participates in the following public entity risk pools through formally organized and separate legal entities. The Town does not have an equity interest in the joint ventures. These entities exercise full powers and authority within the scope of the related agreements including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Obligations and liabilities of the separate entities are not those of the Town, although the Town retains an ongoing financial interest or an ongoing financial responsibility.

Pooled Liability Assurance Network Joint Powers Authority (PLAN JPA) The Town participates in PLAN, which covers general liability claims in the amount up to $5,000,000 plus $25,000,000 in excess liability for total coverage of $30,000,000 per occurrence. The Town has a deductible or uninsured liability of up to $50,000 per claim. PLAN also provides all risk property coverage of $1,000,000,000, excluding flood and earthquake coverage. The Town has a $5,000 deductible for property and vehicle damage. Once the Town’s deductible is met, PLAN becomes responsible for payment of all claims up to the limit. Financial statements may be obtained from PLAN at 1750 Creekside Drive, Suite 200, Sacramento, CA, 95833.

Local Agency Workers’ Compensation Joint Powers Authority (LAWCX) The Town is a member of LAWCX for workers compensation claims coverage. The Town has a $250,000 self-insured retention level or uninsured liability for all employees. Once the Town’s deductible is met, LAWCX becomes responsible for claims up to $5,000,000. For claims greater than $5,000,000, LAWCX has a commercial policy providing coverage. Financial statements may be obtained from LAWCX at 1750 Creekside Oaks Dr., Suite 200, Sacramento, California, 95833. The Town has not significantly reduced its insurance coverage from the prior year and settlements have not exceeded insurance coverage for the past three years.

Liability for Uninsured Claims
The Town is required to record its liability for uninsured claims and to reflect the current portion of this liability as an expenditure in its financial statements. As discussed above, the Town has coverage for such claims, but it has retained the risk for the deductibles, or uninsured portion of these claims. The change in Workers’ Compensation and Self-Insurance Service Funds’ claims liabilities, is based on historical trend information provided by its third party administrator and was computed as follows as of June 30, 2023:

Workers' SelfCompensation Insurance
Internal Internal
Service Fund Service Fund Total
Claims payable balance - June 30, 2021 $ 1,495,482 $ 200,590 $ 1,696,072 Claims incurred - (119,883) (119,883)
Claims paid (130,924) (61,150) (192,074)
Claims payable balance - June 30, 2022 1,364,558 19,557 1,384,115 Claims incurred/adjustments 1,731,577 224,382 1,955,959 Claims paid (1,127,156) (86,210) (1,213,366)
Claims payable balance - June 30, 2023 $ 1,968,979 $ 157,729 $ 2,126,708 DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

NOTE 14 - COMMITMENTS AND CONTINGENCIES
Federal and State Grants - The Town participates in several federal and state grant programs. These are subject to examination by grantors and the amount, if any, of disallowed expenditures cannot be determined at this time. The Town expects such amounts, if any, to be immaterial.

Litigation - The Town is subject to litigation arising from the normal course of business. The Town Attorney believes there is no pending litigation which is likely to have a material adverse effect on the financial position of the Town.

Successor Agency - As of June 30, 2023, the Successor Agency trust fund reported a net deficit of $6,187,788.

Encumbrances- As of June 30, 2023, the town had the following encumbered balances that were carried into the next fiscal year:

NOTE 15 - TOWN/SUCCESSOR AGENCY GRANTS, COOPERATIVE AGREEMENTS Public Improvement Grants and Cooperative Agreements
In January of 2011, the Redevelopment Agency entered into a public improvement grant and cooperative agreement with the Town for the purpose of funding the acquisition of public land and designing and constructing various public improvements to be owned by the Town provided that the projects were in accordance with the Redevelopment Agency’s five year implementation plan and redevelopment plan.

The improvement plan, as identified in the agreement, called for approximately $24 million to be granted to the Town for the following projects:
a. Expansion and improvement of current and new downtown parking b. Highway 9 improvements from Highway 17 to Monte Sereno c. Almond Grove Area street, sidewalk and other improvements d. Downtown Los Gatos gateways, signage, banners and art e. Storm drain, retaining wall, street and other improvements f. New Los Gatos library building
During the fiscal year ended June 30, 2012, the rights and obligations resulting from this cooperative agreement were transferred to the Successor Agency Trust Fund as a part of the Town’s dissolution of its Redevelopment Agency.

General Fund $ 797,302
Appropriated Reserves Fund 5,526,443
Nonmajor Governmental Funds 1,476,257
Internal Service Funds 125,253
Total Encumbrances $ 7,925,255
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Affordable Housing Cooperative Agreement
In March of 2011, the Redevelopment Agency entered into an affordable housing cooperative agreement with the Town for the purpose of funding affordable housing projects and programs to be developed and/or administered by the Town in accordance with the Redevelopment Agency’s five year implementation plan and redevelopment plan. The improvement plan, as identified in the agreement, called for approximately $16 million to be granted to the Town for the following projects:
a. Development of affordable housing at 224 Main St.
b. Development of affordable housing at Dittos Lane
c. Partnership with Senior Housing Solutions for the creation of senior housing in Los Gatos d. Partnerships for the conversion of existing residential developments dedicated to affordable housing e. Grants to the Santa Clara County Housing Trust for the development of affordable housing.

During the fiscal year ended June 30, 2012, the rights and obligations resulting from this cooperative agreement were transferred to the Successor Agency Trust Fund as a part of the Town’s dissolution of its Redevelopment Agency.

NOTE 16 - COVID19 PANDEMIC PROGRAMS
On March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law by President Biden.

The $1.9 trillion package (the Act) provided financial aid to families, governments, businesses, schools, nonprofits and others impacted by the COVID19 public health crisis. Of the $1.9 trillion, $350 billion was directed toward state and local governments. All 19,000 municipal governments are entitled to a direct, noncompetitive federal formula grant from the U.S. Treasury Department. The portion allocated to cities, towns, and villages totals $65.1 billion of which $19.5 billion is obligated toward cities with less than 50,000 residents. The Act has allocated $7,229,744 to the Town over a two-year period. The first tranche payment of $3,614,862 was received on July 13, 2021, and the second payment was received on July 21, 2022. Section 603. Coronavirus Local Fiscal Recovery Fund of the Act identified four eligible uses for funding, as follows:

A. to respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality; B. to respond to workers performing essential work during the COVID19 public health emergency by providing premium pay to eligible workers of the metropolitan city, nonentitlement unit of local government, or county that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work; C. for the provision of government services to the extent of the reduction in revenue of such metropolitan city, nonentitlement unit of local government, or county due to the COVID19 public health emergency relative to revenues collected in the most recent full fiscal year of the metropolitan city, nonentitlement unit of local government, or county prior to the emergency; or D. to make necessary investments in water, sewer, or broadband infrastructure.

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

During the fiscal year ended June 30, 2023, the Town recognized $3,614,872 as operating grant revenue in the ARPA special revenue fund and transferred $3,614,872 to other funds, reimbursing the Town for qualifying public safety expenditures under the provisions of the Act.

DRAFT

Required Supplementary Information
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

BENEFIT PLAN SCHEDULES

Schedule of Pension Plan Contributions

Schedule of Proportionate Share of Net Pension Liability – CalPERS Safety Cost Sharing Plan Schedule of Proportionate Share of Net Pension Liability – CalPERS Misc. Agent-Multiple Employer Plan
Schedule of OPEB Contribution
Schedule of Changes in Net OPEB Liability
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

SCHEDULE OF PENSION PLAN CONTRIBUTIONS

Miscellaneous Agent Multiple-Employer Plan
Plan Measurement Date 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Year Ended 2015 2016 2017 2018 2019 2020 2021 2022 2023 Contractually Required Contributions $ 1,941,765 $ 2,223,782 $ 2,407,496 $ 2,669,133 $ 3,049,748 $ 3,366,304 $ 3,529,373 $ 3,472,727 $ 3,687,213 Contributions in Relation to Contractually
Required Contributions 1,941,765 2,223,782 2,407,496 2,669,133 3,049,748 8,146,791 9,160,680 3,472,727 3,687,213 Contribution Deficiency (Excess) -$ -$ -$ -$ -$ (4,780,487) $ $ (5,631,307) -$ -$ Covered Payroll $ 8,487,940 $ 9,198,318 $ 9,024,370 $ 9,576,157 $ 10,211,967 $ 11,188,927 $ 12,082,520 $ 12,305,265 $ 11,094,190 Contributions as a % of Covered Payroll 22.88% 24.18% 26.68% 27.87% 29.86% 72.81% 75.82% 28.22% 33.24% Safety Cost Sharing Plan
Plan Measurement Date 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Year Ended 2015 2016 2017 2018 2019 2020 2021 2022 2023 Contractually Required Contributions $ 1,999,757 $ 1,586,129 $ 1,738,150 $ 1,951,711 $ 2,325,357 $ 2,565,205 $ 2,853,764 $ 3,072,032 $ 3,409,275 Contributions in Relation to Contractually
Required Contributions 1,999,757 1,586,129 1,738,150 1,951,711 2,325,357 2,565,205 2,853,764 3,072,032 3,409,275 Contribution Deficiency (Excess) -$ -$ -$ -$ -$ -$ -$ -$ -$ Covered Payroll $ 4,897,104 $ 5,022,498 $ 4,941,138 $ 5,079,440 $ 4,445,061 $ 4,928,821 $ 5,178,418 $ 5,603,211 $ 5,863,101 Contributions as a % of Covered Payroll 40.84% 31.58% 35.18% 38.42% 52.31% 52.05% 55.11% 54.83% 58.15% Notes to Schedule:

Valuation Date: June 30, 2021
Assumptions Used: Entry Age Method used for Actuarial Cost Method Level Percentage of Payroll and Direct Rate Smoothing
Remaining Amortization Period no more than 29 years
Inflation Assumed at 2.30%
Investment Rate of Returns set at 6.9%
Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.

The CalPERS discount rate was increased from 7.50% to 7.65% in FY2016, to 7.15% in FY2018 and then decreased to 6.9% in FY2023.

The CalPERS mortality assumptions were adjusted in fiscal year 2023.

The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing morality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more DRAFT

TOWN OF LOS GATOS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

SCHEDULE OF PROPORTIONARE SHARE OF NET PENSION LIABILITY

CALPERS SAFETY COST SHARING PLAN

Safety Cost Sharing Plan
Plan Measurement Date 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Year Ended 2015 2016 2017 2018 2019 2020 2021 2022 2023 Proportion of Net Pension
Liability 0.28588% 0.14860% 0.22394% 0.22603% 0.23583% 0.24100% 0.24953% 0.30994% 0.27474% Proportionate Share of
Net Pension Liability $ 17,788,690 $ 10,199,904 $ 19,377,843 $ 22,415,954 $ 22,725,267 $ 24,695,687 $ 27,149,916 $ 16,762,598 $ 31,734,686 Covered Payroll $ 4,916,535 $ 4,897,104 $ 5,022,498 $ 4,941,138 $ 5,079,440 $ 4,445,061 $ 4,928,821 $ 5,178,418 $ 5,603,211 Proportionate Share of NPL
as a % of Covered Payroll 361.81% 208.28% 385.82% 453.66% 447.40% 555.58% 550.84% 323.70% 566.37% Plan's Fiduciary Net Position
as a % of the TPL 78.83% 74.89% 74.89% 73.87% 74.52% 73.61% 72.46% 83.55% 71.34% Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.

The CalPERS discount rate was increased from 7.50% to 7.65% in FY2016, to 7.15% in FY2018 and then decreased to 6.9% in FY2023.

The CalPERS mortality assumptions were adjusted in fiscal year 2023.

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

SCHEDULE OF PROPORTIONARE SHARE OF NET PENSION LIABILITY

CALPERS MISCELLANEOUS AGENT-MULTPLE EMPLOYER PLAN

Measuement Date 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total Pension liability
Service cost $ 1,579,547 $ 1,491,925 $ 1,560,679 $ 1,651,550 $ 1,700,438 $ 1,771,368 $ 1,930,090 $ 2,062,486 $ 2,264,169 Interest 6,268,015 6,483,032 6,697,247 6,820,536 7,073,843 7,381,846 7,729,269 7,943,404 8,142,881 Diff. between expected and actual exp. (623,495) - (357,870) (892,479) 994,994 1,082,289 1,465,653 (581,801) (108,166) Changes of assumptions (1,513,132) - 5,481,432 - (655,541) - - 3,399,004 - Benefit payments (including refunds) (4,241,487) (4,748,786) (4,953,756) (5,138,083) (5,448,374) (5,720,232) (5,958,101) (6,339,615) (6,623,114) Net change in Total Pension Liability 3,606,075 1,089,544 2,946,300 7,922,956 3,665,360 4,515,271 5,166,911 3,084,474 7,074,774 Total Pension Liability - beginning 84,904,502 88,510,577 89,600,121 92,546,421 100,469,377 104,134,737 108,650,008 113,816,919 116,901,393 Total Pension Liability - ending $ 88,510,577 $ 89,600,121 $ 92,546,421 $ 100,469,377 $ 104,134,737 $ 108,650,008 $ 113,816,919 $ 116,901,393 $ 123,976,167 Plan fiduciary net position
Employer contributions $ 1,796,079 $ 1,941,765 $ 2,223,782 $ 2,407,496 $ 2,669,104 $ 3,049,748 $ 8,146,791 $ 9,160,680 $ 3,472,727 Employee contributions 668,167 679,796 691,770 682,891 761,705 846,125 834,145 889,649 871,063 Plan to plan resource movement - 22,561 (28,866) - (170) - - - - Projected investment earnings 4,328,173 - - - - - - - - Diff. between est. and actual earnings 5,831,718 - - - - - - - - Net investment income 1,470,873 - 369,185 7,171,443 5,883,868 4,759,034 3,913,294 19,606,360 (7,988,150) Benefit payments (including refunds) (4,241,487) (4,748,786) (4,953,756) (5,138,083) (5,448,374) (5,720,232) (5,958,101) (6,339,615) (6,623,114) Administrative expense (74,706) - (40,462) (95,455) (108,582) (52,260) (107,303) (82,856) (66,142) Adjsutments - - - (206,199) - 170 - - -
Net change in plan fiduciary net position 8,382,650 (708,497) (1,738,347) 5,028,292 3,551,352 2,882,585 6,828,826 23,234,218 (10,333,616) Plan fiduciary net position - beginning 58,716,725 67,099,375 66,390,878 64,652,531 69,680,823 73,232,175 76,114,760 82,943,586 106,177,804 Plan fiduciary net position - ending $ 67,099,375 $ 66,390,878 $ 64,652,531 $ 69,680,823 $ 73,232,175 $ 76,114,760 $ 82,943,586 $ 106,177,804 $ 95,844,188 Net Pension liability (asset) $ 21,411,202 23,209,243 27,893,890 30,788,554 30,902,562 32,535,248 30,873,333 10,723,589 28,131,979 Plan fiduciary net position as a percentage
of the total Pension liability 75.81% 74.10% 69.86% 69.36% 70.32% 70.05% 72.87% 90.83% 77.31% Covered Payroll $ 8,406,315 $ 8,487,940 $ 9,198,318 $ 9,024,370 $ 9,576,157 $ 10,211,967 $ 11,188,927 $ 12,082,520 $ 12,305,265 Net Pension liability % of covered payroll 254.70% 273.44% 303.25% 341.17% 322.70% 318.60% 275.93% 88.75% 228.62% Other Notes
Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.

DRAFT

TOWN OF LOS GATOS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

SCHEDULE OF OPEB CONTRIBUTIONS

Fiscal Year Ended 2018 2019 2020 2021 2022 2023
Actuarially determined contribution (ADC) $ 2,129,000 $ 2,108,000 $ 2,172,000 $ 1,859,000 $ 1,860,000 $ 1,372,000 Less: actual contribution in relation to ADC (2,935,000) (2,406,636) (2,508,306) (2,096,847) (1,754,922) (1,733,337) Contribution deficiency (excess) $ (806,000) $ (298,636) $ (336,306) $ (237,847) $ 105,078 $ (361,337) Covered employee payroll $ 16,192,060 $ 17,338,201 $ 17,406,541 $ 17,982,237 $ 16,987,042 $ 17,809,965 Contrib. as a % of covered employee payroll 18.13% 13.88% 14.41% 11.66% 10.33% 9.73% Notes to Schedule:

Assumptions and Methods
Valuation Date:

Measurement Date:

Actuarial Cost Method:

Amortization Period:

Asset Valuation Method:

Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Investment Rate of Return
Healthcare Trend Rate
Mortality
Retirement
Other Notes
In FY 2022, the discount rate was updated based on newer capital market assumptions In FY 2022, decreased medical trend rate for Kaiser Senior Advantage In FY 2022, demographic assumptions were updated to CalPERS 2000-2019 Experience Study in FY 2022, the inflation rate decreased 25 basis points, decreasing discount rate, medical trend, and salary increases in FY 2022, retiree and family participation rates at retirement updated In FY 2022, the Implicit subsidy was added for Tier 1 Medicare eligible In FY 2022, the mortality improvement scale was updated to Scale MP-2021 No changes in FY 2023
June 30, 2021
June 30, 2022
Entry-Age Normal Cost
16 year fixed period for 2022/23
GASB 75 requires a schedule of contributions for the last ten fiscal years, or for as many years as are available if less than ten years are available. GASB 75 was adopted as of June 30, 2018.

Level percentage of payroll, closed
CalPERS 2000-2019 Experience Study
CalPERS 2000-2019 Experience Study

6.25%

2.50%

2.75%
Non-Medicare - 6.50% for 2023,
decreasing to an ultimate rate of 3.75% in

6.25%
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

SCHEDULE OF CHANGES IN NET OPEB LIABILITY

Measurement Date 2017 2018 2019 2020 2021 2022
Total OPEB liability
Service cost $ 1,134,000 $ 1,168,227 $ 1,203,274 $ 1,159,152 $ 1,115,309 $ 955,115 Interest 1,607,000 1,706,270 1,814,072 1,887,105 1,956,034 1,804,972 Differences between expected & actual exp. - (149,297) - (2,521,500) - - Changes of assumptions - (392,681) - (533,825) 1,054,638 - Benefit payments (1,269,000) (1,326,313) (1,298,623) (1,399,933) (1,494,906) (1,591,150) Net change in Total OPEB Liability 1,472,000 1,548,184 1,176,745 1,112,499 109,575 1,168,937 Total OPEB Liability - beginning 23,301,000 24,773,000 26,321,184 27,497,929 28,610,428 28,720,003 Total OPEB Liability - ending $ 24,773,000 $ 26,321,184 $ 27,497,929 $ 28,610,428 $ 28,720,003 $ 29,888,940 Plan fiduciary net position
Employer contributions $ 3,878,000 $ 2,935,313 $ 2,406,636 $ 2,508,306 $ 2,096,847 $ 1,754,922 Net investment income 1,049,000 1,082,977 1,009,315 652,656 5,529,824 (3,510,434) Benefit payments (1,269,000) (1,326,313) (1,298,623) (1,399,933) (1,494,906) (1,591,150) Administrative expense (14,000) (34,261) (11,502) (17,357) (18,556) (21,454) Net change in plan fiduciary net position 3,644,000 2,657,716 2,105,826 1,743,672 6,113,209 (3,368,116) Plan fiduciary net position - beginning 9,964,000 13,608,000 16,265,716 18,371,542 20,115,214 26,228,423 Plan fiduciary net position - ending $ 13,608,000 $ 16,265,716 $ 18,371,542 $ 20,115,214 $ 26,228,423 $ 22,860,307 Net OPEB liability (asset) $ 11,165,000 10,055,468 9,126,387 8,495,214 2,491,580 7,028,633 Plan fiduciary net position as a percentage
of the total OPEB liability 54.93% 61.80% 66.81% 70.31% 91.32% 76.48% Covered Employee Payroll $ 14,985,716 $ 16,192,060 $ 17,338,201 $ 17,406,541 $ 17,982,237 $ 16,987,042 NOL as a % of cov. emp. payroll 74.50% 62.10% 52.64% 48.80% 13.86% 41.38% Other Notes
GASB 75 requires a schedule of contributions for the last ten fiscal years, or for as many years as are available if less than ten years are available. GASB 75 was adopted as of June 30, 2018.

DRAFT

Supplementary Information
DRAFT

This Page Left Intentionally Blank
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

MAJOR GOVERNMENTAL FUND SCHEDULES
(OTHER THAN THE GENERAL FUND) AND

NONMAJOR GOVERNMENTAL FUNDS

Schedule of Revenue, Expenditures and Changes in Fund Balances – Budget and Actual (GAAP):

Appropriated Reserves Fund is used to account for resources provided for capital projects not fully funded from other sources.

Capital Projects Funds:

Storm Drain Basin Funds were established to account for fees paid in conjunction with the development in specified drainage areas.

Construction Tax Funds were established to account for tax levies on building additions or alterations including capital improvements, underground utilities and parks.

Gas Tax Fund was established to account for revenue and expenditures under the State of California Streets and Highways Code Sections 2106, 2107 and 2107.5. The revenues must be used for the maintenance and construction of streets.

Special Revenue Funds:

Community Development Block Grant Fund was established to account for grant funds received and expended under the Community Development Act of 1974.

Non-Point Source Maintenance Fund was established to comply with obligations under the National Pollutant Discharge Elimination system permit issued by the California Regional Water Quality Control Board.

Lighting and Landscape Fund was established to account for maintenance of trees, landscaping, irrigation systems and lighting within the boundaries of Tract No. 8439.

LG Theatre Fund was established to account for monies received from rents on donated property and related expenditures.

Library Trust Fund was established to provide for the servicing of donations and bequests to the Town's Library Program.

DRAFT

Variance
Original Final Positive
Budget Budget Actual (Negative)

REVENUES
Licenses & permits $ 110,000 $ 110,001 $ 181,533 $ 71,532 Intergovernmental 6,187,538 3,340,719 3,358,063 17,344
Charges for services 871,800 956,262 1,072,009 115,747
Developer fees 20,000 620,000 614,820 (5,180)
Interest - - 44,198 44,198
Use of Property 96,000 96,000 91,284 (4,716)
Other 2,900,000 - - -
Total Revenues 10,185,338 5,122,982 5,361,907 238,925

EXPENDITURES
Capital outlay 13,949,982 6,710,867 6,722,633 (11,766)
Total Expenditures 13,949,982 6,710,867 6,722,633 (11,766)

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (3,764,644) (1,587,885) (1,360,726) 227,159

OTHER FINANCING SOURCES (USES)
Settlements - 1,565,000 1,565,000 -
Transfers in 3,706,978 7,103,550 7,732,614 629,064
Transfers (out) (427,616) (427,616) (427,616) -
Total Other Financing Sources (Uses) 3,279,362 8,240,934 8,869,998 629,064 CHANGE IN FUND BALANCE $ (485,282) $ 6,653,049 7,509,272 $ 856,223 BEGINNING FUND BALANCE 14,240,753
ENDING FUND BALANCE $ 21,750,025

BUDGET AND ACTUAL (GAAP)
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

TOWN OF LOS GATOS

APPROPRIATED RESERVES FUND

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE
DRAFT

Total
Capital
Storm Construction Gas Projects
Drains Tax Tax Funds
ASSETS
Cash & investments $ 3,218,331 $ 3,438,996 $ 1,465,877 $ 8,123,204 Restricted cash & investments - - - -
Receivables:

Accounts - - - -
Intergovernmental receivable - - 205,368 205,368
Leases receivable - - - -
Long term notes receivable - - - -
Total Assets $ 3,218,331 $ 3,438,996 $ 1,671,245 $ 8,328,572

LIABILITIES
Accounts payable -$ -$ -$ -$
Accrued payroll and benefits - - - -
Due to other funds - - - -
Unearned revenue - - - -
Total Liabilities - - - -

DEFERRED INFLOWS OF RESOURCES
Leases - - - -

FUND BALANCE
Nonspendable - leases - - - -
Restricted for:

Library - - - -
Repairs and maintenance - - - -
Capital projects 3,218,331 3,438,996 1,671,245 8,328,572 Committed to:

Special revenue funds - - - -
Total Fund Balances 3,218,331 3,438,996 1,671,245 8,328,572 Total Liabilities and Fund Balances 3,218,331 $ $ 3,438,996 $ 1,671,245 $ 8,328,572 (Continued)

CAPITAL PROJECTS FUNDS

TOWN OF LOS GATOS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS
JUNE 30, 2023
DRAFT

Non-Point
Community Source Lighting and
Development Maintenance Landscaping
ASSETS
Cash & investments $ 94,412 $ 580,929 $ 183,129
Restricted cash & investments 58,344 - -
Receivables:

Accounts - 52,426 -
Intergovernmental receivable - - 171
Leases receivable - - -
Long term notes receivable 78,752 - -
Total Assets $ 231,508 $ 633,355 $ 183,300

LIABILITIES
Accounts payable $ 60 $ 1,178 $ 6,334
Accrued payroll and benefits - 2,334 -
Due to other funds - - -
Unearned revenue 64,795 - -
Total Liabilities 64,855 3,512 6,334

DEFERRED INFLOWS OF RESOURCES
Leases - - -

FUND BALANCE
Nonspendable - leases - - -
Restricted for:

Library - - -
Repairs and maintenance - - 176,966
Capital projects - - -
Committed to:

Special revenue funds 166,653 629,843 -
Total Fund Balances 166,653 629,843 176,966
Total Liabilities and Fund Balances $ 231,508 $ 633,355 $ 183,300 (Continued)

SPECIAL REVENUE FUNDS

TOWN OF LOS GATOS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS
JUNE 30, 2023
DRAFT

Total
Total Nonmajor
LG Library Special Revenue Governmental
Theatre Trust Funds Funds
ASSETS
Cash & investments -$ 533,131 $ $ 1,391,601 $ 9,514,805 Restricted cash & investments - - 58,344 58,344
Receivables:

Accounts 32,725 - 85,151 85,151
Intergovernmental receivable - - 171 205,539
Leases receivable 319,957 - 319,957 319,957
Long term notes receivable - - 78,752 78,752
Total Assets $ 352,682 $ 533,131 $ 1,933,976 $ 10,262,548

LIABILITIES
Accounts payable $ 6,189 $ 2,957 $ 16,718 $ 16,718
Accrued payroll and benefits - - 2,334 2,334
Due to other funds 1,832 - 1,832 1,832
Unearned revenue - - 64,795 64,795
Total Liabilities 8,021 2,957 85,679 85,679

DEFERRED INFLOWS OF RESOURCES
Leases 269,670 - 269,670 269,670

FUND BALANCE
Nonspendable - leases 50,287 - 50,287 50,287
Restricted for:

Library - 530,174 530,174 530,174
Repairs and maintenance - - 176,966 176,966
Capital projects - - - 8,328,572
Committed to:

Special revenue funds 24,704 - 821,200 821,200
Total Fund Balances 74,991 530,174 1,578,627 9,907,199
Total Liabilities and Fund Balances 352,682 $ $ 533,131 $ 1,933,976 $ 10,262,548 (Concluded)

TOWN OF LOS GATOS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS
JUNE 30, 2023

SPECIAL REVENUE FUNDS
DRAFT

Total
Storm Construction Gas Capital Projects
Drain Tax Tax Funds

REVENUES
Property Taxes $ - $ - $ - $ -
Other Taxes - 29,042 - 29,042
License and permits 161,830 - - 161,830
Intergovernmental - - 1,597,057 1,597,057
Interest 55,771 58,440 20,481 134,692
Use of property - - - -
Other - 49,000 - 49,000
Total Revenues 217,601 136,482 1,617,538 1,971,621

EXPENDITURES
Current:

Parks and public works - - - -
Library services - - - -
Sanitation and other - - - -
Capital Outlay 218,081 - 1,676,361 1,894,442
Total Expenditures 218,081 - 1,676,361 1,894,442

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (480) 136,482 (58,823) 77,179

OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Transfers (out) - - (106,000) (106,000)
Total Other Financing Sources (Uses) - - (106,000) (106,000) Changes in Fund Balances (480) 136,482 (164,823) (28,821) Fund Balances - Beginning of year 3,218,811 3,302,514 1,836,068 8,357,393 Fund Balances - End of year $ 3,218,331 $ 3,438,996 $ 1,671,245 $ 8,328,572 (Continued)
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

CAPITAL PROJECTS FUNDS

TOWN OF LOS GATOS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
DRAFT

Non-Point
Community Source Lighting and
Development Maintenance Landscaping

REVENUES
Property Taxes $ - $ - $ 38,161
Other Taxes - - -
License and permits - 359,950 -
Intergovernmental - 22,432 -
Interest - - 3,058
Use of property - - -
Other - - -
Total Revenues - 382,382 41,219

EXPENDITURES
Current:

Parks and public works - - 33,572
Library services - - -
Sanitation and other - 204,097 -
Capital Outlay - - -
Total Expenditures - 204,097 33,572

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES - 178,285 7,647

OTHER FINANCING SOURCES (USES)
Transfers in - - -
Transfers (out) - - (4,920)
Total Other Financing Sources (Uses) - - (4,920)
Changes in Fund Balances - 178,285 2,727
Fund Balances - Beginning of year 166,653 451,558 174,239 Fund Balances - End of year $ 166,653 $ 629,843 $ 176,966 (Continued)

SPECIAL REVENUE FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

TOWN OF LOS GATOS

AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES
DRAFT

Total
LG Library Special Revenue
Theatre Trust Funds Total

REVENUES
Property Taxes $ - $ - $ 38,161 $ 38,161
Other Taxes - - - 29,042
License and permits - - 359,950 521,780
Intergovernmental - - 22,432 1,619,489
Interest - 9,845 12,903 147,595
Use of property 108,237 - 108,237 108,237
Other - 76,617 76,617 125,617
Total Revenues 108,237 86,462 618,300 2,589,921

EXPENDITURES
Current:

Parks and public works 52,746 - 86,318 86,318
Library services - 111,541 111,541 111,541
Sanitation and other - - 204,097 204,097
Capital Outlay - - - 1,894,442
Total Expenditures 52,746 111,541 401,956 2,296,398

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 55,491 (25,079) 216,344 293,523

OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Transfers (out) - - (4,920) (110,920)
Total Other Financing Sources (Uses) - - (4,920) (110,920) Changes in Fund Balances 55,491 (25,079) 211,424 182,603 Fund Balances - Beginning of year 19,500 555,253 1,367,203 9,724,596 Fund Balances - End of year $ 74,991 $ 530,174 $ 1,578,627 $ 9,907,199 (Concluded)

SPECIAL REVENUE FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

AND CHANGES IN FUND BALANCES

TOWN OF LOS GATOS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES
DRAFT

TOWN OF LOS GATOS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (GAAP)
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)

REVENUES
Property taxes $ - $ - $ - $ - $ - $ -
Other taxes - - - 30,000 29,042 (958)
License and permits 92,500 161,830 69,330 - - -
Intergovernmental - - - - - -
Interest 12,580 55,771 43,191 22,490 58,440 35,950
Use of property - - - - - -
Other - - - - 49,000 49,000
Total Revenues 105,080 217,601 112,521 52,490 136,482 83,992

EXPENDITURES
Current:

Parks and public works - - - - - -
Library services - - - - - -
Sanitation and other - - - - - -
Capital outlay 218,081 218,081 - - - -
Total Expenditures 218,081 218,081 - - - -

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (113,001) (480) 112,521 52,490 136,482 83,992

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - - -
Operating transfers (out) - - - - - -
Total Other Financing Sources (Uses) - - - - - -
CHANGE IN FUND BALANCE $ (113,001) (480) $ 112,521 $ 52,490 136,482 $ 83,992 BEGINNING FUND BALANCE 3,218,811 3,302,514
ENDING FUND BALANCE $ 3,218,331 $ 3,438,996
(Continued)

STORM DRAIN CONSTRUCTION TAX
DRAFT

Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)

REVENUES
Property taxes $ - $ - $ - $ - $ - $ -
Other taxes - - - - - -
License and permits - - - - - -
Intergovernmental 1,535,078 1,597,057 61,979 - - -
Interest 1,335 20,481 19,146 - - -
Use of property - - - - - -
Other - - - - - -
Total Revenues 1,536,413 1,617,538 81,125 - - -

EXPENDITURES
Current:

Parks and public works - - - - - -
Library services - - - - - -
Sanitation and other - - - - - -
Capital outlay 1,676,361 1,676,361 - - - -
Total Expenditures 1,676,361 1,676,361 - - - -

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (139,948) (58,823) 81,125 - - -

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - - -
Operating transfers (out) (106,000) (106,000) - - - -
Total Other Financing Sources (Uses) (106,000) (106,000) - - - - CHANGE IN FUND BALANCE $ (245,948) (164,823) $ 81,125 $ - - $ - BEGINNING FUND BALANCE 1,836,068 166,653
ENDING FUND BALANCE $ 1,671,245 $ 166,653
(Continued)

TOWN OF LOS GATOS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (GAAP)
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

GAS TAX COMMUNITY DEVELOPMENT
DRAFT

Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)

REVENUES
Property taxes $ - $ - $ - $ 38,220 $ 38,161 $ (59)
Other taxes - - - - - -
License and permits 359,950 359,950 - - - -
Intergovernmental - 22,432 22,432 - - -
Interest - - - 1,425 3,058 1,633
Use of property - - - - - -
Other - - - - - -
Total Revenues 359,950 382,382 22,432 39,645 41,219 1,574

EXPENDITURES
Current:

Parks and public works - - - 42,764 33,572 9,192
Library services - - - - - -
Sanitation and other 198,372 204,097 (5,725) - - -
Capital outlay - - - 62,500 - 62,500
Total Expenditures 198,372 204,097 (5,725) 105,264 33,572 71,692

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 161,578 178,285 16,707 (65,619) 7,647 73,266

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - - -
Operating transfers (out) - - - (4,920) (4,920) -
Total Other Financing Sources (Uses) - - - (4,920) (4,920) - CHANGE IN FUND BALANCE $ 161,578 178,285 $ 16,707 $ (70,539) 2,727 $ 73,266 BEGINNING FUND BALANCE 451,558 174,239
ENDING FUND BALANCE $ 629,843 $ 176,966
(Continued)
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

NON-POINT

SOURCE MAINTENANCE LIGHTING AND LANDSCAPING

TOWN OF LOS GATOS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (GAAP)
DRAFT

Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)

REVENUES
Property taxes $ - $ - $ - $ - $ - $ -
Other taxes - - - - - -
License and permits - - - - - -
Intergovernmental - - - - - -
Interest - - - 6,250 9,845 3,595
Use of property 68,400 108,237 39,837 - - -
Other - - - 75,000 76,617 1,617
Total Revenues 68,400 108,237 39,837 81,250 86,462 5,212

EXPENDITURES
Current:

Parks and public works 55,814 52,746 3,068 - - -
Library services - - - 105,500 111,541 (6,041)
Sanitation and other - - - - - -
Capital outlay - - - 20,755 - 20,755
Total Expenditures 55,814 52,746 3,068 126,255 111,541 14,714

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 12,586 55,491 42,905 (45,005) (25,079) 19,926

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - - -
Operating transfers (out) - - - - - -
Total Other Financing Sources (Uses) - - - - - -
CHANGE IN FUND BALANCE $ 12,586 55,491 $ 42,905 $ (45,005) (25,079) $ 19,926 BEGINNING FUND BALANCE 19,500 555,253
ENDING FUND BALANCE $ 74,991 $ 530,174
(Continued)
LG Theatre Library Trust
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

TOWN OF LOS GATOS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (GAAP)
DRAFT

Variance
Positive
Budget Actual (Negative)

REVENUES
Property taxes $ 38,220 $ 38,161 $ (59)
Other taxes 30,000 29,042 (958)
License and permits 452,450 521,780 69,330
Intergovernmental 1,535,078 1,619,489 84,411
Interest 44,080 147,595 103,515
Use of property 68,400 108,237 39,837
Other 75,000 125,617 50,617
Total Revenues 2,243,228 2,589,921 346,693

EXPENDITURES
Current:

Parks and public works 98,578 86,318 12,260
Library services 105,500 111,541 -
Sanitation and other 198,372 204,097 (5,725)
Capital outlay 1,977,697 1,894,442 83,255
Total Expenditures 2,380,147 2,296,398 89,790

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (136,919) 293,523 430,442

OTHER FINANCING SOURCES (USES)
Operating transfers in - - -
Operating transfers (out) (110,920) (110,920) -
Total Other Financing Sources (Uses) (110,920) (110,920) - CHANGE IN FUND BALANCE $ (247,839) 182,603 $ 430,442
BEGINNING FUND BALANCE 9,724,596
ENDING FUND BALANCE $ 9,907,199
(Concluded)
TOTALS
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

TOWN OF LOS GATOS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (GAAP)
DRAFT

TOWN OF LOS GATOS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

PROPRIETARY FUNDS

INTERNAL SERVICE FUNDS

Internal service funds are used to finance and account for special activities and service performed by a designed department for other departments in the Town on a cost reimbursement basis.

The concept of major funds does not extend to internal service funds because they are used for internal activities only. In the Government-Wide Statement of Activities, the net revenues and expenses of the internal service funds are allocated to the Town departments or programs that generated them, thus eliminating internal service funds.

However, internal service funds are still presented separately in the fund financial statements and include the following funds:

Equipment Fund was established to account for the replacement of major Town equipment and all vehicle replacement.

Workers’ Compensation Fund was established to account for future claims that may occur related to workers compensation injuries.

Self-Insurance Fund was established to account for future general liability claims against the Town.

Information Technology Fund was established to account for the replacement of management information computer systems and components.

Facilities Maintenance Fund was established to account for preventative maintenance and repair for all Town buildings.

DRAFT

Workers' Self Information Facilities
Equipment Comp Insurance Technology Maintenance Total
ASSETS
Cash & Investments $ 2,401,161 $ 2,371,205 $ 386,654 $ 2,462,357 $ 379,020 $ 8,000,397 Restricted Cash & Investments - 115,981 - - - 115,981
Receivables:

Accounts 30,531 2,000 - 18,054 24,853 75,438
Leases receivable - - - - 1,348,155 1,348,155
Subscription assets, net - - - 713,438 - 713,438
Total Assets $ 2,431,692 $ 2,489,186 $ 386,654 $ 3,193,849 $ 1,752,028 $ 10,253,409

LIABILITIES
Accounts Payable $ 17,972 $ 5,394 $ 16,903 $ 96,381 $ 106,775 $ 243,425 Due to Other Governments - - - - 59 59
Interest payable - - - 27,915 - 27,915
Claims Payable - 1,968,979 157,729 - - 2,126,708
Subscription liabilities - - - 594,935 - 594,935
Total Liabilities $ 1,974,373 17,972 $ $ 174,632 $ 719,231 $ 106,834 $ 2,993,042 Deferred Inflows of Resources
Leases $ - $ - $ - $ 717,495 - $ $ 717,495

NET POSITION
Net investment in capital assets -$ -$ -$ 118,503 $ -$ 118,503 $ Restricted for:

Wokers compensation claims - 115,981 - - - 115,981
Unrestricted 2,413,720 398,832 212,022 2,356,115 927,699 6,308,388 Total Net Position $ 2,413,720 $ 514,813 $ 212,022 $ 2,474,618 $ 927,699 $ 6,542,872

TOWN OF LOS GATOS

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF NET POSITION
JUNE 30, 2023
DRAFT

Workers' Self Information Facilities
Equipment Comp Insurance Technology Maintenance Total

OPERATING REVENUES
Charges for services $ 639,367 $ 967,013 $ 397,216 $ 753,356 $ 938,492 $ 3,695,444 Interest - 5 - - - 5
Use of money and property - - - - 122,317 122,317
Other local taxes - - - - 28,322 28,322
Other revenue & reimbursements 78,919 165,757 - 1,745 247,409 988 Total Operating Revenues 718,286 1,132,775 397,216 755,101 1,090,119 4,093,497

OPERATING EXPENSES
Insurance expenses - 1,913,146 988,486 - - 2,901,632
Services and supplies 526,961 - - 306,771 1,334,225 2,167,957 Depreciation/amortization expense - - - 202,422 - 202,422 Total Operating Expenses 526,961 1,913,146 988,486 509,193 1,334,225 5,272,011 Operating Income (loss) 191,325 (780,371) (591,270) 245,908 (244,106) (1,178,514)

NONOPERATING EXPENSES
Interest expense - - - (29,221) - (29,221)
Income (loss) before transfers 191,325 (780,371) (591,270) 216,687 (244,106) (1,207,735) Transfers (in) - - - - 243,325 243,325
Transfers (out) - - - (733,000) - (733,000)
Net Transfers - - - (733,000) 243,325 (489,675)
Change in Net Position 191,325 (780,371) (591,270) (516,313) (1,697,410) (781) BEGINNING NET POSITION 2,222,395 1,295,184 803,292 2,990,931 928,480 8,240,282 ENDING NET POSITION $ 2,413,720 $ 514,813 $ 212,022 $ 2,474,618 $ 927,699 $ 6,542,872

TOWN OF LOS GATOS

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE FISCAL YEAR ENDED JUNE 30, 2023
DRAFT

Workers' Self Information Facilities
Equipment Comp Insurance Technology Maintenance Total

CASH FLOWS FROM OPERATING

ACTIVITIES
Receipts from customers $ 692,308 $ 965,018 $ 397,216 $ 753,443 $ 1,124,868 $ 3,932,853 Payments to suppliers and providers (528,794) (1,913,054) (800,055) (279,594) (1,322,101) (4,843,598) Insurance reimbursements - 165,757 - - - 165,757
Claims paid - 604,421 (74,502) - - 529,919
Net Cash Provided (Used) by
Operating Activities 163,514 (177,858) (477,341) 473,849 (197,233) (215,069)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Transfers in - - - - 243,325 243,325
Transfers out - - (733,000) - (733,000) -
Net Cash Provided (Used) by
Noncapital Financing Activities - - (733,000) - 243,325 (489,675)

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES
Interest paid - - - (1,306) - (1,306)
Acquisition of subscription assets - - (320,925) - (320,925) - Net Cash Used by Capital and
Related Financing Activities - - (322,231) - (322,231) - Net Increase(Decrease) in Cash and Investments 163,514 (177,858) (477,341) (581,382) 46,092 (1,026,975) Cash and investments - beginning of year 2,237,647 2,665,044 863,995 3,043,739 332,928 9,143,353 Cash and investments - end of year $ 2,401,161 $ 2,487,186 $ 386,654 $ 2,462,357 $ 379,020 $ 8,116,378 Reconciliation of Operating Income to Cash
Flows from Operating Activities:

Operating Income $ 191,325 $ (780,371) $ (591,270) $ 245,908 $ (244,106) $ (1,178,514) Adjustments to reconcile operating income to
cash flows from operating activities:

Depreciation/amortization - - - 202,422 - 202,422
Change in assets and liabilities:

Accounts receivable (25,978) (2,000) - (1,658) - (29,636) Leases receivable - - - - 146,566 146,566
Deferred inflows of resources - - - (111,817) - (111,817) Accounts payable (1,833) 92 (24,243) 27,177 12,115 13,308 Due to other governments - - - - 9 9
Claims payable - 604,421 138,172 - - 742,593
Cash Flows From Operating Activities $ 163,514 $ (177,858) $ (477,341) $ 473,849 $ (197,233) $ (215,069)

TOWN OF LOS GATOS

INTERNAL SERVICE FUNDS

COMBINING STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
DRAFT

Statistical Section
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DRAFT

STATISTICAL (UNAUDITED)
This part of the Town of Los Gatos Annual Comprehensive Financial Report (“ACFR”) presents the detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Town’s overall financial health.

Financial Trends
These schedules contain trend information to help the reader understand how Town’s financial performance and well-being have changed over time. (Schedule 1, Schedule 2, Schedule 3, and Schedule 4).

Revenue Capacity
These schedules contain information to help the reader assess one of the Town’s most significant local revenue source, the property tax (Schedule 5, Schedule 6, Schedule 7, and Schedule 8).

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 (Schedule 9, Schedule 10, and Schedule 11)
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 (Schedule 12, Schedule 13, and schedule 14).

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 (Schedule 15 and Schedule 16).

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Town of Los Gatos Schedule 1
Net Position by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
Fiscal Net Investment Total
Year in Capital Assets Restricted Unrestricted Net Position 2014 93,251,117 4,485,246 44,393,265 142,129,628
2015 93,687,029 5,663,182 7,180,919 106,531,130 (1)
2016 93,383,855 6,386,014 12,744,637 112,514,506
2017 96,265,652 5,627,707 15,134,420 117,027,779
2018 102,098,729 8,199,598 170,590 110,468,917 (2)
2019 107,542,588 11,918,688 -4,642,167 114,819,109 (3)
2020 111,700,225 7,117,984 -3,967,178 114,851,031
2021 109,894,936 8,358,267 -4,735,103 113,518,100
2022 126,418,275 10,203,412 1,785,294 138,406,981
2023 130,888,581 11,091,020 11,542,661 153,522,262
(1) The decrease in Restricted Net Position GASB 68 Implementation of Unfunded Pension Liability of Statement of Net Position.
(3) The decrease in unrestricted net position resulted largely from the use of approximately $8.0 million in unrestricted cash balances in the Town’s GFAR fund during the year to invest in the Town’s infrastructure and equipment.
(2) Net position was restated for FY 2018 for amounts placed into fiduciary funds, reclassified to General Fund Restricted Asset.
-15,000,000
-10,000,000
-5,000,000
0 5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
55,000,000
60,000,000
65,000,000
70,000,000
75,000,000
80,000,000
85,000,000
90,000,000
95,000,000
100,000,000
105,000,000
110,000,000
115,000,000
120,000,000
125,000,000
130,000,000
135,000,000
140,000,000
Net Investment in Capital Assets Restricted Unrestricted DRAFT

Town of Los Gatos Schedule 2
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2013/14 2014/15 2015/16 2016/17 2017/18
Expenses
Governmental Activities:

General Government $ 6,955,804 $ 6,465,852 $ 6,993,661 $ 6,771,628 $ 7,948,918 Public Safety 14,119,786 12,644,221 12,825,688 14,587,597 15,545,521 Parks and Public Works 8,154,616 8,069,352 8,320,623 9,502,707 10,047,003 Community Development 4,424,040 4,047,738 3,227,224 5,093,459 4,667,609 Library Services 2,234,431 2,553,414 2,522,142 2,868,748 3,087,684 Sanitation 363,180 491,359 528,580 466,762 536,296
Redevelopment 21,687 - - - -
Interest and Fees - - - - -
Total Governmental Activities 36,273,544 34,271,936 34,417,918 39,290,901 41,833,031 Program Revenues
Charges for Services:

General Government 2,179,077 1,888,213 1,517,012 1,669,020 1,701,146 Public Safety 3,206,579 3,529,166 3,278,585 2,076,688 1,888,359 Parks and Public Works 1,550,867 2,206,765 1,516,108 2,155,841 4,150,068 Community Development 5,156,061 5,027,497 4,359,146 3,803,626 3,456,390 Library Services 51,775 53,123 46,192 46,746 14,702
Sanitation 328,648 328,868 368,813 410,626 771,442
Operating Grants and Contributions:

General Government - - 15,291 - -
Public Safety 42,661 24,838 98,138 837,329 895,730
Parks and Public Works 994,096 907,745 749,300 665,779 953,294 Community Development - - - - -
Library Services 14,662 4,062 12,228 - 57,200
Capital Grants and Contributions:

General Government - 176,705 - - -
Public Safety - - - - -
Parks and Public Works 2,274,879 2,338,154 1,610,657 770,600 348,437 Community Development 19,360 - - 9,280 -
Total Program Revenues 15,818,665 16,485,136 13,571,470 12,445,535 14,236,768 General Revenues and Special Items:

Property Taxes 11,712,312 12,931,603 13,763,458 14,756,214 15,958,406 Sales Taxes 8,029,571 8,202,678 7,501,175 8,925,276 7,466,253 Franchise Taxes - 2,215,430 2,258,892 2,366,908 2,474,814 Other Taxes 3,718,405 2,062,893 1,997,497 2,351,223 2,667,840 Motor Vehicle in Lieu 13,068 - 12,308 14,056 16,483
Developer Fees - - - - -
Investment Earnings 772,200 428,772 698,324 192,260 333,120 Sale of Property - - - - -
Miscellaneous 350,468 813,324 598,170 528,946 622,105
Insurance recoveries - - - - -
Total General Revenues and Special Items 24,596,024 26,654,700 26,829,824 29,134,883 29,539,021 Change in Net Position $ 4,141,145 $ 8,867,900 $ 5,983,376 $ 2,289,517 $ 1,942,758 Continued
Fiscal Year
DRAFT

Town of Los Gatos Schedule 2
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2018/19 2019/20 2020/21 2021/22 2022/23
Expenses
Governmental Activities:

General Government $ 8,163,991 $ 7,405,368 $ 7,086,377 $ 15,681,345 $ 10,522,568 Public Safety 16,635,726 20,446,188 19,808,230 15,093,308 17,428,923 Parks and Public Works 10,627,716 11,803,005 13,141,034 12,969,615 12,258,626 Community Development 5,064,637 5,001,958 6,846,834 5,827,001 5,215,961 Library Services 3,059,294 3,347,523 3,496,153 2,969,954 3,653,642 Sanitation 684,673 3,041 185,981 178,575 208,262
Redevelopment - - - - -
Interest and Fees - - - - 29,221
Total Governmental Activities 44,236,037 48,007,083 50,564,609 52,719,798 49,317,203 Program Revenues
Charges for Services:

General Government 1,562,683 1,470,324 1,894,080 1,725,857 2,635,527 Public Safety 1,745,889 1,549,207 1,288,358 1,596,313 1,846,312 Parks and Public Works 2,910,936 3,674,222 4,209,048 5,090,014 3,590,936 Community Development 4,155,231 3,351,753 4,063,776 4,129,718 3,971,336 Library Services 9,476 11,522 - 521 2,039
Sanitation 966,130 231,323 299,478 231,323 359,950
Operating Grants and Contributions:

General Government - 12,290 - 2,766,833 -
Public Safety 826,643 952,045 1,061,344 1,144,226 4,622,373 Parks and Public Works 1,301,152 2,824,638 1,547,102 1,482,896 1,735,608 Community Development - 15,864 223,129 670,929 616,937
Library Services 47,482 49,351 55,181 114,958 174,663
Capital Grants and Contributions:

General Government - 8,258 2,365 12,205,050 -
Public Safety - 9,100 - - -
Parks and Public Works 146,792 832,755 843,980 10,021,156 3,915,175 Community Development - - - - -
Total Program Revenues 13,672,414 14,992,652 15,487,841 41,179,794 23,470,856 General Revenues and Special Items:

Property Taxes 17,321,347 18,330,426 19,878,835 21,132,098 22,746,842 Sales Taxes 8,158,152 7,531,425 7,933,604 8,483,673 8,806,477 Franchise Taxes 2,475,916 2,495,792 2,499,463 2,822,515 3,074,624 Other Taxes 2,726,743 1,911,774 1,126,887 2,042,580 2,292,008 Motor Vehicle in Lieu 14,689 24,526 23,058 35,624 34,406 Developer Fees - - - 1,735,571 614,820
Investment Earnings 1,809,128 2,428,470 227,136 (1,278,978) 797,587 Sale of Property - - - - -
Miscellaneous 2,407,840 323,940 1,528,039 755,400 1,029,864 Insurance recoveries - - - - 1,565,000
Total General Revenues and Special Items 34,913,815 33,046,353 33,217,022 35,728,483 40,961,628 Change in Net Position $ 4,350,192 $ 31,922 $ (1,859,746) $ 24,188,479 $ 15,115,281 Concluded
Fiscal Year
DRAFT

Town of Los Gatos Schedule 3
Fund Balance, Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2013/14 2014/15 2015/16 2016/17 2017/18
General Fund
Nonspendable $ - $ - $ - $ - $ -
Restricted - - - - 1,206,851
Committed 20,019,187 15,129,925 12,953,399
Assigned 23,791,749 24,121,256 9,555,085 14,050,699 17,475,285 Unassigned 1,363,376 - - - -
Total General Fund $ 25,155,125 $ 24,121,256 $ 29,574,272 $ 29,180,624 $ 31,635,535 All Other Governmental Funds
Nonspendable $ - $ - $ - $ - $ -
Restricted 4,485,246 5,663,182 6,386,014 5,627,707 6,992,747 Committed - - 3,696,000 10,354,584 5,571,087
Assigned 8,191,823 15,346,558 11,099,076 7,928,994 6,361,403 Unassigned 183,045 206,875 - - -
Total All Other Governmental Funds $ 12,860,114 $ 21,216,615 $ 21,181,090 $ 23,911,285 $ 18,925,237 Total Fund Balances $ 38,015,239 $ 45,337,871 $ 50,755,362 $ 53,091,909 $ 50,560,772 Continued
Fiscal Year
DRAFT

Town of Los Gatos Schedule 3
Fund Balance, Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2018/19 2019/20 2020/21 2021/22 2022/23
General Fund
Nonspendable $ - $ - $ 159,000 $ 159,000 $ 159,000
Restricted 5,015,316 669,978 - 690,000 1,444,501
Committed 15,070,944 15,387,706 11,220,970 12,283,132 13,150,130 Assigned 18,256,895 13,277,813 12,534,648 13,764,657 14,774,673 Unassigned - - - - -
Total General Fund $ 38,343,155 $ 29,335,497 $ 23,914,618 $ 26,896,789 $ 29,528,304 All Other Governmental Funds
Nonspendable $ - $ - $ - $ - $ 55,977
Restricted 6,903,372 6,448,006 8,562,653 9,383,483 9,530,538 Committed 2,579,997 - - 637,711 2,590,257
Assigned 6,180,930 14,181,679 15,360,481 13,944,155 19,480,452 Unassigned - - - - -
Total All Other Governmental Funds $ 15,664,299 $ 20,629,685 $ 23,923,134 $ 23,965,349 $ 31,657,224 Total Fund Balances $ 54,007,454 $ 49,965,182 $ 47,837,752 $ 50,862,138 $ 61,185,528 Concluded
Fiscal Year
DRAFT

Town of Los Gatos Schedule 4
Changes in Fund Balances, Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2013/14 2014/15 2015/16 2016/17 2017/18
Revenues:

Taxes $ 23,475,393 $ 23,208,820 $ 23,269,892 $ 25,945,129 $ 26,253,026 Licenses & Permits 5,343,265 6,467,771 5,442,133 5,075,503 5,937,044 Intergovernmental 2,440,127 2,921,002 2,573,475 1,715,580 2,124,903 Charges for Services 5,837,581 5,794,386 4,773,001 4,210,174 5,395,057 Fines and Forfeitures 795,720 868,564 879,277 917,105 676,212 Franchise Fees - 2,215,430 2,258,892 2,366,908 2,474,814 Developer Fees - - - - -
Investment Income 772,164 428,735 698,308 192,978 332,938 Use of Property 37,741 32,209 31,723 32,096 32,206
Other 3,648,277 3,130,975 2,396,992 1,011,939 640,844
Total Revenues 42,350,268 45,067,892 42,323,693 41,467,412 43,867,044 Expenditures:

Current
General Government 8,499,854 8,647,451 9,144,797 8,390,959 8,770,082 Public Safety 13,742,189 13,747,198 13,763,316 13,251,288 14,423,554 Parks and Public Works 5,611,283 5,840,097 6,307,266 6,633,748 7,125,686 Community Development 4,335,599 4,218,500 3,695,504 3,793,930 4,192,165 Library Services 2,131,438 2,268,844 2,332,268 2,508,677 2,529,017 Sanitation & Other 322,817 411,863 452,726 466,762 521,147 Capital Outlay 4,097,662 3,800,478 3,241,657 6,867,034 9,778,058 Debt Service
Principal Repayment - - - - -
Total Expenditures 38,740,842 38,934,431 38,937,534 41,912,398 47,339,709 Excess (Deficiency) of Revenues
Over (Under) Expenditures 3,609,426 6,133,461 3,386,159 (444,986) (3,472,665) Other Financing Sources(Uses):

Transfers In 3,418,872 8,977,220 3,315,846 7,907,692 3,176,760 Transfers Out (2,921,409) (7,788,049) (1,284,514) (7,612,012) (3,880,131) Gain from Sale of Property - - - - 378,219
Insurance Recoveries - - - - -
Issuance of Debt - - - 4,435 -
Total Other Financing Sources(Uses) 497,463 1,189,171 2,031,332 300,115 (325,152) Special Item:

Extraordinary Gain (Loss) RDA Dissolution - - - - -
Prepayment of Pension Obligations (4,534,538) - - - -
Net Change in Fund Balances $ 4,106,889 $ 7,322,632 $ 5,417,491 $ (144,871) $ (3,797,817) Capitalized Capital Outlay $ 4,097,662 $ 3,800,478 $ 3,241,657 $ 6,867,034 $ 9,778,058 Debt Service as a Percentage
of Non Capital Expenditures 0.00% 0.00% 0.00% 0.00% 0.00% Continued
Fiscal Year
DRAFT

Town of Los Gatos Schedule 4
Changes in Fund Balances, Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2018/19 2019/20 2020/21 2021/22 2022/23
Revenues:

Taxes $ 28,244,329 $ 27,811,665 $ 28,977,919 $ 31,627,593 $ 33,851,411 Licenses & Permits 5,173,876 4,818,671 5,212,831 6,055,040 6,333,675 Intergovernmental 2,310,655 4,498,153 3,746,587 15,492,982 10,145,820 Charges for Services 5,584,504 5,309,470 6,035,659 6,925,359 5,718,714 Fines and Forfeitures 510,266 271,117 103,468 319,170 416,950 Franchise Fees 2,475,916 2,495,792 2,499,463 2,822,515 3,074,624 Developer Fees - - - 1,735,571 614,820
Investment Income 1,809,164 2,428,453 227,940 (1,278,983) 797,582 Use of Property 32,960 31,039 40,372 144,901 237,647
Other 579,755 376,922 423,115 349,145 985,188
Total Revenues 46,721,425 48,041,282 47,267,354 64,193,293 62,176,431 Expenditures:

Current
General Government 8,004,254 13,024,146 14,040,134 15,953,968 8,828,779 Public Safety 14,945,407 15,793,815 16,570,836 16,451,190 18,446,048 Parks and Public Works 7,962,135 8,168,599 8,229,944 8,639,128 9,084,406 Community Development 4,577,495 4,473,790 5,195,302 6,313,511 5,065,412 Library Services 2,493,617 2,700,802 2,847,988 2,827,210 3,208,027 Sanitation & Other 628,240 162,837 166,173 194,969 204,097 Capital Outlay 7,888,914 7,861,972 5,707,439 10,478,670 8,917,075 Debt Service
Principal Repayment - - 39,008 156,034 156,034
Total Expenditures 46,500,062 52,185,961 52,796,824 61,014,680 53,909,878 Excess (Deficiency) of Revenues
Over (Under) Expenditures 221,363 (4,144,679) (5,529,470) 3,178,613 8,266,553 Other Financing Sources(Uses):

Transfers In 4,264,131 8,935,260 4,053,535 8,154,307 11,886,022 Transfers Out (3,323,756) (8,628,719) (3,940,015) (8,310,685) (11,396,347) Gain from Sale of Property 1,912,316 1,566 1,201,369 2,151 2,162 Insurance Recoveries - - - - 1,565,000
Issuance of Debt - - 1,560,336 - -
Total Other Financing Sources(Uses) 2,852,691 308,107 2,875,225 (154,227) 2,056,837 Special Item:

Extraordinary Gain (Loss) RDA Dissolution - - - - -
Prepayment of Pension Obligations - - - - -
Net Change in Fund Balances $ 3,074,054 $ (3,836,572) $ (2,654,245) $ 3,024,386 $ 10,323,390 $ 7,888,914 $ 7,861,972 $ 5,707,439 $ 9,180,716 $ 8,598,811 Debt Service as a Percentage
of Non Capital Expenditures 0.00% 0.00% 0.08% 0.30% 0.35% Concluded
Fiscal Year
DRAFT

Town of Los Gatos Schedule 5
Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years
Utility
and Total
Fiscal Unsecured Percent Secured Percent Total Estimated Direct Year Property Change Property Change Assessed Full Market Tax Rate 2014 $ 224,079,502 6.06% $ 9,238,816,900 9.14% 9,462,896,402 $ $ 36,955,267,600 1.0493 2015 227,331,042 1.45% 9,767,782,505 5.73% 9,995,113,547 39,071,130,020 1.0544 2016 217,035,545 -4.53% 10,417,804,357 6.65% 10,634,839,902 41,671,217,428 1.0533 2017 304,443,013 40.27% 11,240,554,198 7.90% 11,544,997,211 44,962,216,792 1.0560 2018 330,504,877 8.56% 11,969,049,272 6.48% 12,299,554,149 47,876,197,088 1.0659 2019 359,276,665 8.71% 12,795,393,103 6.90% 13,154,669,768 51,181,572,412 1.0607 2020 331,517,212 -7.73% 13,510,676,336 5.59% 13,842,193,548 54,042,705,344 1.0598 2021 308,749,655 -6.87% 14,599,669,332 8.06% 14,908,418,987 58,398,677,328 1.0494 2022 304,460,199 -1.39% 15,255,884,284 4.49% 15,560,344,483 61,023,537,136 1.0627 2023 357,370,065 17.38% 16,404,930,826 7.53% 16,762,300,891 65,619,723,304 1.0616 Source: Santa Clara County Assessed Value Report
0 2000
4000
6000
8000
10000
12000
14000
16000
18000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Millions
Unsecured Property Secured Property
DRAFT

Town of Los Gatos Schedule 6
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
Santa Clara School
Fiscal Basic County County Bonds Special District Bonds Year Wide Levy and Levies Districts and Loans Total
2014 1.0000 0.0423 0.0070 0.1417 1.1910
2015 1.0000 0.0479 0.0065 0.1442 1.1986
2016 1.0000 0.0476 0.0057 0.1381 1.1914
2017 1.0000 0.0474 0.0086 0.1223 1.1783
2018 1.0000 0.0597 0.0062 0.1177 1.1836
2019 1.0000 0.0565 0.0042 0.1006 1.1613
2020 1.0000 0.0557 0.0041 0.0935 1.1533
2021 1.0000 0.0457 0.0037 0.0959 1.1453
2022 1.0000 0.0576 0.0051 0.0902 1.1529
2023 1.0000 0.0559 0.0057 0.0854 1.1470
Source: Santa Clara County Book of Tax Rates

0.00 0.25

0.50 0.75

1.00 1.25
Per Hundred $
Santa Clara Valey Water District County
County Bonds and Levies
School District Bonds and Loans
Basic County Wide Levy
DRAFT

Town of Los Gatos Schedule 7
Principle Property Tax Payers
Last Ten Fiscal Years *
2013/14 2014/15 2015/16 2016/17 2017/18
Percentage Percentage Percentage Percentage Percentage
of Total City of Total City of Total City of Total City of Total City Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed ASSESSEE NAME Value Value Value Value Value Value Value Value Value Value 750 University LLC $ 18,600,000 0.19% 19,000,000 $ 0.18% 19,379,620 $ 0.19% $ 19,675,159 0.18% $ 25,241,863 0.21% 980 JR LLC
140 Toll House Hotel LLC
Alberto Way Holdings LLC 23,607,964 0.24% 23,715,141 0.23% 24,188,966 0.23% 24,557,845 0.22% 25,048,998 0.21% Ann R. Desantis 13,823,779 0.14%
A W Los Gatos LLC
Boccardo Corporation 38,617,912 0.40% 38,772,905 0.37% 21,617,318 0.21% 21,918,921 0.20% 22,211,650 0.19% CH Realty IV Downing LP 19,916,443 0.20%
CHL Ventures LP - 0.00%
D&K Los Gatos LLC 15,901,809 0.16% 15,974,003 0.15% 16,293,163 0.16% David A. and Shari Flick Trustee 15,388,884 0.15%
Donahue Schriber Realty Group LP 53,872,083 0.45%
DS Downing Los Gatos LLC 20,006,861 0.19% 21,980,568 0.21% 22,315,770 0.20% DS Village Square 22,799,599 0.20%
El Camino Hospital 20,803,609 0.20% 26,477,160 0.25% 26,880,933 0.24% 23,353,576 0.20% Equestrian 3 Investments LLC 29,584,251 0.25%
Fox Creek Fund LLC
Good Samaritan Hospital LP 19,710,897 0.20% 19,602,594 0.19% 19,880,366 0.19% 22,402,756 0.20% 22,516,823 0.19% Grade Way Associations VI 15,094,623 0.15% 15,163,152 0.15% Green Eyes LLC 12,793,404 0.13%
Grosvenor USA Ltd. 22,886,720 0.23% 22,990,624 0.22% 23,449,975 0.23% Health Care REIT Inc, 20,671,960 0.21% 20,765,810 0.20% 20,089,903 0.19% 20,396,274 0.18% Hercules Holding II LLC
International Hotel 30,144,617 0.25%
Kay K. & Go Sasaki Sr., Trustee 22,752,809 0.23% 24,744,983 0.24% 25,122,131 0.22% 25,624,027 0.21% Knowles Los Gatos LLC 47,986,850 0.49% 48,204,708 0.46% 49,167,836 0.47% 49,917,644 0.44% 50,915,995 0.43% KSL Capital Partners 43,383,370 0.44% 43,580,326 0.42% 30,134,614 0.29% 30,105,945 0.27% 25,893,946 0.22% Leland E Lester, Trustee 29,004,169 0.26%
LG Business Park Bldg 3 LLC 61,947,284 0.59% 53,465,724 0.45% LG Business Park Bldg 4 LLC 43,937,857 0.37%
LG Business Park LLC 47,276,977 0.48% 39,347,485 0.38% 17,507,261 0.17% 31,070,572 0.28% LG Hotel LLC 15,448,057 0.15% 15,497,395 0.15%
Los Gatos Hotel Corp. 18,134,182 0.19% 15,573,314 0.15% 15,676,113 0.15% Lyon Baytree Apartments LLC 14,674,716 0.15%
Paul H. Roskoph
Preylock Los Gatos LLC
Safeway Inc. 24,394,468 0.20%
San Jose Water Works 33,626,381 0.34% 36,693,453 0.35% 37,081,049 0.36% 38,710,728 0.34% 41,202,805 0.34% Serramonte Corporate Center LLC
SI 32 LLC 150,563,119 1.45% 141,348,894 1.36% 143,442,269 1.28% 146,317,944 1.22% SF Los Gatos LLC
Sobrato Interests IV LLC 169,809,676 1.74% 20,869,338 0.20% 44,930,482 0.43% 42,240,994 0.38% 43,071,837 0.36% SRI Old Town LLC 30,981,771 0.32% 31,122,427 0.30% 31,744,252 0.30% 32,228,351 0.29% 32,872,917 0.27% Summerhill N40 LLC
Summerhill Prospect Avenue LLC 18,274,508 0.16%
Wealthcap Los Gatos 121 109,100,000 0.97% 111,282,000 0.93% Wealthcap Los Gatos 31 84,000,000 0.75% 85,680,000 0.72% Total - Principal taxpayers $ 650,252,243 7.68% 394,337,473 $ 6.49% 1,296,723,012 $ 6.37% 814,164,568.00 $ 7.24% 916,633,381 $ 7.66% Total - All real properties assessed by the Town (1) $9,237,887,980 $9,766,765,025 $10,416,786,877 $11,239,536,718 $11,968,031,792 (1) Assessed value includes only net secured real properties. (2) Excludes the value of tax-exempt properties
Source Data: California Municipal Statistics, Inc. DRAFT Continued

Town of Los Gatos Schedule 7
Principle Property Tax Payers
Last Ten Fiscal Years *
2018/19 2019/20 2020/21
Percentage Percentage Percentage Percentage Percentage
of Total City of Total City of Total City of Total City of Total City Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed ASSESSEE NAME Value Value Value Value Value Value Value Value Value Value 750 University LLC $ 25,746,699 0.20% $ 26,261,632 0.19% $ 26,786,863 0.18% $ 27,064,374 0.19% $ 27,605,660 0.17% 980 JR LLC $ 19,277,879 0.15%
140 Toll House Hotel LLC 35,043,180 0.24% 35,499,104 0.24% 34,808,066 0.21% Alberto Way Holdings LLC 25,549,975 0.20% 24,158,350 0.18% 24,641,514 0.17% 24,896,799 0.17% Ann R. Desantis
A W Los Gatos LLC 26,749,500 0.16%
Boccardo Corporation 22,651,732 0.18% 23,099,314 0.17% 24,268,078 0.15% CH Realty IV Downing LP
CHL Ventures LP
D&K Los Gatos LLC
David A. and Shari Flick Trustee
Donahue Schriber Realty Group LP 56,370,186 0.44% 57,497,587 0.43% 58,647,535 0.40% 59,255,121 0.41% 60,440,222 0.37% DS Downing Los Gatos LLC
DS Village Square
El Camino Hospital 28,596,104 0.22% 30,789,155 0.23% 42,611,768 0.29% 50,456,560 0.35% 43,379,731 0.26% Equestrian 3 Investments LLC 28,563,864 0.22% 25,525,880 0.19% 26,036,395 0.18% 26,306,130 0.18% 26,832,251 0.16% Fox Creek Fund LLC 21,558,664 0.17% 27,231,335 0.19% 27,078,255 0.17% Good Samaritan Hospital LP 22,934,274 0.18% 23,391,289 0.17% 23,846,402 0.16% 24,111,608 0.17% 24,569,780 0.15% Grade Way Associations VI
Green Eyes LLC
Grosvenor USA Ltd.

Health Care REIT Inc,
Hercules Holding II LLC
International Hotel 30,747,509 0.24% 31,362,458 0.23% 31,989,706 0.22% Kay K. & Go Sasaki Sr., Trustee 26,135,962 0.20% 28,864,942 0.21% 27,190,951 0.19% 27,471,495 0.19% 28,020,326 0.17% Knowles Los Gatos LLC 51,934,313 0.41% 52,972,998 0.39% 54,032,455 0.37% 54,592,229 0.37% 55,684,072 0.34% KSL Capital Partners 26,411,820 0.21% 33,069,058 0.24% 33,118,759 0.23% 33,037,818 0.23% 32,098,542 0.20% Leland E Lester, Trustee
LG Business Park Bldg 3 LLC
LG Business Park Bldg 4 LLC
LG Business Park LLC
LG Hotel LLC
Los Gatos Hotel Corp.

Lyon Baytree Apartments LLC
Paul H. Roskoph
Preylock Los Gatos LLC 89,141,472 0.66% 95,880,000 0.66% 96,873,316 0.66% 98,810,782 0.60% Safeway Inc. 25,752,231 0.19% 25,577,034 0.18%
San Jose Water Works 46,150,577 0.36% 47,777,432 0.35% 49,649,154 0.34% 53,320,614 0.37% 51,657,625 0.31% Serramonte Corporate Center LLC 200,844,610 1.57% 204,861,501 1.52% 208,958,729 1.43% 211,123,540 1.45% 215,346,008 1.31% SI 32 LLC 149,208,182 1.17% 152,166,578 1.13% 155,181,793 1.06% 158,132,236 1.08% 159,929,209 0.97% SF Los Gatos LLC 33,214,527 0.23%
Sobrato Interests IV LLC 43,919,879 0.34% 44,781,377 0.33% 45,682,006 0.31% 46,155,127 0.32% 47,067,863 0.29% SRI Old Town LLC 33,530,374 0.26% 34,200,980 0.25% 34,884,999 0.24% 35,246,406 0.24% 35,951,333 0.22% Summerhill N40 LLC 56,244,782 0.42% 57,369,661 0.39% 59,462,462 0.41% 71,006,795 0.43% Summerhill Prospect Avenue LLC
Wealthcap Los Gatos 121 113,507,640 0.89% 115,777,792 0.86% 118,093,347 0.81% 119,316,793 0.82% 121,703,128 0.74% Wealthcap Los Gatos 31 87,393,600 0.68%
Total - Principal taxpayers $ 1,061,033,843 8.29% 1,127,696,808 $ 8.35% 1,175,222,251 $ 8.05% 1,202,767,594 $ 8.24% 1,213,007,226 $ 7.39% Total - All real properties assessed by the Town (1) $12,793,751,423 $13,509,034,656 $14,598,027,652 $15,254,242,604 $16,403,289,146 (1) Assessed value includes only net secured real properties. (2) Excludes the value of tax-exempt properties
Source Data: California Municipal Statistics, Inc. Concluded 2021/22 2022/23
DRAFT

Town of Los Gatos Schedule 8
Property Tax Levies and Collections
Last Ten Fiscal Years
Value of
Redevelopment
Agency Value of
Town Redevelopment Total Property Value of Town Property Property Property Tax Property Tax Tax Levied Property subject Subject to Subject to Fiscal Levied and Levied and and to Local Tax Local Local Year Collected Collected Collected Rate Tax Rate Tax Rate 2014 $ 9,120,626 $ - $ 9,120,626 $ 9,462,896,402 $ 1,249,873,303 $ 10,712,769,705 2015 9,787,519 - 9,787,519 9,995,113,547 1,318,214,863 11,313,328,410 2016 10,388,424 - 10,388,424 10,634,839,902 1,395,509,489 12,030,349,391 2017 11,345,588 - 11,345,588 11,544,997,211 1,537,577,241 13,082,574,452 2018 12,060,228 - 12,060,228 12,299,554,149 1,650,746,473 13,950,300,622 2019 12,924,592 - 12,924,592 13,154,669,768 1,717,358,555 14,872,028,323 2020 13,559,587 - 13,559,587 13,842,193,548 1,715,982,555 15,651,922,606 2021 13,864,271 - 13,864,271 14,908,418,987 1,809,729,058 16,718,148,045 2022 14,566,808 - 14,566,808 15,560,344,483 1,891,297,788 17,451,642,271 2023 16,300,797 - 16,300,797 16,762,300,891 2,047,530,717 18,809,831,608 Sources: Santa Clara County Auditor-Controller Office and the Town of Los Gatos $7.0
$8.0
$9.0
$10.0
$11.0
$12.0
$13.0
$14.0
$15.0
$16.0
$17.0
$18.0
$19.0
$20.0
Billions
Value of Property
$7.0
$8.0
$9.0
$10.0
$11.0
$12.0
$13.0
$14.0
$15.0
$16.0
$17.0
$18.0
Millions
Tax Levied
DRAFT

Town of Los Gatos Schedule 9
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Total Total Percentage of
Fiscal PG&E Governmental Primary Personal Per
Year Loan Activities Government Income Capita
2014 - - - 0.0% 0.00
2015 - - - 0.0% 0.00
2016 - - - 0.0% 0.00
2017 - - - 0.0% 0.00
2018 - - - 0.0% 0.00
2019 - - - 0.0% 0.00
2020 - - - 0.0% 0.00
2021 1,508,325 $ $ 1,508,325 $ 1,508,325 56.2% 48.91
2022 1,352,291 $ $ 1,352,291 $ 1,352,291 44.3% 40.90
2023 1,196,257 $ $ 1,196,257 $ 1,196,257 34.7% 36.14
Governmental Activities
Debt was transferred to the Successor Agency Trust Fund as a part of the RDA dissolution in FY 2011 DRAFT

Town of Los Gatos Schedule 10
Direct and Overlapping Governmental Activities Debt
As of June 30, 2023
2022/23 Assessed Valuation: $16,762,300,891 Estimated Share of Direct and
Total Debt at Overlapping Debt
DIRECT AND OVERLAPPING BONDED DEBT: % Applicable (1) June 30, 2023 at June 30, 2023 Overlapping Tax & Assesment Debt
Santa Clara County 2.708% $ 1,041,125,000 $ 28,193,665
West Valley-Mission Community College District 9.426% $ 694,320,000 $ 65,446,603 Campbell Union High School District 7.776% $ 354,085,000 $ 27,533,650 Los Gatos-Saratoga Joint Union High School District 36.333% $ 81,235,000 $ 29,515,113 Cambrian School District 0.648% $ 96,314,944 $ 624,121
Campbell Union School District 7.620% $ 205,899,324 $ 15,689,528 Los Gatos Union School District 74.055% $ 62,020,000 $ 45,928,911 Saratoga Union School District 0.032% $ 15,206,197 $ 4,866 Union School District 20.230% $ 144,497,533 $ 29,231,851 Midpeninsula Regional Open Space District 4.400% $ 82,680,000 $ 3,637,920 Santa Clara Valley Water District Benefit Assessment District 2.708% $ 38,900,000 $ 1,053,412 Total Overlapping Tax and Assesmet Debt $ 246,859,640
Overlapping General Fund Debt
Santa Clara County General Fund Obligations 2.708% $ 1,120,404,570 $ 30,340,556 Santa Clara County Pension Obligation Bonds 2.708% $ 329,741,844 $ 8,929,409 Santa Clara County Board of Education Certificates of Participation 2.708% $ 935,000 $ 25,320 West Valley-Mission Community College District General Fund Obligations 9.426% $ 8,160,000 $ 769,162 Campbell Union High School District General Fund Obligations 7.776% $ 14,500,000 $ 1,127,520 Los Gatos-Saratoga Joint Union High School District Certificates of Participation 36.333% $ 149,000 $ 54,136 Campbell Union School District General Fund Obligations 7.620% $ 1,575,000 $ 120,015 Saratoga Union School District Certificates of Participation 0.032% $ 1,905,000 $ 610 Town of Los Gatos 100.000% $ - $ -
Santa Clara County Vector Control District Certificates of Participation 2.708% $ 1,230,000 $ 33,308 Santa Clara County Central Fire Protection District Certificates of Participation 25.763% $ 27,755,000 $ 7,150,521 Midpeninsula Regional Open Space Park District General Fund Obligations 4.400% $ 91,570,600 $ 4,029,106 Total Gross Overlapping General Fund Debt $ 52,579,663
Less: Santa Clara County Supported Obligations $ 284,888 Total Overlapping General Fund Debt $ 52,294,775
Overlapping Tax Increment Debt ( Successor Agency)
Town of Los Gatos Certificated of Participations $ 11,430,000 Total of Overlapping Tax Increment Debt $ 11,430,000
Total Direct Debt $0
Total Gross Overlapping Dept $ 310,869,303
Total Net Overlapping Debt $ 310,584,415
Gross Combined Total Debt $ 310,869,303 (2)
Net Combined Total Debt $ 310,584,415
Ratios to 2022/23 Assessed Valuation:

Total Overlapping Tax and Assessment Debt: 1.47%
Total Direct Debt: 0.00%
Gross Combined Total Debt: 1.85%
Net Combined Total Debt: 1.85%
Ratios to Redevelpment Incremental Valuation ( $1,792,881,346):

Total Overlapping Tax Increment Debt: 0.64%
Source Data: California Municipal Statistics, Inc.
(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 distric's total taxable asessed value. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue bonds and non-bonded capital lease obligations.

DRAFT

Town of Los Gatos Schedule 11
Legal Debt Margin Information,
Last Ten Fiscal Years
(In Thousands of Dollars)
Assessed Value
Debt Limit
Debt Applicable to Limit:

Legal Debt Margin
2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 Debt Limit $ 1,263,138 $ 1,379,254 $ 1,444,943 $ 1,556,252 $ 1,679,736 $ 1,789,097 $ 2,076,329 $ 2,236,263 $ 2,334,052 $ 2,514,345 Debt Applicable to Limit - - - - - - - - 1,352 1,196
Legal Debt Margin $ 1,263,138 $ 1,379,254 $ 1,444,943 $ 1,556,252 $ 1,679,736 $ 1,789,097 $ 2,076,329 $ 2,236,263 $ 2,332,699 $ 2,513,149 Total Net Debt
Applicable to the Limit
as a Percentage
of Debt Limit 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.06% 0.05% Notes:
(1) The Town of Los Gatos is a general law city and has a debt limit of 15%. (2) Excludes RDA asessed valuation and debt transferred to the Successor Agency trust as a part of the RDA dissolution.

Legal Debt Margin Calculation
Fiscal Year
$ 16,762,300,891
2,514,345,134
$ 2,514,345,134
for Fiscal Year 2022/23
DRAFT

Town of Los Gatos Schedule 12
Demographic and Economic Statistics
Last Ten Fiscal Years
Personal
Income Per Capita Public County
Fiscal (thousands Personal Median School Unemployment
Year Population of dollars) Income Age Enrollment Rate
Ended (1) (2) (3) (4) (5) (6)
2014 30,443 $ 2,267,912 74,497 45.80 6,522 5.7%
2015 30,505 $ 2,197,885 72,050 46.10 6,622 3.8%
2016 31,376 $ 2,286,087 72,861 46.30 6,646 3.5%
2017 31,314 $ 2,281,569 72,861 46.50 6,631 3.8%
2018 30,601 $ 2,290,638 74,855 46.81 6,588 2.6%
2019 30,998 $ 2,365,178 76,301 46.72 6,544 2.6%
2020 31,439 $ 2,546,748 81,006 46.83 6,520 10.7%
2021 30,836 $ 2,686,155 87,111 46.83 6,180 5.2%
2022 33,062 $ 3,055,987 92,432 46.67 6,000 2.2%
2023 33,102 $ 3,443,767 104,035 46.76 5,895 3.7%
Source:
(1) California State Dept. of Finance - Population Research Unit (January 2023) (2) California State Dept. of Finance - Estimate equals county per capita average times population (3) US Census Bureau - QuickFacts
(4) Claritas demographic snapshot report
(5) Los Gatos Saratoga Joint Union and Los Gatos Union Elementary School Districts (6) State of California, Employment Development Dept., Labor Market Info. Div.

DRAFT

Town of Los Gatos Schedule 13
Principal Employers
Last Ten Fiscal Years
Percentage Percentage Percentage Percentage Percentage
of Total Town of Total Town of Total Town of Total Town of Total Town Principal Employers Emp. Employment Emp. Employment Emp. Employment Emp. Employment Emp. Employment Columbia Health Care Assoc/Mission Oaks Hospital 2,000 13.52% - 0.00% - 0.00% - 0.00% 0.00% El Camino Hospital, Los Gatos 700 4.73% 560 3.73% 560 3.53% 560 3.49% 560 3.43% Los Gatos Union School District 237 1.60% 273 1.82% 280 1.76% 274 1.71% 267 1.64% Los Gatos-Saratoga High School District 256 1.73% 157 1.05% 157 0.99% 370 2.30% 367 2.25% Netflix 825 5.58% 1,530 10.19% 1,976 12.45% 1,864 11.61% 2,117 12.98% Safeway 250 1.69% 314 2.09% 314 1.98% 314 1.95% 314 1.92% Alain Pinel Realtors 156 1.05% 156 1.04% 146 0.92% 148 0.92% 131 0.80% Courtside Tennis Club 295 1.99% 440 2.93% 440 2.77% 468 2.91% 542 3.32% Town of Los Gatos 144 0.97% 157 1.05% 158 1.00% 160 1.00% 159 0.97% Whole Foods - 0.00% 179 1.19% 179 1.13% 179 1.11% 179 1.10% Vasona Creek Health Care Center - 0.00% 233 1.55% 233 1.47% 233 1.45% 233 1.43% Good Samaritan Regional Cancer Center - 0.00% 200 1.33% 200 1.26% 200 1.25% 200 1.23% Roku - 0.00% - 0.00% 487 3.07% 554 3.45% 664 4.07%
Terraces of Los Gatos - 0.00% - 0.00% 228 1.44% 228 1.42% 228 1.40% Source: Town of Los Gatos, Finance
Department and Muniservices Continued
2013/14 2014/15 2015/16 2016/17 2017/18
DRAFT

Town of Los Gatos Schedule 13
Principal Employers
Last Ten Fiscal Years
Percentage Percentage Percentage Percentage Percentage
of Total Town of Total Town of Total Town of Total Town of Total Town Principal Employers Emp. Employment Emp. Employment Emp. Employment Emp. Employment Emp. Employment Columbia Health Care Assoc/Mission Oaks Hospital 0.00% 0.00% 0.00% 0.00% 0.00% El Camino Hospital, Los Gatos 560 3.49% 560 3.49% 560 3.35% 517 3.09% 509 3.04% Los Gatos Union School District 281 1.75% 281 1.75% 281 1.68% 281 1.68% 281 1.68% Los Gatos-Saratoga High School District 367 2.28% 367 2.28% 320 1.92% 320 1.91% 320 1.91% Netflix 2,314 14.41% 2,314 14.41% 2,524 15.11% 2,278 13.62% 2,263 13.53% Safeway 314 1.95% 314 1.95% 314 1.88% 314 1.88% 314 1.88% Alain Pinel Realtors 131 0.82% 131 0.82% 0.00% 0.00% 0.00% Courtside Tennis Club 542 3.37% 542 3.37% 542 3.24% 542 3.24% 542 3.24% Town of Los Gatos 160 1.00% 160 1.00% 161 0.96% 165 0.99% 163 0.97% Whole Foods 125 0.78% 125 0.78% 125 0.75% 180 1.08% 132 0.79% Vasona Creek Health Care Center 233 1.45% 233 1.45% 250 1.50% 250 1.49% 250 1.49% Good Samaritan Regional Cancer Center 200 1.25% 200 1.25% 200 1.20% 200 1.20% 200 1.20% Roku 516 3.21% 516 3.21% 0.00% 0.00% 0.00%
Terraces of Los Gatos 228 1.42% 228 1.42% 228 1.36% 200 1.20% 200 1.20% Source: Town of Los Gatos, Finance
Department and Muniservices Concluded
2018/19 2019/20 2020/21 2021/22 2022/23
DRAFT

Town of Los Gatos Schedule 14
Full-time-Equivalent Employees by Function/Program
Last Ten Fiscal Years
2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 Function/Program
General Government 20.73 20.97 20.97 21.35 21.97 22.16 21.80 21.80 22.06 22.05 Police 57.50 60.00 59.00 59.00 59.00 59.00 60.00 60.00 60.00 60.00 Economic Development 0.50 0.63 0.63 0.63 0.75 0.75 0.75 0.75 0.75 0.75 Library 10.30 10.80 11.00 12.25 12.25 12.50 12.50 12.50 12.50 13.50 Planning 17.50 19.50 19.00 19.26 19.63 20.08 20.08 20.20 20.20 20.20 Public Works 31.50 32.00 33.50 33.50 34.50 34.50 34.50 34.75 34.75 36.75 Total 138.03 143.90 144.10 145.98 148.10 148.99 149.63 150.00 150.26 153.25 Full-time equivalent employment is calculated as one or more employee positions totaling one full year of service or approximately 2,080 hours a year.

Page C-45 of Town Budget FY 2022/23
Fiscal Year
DRAFT

Town of Los Gatos Schedule 15
Operating Indicators
Last Ten Fiscal Years

FUNCTION/PROGRAM
General government 2013/14 2014/15 2015/16 2016/17 2017/18 Building Permits Issued
Residential Permits Issued 813 805 899 744 849
Residential Permits Value 87,307,822 76,896,111 85,000,754 53,625,891 63,083,249 Commercial Permits Issued 139 133 147 135 105
Commercial Permits Value 138,676,507 178,195,997 20,185,884 50,024,177 16,626,196 Publically Owned Permits Issued - - - - -
Publically Owned Permits Value - - - - -
Residential Parking Permits
Number of Special Event Permits Issued 133 127 107 118 113 Number of Annual Permits Issued 1,376 1,570 1,363 1,251 1,342 City Clerk
Number of Council Resolutions Passed 86 72 61 69 69
Number of Ordinances Passed 16 9 11 5 17
Number of Contracts Passed 196 222 283 240 262
General Services
Number of Purchase Orders Issued 301 277 334 331 322
Police
Physical Arrests 641 695 987 1,030 1,164
Parking Violations 14,421 13,321 13,975 12,863 11,784
Traffic Violations 4,747 4,633 5,400 4,634 4,757
DUI Arrests 62 48 58 60 51
Library
Number of Library Visits - - - - -
Annual Circulation - - - - -
Number of Library Card holders - - - - -
Circulated e-audiobooks 2,414 ( 5,867 ( 7,761 10,006 8,844 Other Public Works
Street Resurfacing/Overlay/Reconstruction (miles) 10.0 1.8 8.0 10.0 2.6 ADA Compliance: Curb Ramps 19 23 11 30 68
Traffic Circles - 1 1 1 1
Street Poles 1,611 1,609 1,609 1,609 1,762
Planning and Development Department
Building & Safety Inspections Performed 12,764 11,652 8,655 14,722 13,918 Redevelopment: Number of active projects - - - - -
Source: Town of Los Gatos, Finance Department Continued Fiscal Year
DRAFT

Town of Los Gatos Schedule 15
Operating Indicators
Last Ten Fiscal Years

FUNCTION/PROGRAM
General government 2018/19 2019/20 2020/21 2021/22 2022/23 Building Permits Issued
Residential Permits Issued 814 898 1,128 1,144 1,118
Residential Permits Value 80,030,846 47,961,529 111,242,724 132,784,439 73,432,645 Commercial Permits Issued 122 92 68 117 84
Commercial Permits Value 13,295,999 12,389,688 37,285,259 23,442,964 19,422,918 Publically Owned Permits Issued - - - - -
Publically Owned Permits Value - - - - -
Residential Parking Permits
Number of Special Event Permits Issued 78 - - - - (1)
Number of Annual Permits Issued 1,395 1,400 1,568 1,958 1,827 City Clerk
Number of Council Resolutions Passed 59 57 50 64 71
Number of Ordinances Passed 11 24 9 14 10
Number of Contracts Passed 245 242 205 296 275
General Services
Number of Purchase Orders Issued 343 359 376 306 296
Police
Physical Arrests 1,138 616 360 504 522
Parking Violations 6,817 4,023 1,584 4,678 8,569
Traffic Violations 2,877 1,225 764 1,245 1,427
DUI Arrests 70 64 23 49 42
Library
Number of Library Visits - - - 150,198 206,874 (3)
Annual Circulation - - - 432,707 397,517 (3)
Number of Library Card holders - - - 29,322 29,815 (3)
Circulated e-audiobooks 12,130 57,839 54,614 - - (2)
Other Public Works
Street Resurfacing/Overlay/Reconstruction (miles) 5.8 16.2 10.0 9.9 10.9 ADA Compliance: Curb Ramps 49 68 91 59 50
Traffic Circles 1 1 1 1 1
Street Poles 1,830 1,830 2,113 2,113 2,113
Planning and Development Department
Building & Safety Inspections Performed 13,966 13,633 13,806 16,906 16,641 Redevelopment: Number of active projects - - - - -
(3) New metrics being presented in FY 2021/22.

Source: Town of Los Gatos, Finance Department Concluded Fiscal Year
(2) Changed operating indicators to fully reflect Department's efficiency metrics starting FY 2021/22.
(1) The Town streamlined the special event application where multiple events require only one permit.

DRAFT

Town of Los Gatos Schedule 16
Capital Asset Statistics by Function/Program
Last Ten Fiscal Years
2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 Function/Program
Police
Number of Stations 2 2 2 2 2 2 2 2 2 2
Number of Patrol Units 14 14 14 14 14 14 14 14 14 14
Parking Enforcement Vehicles 2 2 2 2 2 2 2 2 2 2
Other Public Works
Streets (miles) 132 132 132 132 132 132 132 132 132 112 (1) Streetlights 1,611 1,609 1,609 1,609 1,762 1,830 1,830 2,113 2,113 2,113 Traffic Signals 29 29 30 30 30 31 31 31 31 31
Parks and Recreation
Number of Parks 12 12 12 12 12 N/A N/A N/A N/A N/A
Number of Community Centers 1 1 1 1 1 1 1 1 1 1
Number of Parks & Open Spaces N/A N/A N/A N/A N/A 17 17 17 17 17 Parking
Number of Parking Garages 1 1 1 1 1 1 1 1 1 1
Number of Parking Lots 22 22 22 22 22 22 22 22 22 22
Number of Off Street Parking Garage Spaces 1,126 1,126 1,126 1,126 1,126 N/A N/A N/A N/A N/A Number of Downtown Off-Street Parking Spaces N/A N/A N/A N/A N/A 1,269 1,269 1,269 1,269 1,269 Fiscal Year
(1) Based on Metropolitan Transportation Commission (MTC) funded Pavement Technical Assistance Program
(P-TAP) inventory for year 2022.

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Other Independent Auditor’s Reports
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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the
Town Council of the Town of Los Gatos
Los Gatos, California
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Town of Los Gatos (the “Town”) as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Town’s basic financial statements, and have issued our report thereon dated November 27, 2023.

Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Town’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Town’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not DRAFT

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express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Morgan Hill, California
November 27, 2023
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Town Manager Responses to Finance Commissioners’ Comments and Questions 1 ATTACHMENT 4
Introduction
The Town appreciates the thorough and thoughtful review by the Finance Commission as demonstrated in its submitted comments and questions. The Finance Commissioners’ comments/questions and Town Manager (TM) responses are organized in the following categories:
 General comments;
 Suggestions for modifying the presentation and correcting typographical errors;  Requests for additional information regarding Town Finances; and  Additional detailed questions and comments.

Many of the comments pertained to the Letter of Transmittal and MD&A. Under GASB guidance, care should be taken to avoid duplication. Two principles may be helpful in this regard:
 Management should use the letter of transmittal to convey any relevant information that is judged too subjective to be included in MD&A (for example, the potential effect of known events) and
 Since authoritative standards limit the content of MD&A to certain specified items, management should use the letter of transmittal to convey other relevant information.

General comments:

expenditures. It is worth noting that ~$3.4M of the $5.3M of favorable variance is due to vacancies. This chronic variance (due to budget padding) should be somewhat smaller in the 2023-2024 budget with the addition of a modest vacancy factor of 4.6% which corresponds to ~$1.7M (as described on page 36).

TM Response: Staff agrees that FY 2023/24 will show decreased budget savings.

One overall general comment is we had a good year - our overall net position improved, revenues are up and while we underrun expenses the major driver (staffing) provides opportunity to improve services to the town. Along those lines I would suggest the opening paragraph on page 2 of the Transmittal Letter under Economic Conditions and Outlook could be modified to focus on the more significant drivers - ie property tax and sales tax which make up appr 62% of our revenue are both up. A total increase of 8.5% is not insignificant. Leading that discussion with TOT, and stating property tax “remain steady” (vs 7.5% increase) doesn’t really reflect the overall picture? I know we don’t want to get too comfortable with the current trend and what may occur in the future but downplaying good news doesn’t really help us.

TM Response: The order the revenue presentation is updated in the Transmittal Letter.

Along those lines - I had 3 big take always.

Town Manager Responses to Finance Commissioners’ Comments and Questions 2 ATTACHMENT 4
1) Revenues were up 8.5% - and $5M more than our Org Budget. The update revenue projection was within .3M of our final actual which means we got a pretty good handle on the changes mid year.
2). We under ran expenses by over $5M (appr 10%) from our updated budget and $2.5M from the original budget. In private business this might be perceived as a good thing but for the Town it may represent lost opportunity. This may be a good area to focus on how we can estimate our expenses more accurately, particularly at the mid-year point. 3). While revenue is up, expenses down - our pension liability grew substantially and given the underlining driver of market performance should be expected to impact our current year.

From a overall summary perspective would you agree?
TM Response: The savings was primary due to vacancies Town-wide. Staff estimates budget savings at mid-year and year end; however, the budget is not adjusted for salary savings. The FY 2023/24 Adopted Operating Budget and Five-Year Forecast include a 4.6% salary savings factor.

The goal of this section is to provide objective and easily readable analysis of the government’s financial activities based on current known facts, decisions, or conditions. The section needs to be simplified and the explanations made more. The explanations are complex and too detail.

TM Response: Noted.

While the draft is a good start, there is work to be done in the MD&A section to fully comply with GASB 34. This statement requires the MD&A to provide an objective and easily readable analysis of the government’s financial activities based on currently known facts, decisions, or conditions. GASB 34’s objective is to enhance the understandability and usefulness of the external financial reports of the Town to its citizens, Town Council, investors, and creditors.

Additionally, accountability is the paramount objective of governmental financial reporting.

Additionally, I have concerns with the Town Manager’s Transmittal letter as noted below.

TM Response: Noted.

Management Discussion and Analysis - The goal of this section is to provide objective and easily readable analysis of the government’s financial activities based on current known facts, decisions, or conditions. The section needs to be simplified and the explanations made more.

The explanations are complex and too detail.

TM Response: Noted.

Suggestions for modifying the presentation and correcting typographical errors:

Commissioners provided corrections of typos and grammatical errors.

Town Manager Responses to Finance Commissioners’ Comments and Questions 3 ATTACHMENT 4
Transmittal Letter - Page 2 – there is a typo regarding percentage of general fund revenues –

4.9%
TM Response: All suggested edits and corrections of typos were incorporated. The percentage should read 44.9% and was corrected prior to the Commission’s December 4th meeting.

Footnote 11 – is the notation “for the year ended June 20, 2023, pension expense for each plan …” correct? Should this say pension contribution?
TM Response: Corrected.

MD&A - TOT revenues are not shown separately on Statement of Activities so the reader is unable to determine the amount. Breakout TOT as a separate line item since it is the majority of “Other taxes” to assist the reader.

TM Response: Transient Occupancy Tax is listed separately in the General Fund Schedule.

Add descriptions for Required Supplementary Information section and Supplementary Information section. These are also part of the Financial Statements which need to be explained.

TM Response: Description added.

MD&A - Total General Revenues of $39.4m as shown on the Statement of Activities increased

10.3% or $3.7m from FY 22, excluding the $1.5m settlement for litigation. Total General Revenues including special items for FY 23 was $40.9m which was 15% increase over prior year.

This should be a highlight.

For the General Fund, excess revenues over expenditures resulted in a $5,718,884 surplus vs prior year $3,290,895 surplus, which represents a $2,427,898 or 74% increase over prior year.

This should be highlighted along with a brief explanation for this increase. What contributed to this?
TM Response: FY 2022/23 results have been added to highlights. The primary factors are summarized in the MD&A.

Fund Financial Statements - Add descriptions for Required Supplementary Information section and Supplementary Information section. These are also part of the Financial Statements which need to be explained.

TM Response: Description added.

Town Manager Responses to Finance Commissioners’ Comments and Questions 4 ATTACHMENT 4
Governmental Activities Revenue Discussion - Provide a subtotal for total Program revenues and total General Revenues on the Statement of Activities Schedule (page 24) for ease of understanding of the amount of revenue for each year shown.

Staff Response: Implemented.

Staff should consider including more graphs as a basis for explanation (less text) such as the ones provided by the Auditor.

TM Response: Graphs added.

Staff should consider showing only two years comparison (FY 23 and FY 22) since FY 21 is not presented in the financial statements.

TM Response: Graphs added.

Staff should highlight the good news story that revenues exceeded operating expenditures and there was an operating surplus for both FY 23 and FY 22.

TM Response: Highlights added to FY 2022/23.

Transmittal Letter - Page 2 – states the Town’s economically sensitive TOT revenues remain near historic lows (?) and sales tax receipts are flattening. Please check this for accuracy.

MD&A - FY 23 TOT increased 100% over the low point of $1.1m in FY 21 and 12% over FY 22.

Discuss the recovery in both % and $ from the low point in FY 21 (pandemic) so the reader has a better understanding of the trend in TOT. The trend is inconsistent with the statement regarding TOT in the transmittal letter. Reference to FY 19 should be dropped since FY 19 results are not presented in any schedules.

Confirm the trend in economically sensitive revenue items including Sales Tax, TOT tax and Property Taxes is accurate. FY 23 results are showing strong recovery and in total exceed FY 21 levels (low point) and FY 19 levels (pre-pandemic).

TM Response: FY 2022/23 Transient Occupancy Tax (TOT) revenue collection increased by $0.3 million compared to the level collected in FY 2021/22; however, FY 2022/23 inflows of $2.2 million are still $0.5 million lower than the FY 2018/19 level of TOT collection (pre-pandemic level). Actual TOT collection was $120,357 below budget in FY 2022/23.

While sales tax increased from the prior year, the actual sales tax collection was $152,657 below the budgeted amount, and therefore it is considered flat.

grants and contributions.

TM Response: Additional details provided.

Town Manager Responses to Finance Commissioners’ Comments and Questions 5 ATTACHMENT 4

Total expenses as reported in the Statement of Activities removing the impact of the known one time events - $6.9m fire safety grant in FY 22, pension expense for both years (FY 23 $5.8m vs FY 22 $3.3m), OPEB expense for both years (FY 23 $1m vs FY 22 $.5m), and $1.2m BMP loan expense in FY 22. After these adjustments Adjusted Total Expense increased in FY 23. Let’s make sure the reader understands the underlying trend. This can be done in a few sentences.

TM Response: Additional explanation added.

TM Response: Total budget column added.

TM Response: Total budget column added.

5. Page 38- please add the original adopted revenue budget to the graph and a Total column TM Response: Total budget column and Original (Adopted) Budget numbers added.

TM Response: Total budget column and Original (Adopted) Budget numbers added.

the 5 year outlook until a new plan is adopted leveraging off FY 23 actual. The last 5 Year Forecast has FY 24 Property Tax revenues the same as FY 23 actual when we know a reasonable forecast is for 6.5% increase year over year.

TM Response: The updated forecast will be provided to the Finance Commission and the Town Council in February 2024. The reference to the forecast is removed.

reserve if there is no risk of future litigation as disclosed in Footnote 14? If this is a real liability, why isn’t it recorded as a liability vs an assigned fund reserve? TM Response: Reserves are established by the Town Council General Fund Reserve Policy and Council Resolutions. Providing details to only one Reserve would not be consistent. ERAF is not a liability from a financial perspective, but a risk that Santa Clara County has communicated to all its municipalities.

Town Manager Responses to Finance Commissioners’ Comments and Questions 6 ATTACHMENT 4
Requests for additional information regarding Town Finances:

Transmittal Letter - Page 3 – The financial statements show the $3.6m ARPA funds were transferred to the General Fund. What qualifying expenditures under the Act were reimbursed and for how much? How much remains of the $7.2m ARPA grant? MD&A - ARPA – technical question – what is the revenue recognition policy on ARPA Grant? Should revenue be recognized when a qualified expenditure has been made or when cash received? Also, how much of $7.2m is still available?
Footnote 16 – Covid – please disclose in detail which funds the FY 23 ARPA revenue of $3.6m was transferred to. Please also disclose for FY 22 ARPA revenue of $3.4m which funds the money was transferred to.

TM Response: The Town received $7,229,744 from the American Rescue Plan Act (ARPA) grant.

For FY 2020/21, $200K of ARPA proceeds were recognized as revenue to reimburse the Town for qualifying expenditures under the provisions of the Act, including boosting economic recovery, providing rent forgiveness, and directing grants to non-profit and social welfare organizations.

For FY 2021/22 and FY 2022/23, the Town recognized $3.4 million and $3.6 million respectively in ARPA revenues for qualifying public safety expenditures. The ARPA fund was fully expended and the remaining balance is $0.00 as of June 30, 2023. See Note 19.

Transmittal Letter - Page 3 – Regarding labor negotiations, please disclose the total increases approved as a %.

TM Response: The three labor agreements called for one-time non-pensionable bonuses and a combined market adjustment and cost of living adjustment for the Police Officers Association (7.25%), Town Employees Association (8%), and Association of Federal, State, County, and Municipal Employees (7.5%) for FY 2022/23.

For this same year, the unrepresented Confidential employees received a one-time nonpensionable bonus and a combined market and cost of living adjustment (COLA) of 8%.

Temporary classifications received a market adjustment and COLA totaling 8%. The unrepresented Management employees received a 3% COLA and one-time non-pensionable bonus. Effective July 1 2023, Management employees (except for the Council appointed Town Manager and Town Attorney) received an additional 3% market rate adjustment effective April 2, 2023. This information is available to the Finance Commission and the public in the Adopted Operating Budget: https://www.losgatosca.gov/DocumentCenter/View/36220/FY-2023-24- Operating-Budget?bidId=
Footnote 1 – Basis of Accounting – consider adding a paragraph which discusses claims and judgments. Disclose how the Town accounts for material claims and judgments and associated legal and administrative costs when it is probable that the liability claim has been incurred and the amount of the loss can be reasonably estimated. Disclose where (which fund) the Town

Town Manager Responses to Finance Commissioners’ Comments and Questions 7 ATTACHMENT 4
records estimated loss liabilities, including a) known loss events expected to be presented as claims later, b) unknown loss events that are expected to be claims and c) expected future development on claims are ready reported.

TM Response: See Note 13- Risk Management.

Disclose how the assigned balances are assigned. Is this done by the Town Manager or by the Town Council. What is the basis for assigning ERAF Risk of $689,608 in fund balance. Was all ERAF revenue recognized in FY 23, FY 22 and FY 21? Should it have been? If litigation is probable, then please discuss in the footnotes - litigation.

Footnote 10 – Please explain the addition and deletion accounting for ERAF Risk. Why is $2,298,692 shown as an addition to fund balance? Was $2,298,692 recorded as General Fund Revenue – Property Tax? (Please see ERAF Risk comment above). Discuss why the Town does not have an unassigned fund balance to fund unplanned expenditures. Historically the Town has used the Capital/Special Projects assigned fund balance to cover unplanned expenditures.

Discuss the ERAF set aside for potential settlement of lawsuit between the State and the School districts.

ERAF Risk – what is the basis of accounting for creating an assigned fund reserve in the General Fund for ERAF risk as opposed to a liability for claim or judgment? Does the risk not rise to the level of being probable or reasonably estimated?
TM Response: The disclosure of the fund balance assignment is described in Note 1. The ERAF Risk Reserve was assigned by Town Council Resolution. Additional detail was provided to the Finance Commission at its October 9, 2023 regular meeting regarding the actual ERAF collection and the reserve (Items 7 and 8).

Discuss why the Town does not have an unassigned fund balance to fund unplanned expenditures. Historically the Town has used the Capital/Special Projects assigned fund balance to cover unplanned expenditures.

TM Response: Per the Town Council General Fund Reserve Policy, upon closing the Fiscal Year the entire unassigned balance will be placed in the Capital Projects/Special Project Reserve.

Transmittal Letter - Page 3 – Please explain how a “successful" completion” of the labor negotiations “exacerbate” an “already existing imbalance between revenues and expenditures”? Does Staff believe there was an imbalance in FY 23 between revenues and expenditures? Is this a forward-looking or backward-looking statement? TM Response: This statement acknowledges the trends in the Five-Year Forecast contained in the Adopted Operating Budget.

Town Manager Responses to Finance Commissioners’ Comments and Questions 8 ATTACHMENT 4
Transmittal Letter - Page 3 – How did the Town adjust and prepare for rising pension costs in FY 23? Please explain.

TM Response: To address the escalation in pension costs, previous Councils have allocated additional discretionary pension payments totaling $10.4 million. These additional discretionary payments will ultimately yield an approximate $12.7 million in contribution savings. In addition to the management of the Town’s pension obligations, prior Councils have worked to curb cost escalations in Other Post-Employment Benefits (OPEB). In 2009, the Town initiated prefunding of the retiree healthcare benefit and has since established approximately $22.6 million in OPEB assets from zero in 2009. In addition, the Town plans an additional $690,000 annually toward mitigating pension costs.

Transmittal Letter - Page 3 – Please clarify when the $10.4m in discretionary pension funding occurred. This was not in FY 23.

TM Response: Clarifying language was added. The Town has contributed $4.7 million in additional discretionary payments in FY 2019/20 and $5.6 million in FY 2020/21. This level of detail is not appropriate for the Transmittal Letter and the referenced prior actions mitigate the increasing costs related to unfunded pension liabilities.

Transmittal Letter - Page 4 – There is a “caution” provided to readers that the actuary reports provided by CALPERS are “forward looking” information. What is the purpose of this “caution”? TM Response: The caution is warranted since there is uncertainty in the forward-looking information.

Transmittal Letter - Page 4 – There is a statement “despite revenue constraints” – please explain constrains exist.

The mention of “revenue constraints” is confusing in that FY 23 General Fund revenues exceeded General Fund Expenditures and resulted in a $5.7m surplus.

TM Response: The Town’s expenses are growing faster than its revenues.

Transmittal Letter - Page 4 – increasing costs associated with unfunded federal and state mandates is cited as an issue. Can you give an example of unfunded federal and state mandates that increased costs?
For sake of clarity, provide an example of an unfunded federal or state mandate that is driving cost increases.

TM Response:
 There are several bills that have added costs to capital projects, operations, maintenance, and fleet, including but not limited to:

Town Manager Responses to Finance Commissioners’ Comments and Questions 9 ATTACHMENT 4
o Americans with Disabilities Act – This federal mandate requires the Town to improve Town-owned buildings, parks, sidewalks, and streets in conjunction with every capital project. In developing the Town’s ADA Transition Plan, all Town-owned assets were evaluated for compliance. A recent example is a project to improve restrooms and the human resources offices at the Civic Center. This project necessitated replacement of the access ramp to the lower level of the building. The cost of the design and construction of the ramp added an estimated $370,000 to the project.
o Municipal Regional Stormwater National Pollutant Discharge Elimination System (NPDES) Permit – This Permit addresses stormwater discharged to rivers and streams. The requirements are extensive and include water quality target goals, management of certain contaminants (such as Mercury and PCBs), reduction of trash in waterways, management of construction sites to prevent erosion, detection and elimination of illicit discharge, public information, outreach, and monitoring to document the reductions. The following are examples of the financial impacts: (1) in 2023, the Town funded and installed 17 trash capture devices in the storm drainage system and these must now be maintained by staff; (2) the Town is required to map the storm drainage system which is expected to cost almost $300,000; and (3) the Town is required to identify and fund new stormwater treatment(s) systems for 1.8 acres of existing impervious areas by 2025 with construction to follow. o Waste management – Senate Bill (SB) 1383 was signed by Governor Brown on September 19, 2016 to reduce organic waste disposed in landfills by 50% by 2020 and 75% by 2025 (2014 baseline), and to reach recovery of 20% edible food that would otherwise be disposed in landfills by 2025. To achieve these goals, SB 1383 requires action in the following areas: organics collection, ordinance development, education and outreach, contamination monitoring, procurement of organic materials, edible food recovery, and compliance reporting. While certain elements of the implementation are completed through the waste collection and hauling Joint Powers Authority, Town staff time is required to achieve compliance. Enforcement and penalties for non-compliance began on January 1, 2022 for jurisdictions. o Fleet Electrification – California has passed Advanced Clean Fleet requirements that, starting January 1, 2024, require the Town to transition its 80+ vehicle fleet to electric vehicles. New vehicles purchased after this date must be electric. At current market conditions, the EVs will require a larger capital expense than gas powered or hybrid vehicles. In addition, the conversion is going to require the installation of extensive charging infrastructure at Civic Center, PPW Yard, and the Police Operations Building. It is estimated by Silicon Valley Clean Energy that the total cost of fleet ownership will increase 56% as a result of the change to electric. The Town currently has 1.5 FTE Mechanics, both of whom will need to re-trained to work on EVs.

Town Manager Responses to Finance Commissioners’ Comments and Questions 10 ATTACHMENT 4
 Several bills and court decisions created unfunded mandates for the Police Department:
o 2015- Assembly Bill (AB) 953 - Racial Identity and Profiling Act o SB 1421 (2018) - Right to Know Act pertaining to records related to police misconduct and serious uses of force
o AB 748 (2018) - Disclosure of written, video/body worn camera materials for law enforcement
o SB 2 (2022) - Assessment process and decertification of law enforcement for Officer misconduct
o SB 16 (2022) - Retention of internal affairs records requirements o New York v Bruins/SB 2 (2023) - Updated laws related to issuance of concealed weapons permits
In schedule 14 are the staff numbers for 22/23 budget or actual? I assume the prior years are actual?
TM Response: The Schedules show the budgeted number. Staff reports on actual vacancies to the Finance Commission quarterly with the Key Performance Indicators.

Footnote 1 – Basis of Accounting – consider adding a paragraph which discusses claims and judgments. Disclose how the Town accounts for material claims and judgments and associated legal and administrative costs when it is probable that the liability claim has been incurred and the amount of the loss can be reasonably estimated. Disclose where (which fund) the Town records estimated loss liabilities, including a) known loss events expected to be presented as claims later, b) unknown loss events that are expected to be claims and c) expected future development on claims are ready reported.

TM Response: See Note 13- Risk Management.

MD&A - Can you provide more information on the $1.6m litigation settlement. Perhaps this should also be addressed in a footnote 14 – litigation.

Staff should provide more information regarding the legal settlement of $1,565,000. This could be done in the litigation footnote.

Footnote 14 – Litigation – discuss the litigation settlement of $1,565,000 and that it was recorded in the Appropriated Reserve Fund.

TM Response: Note 14 includes all outstanding liabilities as of June 30, 2023. The settlement was collected during FY 2022/23 and is not an outstanding liability.

On January 16, 2018, the Town annexed a portion of Shannon Road from the County of Santa Clara. After annexation, the Town noticed that necessary repairs to the road had not been made. On March 3, 2022, the Town sued the County of Santa Clara to seek repairs or funding for road repairs. The Town also sued two County contractors, Graniterock Construction and Uretek. All parties settled. The County paid the Town $1.5M, Graniterock Construction paid

Town Manager Responses to Finance Commissioners’ Comments and Questions 11 ATTACHMENT 4
$50,000, and Uretek paid $15,000. These funds are being used to make repairs to Shannon Road. This information was discussed at the March 7, 2023 Council meeting.

Appropriated Reserves Fund should disclose the amount of ARPA funds included in the $7.3m net transfer and why the $1.6m legal settlement was recorded into the Appropriated Reserves Fund and not the General Fund. Which fund paid the legal expenses? TM Response: There was no ARPA fund transfer to the Appropriated Reserve. The legal settlement is providing funding to the Shannon Road repair. Legal expenses were paid by the Town Attorney Department.

Restricted cash - Should the cash received from the BMP Housing Program of $3.7m be reported as restricted cash in the General Fund since it is restricted for BMP Housing program activities? Even better, why not have this reported in a separate fund like Traffic Impact Mitigation fees to increase transparency?
Footnote 2 – should the BMP funds be included in Restricted Cash and Investments? A special revenue fund for BMP Housing Program In-Lieu fee should be established given the current balance ($3.7m) and the fact that the funds are restricted for BMP Housing Program activities. Additionally, there are numerous Housing Element programs that are planned to be funded from the BMP fees as outlined in the adopted Housing Element.

TM Response: Staff will research establishing ordinances and evaluate if a special revenue fund is warranted.

Additional detailed questions and comments:

TM Response: The redlined ACFR includes additional graphs, the removal of FY 2020/21 data, and summary presentations to address some of the Commissioners’ comments. Many of the following questions require detailed year over year, normalized, and/or other analyses that are beyond the scope of the MD&A. The Town’s Adopted Operating Budget contains information that is requested in some of these comments.

Question: on page 26 last paragraph - the discussion on prior year one-time-pass through for fire safety doesn’t specifically say how much it was ( or I missed it). Would like to understand the $5.2m difference between 22 to 23 in General Gov’t expenses better.

MD&A - Please explain how net expenses over revenues impacted the $15.1m increase in total net position. Wouldn’t this decrease the total net position? MD&A - FY 23 Pension expense of $5,870,044 – please add FY22 pension expense of $3,389,540 and FY 21 Pension expense of $9,806,974 and explain the year over year changes for all 3 years which are material. Why the change?
MD&A - When comparing year over year Total Expenses of $49,317,203 in FY 23 to $52,719,798 in FY 22, one-time activities such as the fire safety grant ($6.9m) in FY 22, the impact of pension

Town Manager Responses to Finance Commissioners’ Comments and Questions 12 ATTACHMENT 4
expense credit and OPEB credits ($4.4m) in FY 22 and $(2m) in FY 23 are materially impacting the analysis of the change. The total impact of known one-time activities should be disclosed and a “proforma” normalized Total Expense reported for each year to aid the reader in understanding the “normalized” year over year changes from FY 21, FY22 and FY23.

Confirm the trend in economically sensitive revenue items including Sales Tax, TOT tax and Property Taxes is accurate. FY 23 results are showing strong recovery and in total exceed FY 21 levels (low point) and FY 19 levels (pre-pandemic).

Question: on page 26 last paragraph - the discussion on prior year one-time-pass through for fire safety doesn’t specifically say how much it was ( or I missed it). Would like to understand the $5.2m difference between 22 to 23 in General Gov’t expenses better.

Overview of the Financial Statements - The first paragraph is confusing and needs to be simplified to discuss the mix of revenue by source – Program Revenues vs Total General Revenues and what revenues are included in program and general revenues. Total general revenues and special items and Program revenues are reported separately and should be discussed separately in their own section. Program Revenues are applied against Total Expenses to show the net expense for all governmental activities. Comparing the net expense allows the reader to understand whether general tax revenues are sufficient to cover the net expense for all governmental activities.

Overview of the Financial Statements - Program Revenues - Discuss material change in Capital Grants and Contributions from FY 21, to FY 22 and to FY 23, including the impact of ARPA Grants. The change from FY 22 to FY 23 was $18,311,031 decrease and the change from FY 21 to FY 22 was $21,379,861. Why did charges for services decrease from FY 22 but are up $1m from FY 21.

Overview of the Financial Statements - General Revenues – Investment Earnings - Disclose the two components of investment earnings – interest income and the mark-to-market adjustment so the reader understands the year over year fluctuations.

Overview of the Financial Statements - General Revenues - Developer Fees - Provide an explanation for the change in developer fees for FY 21, FY 22, and FY 23. Please explain the revenue recognition policy since, I believe, it is tied to qualified expenditures and not to when cash is received. Explain the term “pass through developer contributions.” Overview of the Financial Statements - General Revenues – Property Tax - Disclose the dollar and percentage change for the components of property tax revenues. I believe total secured tax increased 9.2% from prior year, VLF increased 7.7% and ERAF decreased 3%.

Overview of the Financial Statements - I am unclear as to the $.4m decrease in property transfer tax – what does this exactly mean? In FY 23 there was a positive impact on general property tax over the statutory 2% increase resulting from home sales. Is the comment that in FY 23 this was not as great as the prior year? Isn’t it a component of general property tax collection?

Town Manager Responses to Finance Commissioners’ Comments and Questions 13 ATTACHMENT 4
Overview of the Financial Statements - Disclose how much assessed valuations for the Town increased FY 23, FY 22, and FY 21. You can reference the SCC Assessor’s Annual Report. I believe for Los Gatos the net assessment roll for FY 23 increased 7.77%, FY 22 increased 4.33% and increased 7.7% for FY 21. The increase in assessed valuations has been a major driver of increasing property tax revenues.

Governmental Activities Expenses Discussion - In comparing the change in total expenses across FY 21, FY 22, and FY 23 there are several one-time charges ( fire safety pass through grant $6.9m, pensions expense and OPEB credit $4.4m, etc.) that make this comparison extremely difficult. To provide a better user experience and more fair comparison, one-time credits and one-time pass-through grants need to be adjusted out, so the reader has a better understanding of how total expenses on a normalized basis have changed over time for all operating departments. The current format fails to provide that level of clarity. This section needs a different approach to explain the underlying trends in total expenses.

Major Governmental Fund Results - Add discussion of the excess of Revenues over expenditures and discuss year over year change from FY 21, FY 22, and FY 23. The reader needs to understand that for FY 22 and FY 23 there were surpluses.

Major Governmental Fund Results - The revenue and expense discussion should disclose all one-time major events (fire safety pass through grant ($6.9m), pension and OPED credits ($4.4m), mark to market adjustments ($1.6m), pass through developer contributions ($1.1m), expensing the affordable housing loan ($1.2m), etc.) which impact the underlying trends and year over year comparisons for revenues and expenditures. The analysis should include both a discussion of actual results as well as results on a normalized ”pro-forma” basis by removing known one-time events. Without this, the reader will not gain a sufficient understanding of the Town’s underlying operating performance in FY 23, FY 22 and FY 21 let alone be able to judge whether the normalized revenues were sufficient to pay for normalized services for each year shown.

Major Governmental Fund Results - To provide more insight on expenditures for each category (public safety, general government, parks and public works, community development, library services) the analysis should clearly identify the increase in total expenditures from salary increases vs increases in benefit contributions. Both are important cost forces that need to be explained.

General Fund Budgetary Highlights - The analysis of budget to actual is entirely focused on comparing final budget to actual results. What is not discussed is the variance between original budget to actual results. An analysis which provides useful insights into the variance between original adopted budget and actuals as well as the final budget vs actuals will allow readers to assess the Town’s ability to estimate and manage general resources throughout the year. For example, the original adopted budget expenditures totaled $47,354,218. The analysis provides a list of most of the changes approved which resulted in a final budget $50,204,894, a 6.1% increase. Presumably, all of these were necessary to provide new services or maintain existing

Town Manager Responses to Finance Commissioners’ Comments and Questions 14 ATTACHMENT 4
services. However, actual expenditures were $44,890,847 – reflecting a “savings” of $5,314,047 (10%) from the final budget and a “savings” from the adopted budget of $2,463,381 (5%). If the Town needed to spend $50,204,894 to deliver all services, why did the Town spend $44,890,847? Are these true “savings” in the sense the Town has become more efficient and does not need to spend that amount of money to deliver the planned level of service levels OR was this a cut in service levels in that the Town did not deliver the planned level of services that had been approved? This is a very important question to be discussed since the change from the adopted budget is material and in several places in the ACFR there is the mention of an imbalance between revenues and expenditures which does not appear to square with the budgetary outcomes. This only confuses the reader. Additionally, the adopted budget called for a deficit of revenues over expenditures of $1,816,881. During the year, the TC adopted revenue budget adjustments totaling $4,734,887 and increased expenditures of $2,850,676 which moved the deficit to a slight surplus. Was this the result of added information received, or the result of becoming less conservative in budgeting as the year progressed? I believe a re-write of this section is required so the reader can gain a better understanding of the budgetary process and is able to make a judgment on the Town’s ability to estimate and manage its general resources throughout the year. It is hard to understand how the Town can increase the total expenditure budget to $50.2m during the year and then only incur $44.9m when the majority of expenses are salary and benefits.

The discussion of general fund budgetary highlights needs to be rewritten to make it more easily understood and to discuss variances from the original adopted budget and the final budget.

This section is critical in that it provides the reader the necessary information to assess the Town’s ability to estimate and manage general fund resources throughout the year. The magnitude of change from the adopted budget to actuals is material. For example, the original adopted budget planned for an ending GF Balance of $19,493,386. The actual ending balance was $29,528,304 or 52% greater. Why did this occur ? A partial explanation is during the year the Town Council approved additional expenditures of $2,850,676 increasing the budget to $50,204,894 presumably for additionally needed services. However, actual expenditures were $44,890,847 or a total of $5,314,047 (11%) less. This reduction in planned expenditures was a major component in increasing the general fund balance. But was this reduction a “savings” in the sense the Town was more productive or was it a “reduction in service levels” in that planned services were not delivered? This is not explained. A thoughtful analysis of budget vs actuals will address a subtle “theme” that seemingly weaves through the ACFR that there is some type of “imbalance between revenues and expenditures”. This is stated a few times in the ACFR in different areas. And yet the actual results do not support this conclusion.

Economic Factors and Next Year’s Budgets and Rates - There is a mention of a Five-Year Financial Forecast predicting operating shortfalls. There is no context about this forecast. I am not aware of any five-year forecast which reflects the actuals for FY 23 as its stepping off point.

Additionally, it is stated a “strong return to pre-pandemic performance of the Town’s economically sensitive revenues” is required to provide current service levels. Is this accurate given the discussion above regarding expenditures and the fact that FY 23 property taxes, sales

Town Manager Responses to Finance Commissioners’ Comments and Questions 15 ATTACHMENT 4
taxes, and TOT taxes exceeded FY 19 (pre-pandemic) by 20%. These statements need to be fact checked.

The assumption of 3.6% growth in property tax collections is not supported by the SCC Tax Assessor’s Office Annual Report FY 2023-2024 which reports a 7.72% growth in net assessment roll growth for Los Gatos for FY 24 and the SCC Finance Agency which has published a revenue estimate in September 2023 for FY 24 total property tax revenues increasing 6.7% over FY 23, which includes the impact of ERAF and VLF tax receipts. What is the basis for this 3.6% growth? The Towns should disclose the projected increase in pension contributions over the next five years so the reader can understand the magnitude of these payments for both the miscellaneous and safety plans. Based on the latest analysis from Foster and Foster the combined annual contribution are projected to increase from $7.6m in FY 23 to $10m in FY 28 which is a 31.5% increase. Are any other discretionary payments planned given the increase in Total Governmental Fund Balances in FY 23 and FY 22?
The economic factors and next year’s budget should be shortened and rewritten as well. Most importantly the section should provide up to date information regarding current facts as known.

For example, SCC Assessor’s Office has released the FY 2023 net assessment roll for Los Gatos which increased 7.72% from the prior year. In addition, the SCC Finance Agency has published revenue estimates for property taxes (including ERAF and VLF) which forecast a 6.7% growth over prior year. These would suggest that the Town’s property taxes will be higher than the FY 24 budget which was built on a 3.6% growth. This is good news and should be disclosed.

Confirm the trend in economically sensitive revenue items including Sales Tax, TOT tax and Property Taxes is accurate. FY 23 results are showing strong recovery and in total exceed FY 21 levels (low point) and FY 19 levels (pre-pandemic).

Discuss more fully what actions were taken in FY 23 to address rising pension contributions (an element of pension expense) and increasing unfunded pension liabilities. Transmittal letter is confusing regarding actions taken in FY 23 vs prior periods.

There should also be a discussion of the future pension expense (or pension contributions) as a result of the increased unfunded pension liability. It is clear – pension contributions are materially increasing unless action is taken. With the GF balance ending over $10m greater than what was originally planned, perhaps the Town should consider making additional ADPs like those made in FY 20 and FY 21.

Staff should discuss in a revenue comment and a separate expenditure comment for both the government wide financial activities analysis and for the general fund analysis, all one-time revenue and expense items that are materially impacting year over year comparisons. The objective is to present on a “pro-forma” basis normalized total revenues and normalized total expenditures so the reader can easily understand underlying operating revenue and

Town Manager Responses to Finance Commissioners’ Comments and Questions 16 ATTACHMENT 4
expenditure trends. The number of onetime events in just FY 22 is material. A partial list includes:
o Fire Safety pass through grant - $6.9mm
o ARPA revenues - $3.6m
o Pensions expense and OPEB credits - $4.4m
o Mark to market adjustments – ($1.6m)
o Expensing affordable housing loan - $1.2m
o Pass through developer contributions - $1.1m
o Total impact on all salary adjustments - ?

PREPARED BY: Gary Heap
Town Engineer
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, Finance Director, and Director of Parks and Public Works
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 12/19/2023
ITEM NO: 13
DATE: December 5, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Approve the Following Actions for Americans with Disabilities Act (ADA) Transition Plan (CIP No. 812-0129):
a. Authorize the Town Manager to Execute a Second Amendment to the Agreement for Consultant Services with Disability Access Consultants, LLC for Additional Services, in an Amount of $50,000 for a Total Agreement Not to Exceed $220,000; and
b. Authorize An Expenditure Budget Transfer in an Amount of $35,150 from Project #411-813-9921 (Curb, Gutter & Sidewalk Maintenance).

RECOMMENDATION:

Approve the following actions for the Americans with Disabilities Act (ADA) Transition Plan (CIP No. 812-0129):
a. Authorize the Town Manager to execute a second amendment to the agreement for consultant services with Disability Access Consultants, LLC (Attachment 1) for additional services, in an amount of $50,000 for a total agreement not to exceed $220,000; and b. Authorize an expenditure budget transfer in an amount of $35,150 from project #411-813- 9921 (Curb, Gutter & Sidewalk Maintenance).

BACKGROUND:

The federal statute on Nondiscrimination on the Basis of Disability in State and Local Government Services (28 CFR § 35.150 – Existing Facilities) requires a public entity that employs 50 or more persons to develop a transition plan setting forth the steps necessary to achieve program accessibility and reasonable modifications to eliminate barriers for persons with disabilities. In addition, Section 504 of the Rehabilitation Act of 1973 prohibits discrimination against people with disabilities in programs that receive Federal financial assistance.

PAGE 2 OF 4
SUBJECT: Americans with Disabilities Act Transition Plan (CIP No. 812-0129) DATE: December 5, 2023
BACKGROUND (continued):

The Town’s previous ADA Transition Plan (the 1993 Plan) was adopted by Council in 1993, which identified improvements needed for accessibility compliance and prioritized them to occur over a three-year time frame. After adoption of the 1993 Plan, the Town constructed numerous projects and infrastructure to address the ADA requirements identified. However, ADA standards are ever evolving at the Federal and State levels with broader rulings and regulation requirements.

On April 5, 2021, the Town entered into an agreement with Disability Access Consultants (DAC) to develop an updated American with Disabilities Act (ADA) Transition Plan (the 2023 Transition Plan). The legally required 2023 Transition Plan identifies required improvements to the Town’s programs, services, activities, and assets to achieve compliance with the ADA. The 2023 Plan was completed in spring 2023 and has not yet been scheduled for formal adoption by the Town Council because of changes in staffing, and the need for ongoing coordination with the consultant to determine the best way to communicate the information. Staff intends to bring it for formal adoption in February 2024. The original agreement was for $130,000 with term ending December 31, 2022.

Amendment 1 to the agreement extended the term through December 31, 2023 and increased the compensation by $40,000 for a total contract amount of $170,000. The additional services included evaluation of the Town owned rights-of-way (e.g., sidewalks, curb ramps, etc.) and oncall services related to implementing the Transition Plan. Compliance with the Americans with Disabilities Act and implementation of the 2023 Transition Plan is an ongoing process that staff consistently endeavors to undertake. As such, staff has continued to implement the Plan as needs arise and capital projects are implemented despite the 2023 Transition Plan having not been formally adopted by Town Council.

DISCUSSION:

Since the execution of Amendment 1, staff has begun implementing the necessary improvements when possible. Examples of this include the Annual Curb, Gutter, Sidewalk Project (CIP 813-9921) where select sidewalks and curb ramps are replaced annually to comply with ADA standards. In 2023, the Town also contracted to remove trip hazards on sidewalks in the downtown, parks and around schools. In completing this work, staff coordinates with DAC to update the database of required improvements and demonstrate compliance with the ADA.

With the requested action, staff is proposing a second amendment for additional services from DAC. Under this amendment, DAC will recommend and prioritize future Town programs and projects and provide as-needed consultation services to support implementation of the 2023 Transition Plan. The requested action will increase the total compensation from $170,000 to $220,000 and extend the agreement term to December 31, 2024.

PAGE 3 OF 4
SUBJECT: Americans with Disabilities Act Transition Plan (CIP No. 812-0129) DATE: December 5, 2023
CONCLUSION:

The Town Council’s authorization of the second amendment for the ADA Transition Plan agreement would allow DAC to provide additional ADA consulting services for future Town program and projects to implement the 2023 Transition Plan.

COORDINATION:

This report is coordinated with Community Development and the Finance Department.

FISCAL IMPACT:

On March 15, 2021, Council authorized a revenue and expenditure budget adjustment for CIP project #812-0129 to recognize a Joint Powers Authority Liability Assurance Network grant in the amount of $35,000. The grant fund was spent in a prior year and staff has recently discovered that the grant funding had not been previously received and the funds are no longer available for the project. Staff will analyze a new funding plan for the $35,000 and bring the action item to Council as part of the mid-year budget process.

With the proposed budget transfer, there are sufficient funds in the project budget to cover the amendment to the consultant services agreement for the American with Disabilities Act (ADA) Transition Plan project. Staff recommends that Town Council authorize the transfer of available funds from #411-813-9921 (Curb, Gutter & Sidewalk Maintenance) to 411-812-0129 (ADA Transition Plan).

Budget Costs
GFAR $ 150,000
JPA Grant Funding $ 35,000
Transfer from CIP #411-813-9921 – Curb Gutter Sidewalk
Maintenance (Proposed with this Staff Report) $ 35,150
Total Budget $ 220,150
Costs
Prior Consultant Services $ 170,000
Consultant Services Second Amendment to Agreement with
DAC (Proposed with this Staff Report) $ 50,000
Misc. Project Costs $ 150
Total Costs $ 220,150
Available Balance $ -
American with Disabilities Act (ADA) Transition Plan
CIP No. 812-0129

PAGE 4 OF 4
SUBJECT: Americans with Disabilities Act Transition Plan (CIP No. 812-0129) DATE: December 5, 2023
ENVIRONMENTAL ASSESSMENT:

The actions associated with this item are not a project defined under CEQA, and no further action is required.

Attachment:

1. Second Amendment – Agreement for Consultant Services - Disability Access Consultants, LLC with Exhibit A (Original Agreement and Previous Amendments) and Exhibit B (Updated Scope of Services)

Disability Access Consultants – Second Amendment to Agreement for Consultant Services

SECOND AMENDMENT TO AGREEMENT FOR CONSULTANT SERVICES
This SECOND AMENDMENT TO AGREEMENT FOR CONSULTANT SERVICES is dated for identification this 19th day of December 2023 and amends that certain FIRST AMENDMENT TO AGREEMENT FOR CONSULTANT SERVICES dated April 5, 2022, made by and between the Town of Los Gatos, ("TOWN") and Disability Access Consultants, LLC (“CONSULTANT”) identified as a Partnership and whose address is 2862 Olive Highway, Suite D, Oroville, CA 95966.

RECITALS
A. TOWN and CONSULTANT entered into an Agreement for Consultant Services on April 1, 2021, (“Agreement”), and a First Amendment to Agreement for Consultant Services on April 5, 2022, copies of which are attached hereto and incorporated by reference as Exhibit A to this Amendment.

B. TOWN desires to amend the Agreement to increase the scope of work, extend the term, add to the compensation, and add to the minimum scope of insurance of the agreement.

AMENDMENT

1. Section 2.1 Scope of Services is amended to read as follows:

Consultant shall provide services as described in that certain Proposal dated November 27, 2023, which is hereby incorporated by reference and attached as Exhibit B.

2. Section 2.2 Term and Time of Performance is amended to read as follows:

This contract will remain in effect from April 1, 2021, to December 31, 2024.

3. Section 2.6 Compensation is amended to read as follows:

Compensation for Consultant’s professional services shall be increased by $50,000 for a total agreement amount not exceed $220,000. Payment shall be based upon Town approval of each task based on Exhibit B.

4. Section 3.1 Minimum Scope of Insurance is amended to read:

Service Provider agrees to have and maintain, for the duration of the contract, General Liability insurance policies insuring him/her and his/her firm to an amount not less than:
two million dollars ($2,000,000) combined single limit per occurrence for bodily injury, personal injury and property damage.

5. All other terms and conditions of the Agreement remain in full force and effect.

ATTACHMENT 1

Disability Access Consultants – Second Amendment to Agreement for Consultant Services

IN WITNESS WHEREOF, the Town and CONSULTANT have executed this Amendment.

Town of Los Gatos, by: CONSULTANT, by:
_______________________________ ______________________________ Laurel Prevetti Tim Mahoney, General Manager
Town Manager
Department Approval:
__________________________________
Nicolle Burnham
Director of Parks and Public Works
Approved as to Form: Attest:
______________________________ ______________________________ Gabrielle Whelan, Town Attorney Wendy Wood, CMC, Town Clerk

Disability Access Consultants – First Amendment to Agreement for Consultant Services Americans with Disabilities Act (ADA) Transition Plan Project CIP No. 812-0129

FIRST AMENDMENT TO

AGREEMENT FOR CONSULTANT SERVICES
Americans with Disabilities Act (ADA) Transition Plan Project CIP No. 812-0129
This FIRST AMENDMENT TO AGREEMENT FOR CONSULTANT SERVICES is dated for identification this 5th day of April 2022 and amends that certain AGREEMENT FOR CONSULTANT SERVICES for the Americans with Disabilities Act (ADA) Transition Plan Project CIP No. 812-0129, dated April 1, 2021, made by and between the Town of Los Gatos, ("TOWN") and Disability Access Consultants, LLC (“CONSULTANT”).

RECITALS
A. TOWN and CONSULTANT entered into an Agreement for Consultant Services on April 26, 2021, (“Agreement”), a copy of which is attached hereto and incorporated by reference as Attachment 1 to this Amendment.

B. TOWN desires to amend the Agreement to increase the scope of work and compensation of the agreement
C. TOWN desires to amend the Agreement to extend the agreement term to December 31, 2023.

AMENDMENT

1. 2.2 Term and Time of Performance is amended to read as follows:

Term and Time of Performance. This contract will remain in effect from April 12, 2021 to December 31, 2023. Consultant shall perform the services described in this agreement as follows: (refer to Exhibit A - Scope of Services).

2. 2.6 Compensation is amended to read as follows:

Compensation. Compensation for Consultant’s professional services shall not exceed $170,000 inclusive of all costs as described in Exhibit B – Additional Services Proposal dated March 17, 2022. Compensation shall be based upon TOWN approval of each task as outlined in the terms of the Exhibit A – Scope of Services and Exhibit B – Additional Services Proposal.

3. All other terms and conditions of the Agreement remain in full force and effect.

DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

EXHIBIT A

Disability Access Consultants – First Amendment to Agreement for Consultant Services Americans with Disabilities Act (ADA) Transition Plan Project CIP No. 812-0129

IN WITNESS WHEREOF, the LOCAL AGENCY and CONSULTANT have executed this Amendment.

Town of Los Gatos, by: CONSULTANT, by:
_______________________________ ______________________________ Laurel Prevetti
Town Manager
______________________________
Name/Title
Recommended by:
__________________________________
Timm Borden
Interim Director of Parks and Public Works
Approved as to Form:
__________________________________
Robert Schultz, Town Attorney
Attest:
__________________________________
Shelley Neis, MMC, CPMC, Town Clerk
DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B Tim Mahoney
4/17/2022
Tim Mahoney - Manag
4/17/2022
4/19/2022
4/19/2022
4/19/2022

Agreement for Consultant Services
Disability Access Consultants, LLC Page 1 of 7

AGREEMENT FOR CONSULTANT SERVICES
THIS AGREEMENT is made and entered into on April 1, 2021) by and between TOWN OF LOS GATOS, a California municipal corporation, (“Town”) and Disability Access Consultants, LLC, (“Consultant”), whose address is 2862 Olive Highway, Suite D, Oroville, CA 95966. This Agreement is made with reference to the following facts.

I. RECITALS

1.1 The Town desires to engage Consultant to provide an ADA Transition Plan.

1.2 The Consultant represents and affirms that it is willing to perform the desired work pursuant to this Agreement.

1.3 Consultant warrants it possesses the distinct professional skills, qualifications, experience, and resources necessary to timely perform the services described in this Agreement.

Consultant acknowledges Town has relied upon these warranties to retain Consultant.

II. AGREEMENTS

2.1 Scope of Services. Consultant shall provide services as described in that certain Proposal sent to the Town on March 8, 2021, which is hereby incorporated by reference and attached as Exhibit A.

2.2 Term and Time of Performance. This contract will remain in effect from April 12, 2021 to December 31, 2022. Consultant shall perform the services described in this agreement as follows: (refer to Exhibit A in Scope of Services).

2.3 Compliance with Laws. The Consultant shall comply with all applicable laws, codes, ordinances, and regulations of governing federal, state and local laws. Consultant represents and warrants to Town that it has all licenses, permits, qualifications and approvals of whatsoever nature which are legally required for Consultant to practice its profession. Consultant shall maintain a Town of Los Gatos business license pursuant to Chapter 14 of the Code of the Town of Los Gatos.

2.4 Sole Responsibility. Consultant shall be responsible for employing or engaging all persons necessary to perform the services under this Agreement.

2.5 Information/Report Handling. All documents furnished to Consultant by the Town and all reports and supportive data prepared by the Consultant under this Agreement are the Town’s property and shall be delivered to the Town upon the completion of Consultant's services or at the Town's written request. All reports, information, data, and exhibits prepared or assembled by Consultant in connection with the performance of its services DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Agreement for Consultant Services
Disability Access Consultants, LLC Page 2 of 7
pursuant to this Agreement are confidential until released by the Town to the public, and the Consultant shall not make any of the these documents or information available to any individual or organization not employed by the Consultant or the Town without the written consent of the Town before such release. The Town acknowledges that the reports to be prepared by the Consultant pursuant to this Agreement are for the purpose of evaluating a defined project, and Town's use of the information contained in the reports prepared by the Consultant in connection with other projects shall be solely at Town's risk, unless Consultant expressly consents to such use in writing. Town further agrees that it will not appropriate any methodology or technique of Consultant which is and has been confirmed in writing by Consultant to be a trade secret of Consultant.

2.6 Compensation. Compensation for Consultant's professional services shall not exceed $130,000 inclusive of all costs. Payment shall be based upon Town approval of each task.

2.7 Billing. Billing shall be monthly by invoice within thirty (30) days of the rendering of the service and shall be accompanied by a detailed explanation of the work performed by whom at what rate and on what date. Also, plans, specifications, documents or other pertinent materials shall be submitted for Town review, even if only in partial or draft form.

Payment shall be net thirty (30) days. All invoices and statements to the Town shall be addressed as follows:

Invoices:

Town of Los Gatos
Attn: Accounts Payable
P.O. Box 655
Los Gatos, CA 95031-0655

2.8 Availability of Records. Consultant shall maintain the records supporting this billing for not less than three years following completion of the work under this Agreement. Consultant shall make these records available to authorized personnel of the Town at the Consultant's offices during business hours upon written request of the Town.

2.9 Assignability and Subcontracting. The services to be performed under this Agreement are unique and personal to the Consultant. No portion of these services shall be assigned or subcontracted without the written consent of the Town.

2.10 Independent Contractor. It is understood that the Consultant, in the performance of the work and services agreed to be performed, shall act as and be an independent contractor and not an agent or employee of the Town. As an independent contractor he/she shall not obtain any rights to retirement benefits or other benefits which accrue to Town employee(s). With prior written consent, the Consultant may perform some obligations under this Agreement by subcontracting but may not delegate ultimate responsibility for performance or assign or transfer interests under this Agreement. Consultant agrees to DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Agreement for Consultant Services
Disability Access Consultants, LLC Page 3 of 7
testify in any litigation brought regarding the subject of the work to be performed under this Agreement. Consultant shall be compensated for its costs and expenses in preparing for, traveling to, and testifying in such matters at its then current hourly rates of compensation, unless such litigation is brought by Consultant or is based on allegations of Consultant's negligent performance or wrongdoing.

2.11 Conflict of Interest. Consultant understands that its professional responsibilities are solely to the Town. The Consultant has and shall not obtain any holding or interest within the Town of Los Gatos. Consultant has no business holdings or agreements with any individual member of the Staff or management of the Town or its representatives nor shall it enter into any such holdings or agreements. In addition, Consultant warrants that it does not presently and shall not acquire any direct or indirect interest adverse to those of the Town in the subject of this Agreement, and it shall immediately disassociate itself from such an interest, should it discover it has done so and shall, at the Town's sole discretion, divest itself of such interest. Consultant shall not knowingly and shall take reasonable steps to ensure that it does not employ a person having such an interest in this performance of this Agreement. If after employment of a person, Consultant discovers it has employed a person with a direct or indirect interest that would conflict with its performance of this Agreement, Consultant shall promptly notify Town of this employment relationship, and shall, at the Town's sole discretion, sever any such employment relationship.

2.12 Equal Employment Opportunity. Consultant warrants that it is an equal opportunity employer and shall comply with applicable regulations governing equal employment opportunity. Neither Consultant nor its subcontractors do and neither shall discriminate against persons employed or seeking employment with them on the basis of age, sex, color, race, marital status, sexual orientation, ancestry, physical or mental disability, national origin, religion, or medical condition, unless based upon a bona fide occupational qualification pursuant to the California Fair Employment & Housing Act.

III. INSURANCE AND INDEMNIFICATION

3.1 Minimum Scope of Insurance:
i. Consultant agrees to have and maintain, for the duration of the contract, General Liability insurance policies insuring him/her and his/her firm to an amount not less than: one million dollars ($1,000,000) combined single limit per occurrence for bodily injury, personal injury and property damage. ii. Consultant agrees to have and maintain for the duration of the contract, an Automobile Liability insurance policy ensuring him/her and his/her staff to an amount not less than one million dollars ($1,000,000) combined single limit per accident for bodily injury and property damage.

DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Agreement for Consultant Services
Disability Access Consultants, LLC Page 4 of 7
iii. Consultant shall provide to the Town all certificates of insurance, with original endorsements effecting coverage. Consultant agrees that all certificates and endorsements are to be received and approved by the Town before work commences.
iv. Consultant agrees to have and maintain, for the duration of the contract, professional liability insurance in amounts not less than $1,000,000 which is sufficient to insure Consultant for professional errors or omissions in the performance of the particular scope of work under this agreement.

General Liability:
i. The Town, its officers, officials, employees and volunteers are to be covered as insured as respects: liability arising out of activities performed by or on behalf of the Consultant; products and completed operations of Consultant, premises owned or used by the Consultant. This requirement does not apply to the professional liability insurance required for professional errors and omissions.
ii. The Consultant's insurance coverage shall be primary insurance as respects the Town, its officers, officials, employees and volunteers. Any insurance or self-insurances maintained by the Town, its officers, officials, employees or volunteers shall be excess of the Consultant's insurance and shall not contribute with it.
iii. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the Town, its officers, officials, employees or volunteers.
iv. The Consultant's insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability.

3.2 All Coverages. Each insurance policy required in this item shall be endorsed to state that coverage shall not be suspended, voided, cancelled, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to the Town. Current certification of such insurance shall be kept on file at all times during the term of this agreement with the Town Clerk.

3.3 Workers’ Compensation. In addition to these policies, Consultant shall have and maintain Workers' Compensation insurance as required by California law and shall provide evidence of such policy to the Town before beginning services under this Agreement. Further, Consultant shall ensure that all subcontractors employed by Consultant provide the required Workers' Compensation insurance for their respective employees.

DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Agreement for Consultant Services
Disability Access Consultants, LLC Page 5 of 7

3.4 Indemnification. The Consultant shall save, keep, hold harmless and indemnify and defend the Town its officers, agent, employees and volunteers from all damages, liabilities, penalties, costs, or expenses in law or equity that may at any time arise or be set up because of damages to property or personal injury received by reason of, or in the course of performing work which may be occasioned by a willful or negligent act or omissions of the Consultant, or any of the Consultant's officers, employees, or agents or any subconsultant.

IV. GENERAL TERMS

4.1 Waiver. No failure on the part of either party to exercise any right or remedy hereunder shall operate as a waiver of any other right or remedy that party may have hereunder, nor does waiver of a breach or default under this Agreement constitute a continuing waiver of a subsequent breach of the same or any other provision of this Agreement.

4.2 Governing Law. This Agreement, regardless of where executed, shall be governed by and construed to the laws of the State of California. Venue for any action regarding this Agreement shall be in the Superior Court of the County of Santa Clara.

4.3 Termination of Agreement. The Town and the Consultant shall have the right to terminate this agreement with or without cause by giving not less than fifteen days (15) written notice of termination. In the event of termination, the Consultant shall deliver to the Town all plans, files, documents, reports, performed to date by the Consultant. In the event of such termination, Town shall pay Consultant an amount that bears the same ratio to the maximum contract price as the work delivered to the Town bears to completed services contemplated under this Agreement, unless such termination is made for cause, in which event, compensation, if any, shall be adjusted in light of the particular facts and circumstances involved in such termination.

4.4 Amendment. No modification, waiver, mutual termination, or amendment of this Agreement is effective unless made in writing and signed by the Town and the Consultant.

4.5 Disputes. In any dispute over any aspect of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, including costs of appeal.

4.6 Notices. Any notice required to be given shall be deemed to be duly and properly given if mailed postage prepaid, and addressed to:

Town of Los Gatos
Attn: Town Clerk
110 E. Main Street
Los Gatos, CA 95030
Disability Access Consultants, LLC
Attn: Barbara Thorpe
2862 Olive Highway, Suite D
Oroville, CA 95966
DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Agreement for Consultant Services
Disability Access Consultants, LLC Page 6 of 7
or personally delivered to Consultant to such address or such other address as Consultant designates in writing to Town.

4.7 Order of Precedence. In the event of any conflict, contradiction, or ambiguity between the terms and conditions of this Agreement in respect of the Products or Services and any attachments to this Agreement, then the terms and conditions of this Agreement shall prevail over attachments or other writings.

4.8 Entire Agreement. This Agreement, including all Exhibits, constitutes the complete and exclusive statement of the Agreement between the Town and Consultant. No terms, conditions, understandings or agreements purporting to modify or vary this Agreement, unless hereafter made in writing and signed by the party to be bound, shall be binding on either party.

DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Agreement for Consultant Services
Disability Access Consultants, LLC Page 7 of 7
IN WITNESS WHEREOF, the Town and Consultant have executed this Agreement.

Town of Los Gatos by:

Laurel Prevetti, Town Manager

Recommended by:

Matt Morley, Director of Parks and Public
Works
Consultant, by:

Printed Name and Title
Approved as to Form:

Robert Schultz, Town Attorney
Attest:

Shelley Neis, MMC, CPMC, Town Clerk
DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 4/14/2021
4/14/2021 Timothy J Mahoney, General Manager
4/24/2021
4/26/2021
4/26/2021
DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Scope of Services
Americans with Disabilities Act (ADA) Transition Plan
Town of Los Gatos
(CIP No. 812-0129)
Town of Los Gatos
Parks and Public Works Department
41 Miles Avenue
Los Gatos, CA 95030

EXHIBIT A
DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Exhibit A -Scope of Services by Disability Access Consultants, LLC for an ADA Self-evaluation and Transition Plan

EXHIBIT A

PROJECT
Americans with Disabilities Act (ADA) Transition Plan
CIP No. 812-0129

PROJECT CONTACTS
Town of Los Gatos Disability Access Consultants, LLC (DAC) Janice Chin Barbara Thorpe, Project Manager
Parks and Public Works Department 2862 Olive Highway
41 Miles Avenue Suite D
Los Gatos, CA 95030 Oroville, CA 95965
[email protected] [email protected]
408.395.3460 800.743.7067

SCOPE OF SERVICES
The scope of services includes seven (7) tasks:

Task A: Project Management and Coordination
Task B: Self‐Evaluation of Town Policies and Standards
Task C: Self‐Evaluation of Town Facilities
Task D: Self‐Evaluation of Town’s Key Right‐Of-Way Assets and Trails Task E: Public Outreach
Task F: Develop the Transition Plan
Task G: Additional Activities

PROJECT TASKS, SCHEDULE, TIMELINE, STAFF ALLOCATIONS AND BILLING RATES The Scope of Services are outlined and described in Tasks A, B, C, D, E, F and G.

A project schedule and activities are included in Table 1: Task, Activities and Timelines. The project will be completed in seven (7) months or sooner from the notice to proceed.

Tasks, allocated staff and billing rates are included in Table 2: Tasks, Staff and Billing Rates.

TASK A: PROJECT MANAGEMENT AND COORDINATION
DAC shall provide the necessary project coordination, administration, management throughout the project.

DAC will organize planning and orientation meetings to be held via teleconference or virtual video conferencing when appropriate.

DAC will conduct an initial project kickoff meeting or virtual conference call with selected Town staff to clarify roles and lines of communication, refine project goals, review the overall project schedule, schedule surveys of Town facilities and identify key Town personnel related to the project scope. DAC will send a draft agenda prior to the initial kickoff meeting to the designated Town contact for review. A suggested list of attendees will be developed in collaboration with DAC and the Town.

Notes will be collected during the initial meeting and adjustments made to the project work plan as indicated by the Town. A formal kickoff meeting will subsequently be scheduled with the confirmed list of attendees with oversight responsibilities for project activities.

The project methodology is designed to develop a comprehensive plan without placing additional activities and impact upon Town staff. The initial orientation meeting will include an assessment of previous compliance activities and areas of current or potential litigation. The review of compliance activities and high priority areas will assist with the development of an overall project plan.

DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Exhibit A -Scope of Services by Disability Access Consultants, LLC for an ADA Self-evaluation and Transition Plan The review and documentation of prior accessibility initiatives will be conducted and documented to build a more defensible plan to assist the Town to defend litigation challenges.

Related documents will be reviewed and may include, but are not limited to the facility master plans, strategic plans and other related documents.

Progress reports will be issued by DAC in accordance with Town requirements. Invoice requirements and frequency of invoices will be confirmed as directed by the Town.

Deliverables: progress reports, meeting notes and recommendations and action plans.

TASK B: SELF‐EVALUATION OF TOWN POLICIES AND STANDARDS
DAC will work with designated Town contacts to gain access to the Town’s regulations, policies, standards, programs, and activities for evaluation according to ADA standards and California accessibility requirements.

The self-evaluation will include factors for eligibility requirements and participation for persons with disabilities, methods for providing accommodations, effective communication and grievance procedures. The self-evaluation results will also include recommendations for acceptable terminology, and updates to policies that may be inadequate or not established.

As the Town’s website has a large repository of documents publicly available, DAC will begin with an extensive review of information offered directly on the Town’s website pages, within the Los Gatos Town Codes, and in the Town’s online “Document Center” catalogue of folders. The review will first determine if the required information is available, and if so, the review will also include suggested updates or modifications to ensure the policy is compliant and inclusive when needed. If specific policies or regulations are not found, DAC will inquire with Town staff to confirm. When necessary, recommendations will be made to establish compliant policies, procedures, statements and notices.

For example, DAC will evaluate Town policies, procedures and related documents including, but not limited to:
• Grievance procedures and tracking
• Service animals
• Accommodation statements and procedures
• Other power-driven mobility devices
• Accessible seating and ticketing
• Emergency procedures
• Policies for use or lease of Town facilities
• Contracted services
• Construction standards, specifications and details
• Lease and facility use agreements
• Eligibility criteria
• Maintenance of accessible features
• Effective communication
• Auxiliary aids and services
• Social media
• New employee and volunteer training
• Planning and budgeting
• Access to programs, services, activities and events
DAC will review the provision of Town programs, services and activities to determine if there are any discriminatory practices that may deny access for persons with disabilities.

DAC will also evaluate if the Town provides required notices and postings, including but not limited to:
• Identification and contact information for the ADA and/or 504 Coordinator DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Exhibit A -Scope of Services by Disability Access Consultants, LLC for an ADA Self-evaluation and Transition Plan • Notice of rights and statement of nondiscrimination
• Statement of reasonable accommodation on public notices • Grievance policy and procedure
• Statement of website accessibility
DAC will also review additional available documents that have impacts on accessibility, such as the Town’s Master Plan, Fee Schedules, General Plan, other planning documents and annual budget documents.

As part of the requirements for effective communication, DAC will also perform a comprehensive website accessibility review for compliance with Web Content Accessibility Guidelines (WCAG) 2.0 Level AA, which is the current level of accessibility required for Title II public entities. The evaluation will yield results for the following at minimum:
• Accessibility and compliance with WCAG 2.0 AA and Section 508 • Compatibility with all major web browsers, including Chrome, Firefox, Edge and Safari • Search engine optimization per Google and Bing guidelines • Broken links and spelling errors in links
• Usability with assistive technology.
• Missing alternative text in graphics and PDF documents • Small, difficult to read text fonts
References to WCAG evaluation success criteria are included with noncompliant or incompatibility findings.

Deliverables: Executive summary of findings and recommendations for the self-evaluation; accessibility website review
TASK C: SELF‐EVALUATION OF TOWN FACILITIES
DAC will survey and assess the Town buildings, facilities, parking areas, parks and open spaces, public rightsof-way to document accessibility barriers. Data and reports will be reviewed by a CASp certified DAC team member prior to being presented to the Town. The CASp designated team member that will coordinate the inspection team during the facility reviews and conduct quality control reviews will be Michael Boga (CASp152). Candice Pursch will be the designated Team Leader for the collection of data in the field and will coordinate scheduling and monitoring of DAC team members. Weekly, or as-needed, progress updates will be confirmed and scheduled.

As required by the ADA, the 2010 ADA Standards will be compared with state codes (Title 24 of the California Building Code) and the standard that provides the greater level of accessibility utilized. The accessibility compliance standards and regulations will be applied as appropriate and may include the ADA Standards, Title 24 of the California Building Code, Public Rights-of-Way Accessibility Guidelines, California Manual on Uniform Traffic Control Devices, Caltrans Standards and other applicable federal or state accessibility codes. Cost estimates will be provided as available.

As DAC collects actual measurements of as-is field conditions and records all information, data can be reprocessed if codes change without conducting a re-inspection, thus resulting in a significant savings when codes change and the plan needs to be updated.

Reports will be provided to the Town through DACTrak, an online accessibility management program developed by DAC. Assessments and reports will include a high degree of detail with photographs, code references, cost estimates and GIS information for available exterior areas. The DACTrak software provides the user with the capability to generate reports in multiple formats such as photo and progress reports, summary and chart reports, and compliant items reports. In addition to numerous standard reporting features, DACTrak also offers the user the capability of generating custom reports. The inclusion of photographs showing the asis condition has proven to be valuable assistance to clients in the formulation of the decisions regarding barrier removal priorities. Photographs will be taken for each finding and GIS coordinates for public rights-of-way.

The DACTrak software provides an easy-to-use accessibility management platform that exceeds the ability to DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Exhibit A -Scope of Services by Disability Access Consultants, LLC for an ADA Self-evaluation and Transition Plan manage the plan by hard copies and binders. Use of the DACTrak software will provide the Town with an additional tool to reprioritize items depending upon the unique and ongoing needs of the Town and public comments during the public input process.

Deliverables: Facility inspections incorporated into DACTrak. DACTrak training will be provided to designated Town staff.

TASK D: SELF‐EVALUATION OF TOWN’S KEY RIGHT‐OF-WAY ASSETS AND TRAILS DAC will assess the Town’s public trails and selected assets in the Town’s public rights-of-way (PROW) for compliance with the ADA and related accessibility standards. DAC will consult with the Town to recommend and determine the areas to be assessed.

DAC uses a comprehensive approach to inspecting accessibility of pedestrian access routes in the public rightsof-way (PROW) and trails. To conduct PROW and trail field assessments, DAC accessibility specialists walk sidewalks and trails to record manual measurements, take photographs and capture GIS coordinates (as applicable for exterior measurements) of the field conditions and enter the information into our DACTrak tablet in the field. Information captured in the field will be uploaded into the DACTrak accessibility management system.

The field survey teams are supervised by a qualified Certified Access Specialist (CASp). Data and reports are also reviewed by a CASp certified team member prior to being presented to the Town.

A facility report for each PROW area and trail surveyed will include detailed areas of deficiency in addition to corrective recommendations and cost estimates. The reports will be presented through DACTrak in an initial priority sort order that can be customized for implementation by the Town. The assessment will include cost estimates to correct deficiencies in accordance with the ADA, Title 24 of the California Building Code, Public Rights of Way Accessibility Guidelines, California Manual on Uniform Traffic Control Devices, or other applicable federal or state accessibility codes such as Outdoor Developed Recreational Standards.

General areas of the PROW inspections for pedestrian routes include but are not limited to the following areas:
sidewalks, curb ramps, intersections, crosswalks, street furniture, bus stops and shelters, on-street parking and related items in the pedestrian access route. The following items are included:
▪ Sidewalks
o Sidewalk starting and ending points and length
o GIS location and street markers
o Width
o Running and cross slope
o Changes in elevation
o Obstructions-into the path of travel and overhead obstructions o Utilities and mailboxes that may interfere with the pedestrian route o Gratings
▪ Curb Ramps
o Location including GIS
o Curb ramp type
o Curb ramp material
o Ramp run
o Ramp width
o Side flares
o Slope and cross slope
o Finish
o Contained in crosswalk
o Detectable warnings
o Top & bottom ramp
o Gutter
o Changes in elevation to bottom ramp
o Contains water
DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Exhibit A -Scope of Services by Disability Access Consultants, LLC for an ADA Self-evaluation and Transition Plan ▪ Crosswalks and Mid-block crossings
o Width
o Slope
o Detectable warnings
o Pedestrian head
▪ Intersections
o GIS location and cross streets
o Pedestrian signal controls and indicators
▪ Medians and Islands
▪ Roundabouts
▪ Trails
▪ Parks
▪ Open Space
▪ Bus stops and shelters
o Type
o Length and width
o Boarding pad-length, width, slope and vertical clearance o Accessible route to shelter-slope, cross slope, width o Clear floor space-length, width, slope, located in shelter o Signage
o Amenities accessible-trash cans, literature, information ▪ Benches and Street Furniture
Deliverables: Deliverables: Facility inspections incorporated into DACTrak. DACTrak training will be provided to designated Town staff.

TASK E: PUBLIC OUTREACH
DAC will advise the Town on methods to advertise for public input and solicit input into the transition plan.

DAC will lead a process for interested persons, including individuals with disabilities and organizations representing individuals with disabilities, to participate in the self-evaluation process by submitting comments.

The process may include hard copy and online surveys, community workshops, or other outreach methods as appropriate for the Town. Since a public outreach meeting is not required by the ADA, DAC can suggest public outreach activities that will satisfy the opportunities for public input requirements of the ADA and encourage community response, such as online and hard copy surveys. Two (2) virtual meetings for the Town council and two (2) public virtual meetings.

The process of providing opportunity for public input is designed to help ensure that the Town is successful in receiving information that will assist the Town to implement the transition plan, ensuring that the needs of the community are incorporated. Surveys will be developed for the Town to collect input from members of the community and visitors to the Town, area organizations that provide services to residents with disabilities, and from Town staff.

Surveys will be made available in multiple formats including online surveys, fillable PDF, Word documents and hard copies. The methods used for advertising the opportunities for public input will be customized for the Town to ensure that established procedures for collecting public input are followed at a minimum. Methods of advertising may include news banners on the Town’s website, posts on the Town’s social media accounts, an advertisement place in a local newspaper, and hard copies of the public notice displayed in public areas, such as Town Hall, community centers and libraries.

As public input is received, DAC will compile the results and include the comments in the Executive Summary provided to the Town. Input that is appropriate for the provision of programs, services and activities will be integrated into the plan. Public and staff input regarding access to facilities and barriers will assist in the development of the transition plan by assisting with the priorities and schedule for the removal of barriers.

Deliverables: Hard copy and digital surveys, notices, announcements, and a summary of public and staff comments.

DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Exhibit A -Scope of Services by Disability Access Consultants, LLC for an ADA Self-evaluation and Transition Plan TASK F: DEVELOP THE TRANSITION PLAN
Upon completion of the field assessments, DAC will present the transition plan and findings to the Town by providing login access to the DACTrak Accessibility Management software program for Town staff. DACTrak will allow Town users to generate reports in multiple formats, including PDF, Excel, KMZ and ESRI Shapefile.

There are no maintenance or storage fees associated with use of the DACTrak software.

The transition plan reports provided through DACTrak will include an initial prioritization, however using the tools in DACTrak, the Town users will have the ability to customize the transition plan implementation schedule and priorities, using multiple options and criteria for mitigating barriers. The tools in DACTrak will allow the Town to create a schedule for repair, that can be adjusted as often as needed.

DACTrak is an online software program that is accessed through a web browser. There are no files or programs to download or install on the Town’s computers or servers. DAC performs all maintenance and updates to the software, so there is no burden on the Town’s IT staff to provide support to the DACTrak users. All support is provided by DAC.

Using DACTrak, Town staff will have the ability to view and generate multiple styles of reports for all buildings, facilities, parks, trails and public rights-of-way assessed, as well as export reports in several file types, including PDF, Excel, KML and Shapefiles. DACTrak report styles include very detailed reports as well as summary reports by facility or category to help identify and prioritize barriers, establish solutions that may apply to many locations Town-wide to assist with purchasing, and estimate probable costs for corrections.

For reports that contain exterior findings where GIS coordinates can be captured, such as sidewalks and curb ramps, the DACTrak online accessibility management software provides the Town with several ways to view the resulting reports on a map following the processing of the data collected during the field inspections. As DAC collects GIS location information for each element in the public right-of-way, data can be viewed in a map directly in the DACTrak software, as well as exported to popular map file types, including KML for viewing and managing on Google Earth and ESRI Shapefile for viewing and managing with ArcMap or other ESRI program.

DACTrak provides users with several map style options and customizations, including maps that simply identify the location of each noncompliant finding, to “heat maps” that identify clusters of noncompliant findings for specific areas with color coded icons that indicate the number of noncompliant findings at a specific location.

When exporting public right-of-way data from DACTrak into a KML or Shapefile from any map style, all information associated with the finding is included, such as the reason the item is not compliant, the recommended method to remove the barrier, state and federal code references applicable to the barrier, a photograph of the item and any notes that are recorded about the element and implementation for the transition plan. Reports for public rights-of-way can also be viewed in PDF and Excel file formats, in addition to KML and ESRI Shapefile.

While the Town may present the completed ADA self-evaluation and transition plan to Town Council as an informational update on the project, it is not required or recommended that the plan be approved or adopted by Council as projected dates of barrier may need to change to align with future projects or Town priorities.

Additionally, since the data in the field is collected using our DACTrak software and exported daily for processing by our DACTrak server engines, the report data is available for editing by our Quality Control team as soon as each facility survey is completed each day. This ensures a very prompt turnaround time for the deliverables to be available to the Town. Since deliverables are provided to Town staff via logins to the DACTrak online software, there is no additional wait time for printing, binding, packaging and shipping hard copies of reports. Project deliverables are available instantly upon logging in to DACTrak. Because of the preplanning and flexible scheduling for our projects as well as our DACTrak software to collect data and provide reports, we can provide of our clients with deliverables within established project deadlines.

Staff training and support regarding the use of the DACTrak Accessibility Management System is currently included in Task F and Task G at no cost.

DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Exhibit A -Scope of Services by Disability Access Consultants, LLC for an ADA Self-evaluation and Transition Plan The DACTrak software and reports will provide the Town with the remaining three requirements:
• Identification of physical barriers in the Town’s surveyed facilities that limit access to its programs or activities for individuals with disabilities;
• Detailed descriptions of the recommended methods and estimated costs to make the facilities accessible. The DACTrak management tools can also be used to identify the responsible party for structural modifications in the case of leased sites;
• The required schedule for removing the barriers is completed in collaboration with the Town. It is reasonable to assume that the Town’s schedule of barrier removal will include work to be performed over multiple years, therefore the transition plan should include an estimated annual projection for barrier removal activities. The DACTrak software tools will offer the Town an ongoing method to manage and adjust the implementation plans.

Deliverables: Transition plan of physical barriers with noncompliant findings and recommendations for barrier removal.

TASK G: ADDITIONAL ACTIVITIES
As the Town has noted it the RFQ, additional services (TASK G) may be requested by the Town in addition to Task A, B, C, D, E and F and may include staff training, plan reviews, additional consultation and other activities as requested by the Town and agreed to by DAC.

Training activities for managers, supervisors, administrative staff and support staff may include:
• Roles and Responsibilities of the ADA Coordinator
• ADA Roles and Responsibilities for Front Line Staff
• ADA Roles and Responsibilities for Executive and Management Staff • Maintenance of Accessible Facilities
• Maintenance of Accessible Public Rights-of-Way
• Using and maintaining the database
• Using and maintaining the project map
• Monitoring and updating the ADA self-evaluation and transition plan; • Development of internal procedures for granting exemptions for Town projects.

Several of the optional training topics noted that the Town may are included in the scope of services and will be provided at no additional cost. Training at no cost includes:
• Using and maintaining the database – included with the DACTrak training • Using and maintaining the project map - included with the DACTrak training • Monitoring and updating the ADA self-evaluation and transition plan is included with DACTrak training Training Topic Course Description and Notes Cost
Accessibility
standards and
regulations
• Requirements for ADA and Section 504 compliance, including programmatic and facility accessibility requirements.
• 4-to-6-hour course $1,000
Performing field
inspections
• Training regarding data collection in the field
• Includes classroom and field training.
• 2 days depending on staff backgrounds and prior experience $2,400
per day
Procedures for
granting
exemptions for
Town projects
• Course would be interactive and include an examination of existing processes and procedures to refine current system and recommend or develop enhanced processes.
• 2-to 3-hour course. $500
Deliverables: deliverables may vary depending upon the additional activities selected by the Town. Curriculum and training materials would be included with staff training.

DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Exhibit A -Scope of Services by Disability Access Consultants, LLC for an ADA Self-evaluation and Transition Plan

TOWN STAFF TIME
DAC’s methodology for the Town’s ADA Self-evaluation and Transition Plan is designed to require minimal Town staff time and resources. DAC does not require any office space, equipment or supplies. Based on experience and knowledge of the accessibility field and best practices, DAC continues to develop innovative methodologies, easy to use ADA management tools, and proven, successful strategies for evaluating programs, services, activities, events, facilities, parks and public rights-of-way.

Project Coordination
The methodology for scheduling, coordination of project, policy reviews and the analysis of programs, services and activities will be confirmed at the kickoff and planning meeting with DAC and Town staff. Involvement of Town staff will be needed to review the draft agenda for the initial start-up meeting, recommend any changes and participate in the start-up meeting.

Policies, Procedures, Programs and Services
DAC will need access to the Town’s policies, procedures, ordinances, memorandums of understanding, planning and budgeting documents and related items that pertain to the administration of programs, services and activities and may require minimal staff time.

Field Surveys
As is the case with most public entities, due to the limited Town staff availability it is the intent of DAC to conduct the surveys as minimal impact on Town staff as possible. Surveys requiring Town staff assistance, such as secure, locked or alarmed areas, will be coordinated through the Town’s designated contacts, and will be scheduled in a way that minimizes the impact to the regular workloads of the applicable staff members. The flexible scheduling also allows for continued efficiency of the survey process, so that there is no delay between the completion of one facility survey and the start of the next survey and allows for the anticipated survey plans to be altered quickly when unforeseen circumstances arise, such as rain prohibiting the planned survey of a park. In these situations, our survey staff would proceed to an available facility.

Data Collection and Management
DACTrak, an online accessibility management program was developed by DAC for the purpose of easy and useful importing and management of the accessibility data collected in the field. DACTrak is interactive online software and is not an enhanced excel spread sheet. The ability to collect, compile, analyze and use report data in a practical format was one of the driving forces to develop the DACTrak intake and management software.

Town staff will be provided training by DAC regarding the use of DACTrak to manage, update and implement the Town’s transition plan.

During the DACTrak training, selected Town staff will be instructed regarding the methods to manage the Town’s ADA Transition Plan. The transition plan data and reports provided through DACTrak will identify structural accessibility barriers, to help the Town prioritize and schedule the removal of identified barriers to develop a manageable transition plan.

Town staff will need to provide input into the timelines and estimated dates to be entered into the Transition Plan as DAC cannot unilaterally enter the dates that the Town plans to remediate the barriers without collaboration.

Public Outreach and Staff Input
DAC will provide the Town with proposed methodologies for review and comments regarding public outreach activities that may include surveys for the public and organizations that assist persons with disabilities. Staff input and approval will be needed regarding the proposed methods and sample documents provided by DAC.

Assistance will be needed regarding the dissemination of information regarding the notices to be placed on the website and posted selected Town publications and newsletters or in the local newspaper.

DAC compiles the surveys and the information collected during the public outreach portion of the project and staff surveys and input. The information is integrated into the Town of Los Gatos ADA/504 Self-evaluation and Transition Plan Executive Summary.

DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Exhibit A -Scope of Services by Disability Access Consultants, LLC for an ADA Self-evaluation and Transition Plan TABLE 1: TASKS, ACTIVITIES AND TIMELINES
Key tasks, activities and timelines are outlined in TABLE 1 below. Timelines are represented in months.

As indicated the project timeframe is 7 months or less.

TASK MONTH 1 2 3 4 5 6 7
A Project Management and Coordination
Initial planning, orientation meeting, schedules
Review documents, prior activities
Overall progress reports, coordination activities
B Self-evaluation of Town Policies and Standards
Evaluation of Town policies, programs and services
Review of related documents and plans
C Self-evaluation of Town Facilities
Inspections by DAC of Town facilities
Town review of sample of draft reports completed
Report comments integrated as indicated
Inspections completed
D Self-evaluation of Key Rights-of-Way and Trails
Inspections by DAC of public rights-of-ways and trails
Reports issued in DACTrak
E Public Outreach
Methods for public outreach and staff input confirmed
Staff input
Public outreach conducted
Outreach and input comments compiled
Comments integrated into executive summary
F Develop Transition Plan
Priority methodology confirmed
Estimated dates of barrier removal into DACTrak
Draft of Transition Plan
Final Transition Plan
G Additional Activities (as requested throughout project) TABLE 2: TASKS, STAFF AND BILLING RATES
Tasks, allocated staff and billing rates are included in Table 2: Task and Budget Worksheet (attached).

DocuSign Envelope ID: F69534DD-FEB6-4826-9634-EF90244C0E63 DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Scope of Services
Americans with Disabilities Act (ADA) Transition Plan
Town of Los Gatos
Additional Services Proposal
(CIP No. 812-0129)
Town of Los Gatos
Parks and Public Works Department
41 Miles Avenue
Los Gatos, CA 95030
March 17, 2022

EXHIBIT B
DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Town of Los Gatos ADA Additional Services Amendment Proposal Page 2 of 4 Additional Services Amendment Proposal
March 17, 2022

PROJECT
Americans with Disabilities Act (ADA) Transition Plan
CIP No. 812-0129

PROJECT CONTACTS
Town of Los Gatos Disability Access Consultants, LLC (DAC) Janice Chin Barbara Thorpe, Project Manager
Parks and Public Works Department 2862 Olive Highway
41 Miles Avenue Suite D
Los Gatos, CA 95030 Oroville, CA 95965
[email protected] [email protected]
408.395.3460 800.743.7067

SCOPE OF SERVICES
The scope of services includes additional services to be added two (2) tasks from the original proposal and agreement:

Task D: Self‐Evaluation of Town’s Key Right‐Of-Way Assets and Trails Task G: Additional Activities/On-Call Services
TASK D: SELF‐EVALUATION OF TOWN’S KEY RIGHT‐OF-WAY ASSETS The original RFQ data provided by the Town estimated the total linear miles of sidewalk at approximately 94 linear miles. Currently DAC has completed approximately 110 linear miles and estimates the total linear miles of sidewalk at closer to 160 linear miles.

The cost to complete the additional estimated 50 linear miles of Town owned sidewalk, is proposed at $25,000.

As presented in the agreement, DAC uses a comprehensive approach to inspecting accessibility of pedestrian access routes in the public rights-of-way (PROW). To conduct PROW and trail field assessments, DAC accessibility specialists walk sidewalks and trails to record manual measurements, take photographs and capture GIS coordinates (as applicable for exterior measurements) of the field conditions and enter the information into our DACTrak tablet in the field. Information captured in the field will be uploaded into the DACTrak accessibility management system.

The field survey teams are supervised by a qualified Certified Access Specialist (CASp). Data and reports are also reviewed by a CASp certified team member prior to being presented to the Town. A facility report for each PROW area and trail surveyed will include detailed areas of deficiency in addition to corrective recommendations and cost estimates. The reports will be presented through DACTrak in an initial priority sort order that can be customized for implementation by the Town.

The assessment will include cost estimates to correct deficiencies in accordance with the ADA, Title 24 of the California Building Code, Public Rights of Way Accessibility Guidelines, California Manual on Uniform Traffic Control Devices, or other applicable federal or state accessibility codes.

General areas of the PROW inspections for pedestrian routes include but are not limited to sidewalks, curb ramps, intersections, crosswalks, street furniture, on-street parking and related items in the pedestrian access route.

EXHIBIT B
DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Town of Los Gatos ADA Additional Services Amendment Proposal Page 3 of 4 The following items are included:
▪ Sidewalks
o Sidewalk starting and ending points and length
o GIS location and street markers
o Width
o Running and cross slope
o Changes in elevation
o Obstructions-into the path of travel and overhead obstructions o Utilities and mailboxes that may interfere with the pedestrian route o Gratings
▪ Curb Ramps
o Location including GIS
o Curb ramp type
o Curb ramp material
o Ramp run
o Ramp width
o Side flares
o Slope and cross slope
o Finish
o Contained in crosswalk
o Detectable warnings
o Top & bottom ramp
o Gutter
o Changes in elevation to bottom ramp
o Contains water
▪ Crosswalks and Mid-block crossings
o Width
o Slope
o Detectable warnings
o Pedestrian head
▪ Intersections
o GIS location and cross streets
o Pedestrian signal controls and indicators
▪ Medians and Islands
▪ Roundabouts
▪ Trails
▪ Parks
▪ Open Space
▪ Benches and Street Furniture
Deliverables: Completion of surveys for an additional 50 linear miles of Town owned sidewalk Estimated Budget for additional 50 linear miles of Town owned sidewalk: $25,000 TASK G: ADDITIONAL ACTIVITIES/ON-CALL SERVICES
Town may request additional “on-call” and as needed services from DAC that may include, but not limited to:
• General ADA consulting
• Assistance for the ADA Coordinator
• Code interpretation/application
DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

Town of Los Gatos ADA Additional Services Amendment Proposal Page 4 of 4 • Accessibility Plan Reviews
• Annual Plan update
• Legal/claim expertise
• Data entry into DACTrak
• Transition Plan Implementation re-training
• Supplemental DACTrak training and services
• Staff Training
Estimated Budget for On-Call Services: $15,000

DAC STAFF AND BILLING RATES

TITLE NAME HOURLY RATE
Project Manager Barbara Thorpe $110
CASp Mike Boga $100
Assistant Project Manager Tim Mahoney $90
Director of Administrative Services Jennie Grover $65
Field Team Leader Candice Pursch $90
Accessibility Specialists Various $75
Director of IT Srikant Talasila $0
Expenses: Rates do not include travel expenses, travel time, airfare, meals, hotel, rental car Note: If expenses are applicable, DAC will obtain authorization from the Town prior to travel.

PROPOSAL FOR ADDITIONAL SERVICES – BUDGET SUMMARY
Task D: Additional Sidewalk Inspections $25,000
Task G: On-Call/As-needed Services $15,000
Total $40,000
DocuSign Envelope ID: 18FC5912-04B0-4A22-B5DB-C1E5F4DF969B

DISABILITY ACCESS CONSULTANTS LLC
Accessibility and ADA Support Services Proposal - Monthly Fixed and On-Call

STAFF POSITIONS AND BILLING RATES
TASKS
Project
Manager
Senior
Director of
Accessibilit
y Services -
CASp
General
Manager
Director of
Administrative
Services
Director of
Accessibility
Services
Accessibility
Specialists
IT
Director
Annual
Cost
Monthly
Cost
$170 $170 $120 $110 $100 $85 $0 ($) ($)
A.

Public Accommodation requests and review 8 8 8 $ 3,200
Accommodation Solutions 8 8 8 $ 3,200
ADA Grievance review and Response 8 4 8 $ 2,720
Review and Update Notices and Postings 6 4 10 $ 2,600
Review and update of Town's Accessibility Policies.

Procedures and practices 12 6 12 $ 4,080
Review and update accessibility training policies 8 4 8 $ 2,720 Review of Town's website and report of compliance 4 4 6 $ 1,820 Total 1.A ADA Support 54 38 60 $ 20,340 $ 1,695
B.

Transition Plan Implementation Strategies and Review 18 16 22 $ 7,400 Quarterly Report and Review 2 2 8 $ 1,460
DACTrak Data Entry 2 40 $ 4,740
Annual Report 6 8 8 $ 2,860
Annual Planning 12 12 14 $ 5,020

1.B ADA SETP Documentation 40 0 38 92 0 0 0 $ 21,480 $ 1,790 Annual Monthly
94 0 76 152 0 0 0 $ 41,820 $ 3,485
1 Accessibility Plan Reviews
2 Staff Training

3. Review of construction and design standards

4. On-site inspections

5. Other ADA and accessibility related consulting
services, as requested

2. On-Call/As Needed 0 0 0 0 0 0 0 $ 8,180 $ -
ANNUAL TOTAL 1.A, 1.B and 2 $ 50,000
Notes Detail
1 2
3 4
5 Total 1.A. and 1.B Fixed Services Cost

2. On-Call/As needed
ADA program and policy support tasks
ADA Self Evaluation and Transition Plan documentation, planning and update services tasks

1. Fixed Fee Services
Term: Twelve (12) month, annual agreement: Monthly cost is based on a twelve month agreement. May be renewed each year.

Total Annual Cost: $50,000
On-Call/As Needed Cost: Total of $8,180 is available to Town for on-call or as needed services.

Fixed Services Costs (1.A. and 1.B): Monthly cost for 1.A will be $1,695. Monthly cost for 1.B will be $1,790. Total monthly cost for both will be $3,485. Total aggregate cost for one year will be $41,820
Fixed Services Tasks: Town and DAC will have set monthly meetings to collaborate on tasks, determine deliverables and priorities each month.

EXHIBIT B

PREPARED BY: Clint Tada
Support Services Captain
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● 406-354-6832
www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 12/19/2023
ITEM NO: 14
DATE: December 14, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Axon Enterprises Incorporated Agreement:
a. Authorize the Town Manager to Execute a Five-Year Agreement In Substantially the Form Attached to this Report with Axon Enterprises Incorporated for the Purchase and Maintenance of Axon Officer Safety Plan 10+ Body Worn Cameras (BWC), Tasers, and a Digital Evidence Management System in The Amount Not to Exceed $800,000; and b. Authorize an Expenditure Budget Adjustment in the Amount of $68,356 from the Available General Fund Capital/Special Projects Reserve RECOMMENDATION:

Staff recommends the Town Council:
a. Authorize the Town Manager to execute a five-year agreement in substantially the form attached to this report with Axon Enterprises Incorporated for the purchase and maintenance of Axon Officer Safety Plan 10+ Body Worn Cameras (BWC), Tasers, and a digital evidence management system in an amount not to exceed $800,000; and b. Authorize an expenditure budget adjustment in the amount of $68,356 from the available General Fund Capital/Special Projects Reserve.

BACKGROUND:

The Los Gatos-Monte Sereno Police Department was a pioneer in Santa Clara County by deploying Officers with Body-Worn Cameras (BWC) beginning in 2008. In addition, since 2007, the Department was an early adopter in the integration and use of Axon Enterprises Inc. Tasers as a less lethal de-escalation of force option.

In 2020, the Police Department identified Axon Enterprises Inc. as a preferred sole source vendor with upgraded BWC technology and a digital evidence storage platform for a successful BWC program, in compliance with legislative mandates.

PAGE 2 OF 6
SUBJECT: Authorize Actions Related to an Agreement with Axon Enterprises Incorporated DATE: December 14, 2023
BACKGROUND (continued):

On February 18, 2020, the Town Council approved allocation of $377,130 of total funding to authorize the Town Manager to execute two five-year agreements with Axon Enterprises Inc. for the purchase and maintenance of Body-Worn Cameras (BWC), Evidence.com (digital cloud storage platform), and conducted energy weapons (Tasers) for sworn officers for the duration of an agreement term through FY 2023/24.

With the evolution and expansion of technology, demands for increased transparency, and legislative mandates, the Police Department incurred additional costs during this agreement term. These added costs included the purchase and maintenance of additional body-worn cameras for civilian field personnel and the need to increase digital evidence storage capacity due to the increase in digital evidence collected and requested for the prosecution of cases.

Additionally, new legislation created unfunded requirements for more robust storage capacity due to extended retention schedules and investigative obligations that necessitated the storage of materials. Some of these legislative mandates resulting in storage, extended retention, and release of redacted recorded information include Assembly Bill (AB) 748 (2018), Senate Bill (SB) 1421 (2018), SB 2 (2022), and SB 16 (2022).

Between 2021 and 2023, the Police Department purchased an additional three Axon BWC devices and an additional 6 terabytes of storage capacity on the Axon Digital Evidence System.

The total for both BWC and Tasers agreements then increased to $398,405.

Since the release of the most current Axon Officer Safety Plan (OSP 10), Axon Enterprises Inc. has changed their pricing structures and plans to incorporate additional options to bundle specific Axon products, features, and platforms. Beginning in January 2024, Axon has indicated to existing customers that all currently offered OSP 10 pricing plans will increase in excess of 16% immediately, and thereafter incur additional inflation increases. This would be a significant increase and would impact OSP 10 plan renewals and new plan agreements in future years.

DISCUSSION:

The Police Department is in the final year of two separate five-year agreements with Axon for the maintenance and services of individual equipment such as Tasers, Taser Cartridges, bodyworn cameras, docking stations, and a limited cloud-based storage for body-worn camera videos and other digital video evidence.

At the time of the original Axon agreements in 2020, the Department opted to purchase the Officer Safety Plan 7 (OSP 7) which included Axon body-worn cameras, Axon digital evidence system, and Axon Tasers with limited features and an “a la carte” pay for additional options.

PAGE 3 OF 6
SUBJECT: Authorize Actions Related to an Agreement with Axon Enterprises Incorporated DATE: December 14, 2023
DISCUSSION (continued):

With advancement in equipment, technology, and system capabilities, Axon has since restructured their Officer Safety Plan bundle packages as Officer Safety Plan 10 (OSP 10), (OSP 10+), and (OSP 10 Premium). See Exhibit A for current OSP10 packages (with features) offered by Axon Enterprises.

The total cost of the five-year Axon OSP 10+ proposed agreement which includes a bundle package for Axon Body Worn Cameras, Digital Evidence Storage, and Tasers is $780,612.55.

The annual cost for the proposed Axon OSP 10+ Agreement is approximately $156,000, an average annual increase of $77,000 over the previous Axon OSP 7 BWC and Taser agreements budgeted. The increase in costs between Axon’s OSP 7 and OSP 10+ bundles include increasing quantities of BWC devices from 47 to 51, increase of Tasers from 40 to 47, and transitioning from limited paid capacity digital evidence storage to unlimited storage.

The Police Department’s goal is to outfit all sworn staff and civilian field staff (Reserve Police Officers, Community Service Officers, and Parking Control Officers) with their own BWC, with a surplus of additional cameras for immediate deployment in the event of faulty equipment or repairs. There is a need to increase the number of Tasers to provide current Reserve Police Officers with Tasers as standard issued equipment. Axon OSP 10+ provides redaction assistant software, the increase of four additional user licenses and numerous technology features which were not included in the current OSP 7 package. The Department would be upgraded to the latest high-definition Axon cameras and Taser 10 conducted energy weapon on the OSP 10+ plan with an accommodating 5-year warranty for service and replacement.

Body Worn Cameras have proven to improve law enforcement legitimacy by enhancing transparency and aiding in the investigation and resolution of community complaints, as well as providing better evidence for criminal prosecutions, and reduced time for Officers in criminal court. From 2020 to 2023, the Police Department has uploaded and maintained over 81,000 digital files to Axon’s secure, cloud-based digital evidence management system for evidentiary purposes. During that time, over 1,400 criminal cases with videos with digital evidence were submitted electronically to the District Attorney’s Office, and over 125,000 community contacts were recorded. Axon’s cloud-based storage system stores both body-worn video and crime scene photos. Currently, the system is storing over 13 terabytes (TB) of evidence.

The original Axon OSP 7 agreement included 8 TB of storage; however, an additional 6 TB were purchased in 2023 for the remaining two years of the agreement to accommodate the increase in digital evidence and the ability to adhere to mandatory retention periods. The proposed OSP 10+ agreement includes unlimited storage for digital evidence which is projected to exponentially reduce potential add-on storage costs under the current pricing structure.