Los Gatos City Council
December 19, 2023

How to participate: The Town of Los Gatos strongly encourages your active participation in the public process, which is the cornerstone of democracy. If you wish to speak to an item on the agenda, please follow the participation instructions on page 2 of this agenda. If you wish to speak to an item NOT on the agenda, you may do so during the “Verbal Communications” period, by following the participation instructions on page 2 of this agenda. The time allocated to speakers may change to better facilitate the Town Council meeting.

Effective Proceedings: The purpose of the Town Council meeting is to conduct the business of the community in an effective and efficient manner. For the benefit of the community, the Town of Los Gatos asks that you follow the Town’s meeting guidelines while attending Town Council meetings and treat everyone with respect and dignity. This is done by following meeting guidelines set forth in State law and in the Town Code. Disruptive conduct is not tolerated, including but not limited to: addressing the Town Council without first being recognized; interrupting speakers, Town Council or Town staff; continuing to speak after the allotted time has expired; failing to relinquish the podium when directed to do so; and repetitiously addressing the same subject.

Deadlines for Public Comment and Presentations are as follows:
 Persons wishing to make an audio/visual presentation on any agenda item must submit the presentation electronically, either in person or via email, to the Clerk’s Office no later than 3:00 p.m. on the day of the Council meeting.
 Persons wishing to submit written comments to be included in the materials provided to Town Council must provide the comments as follows:
o For inclusion in the regular packet: by 11:00 a.m. the Thursday before the Council meeting o For inclusion in any Addendum: by 11:00 a.m. the Monday before the Council meeting o For inclusion in any Desk Item: by 11:00 a.m. on the day of the Council Meeting

TOWN OF LOS GATOS

COUNCIL MEETING AGENDA
DECEMBER 19, 2023
110 EAST MAIN STREET AND TELECONFERENCE

TOWN COUNCIL CHAMBERS
7:00 PM
Mary Badame, Mayor
Matthew Hudes, Vice Mayor
Rob Moore, Council Member
Rob Rennie, Council Member
Maria Ristow, Council Member
Town Council Meetings Broadcast Live on KCAT, Channel 15 (on Comcast) on the 1st and 3rd Tuesdays at 7:00 p.m.

Rebroadcast of Town Council Meetings on the 2nd and 4th Tuesdays at 7:00 p.m.

Live & Archived Council Meetings can be viewed by going to:
www.LosGatosCA.gov/TownYouTube

TOWN OF LOS GATOS

COUNCIL MEETING AGENDA
DECEMBER 19, 2023
110 EAST MAIN STREET AND TELECONFERENCE

TOWN COUNCIL CHAMBERS
7:00 PM

IMPORTANT NOTICE
This is a hybrid meeting and will be held in-person at the Town Council Chambers at 110 E. Main Street and virtually through the Zoom webinar application (log-in information provided below).

Members of the public may provide public comments for agenda items in-person or virtually through the Zoom webinar by following the instructions listed below. The live stream of the meeting may be viewed on television and/or online at www.LosGatosCA.gov/TownYouTube.

PARTICIPATION
To provide oral comments in real-time during the meeting:
 Zoom webinar: Join from a PC, Mac, iPad, iPhone or Android device: Please click this URL to join: https://losgatoscagov.zoom.us/j/85379428243?pwd=b3QzdklOUXRxaG5XQ2dSN3c0U0NLdz09 Passcode: 192366. You can also type in 853 7942 8243 in the “Join a Meeting” page on the Zoom website at https://zoom.us/join.
o When the Mayor announces the item for which you wish to speak, click the “raise hand” feature in Zoom. If you are participating by phone on the Zoom app, press *9 on your telephone keypad to raise your hand.
 Join by telephone: Join by Telephone: Dial: USA 877 336 1839 US Toll-free or 636 651 0008 US Toll. Conference code: 1052180
If you are participating by calling in, press #2 on your telephone keypad to raise your hand.  In-Person: If you wish to speak during the meeting, please complete a “speaker’s card” located on the back of the chamber benches and return it to the Town Clerk. If you wish to speak to an item on the agenda, please list the item number. If you wish to speak on an item NOT on the agenda, please list the subject and you may speak during the “Verbal Communications” period. The time allocated to speakers may change to better facilitate the Town Council meeting.

When called to speak, you may be asked to provide your full name and your town/city of residence.

This identifying information is optional and not a requirement for participation. Please limit your comments to three (3) minutes, or such other time as the Mayor may decide, consistent with the time limit for speakers at a Council meeting. If you wish to speak to an item or items on the Consent Calendar, please state which item number(s) you are commenting on at the beginning of your time.

If you are unable to participate in real-time, you may email to [email protected] the subject line “Public Comment Item #__ ” (insert the item number relevant to your comment) or “Verbal Communications – Non-Agenda Item.” Comments received by 11:00 a.m. the day of the meeting will be reviewed and distributed before the meeting. All comments received will become part of the record.

CALL MEETING TO ORDER

ROLL CALL
APPROVE REMOTE PARTICIPATION (This item is listed on the agenda in the event there is an emergency circumstance requiring a Council Member to participate remotely under AB 2449 (Government Code 54953)).

PLEDGE OF ALLEGIANCE

CLOSED SESSION REPORT

COUNCIL / MANAGER MATTERS
CONSENT ITEMS (Items appearing on the Consent Items are considered routine Town business and may be approved by one motion. Any member of the Council may request to have an item removed from the Consent Items for comment and action. Members of the public may provide input on any or multiple Consent Item(s) when the Mayor asks for public comments on the Consent Items. If you wish to comment, please follow the Participation Instructions contained on Page 2 of this agenda.

If an item is removed, the Mayor has the sole discretion to determine when the item will be heard.)

1. Approve Minutes of the December 5, 2023 Town Council Meeting.

2. Approve Minutes of the December 6, 2023, Town Council Special Meeting Regarding Commission Interviews.

3. Approve Minutes of the December 12, 2023 Town Council Special Meeting.

4. Authorize the Town Manager to Execute a Fourth Amendment to a Consultant Agreement for Executive Recruitment Services with Teri Black & Company, LLC for an Additional Amount of $35,000 with a Total Amount Not to Exceed $205,500 and Authorize an Expenditure Budget Adjustment from Available General Fund Capital/Special Projects Reserve.

5. Add One Limited Term, Full-Time Equivalent Human Resources Administrative Analyst and Approve a Budget Adjustment of $103,370 from the Available Special/Capital Projects Reserve.

6. Appoint William Ward Butler to the Honorary Position of Town Poet Laureate to Serve a Three-Year Term Beginning in January of 2024.

7. Authorize Revenue and Expenditure Budget Adjustments in the Amount of $50,000 to Recognize County of Santa Clara Grant Receipt for Case Management for Unhoused Los Gatos Residents.

8. Authorize the Town Manager to Execute a Second Amendment with HdL Companies for Business License Operations Management Services for Up to $70,000 Annually Through December 31, 2025 with the Total Contract Not to Exceed $233,000, and Discontinue the Business License Late Fee Penalty Waiver in the 2024 Calendar Year.

9. Receive the Monthly Financial and Investment Report for October 2023.

10. Receive an Annual Report Regarding the Independent Police Auditor Function.

11. Adopt Council Committee Appointments Effective January 1, 2024.

12. Annual Comprehensive Financial Report (ACFR):

a. Receive the Annual Comprehensive Financial Report (ACFR) for the Fiscal Year Ended June 30, 2023, and
b. Adopt a Resolution Confirming June 30, 2023 Fund Balances in Accordance With Fiscal Year 2022/23 Final Audit and Town Council General Fund Reserve Policy.

13. 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).

14. Axon Enterprises Agreement:
a. Authorize the Town Manager to Execute a Five-Year Agreement 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.

VERBAL COMMUNICATIONS (Members of the public are welcome to address the Town Council on any matter that is not listed on the agenda and is within the subject matter jurisdiction of the Town Council. To ensure all agenda items are heard, this portion of the agenda is limited to 30 minutes.

In the event additional speakers were not able to be heard during the initial Verbal Communications portion of the agenda, an additional Verbal Communications will be opened prior to adjournment.

Each speaker is limited to no more than three (3) minutes or such time as authorized by the Mayor.) PUBLIC HEARINGS (Applicants/Appellants and their representatives may be allotted up to a total of five minutes maximum for opening statements. Members of the public may be allotted up to three minutes to comment on any public hearing item. Applicants/Appellants and their representatives may be allotted up to a total of three minutes maximum for closing statements. Items requested/recommended for continuance are subject to Council’s consent at the meeting.)

15. Review and Discuss the Draft Revised 2023-2031 Housing Element. Location: Town-Wide.

General Plan Amendment Application GP-22-003.

16. Open the Public Hearing for an Appeal of a Planning Commission Decision to Deny a Fence Height Exception Request at 124 Garden Hill Drive for the Construction of a Six-Foot Tall Fence Located Within the Required Front Yard Setback, Street Side Yard Setback, and Corner Sight Triangle on Property Zoned R-1:8 and Continue the Matter to January 16, 2024. APN 424-23-084. Fence Height Exception Application FHE-23-005. Categorically Exempt Pursuant to CEQA Guidelines Section 15303: New Construction or Conversion of Small Structures and Section 15301: Existing Facilities. Property Owner: Rushikesh Kulkarni. Applicant/Appellant: Martin Lettunich. Project Planner: Ryan Safty.

17. Consider an Appeal of a Planning Commission Decision to Approve a Lot Line Adjustment Application in Accordance with California Government Code Section 66412(d) for Three Adjoining Lots on Property Zoned R-1:20. Located at 17200 Los Robles Way. APNs 532- 36-075, -076, and -077. Lot Line Adjustment Application M-23-001. Statutorily Exempt from CEQA as a Ministerial Approval in Accordance with Public Resources Code Section

21080(b)(1) (CEQA Statute) and CEQA Guidelines Section 15268. Application is Only for Ministerial Approval of a Lot Line Adjustment Pursuant to Section 66412(d) of the Subdivision Map Act. Property Owners: Daran Goodsell, Trustee and Mark Von Kaenel.

Applicant: Tony Jeans. Appellant: Alison Steer. Project Planner: Ryan Safty.

OTHER BUSINESS (Up to three minutes may be allotted to each speaker on any of the following items.)

18. Authorize Revenue and Expenditure Budget Adjustments in the Amount of $125,000 to Recognize Receipt and Expenditure of a County of Santa Clara Grant Received by the Town, and Provide Direction on the Allocation of the Grant for Adult Day Services and/or Case Management in Consideration of the Recommendation from the Community Health and Senior Services Commission.

19. Review the Revenue Modeling Report Prepared by NBS and Provide Direction on Any Ballot Measures to Consider for Polling.

ADJOURNMENT (Council policy is to adjourn no later than midnight unless a majority of Council votes for an extension of time.)

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: 1
DRAFT
Minutes of the Town Council Meeting
Tuesday, December 5, 2023
The Town Council of the Town of Los Gatos conducted a regular meeting in-person and utilizing teleconferencing means on Tuesday, December 5, 2023, at 7:00 p.m.

MEETING CALLED TO ORDER AT 7:00 P.M.

ROLL CALL

Present: Mayor Maria Ristow, Vice Mayor Mary Badame, Council Member Matthew Hudes, Council Member Rob Moore, Council Member Rob Rennie.

Absent: None

PLEDGE OF ALLEGIANCE
Harrison Armer led the Pledge of Allegiance. The audience was invited to participate.

COUNCIL/TOWN MANAGER REPORTS
Council Matters
- Council Member Hudes stated he attended an Initiatives and Publicity Committee meeting of the Older Adults Thrive Foundation and a Council Policy Committee meeting; met with Rob Stump regarding wildfire safety; and attended the Winter Celebration event and the Children’s Christmas/Holiday Parade.
- Council Member Rennie stated he attended a Silicon Valley Clean Energy Authority (SVCEA) Executive Committee meeting, a Finance Commission meeting, and the Winter Celebration event; and met with his Finance Commission appointee.
- Council Member Moore stated he attended the Winter Celebration, the Children’s Christmas/Holiday Parade, and the Silicon Valley at Home (SV@Home) Civic Leadership Program; met with faith leaders, Katherine Alexander from Supervisor Simitian’s Office, and staff from the Governor’s Office with the Mayor; attended a Policy Committee meeting; observed a Parks and Sustainability Commission meeting; and stated he will hold his Council Member Community Coffee on Friday.
- Vice Mayor Badame stated she attended a Community Health and Senior Services Commission (CHSSC) meeting as Council liaison, the Winter Celebration, and the Children’s Christmas/Holidays Parade; met with the Executive Director of the Chamber of Commerce; and observed a Finance Commission meeting.
- Mayor Ristow stated she met with representatives from Governor Newsom’s Office; attended a West Valley Mayor’s and Managers meeting; met with a representative from Supervisor Simitian’s Office and faith leaders; attended the Winter Celebration, the Children’s Christmas/Holiday Parade, and a Finance Commission meeting; observed a Policy Committee meeting; and met with the Executive Director of the Chamber of Commerce.

PAGE 2 OF 7
SUBJECT: Draft Minutes of the Town Council Meeting of December 5, 2023 DATE: December 5, 2023
Manager Matters
- Announced Board, Commission, and Committee interviews will be held on Wednesday, December 6, 2023, at 6:00 p.m.
- Announced a Community Meeting regarding the Community Garden and Path project will be held at the Adult Recreation Center on December 7, 2023. - Announced a Study Session regarding the Community Garden project on December 19, 2023, at 5:45 p.m.
- Announced the Mayoral transition will be held on December 12, 2023, at 7:00 p.m. in the Town Council Chambers and invited the public to attend. - Provided a Housing Element Update; stated the Town received a letter from the California Department of Housing and Community Development in response to the Town’s recent submittal which was distributed as a Desk Item with item 11 of this meeting. - Announced the Draft Housing Element is scheduled for discussion before the Council on December 19, 2023, at 7:00 p.m.

CONSENT ITEMS (TO BE ACTED UPON BY A SINGLE MOTION)

1. Approve Minutes of the November 21, 2023 Closed Session Town Council Meeting.

2. Approve Minutes of the November 21, 2023 Town Council Meeting.

3. Adopt a Resolution Declaring Certain Hazardous Vegetation Growing in the Town of Los Gatos to be a Public Nuisance, Describing Properties Where Such Nuisance Exists, and Setting a Public Hearing Date of January 16, 2024 to Consider Objections to the Proposed Abatement of Hazardous Vegetation for Properties Listed on the 2024 Weed Abatement Program Commencement Report and Order the Abatement. RESOLUTION 2023-066

4. Authorize the Town Manager to Execute the Fourth Amendment to the Consulting Services Agreement with ActiveWayz Engineering Extending the Term to December 31, 2024 for the Shannon Road Pedestrian and Bikeways Improvement Project (CIP No. 813- 0218).

5. Parking Program Implementation-Wayfinding Signage (CIP No. 813-0242):
a. Approve the Plans and Specifications; and
b. Authorize Advertising the Project for Bid.

6. Receive Fiscal Year (FY) 2022/23 Status Report on Receipt and Use of Development Impact Fees.

7. Adopt the Emergency Procurement Policy as Recommended by the Policy Committee.

POLICY 4-10

8. Receive Report on Remote Participation at Town Commissions, Boards, and Committees with Discussion Points Identified by the Council Policy Committee.

Mayor Ristow opened public comment.

No one spoke.

Mayor Ristow closed public comment.

PAGE 3 OF 7
SUBJECT: Draft Minutes of the Town Council Meeting of December 5, 2023 DATE: December 5, 2023
Consent Item - continued
MOTION: Motion by Vice Mayor Badame to approve consent items 1-8. Seconded by Council Member Moore.

VOTE: Motion passed unanimously.

VERBAL COMMUNICATIONS
Joseph Enz
- Commented on the unhoused and gave positive remarks about the Police Department.

Lynley Hogan
- Provided positive remarks.

Lee Quintana
- Commented on the Draft Housing Element review letter.

OTHER BUSINESS

9. Approve an Amendment to the Employment Agreement Between the Town of Los Gatos and the Town Manager and Authorize Salary and Benefits Budget Adjustments in the Amount of $15,682 from Available General Fund Capital/Special Projects Reserve.

Katy Nomura, Acting Human Resources Director and Assistant Town Manager, presented the staff report.

Mayor Ristow opened public comment.

Jak Van Nada
- Commented on concerns.

Mayor Ristow closed public comment.

MOTION: Motion by Council Member Rennie to approve an amendment to the Employment Agreement in attachment one of the staff report, between the Town of Los Gatos and the Town Manager and authorize a salary and benefits budget adjustment in the amount of $15,682 from the available General Fund Capital/Special Projects Reserve. Seconded by Council Member Moore.

VOTE: Motion passed 4-1. Council Member Hudes voted no.

10. Approve an Amendment to the Employment Agreement Between the Town of Los Gatos and the Town Attorney and Authorize Salary and Benefits Budget Adjustments in the Amount of $5,897 from Available General Fund Capital/Special Projects Reserve.

PAGE 4 OF 7
SUBJECT: Draft Minutes of the Town Council Meeting of December 5, 2023 DATE: December 5, 2023
Other Business Item #10 – continued
Katy Nomura, Acting Human Resources Director and Assistant Town Manager, presented the staff report.

Mayor Ristow opened public comment.

No one spoke.

Mayor Ristow closed public comment.

MOTION: Motion by Vice Mayor Badame to approve an amendment to the Employment Agreement in attachment one of the staff report, between the Town of Los Gatos and the Town Attorney and authorize a salary and benefits budget adjustment in the amount of $5,897 from the available General Fund Capital/Special Projects Reserve.

Seconded by Council Member Hudes.

VOTE: Motion passed unanimously.

Mayor Ristow stated she is recused from item 11 due to the proximity of her residence, stated the Vice Mayor will preside in her absence, and left the Council Chambers.

PUBLIC HEARINGS

11. Approve a Recommendation of the Planning Commission to Introduce an Ordinance Titled “An Ordinance of the Town Council of the Town of Los Gatos to Apply the Housing Element Overlay Zone (HEOZ) to Provide for Increases to the Allowable Density, Height, Floor Area Ratio, and Lot Coverage for Residential Development on the Following Site: 101 South Santa Cruz Avenue.” An Environmental Impact Report was Prepared and Certified for the 2040 General Plan Update on June 30, 2022, which Included the Proposed Zoning Code Amendments. No further Environmental Analysis is Required. Zoning Code Amendment Application Z-23-003. Applicant: Town of Los Gatos.

Jennifer Armer, Planning Manager, presented the staff report.

Vice Mayor Badame opened public comment.

Mike Labarbera, 101 North Santa Cruz Avenue Property Owner - Requested the Council reconsider the floor area ratio and density per acre.

Lee Fagot
- Commented on concerns with the Housing Element process.

PAGE 5 OF 7
SUBJECT: Draft Minutes of the Town Council Meeting of December 5, 2023 DATE: December 5, 2023
Public Hearing Item #11 – continued
Tony Alarcon
- Commented on concerns with the Draft Housing Element and the height of the proposed project on this site.

Stanford Stickney
- Commented on Post Office and would like it to remain at the current location.

Vice Mayor Badame closed public comment.

Council discussed the item.

MOTION: Motion by Council Member Moore to approve the staff recommendation and introduce the ordinance. Seconded by Council Member Rennie.

Council further discussed the item.

Council Member Rennie withdrew his second. Motion failed for lack of a second.

No action was taken.

Mayor Ristow re-entered the Council Chambers.

Mayor Ristow called a recess at 8:22 p.m.

Mayor Ristow reconvened the meeting at 8:30 p.m.

OTHER BUSINESS

12. Adopt a Resolution, Based on Planning Commission Recommendations, Modifying the Height Pole and Netting Policy for Additions and New Construction. The Proposed Modifications to Town Policy are Not Considered a Project Under the California Environmental Quality Act. Project Location: Town Wide. Applicant: Town of Los Gatos.

Jennifer Armer, Planning Manager, presented the staff report.

Mayor Ristow opened public comment.

Lee Quintana
- Commented on animated visual renderings and inquired who would be responsible for creating renderings.

Lee Fagot
- Commented on creating an image from different perspectives on a site.

PAGE 6 OF 7
SUBJECT: Draft Minutes of the Town Council Meeting of December 5, 2023 DATE: December 5, 2023
Other Business Item #12 – continued
Mayor Ristow closed public comment.

Council discussed the item.

MOTION: Motion by Council Member Hudes to adopt the staff recommendation (Item A in the staff report), excluding balloons and include all other language noted in item A; revise the Story Pole Policy to impose video renderings and signage requirements for buildings over 55 feet in height and remove the story pole requirement as stated in the Desk Item. Seconded by Council Member Moore.

VOTE: Motion passed unanimously.

MOTION: Motion by Council Member Hudes to adopt the staff recommendation (Item B in the staff report which is to require that accurate representations of the height and massing of adjacent existing structures; videos that show the project from the street from a pedestrian level and speed; views of all sides of the proposed structures; and a representation of how the building could affect views of the hills) for specifications for animated visual renderings and to add that the renderings will be performed by a consultant that is approved by staff in a similar manner to other consultants that are used for subject matter expertise with the clarification that the developer will pay for the renderings. Seconded by Mayor Ristow.

VOTE: Motion passed unanimously.

MOTION: Motion by Council Member Moore to remove the story pole requirement on multifamily and mixed-use projects and require visual renderings and signage requirements or the option to use story poles. Seconded by Council Member Rennie.

VOTE: Motion passed 4-1. Council Member Hudes voted no.

MOTION: Motion by Vice Mayor Badame to reject the Planning Commission recommendation (which was to limit the length of installation to no more than 30 days after the first public hearing) and maintain story poles until a decision has been made on the project and the appeal period has ended. Seconded by Council Member Hudes.

VOTE: Motion fails 2-3. Mayor Ristow, Council Member Rennie, Council Member Moore voted no.

PAGE 7 OF 7
SUBJECT: Draft Minutes of the Town Council Meeting of December 5, 2023 DATE: December 5, 2023
Other Business Item #12 – continued
MOTION: Motion by Council Member Moore to modify the Story Pole [Policy] to limit the length of installation to no more than 60 days after the first public hearing.

Seconded by Council Member Rennie.

VOTE: Motion passed 3-2. Vice Mayor Badame and Council Member Hudes voted no.

MOTION: Motion by Council Member Moore to require QR codes, email contact, and a link to the project on the signage and require that signage be posted within 30 days of initial staff technical review of a pending application for all projects that are publicly noticed. Seconded by Mayor Ristow.

VOTE: Motion passed unanimously.

MOTION: Motion by Vice Mayor Badame to reject the Planning Commission recommendation regarding exceptions and maintain the existing process which requires Town Council review. Seconded by Mayor Ristow.

VOTE: Motion passed unanimously.

ADJOURNMENT
The meeting adjourned at 10:41 p.m.

Respectfully Submitted:
_____________________________________
Jenna De Long, Deputy Town Clerk

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: 2
DRAFT
Minutes of the Town Council Special Meeting – Commissioner Interviews December 6, 2023
The Town Council of the Town of Los Gatos conducted a special meeting in-person and utilizing teleconferencing means on Tuesday, December 6, 2023, at 6:00 p.m. to interview applicants and make appointments to Town Boards, Commissions, and Committees.

MEETING CALLED TO ORDER AT 6:00 P.M.

ROLL CALL

Present: Mayor Maria Ristow, Vice Mayor Mary Badame, Council Member Matthew Hudes, Council Member Rob Moore, Council Member Rob Rennie.

Absent: None

VERBAL COMMUNICATIONS
No one spoke.

OTHER BUSINESS

1. Interview applicants and make appointments for the following Boards and Commissions:

Arts and Culture Commission; Community Heath and Senior Services; Complete Streets and Transportation Commission; Diversity, Equity, and Inclusion Commission; Historic Preservation Committee; Library Board; Parks and Sustainability Commission; Personnel Board; and Planning Commission.

Wendy Wood, Town Clerk, presented the staff report.

Council interviewed the following applicants for the vacant positions on Town Boards, Commissions, and Committees.
 Arts and Culture Commission
o Cristiano Colantoni
o Dornaz Mermarzia
 Community Health and Senior Services Commission
o Gregory Gentile
o Richard Konrad
o Martha Sterne

PAGE 2 OF 5
SUBJECT: Draft Minutes of the Town Council Special Meeting of December 6, 2023 – Commissioner Interviews
DATE: December 6, 2023
Board/Commission/Committee Appointments – continued
 Complete Streets and Transportation Committee
o William (Bill) Ehlers
o Erik Miller
 Diversity, Equity, and Inclusion Committee
o Tony Alarcon (Faith Leader, Los Gatos Business Owner and Resident, Resident; Planning Commission)
o Steven Bakota (Resident)
o Dominic Broadhead (Business Owner or Employee)
o Karen Delaney (Resident)
o Jamie Donofrio (Business Employee, Non-Profit Employee) o Diane Fisher (Faith Leader)
o Varily Isaacs (Resident)
o Carmen Lo (Resident)
o Dornaz Memarzia (Resident; interviewed once with the Arts and Culture Commission candidates)
o Folake Phillips (Resident, Non-Profit Employee)
o Johanes Swenberg (Resident)
o Gordon Yamate (Resident)
 Historic Preservation Committee
o Gregory Gentile (interviewed once with the Community Health and Senior Services Commission candidates)
o Lee Quintana
 Library Board
o Richard Capatosto
o Sabiha Chunawala
o Megan Grasser
 Parks and Sustainability Commission
o Craig Gleason
 Personnel Board
o David Sabes

PAGE 3 OF 5
SUBJECT: Draft Minutes of the Town Council Special Meeting of December 6, 2023 – Commissioner Interviews
DATE: December 6, 2023
Board/Commission/Committee Appointments – continued
 Planning Commission
o Tony Alarcon (interviewed once with the Diversity, Equity, and Inclusion Commission candidates)
o Adam Mayer
o Emily Thomas
The Council completed written ballots and provided them to the Town Clerk. Town Clerk Wood read the appointments and votes as follows:
 Arts and Culture Commission
o Cristiano Colantoni was appointed unanimously.
o Dornaz Mermarzia was appointed unanimously.
 Community Health and Senior Services Commission
o Gregory Gentile received one (1) vote and was not appointed (Badame). o Richard Konrad was appointed unanimously.
o Martha Sterne was appointed by four (4) votes (Ristow, Hudes, Rennie, and Moore).
 Complete Streets and Transportation Committee
o William (Bill) Ehlers was appointed by four (4) votes (Ristow, Badame, Rennie, and Moore).
o Erik Miller was appointed unanimously.
 Diversity, Equity, and Inclusion Committee
o Tony Alarcon (Faith Leader, Los Gatos Business Owner and Resident, Resident) received one (1) vote and was not appointed (Rennie).
o Steven Bakota (Resident) was not appointed.
o Dominic Broadhead (Los Gatos Business Employee) was appointed by three (3) votes (Ristow, Rennie, and Moore).
o Karen Delaney (Resident) was not appointed.
o Jamie Donofrio (Los Gatos Business Employee, Non-Profit Employee) received two (2) votes for the Los Gatos business employee seat (Badame and Hudes) and two (2) votes for the non-profit seat (Ristow and Moore) and was not appointed.
o Diane Fisher (Faith Leader) was appointed unanimously. o Varily Isaacs (Resident) was appointed by four (4) votes (Ristow, Badame, Hudes, and Rennie).

PAGE 4 OF 5
SUBJECT: Draft Minutes of the Town Council Special Meeting of December 6, 2023 – Commissioner Interviews
DATE: December 6, 2023
Board/Commission/Committee Appointments – continued
o Carmen Lo (Resident) was appointed by four (4) votes (Badame, Hudes, Rennie and Moore).
o Dornaz Memarzia (Resident) was not appointed.
o Folake Phillips (Resident, Non-Profit Employee) received two (2) votes for resident seat (Ristow and Moore) and three (3) votes for non-profit employee seat (Badame, Hudes, and Rennie) and was appointed to the non-profit employee seat.
o Johanes Swenberg (Resident) received two (2) votes and was not appointed. (Badame and Hudes).
o Gordon Yamate (Resident) was appointed by three (3) votes (Ristow, Rennie, and Moore).
 Historic Preservation Committee
o Gregory Gentile received two (2) votes and was not appointed (Hudes and Rennie).
o Lee Quintana was appointed by three (3) votes (Ristow, Badame, and Moore).  Library Board
o Richard Capatosto was appointed unanimously.
o Sabiha Chunawala was appointed by four (4) votes (Ristow, Hudes, Rennie, and Moore).
o Megan Grasser received one (1) vote and was not appointed (Badame).  Parks and Sustainability Commission
o Craig Gleason was appointed unanimously.
 Personnel Board
o David Sabes was appointed unanimously.
 Planning Commission
o Tony Alarcon received two (2) votes and was not appointed (Badame and Hudes).
o Adam Mayer was appointed unanimously.
o Emily Thomas was appointed by three (3) votes (Ristow, Rennie, and Moore).

PAGE 5 OF 5
SUBJECT: Draft Minutes of the Town Council Special Meeting of December 6, 2023 – Commissioner Interviews
DATE: December 6, 2023
MOTION: Motion by Mayor Ristow to conduct the recruitment for the current openings before the Youth Commission recruitment as soon as practical; and decouple Finance Commission recruitment from the general recruitment, leaving it open until filled. Seconded by Council Member Rennie.

VOTE: Motion passed unanimously.

MOTION: Motion by Vice Mayor Badame to the Council Policy Committee to review the interview and appointment process for Boards, Commissions, and Committees (Council Policy 2-11). Seconded by Council Member Moore.

VOTE: Motion passed unanimously.

ADJOURNMENT
The meeting adjourned at 11:04 p.m.

Respectfully Submitted:
_____________________________________
Jenna De Long, Deputy Town Clerk

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: 3
DRAFT
Minutes of the Town Council Special Meeting
December 12, 2023
The Town Council of the Town of Los Gatos conducted a special meeting in-person and utilizing teleconferencing means on Tuesday, December 12, 2023, at 7:00 p.m. to reorganize the Town Council.

MEETING CALLED TO ORDER AT 7:03 P.M.

ROLL CALL

Present: Mayor Maria Ristow, Vice Mayor Mary Badame, Council Member Matthew Hudes, Council Member Rob Moore, Council Member Rob Rennie.

Absent: None

CONSENT ITEMS (TO BE ACTED UPON BY A SINGLE MOTION)

1. Authorize the Town Manager to Enter into an Agreement with Santa Clara County to Receive a $125,000 Grant for Adult Day Services and/or Case Management for Older Adults.

Mayor Ristow opened public comment.

No one spoke.

Mayor Ristow closed public comment.

MOTION: Motion by Vice Mayor Badame to approve consent item #1. Seconded by Council Member Moore.

VOTE: Motion passed unanimously.

VERBAL COMMUNICATIONS (ONLY ON ITEMS ON THE AGENDA)
Marna Taylor, United Methodist Church, St. Vincent de Paul, St. Luke’s Episcopal Church - Thanked the Mayor for her support of the unhoused community members.

Karen Rubio and Kathleen Willey, Plant Based Advocates
- Thanked Mayor Ristow for her efforts toward sustainability and commended the Council.

Karen Delaney
- Commented in opposition of appointing the presumed Mayor.

PAGE 2 OF 3
SUBJECT: Draft Minutes of the Town Council Special Meeting of December 12, 2023 DATE: December 12, 2023
Town Manager Prevetti presented a commemorative video of outgoing Mayor Ristow.

Town Manager Prevetti presented Mayor Ristow with a ceremonial plaque.

Assembly Member Gail Pellerin presented the outgoing Mayor with a commendation.

Kelsey Combellick, Chief of Staff for Supervisor Simitian, commended Mayor Ristow, the Town Council, and staff for their work on expanding mental health services.

OTHER BUSINESS

2. Consider the Reorganization of the Town Council and Appointment of the Mayor and Vice Mayor:
a. Appreciation of Mayor Ristow
b. Appointment of Mayor and Vice Mayor
Mayor Ristow provided comments regarding her mayoral year.

The Council Members thanked outgoing Mayor Ristow for her service and leadership.

Mayor Ristow thanked each Council Member.

MOTION: Motion by Mayor Ristow to nominate Vice Mayor Badame as Mayor. Seconded by Council Member Rennie.

VOTE: Motion passed unanimously.

Mayor-Elect Badame provided comments on her upcoming mayoral year and thanked her family and Town staff.

MOTION: Motion by Mayor-Elect Badame to nominate Council Member Hudes as Vice Mayor.

Seconded by Council Member Ristow.

VOTE: Motion passed unanimously.

Vice Mayor-Elect Hudes gave comments on his coming Vice Mayoral year and thanked his family.

Mayor-Elect Badame introduced former Mayor and Council Member Barbara Spector who then administered the Oath of Office to Vice Mayor-Elect Hudes and Mayor-Elect Badame.

Vice Mayor Hudes thanked former Mayor Spector for her service.

PAGE 3 OF 3
SUBJECT: Draft Minutes of the Town Council Special Meeting of December 12, 2023 DATE: December 12, 2023
Mayor Badame made closing comments.

ADJOURNMENT
The meeting adjourned at 7:54 p.m.

Respectfully Submitted:
_____________________________________
Jenna De Long, Deputy Clerk

Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 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: 4
DATE: December 1, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Authorize the Town Manager to Execute a Fourth Amendment to a Consultant Agreement for Executive Recruitment Services with Teri Black & Company, LLC for an Additional Amount of $35,000 with a Total Amount Not to Exceed $205,500 and Authorize an Expenditure Budget Adjustment from Available General Fund Capital/Special Projects Reserve RECOMMENDATION:

Authorize the Town Manager to execute a Fourth Amendment (Attachment 5) to a Consultant Agreement for executive recruitment services with Teri Black & Company, LLC (TB&Co) for an additional amount of $35,000 with a total amount not to exceed $205,500 and authorize an expenditure budget adjustment from available General Fund Capital/Special Projects Reserve.

BACKGROUND:

On October 19, 2021, the Town Council authorized the Town Manager to execute an Agreement with TB&Co for executive recruitment services (Attachment 1). On November 16, 2021, the Town Council authorized the Town Manager to execute a First Amendment to the Agreement for three executive recruitments (Attachment 2). On May 17, 2022, the Town Council authorized the Town Manager to execute a Second Amendment to the Agreement for two additional executive recruitments (Attachment 3). On January 17, 2023, the Town Council authorized the Town Manager to execute a Third Amendment to the Agreement for two additional executive recruitments (Attachment 4).

DISCUSSION:

The candidate pool for executive level positions is typically smaller, so it is not unusual for public sector agencies to outsource recruitment processes to executive recruitment search firms. Because executive search firms focus solely on recruitments, they have a vast number of contacts. They also have the resources and relationships to proactively contact candidates

PAGE 2 OF 2
SUBJECT: Fourth Amendment to Agreement with Teri Black & Company, LLC DATE: December 1, 2023
DISCUSSION (Continued):
directly that may not be actively searching for a new opportunity and encourage those candidates to compete in a specific recruitment.

Based on TB&Co.’s expertise related to successfully completing several director level recruitments for the Town, staff is requesting authorization for the Town Manager to execute a Fourth Amendment to the current Agreement for services. Given the competition for talent within the public sector, the Town needs to be positioned to move swiftly to fill executive positions.

The Town’s Human Resources Director recently submitted their resignation. The cost of this executive recruitment is estimated to cost $33,000. Therefore, the Town has an immediate need for the services of TB&Co.

CONCLUSION:

Staff recommends that the Town Council authorize the Town Manager to execute a Fourth Amendment to add $35,000 to this Agreement and approve the associated budget adjustment as described under the Fiscal Impact section below.

COORDINATION:

The preparation of this report was coordinated with the Human Resources and Finance Departments, and the Town Attorney’s Office.

FISCAL IMPACT:

The additional cost of $35,000 brings the total not to exceed amount to $205,500. Staff recommends using a portion of the available balance in the Town’s Capital/Special Projects Reserve.

ENVIRONMENTAL ASSESSMENT:

This is not a project defined under CEQA, and no further action is required.

Attachments:

1. Agreement for Consultant Services

2. First Amendment

3. Second Amendment

4. Third Amendment

5. Proposed Fourth Amendment

ATTACHMENT 3

Attachment 4

FOURTH AMENDMENT TO AGREEMENT FOR CONSULTANT SERVICES
THIS FOURTH AMENDMENT TO AGREEMENT is entered into this 19 th day of December, 2023, by
and between the Town of Los Gatos, State of California, herein called the “Town,” and Teri Black & Company, LLC (“Consultant”), herein called the “Consultant.”

RECITALS
Town and Consultant entered into a Consultant Services Agreement on October 20, 2021, (“Agreement”), a copy of which is attached hereto and incorporated by reference as Attachment 1 to this Amendment.

AMENDMENT

1. Scope of Services of the Agreement is hereby amended to provide executive recruitment services for one additional executive recruitment.

2. Compensation by the Town for the Consultant’s services shall increase by an additional $35,000 of which $22,000 is the professional fee and expenses are not to exceed $11,000. The new notto-exceed total amount for the Agreement is $205,500. The Agreement is here by amended from $170,500 to $205,500.

3. Term. Extend the term through December 31, 2024.

4. All other terms and conditions of the Agreement dated October 20, 2021, remain in full force and effect.

IN WITNESS WHEREOF, the Town and Consultant have executed the Third Amendment to Agreement.

Town of Los Gatos: Consultant:

By: ______________________________ By: ______________________________ Laurel Prevetti Teri Black, President
Town Manager Teri Black & Company, LLC
Department Approval:
__________________________
Katy Nomura
Assistant Town Manager/Acting Human Resources Director
Approved as to Form: Attest:
_____________________________________ _____________________________________ Gabrielle Whelan Wendy Wood
Town Attorney Town Clerk
ATTACHMENT 5

Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 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: 5
DATE: December 6, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Add One Limited Term, Full-Time Equivalent Human Resources Administrative Analyst and Approve a Budget Adjustment of $103,370 from the Available Special/Capital Projects Reserve
RECOMMENDATION:

Add one limited term, Full-Time Equivalent Human Resources Administrative Analyst and approve a budget adjustment of $103,370 from the available Special/Capital Projects Reserve.

REMARKS:

The Town of Los Gatos has a small Human Resources (HR) Department providing the full range of HR services to employees, including but not limited to recruitments, on/off-boarding, benefits administration, assistance with retirements, trainings, mandatory reporting, overseeing the Workers Compensation Third Party Administrator, and more. The Department has three positions: HR Director, HR Administrative Analyst, and HR Technician. The HR Director position is a “working” Director, handling day to day tasks as well as strategic work.

During the absence of the HR Director, Assistant Town Manager Katy Nomura stepped into the role and has assessed the structure and functions of the Department. It has become clear that the Department needs additional staff resources to complete its work in a timely and highquality manner given the breadth of services provided by the Department that cannot be outsourced, increasing complexity of the work, additional requirements from changes in employment law, and the large volume of customer service inquiries from Town employees and retirees. While the HR Department continues to incorporate efficiencies through technology, the sensitive, complex, and customer service nature of the work requires that much of the workload involves in-person services and interactions that cannot be replaced with technology.

PAGE 2 OF 2
SUBJECT: Add One Limited Term, Full-Time Equivalent Human Resources Administrative Analyst and Approve Budget Adjustment of $103,370
DATE: December 6, 2023
REMARKS (continued):

This agenda item requests the addition of one Full-Time Equivalent (FTE) Human Resources Administrative Analyst as a limited term position through June 30, 2025.

As noted in another agenda item for this meeting, the Town is about to start the recruitment process to fill the HR Director position which was recently vacated due to a resignation. While filling the Director position adds capacity to the current team, there remains the ongoing need to have staff resources to complete work tasks thoroughly and to move away from “just in time” service delivery that may lead to costly errors for the Town. The additional resource is important to maintain the critical support role of HR to the Town and to allow for cross-training to ensure uninterrupted HR services when HR staff is out of the office for vacation, sick leave, or training.

If approved by the Town Council, a recruitment for the limited term position would begin quickly with the intention to fill as soon as possible. If the position was only six months in duration (January – June 2024), it is unlikely that the Town would be able to attract qualified candidates. For this reason, the request is through the next fiscal year (June 30, 2025).

COORDINATION:

The preparation of this report was coordinated with the Finance Department.

FISCAL IMPACT:

The cost of a limited term HR Administrative Analyst (1FTE) from January 2024 through June 30, 2024 is $103,370. A budget adjustment of this amount from the available Special/Capital Projects Reserve is needed to support this action. The final year of the limited term position will be incorporated into the Proposed FY 2024/25 Operating Budget.

ENVIRONMENTAL ASSESSMENT:

This is not a project defined under the California Environmental Quality Act, and no further action is required.

PREPARED BY: Ryan Baker
Library Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 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: 6
DATE: December 11, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Appoint William Ward Butler to the Honorary Position of Town Poet Laureate to Serve a Three-Year Term Beginning in January of 2024 RECOMMENDATION:

Appoint William Ward Butler to the honorary position of Town Poet Laureate to serve a threeyear term beginning in January of 2024.

BACKGROUND:

The Town of Los Gatos Poet Laureate is an honorary position first established in 2010 to further the appreciation and advancement of poetry and literary arts in Los Gatos. The Poet Laureate serves a three-year term and is selected through an open call for applications and competitive selection process. This year, the selection panel included Mayor Ristow, Arts and Culture Commissioner Colantoni, Library Board Commissioner Lowe, and Youth Commissioner Bagora.

DISCUSSION:

The selection panel recommends William Ward Bulter for appointment to the honorary position.

William Ward Butler is a writer and educator living in Los Gatos, California. He is the author of the poetry chapbook Life History from Ghost City Press and holds a master’s degree in education from UC Santa Cruz. He has received support from the Napa Valley Writers’ Conference, the Catamaran Writing Conference, and the Community of Writers. He is a poetry reader for TriQuarterly, the literary magazine of Northwestern University, and the poetry editor of Frozen Sea.

PAGE 2 OF 2
SUBJECT: Appoint William Ward Butler to the Honorary Position of Town Poet Laureate DATE: December 11, 2023
DISCUSSION (continued):

If appointed, William Ward Butler will serve a three-year term which will begin on January 1, 2024 and end on December 31, 2026. The first ceremonial appearance of the Poet Laureate at a Council meeting traditionally is in April, coinciding with National Poetry Month.

FISCAL IMPACT:

There is no anticipated fiscal impact associated with the appointment of the Poet Laureate and its programs and projects.

ENVIRONMENTAL ASSESSMENT:

This is not a project defined under CEQA, and no further action is required.

Attachments:

1. Selected Poems of William Ward Butler

Afternoon at the Bigfoot Discovery Museum
Highway 9 was closed so Hunter parked
his car on the shoulder and we all walked there,
to Felton, the word half-moon carved three times
in the moss on the Jersey barrier. We laughed
about the theories of the earth: how the world
has been thought an egg, or hollow, or flat.

When we got to the museum there was a talk
on the types of Bigfoot sightings:
mythical, paranormal, biological.

Apparently, there’s evidence all over the forests
of the West Coast: hair, teeth, anomalous screams.

But every dark shadow in the woods
is a Bigfoot nowadays, grumbles Mike,
who owns the museum and knows
it might go out of business soon.

Mike, the Stanford graduate, who put his savings
into this two-room museum, stands behind a counter
answering questions fifty weeks out of the year.

He’s been here for eleven years
and has been insulted, threatened, cursed,
rocks and bottles thrown through his windows.

It’s five o’clock and I am heartbroken
at the Bigfoot Discovery Museum.

This isn’t the poem I thought I’d write.

I don’t disgrace the man for his passion—
I only wish I could believe the way Mike does;
to have that kind of faith in anything
would be a miracle no one would be able to disprove.

Published in Life History chapbook
ATTACHMENT 1

Dear I Can’t Believe It’s Not Butter [Letter #2]
You’re still in the back of my fridge, lonely as God. This is how we’re similar: at times we’ve resigned to let the heat of this world ruin us, we may or may not be genetically modified, we’ve both been judged based on what we are not. I know it doesn’t matter: you don’t care that I’m composed of fistfuls of carbon, just like it doesn’t bother me that you consist of soybean oil and salt. I’m writing to let you know that I’m still moved by beauty in unexpected places. Last year I went to an orchestra performance in a room filled with wires. When the violinists finished playing their instruments, they started to play the wire, a single note—held it, then cut the wire, which released one final sound. I cried in that audience of strangers. I’ve never attended a house of worship but seek grace in all things. I take 8 vitamins every day. I’m 25 and have entered a phase of life that has not always been filled with the delight I feel when I gaze upon you, my savory substitute, leaning against a jar of expired pickles like a stoic. Dear Not-Butter, I can’t claim to know how old you are but I’m glad to know you all the same. My imaginary dairy. My condiment of imitation. My simulacrum of joy.

Originally published in Tinderbox Poetry Journal

Reading Cavafy by Candlelight
The storm we’ve been fearing hit tonight;
it brought down redwoods and power lines
and half a mile away, a transformer exploded,
sending up blue sparks bright as fallen stars.

I’m glad to live with you here, in these mountains,
even though awful things have happened—
when that car flipped and littered the road with glass, when the sky was filled with smoke all November,
when you were so sick, the state of California called
and I drove you to urgent care for intravenous fluids.

Now, this storm threatens to flood
our small apartment, and there’s nothing to do
but wait on the couch with you in the dark.

This must be what straight couples
think of when they’re told for better or worse.

We haven’t talked about marriage
but next month marks five years together,
a length of time that once seemed impossible.

Who am I without you in my life?
The answer, like a burning wick.

I love you with all my insufficient words.

Published in Life History chapbook

Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 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: 7
DATE: December 11, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Authorize Revenue and Expenditure Budget Adjustments in the Amount of $50,000 to Recognize County of Santa Clara Grant Receipt for Case Management for Unhoused Los Gatos Residents
RECOMMENDATION:

Authorize Revenue and Expenditure Budget adjustments in the amount of $50,000 to recognize County of Santa Clara grant receipt for case management for unhoused Los Gatos residents.

BACKGROUND:

On June 15, 2023, the Santa Clara County Board of Supervisors approved a $50,000 grant for the Town to use towards case management for unhoused Los Gatos residents. Supervisor Simitian worked with the Town Manager’s Office to create the proposal in light of the Town’s $50,000 investment in services for unhoused residents.

The Town’s funding went towards the shower ministry operated by the Los Gatos United Methodist Church, a temporary public restroom facility at Town Plaza Park, and a hotel program pilot during extreme weather events. As the amount is within the Town Manager’s authority, she executed the agreement in early December 2023 as soon as it was provided by the County. Grant funds must be expended by the Town by June 30, 2024 and are one-time funds.

DISCUSSION:

The grant specifies that the funds must be used for case management for unhoused residents.

The Town staff do not have this skill set nor the capacity to offer these services. For this reason, the Town will conduct a competitive Request for Proposals (RFP) process to identify contract services vendors to provide the service(s).

PAGE 2 OF 2
SUBJECT: County Grant for Case Management for Unhoused Residents DATE: December 11, 2023
DISCUSSION (Continued):

Based on an analysis of recent recruiting announcements in the Bay Area, the hourly rate for case managers ranges from $30 to $40 per hour depending on education and qualifications.

The fully benefited rate for a full-time position is estimated at $81,000 to $108,000. Since the Town’s grant is significantly less, it is expected that responses to the RFP would be for a parttime case manager. Staff would evaluate the proposals and recommend a service provider to Town Council.

CONCLUSION:

Staff recommends the Council recognize the revenue and approve the associated budget expenditure of $50,000. If approved, staff will initiate the RFP process.

COORDINATION:

The preparation of this report was coordinated between the Town Manager’s Office, the Finance Department, and the Town Attorney’s Office.

FISCAL IMPACT:

The $50,000 grant funds are being provided to the Town from the County to cover the costs of contracted case management services. With this agenda item, Council has two fiscal actions to take: Authorize Revenue and Expenditure Budget adjustments in the amount of $50,000 to recognize County of Santa Clara grant receipt for case management for unhoused Los Gatos residents.

Staff time related to grant management, the RFP, and program oversight will not be covered by grant funds and will be absorbed by existing staff.

ENVIRONMENTAL ASSESSMENT:

This is not a project defined under CEQA, and no further action is required.

PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager, Town Attorney, and Assistant Town Manager 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: 8
DATE: December 12, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Authorize the Town Manager to Execute a Second Amendment with HdL Companies for Business License Operations Management Services for Up to $70,000 Annually Through December 31, 2025 with the Total Contract Not to Exceed $233,000, and Discontinue the Business License Late Fee Penalty Waiver in the 2024 Calendar Year
RECOMMENDATION:

Staff recommends that the Council authorize the Town Manager to execute a second amendment with HdL Companies for business license operations management services for up to $70,000 annually through December 31, 2025 with the total contract not to exceed $233,000, and discontinue the business license late fee penalty waiver in the 2024 calendar year.

BACKGROUND:

In November 2022, Los Gatos voters approved Measure J, which modernized the Town’s business license tax program. This was the first update to the program since 1991 and included adjustments to flat rate fees, retailing gross receipts, and e-commerce, manufacturing, wholesaling, and jobbing gross receipts. HdL Companies assisted the Town with the business license modernization process (Attachment 3). Once those services were completed, the Town executed a first amendment to the original agreement for business license tax and fee administration services until December 31, 2023 (Attachment 2).

The Town requires all businesses located within Los Gatos and/or those that operate within Los Gatos to obtain a business license. Annual renewal payments are due on January 2 of each year.

According to the Town Code, a 25% late fee penalty is assessed monthly, up to 100% on unpaid balances.

PAGE 2 OF 3
SUBJECT: Authorize the Town Manager to Execute a Second Amendment with HdL Companies for Business License Tax Operations Management Services for Up to $70,000 Annually Through December 31, 2025
DATE: December 19, 2023
DISCUSSION:

With the second amendment, the Town would continue its current partnership with HdL Companies (HdL) through December 31, 2025 to provide dedicated business license support to Los Gatos businesses. Through the partnership, the Town’s business license application and renewal process has been streamlined by offering online business license applications and renewals. HdL is assisting with a variety of business license related tasks, including new applications, annual renewals, payments, compliance inquiries, and other general support.

Staff is continuously monitoring and fine-tuning the business license application and renewal process.

Since March 2020, to alleviate the impacts of the pandemic, the Town Council has been working to remain supportive and adaptive to the community’s businesses. One of the steps taken to support businesses included a business license late fee penalty suspension during the pandemic emergency proclamation. Council continued the business license late fee penalty waiver into 2023 to provide adequate time for businesses to adjust to the new process and fee structure.

Discontinuing the late fee penalty waiver in 2024 would enable the Town enforce business license compliance.

CONCLUSION:

Authorize the Town Manager to execute a second amendment with HdL Companies for business license operation management services for the Town of Los Gatos for up to $70,000 annually through December 31, 2025 for a total contract amount not to exceed $233,000, and discontinue the business license late fee penalty waiver in the 2024 calendar year.

FISCAL IMPACT:

The cost for business license administration a services is built into the FY 2023/24 operating budget. Fees for the administration services are assessed for each processed account, so the annual amount varies based on the number of active business licenses. Valid business license holders also pay business license processing fees that partially cover the consulting fee and staff time. The Town analyze the business license processing fee with the next comprehensive cost allocation study and Council may choose to adjust it. Providing the online platform and other HdL efficiencies enables businesses to pay on time, therefore staff estimates minimal collection of late fee penalties.

PAGE 3 OF 3
SUBJECT: Authorize the Town Manager to Execute a Second Amendment with HdL Companies for Business License Tax Operations Management Services for Up to $70,000 Annually Through December 31, 2025
DATE: December 19, 2023
ENVIRONMENTAL ASSESSMENT:

This is not a project defined under CEQA, and no further action is required.

Attachments:

1. Second Amendment with HdL Compaines

2. First Amendment with HdL Companies

3. Original Agreement with HdL Companies

1 of
HdL Companies 2nd Amendment to Agreement
2nd AMENDMENT TO AGREEMENT
This AMENDMENT TO AGREEMENT is dated for identification this 19th day of December, 2023 and amends that certain agreement for business license tax consulting services dated 04/05/2022, made by and between the Town of Los Gatos, ("Town,") and HdL Companies.(“Consultant.”)

RECITALS
A. Town and Consultant entered into a business license tax consulting services Agreement on April 5th 2022, (“Agreement”), a copy of which is attached hereto and incorporated by reference as Attachment 1 to this Amendment.

B. Town and Consultant entered into a first amendment for business license tax consulting services Agreement on September 30th 2022, (“1st Amendment”), a copy of which is attached hereto and incorporated by reference as Attachment 2 to this Amendment.

AMENDMENT

1. 2.2 Term and Time of Performance: This contract will remain in effect until December 31, 2025.

2. 2.6 Compensation: Compensation for Consultant’s professional services shall be increased by $70,000 annually for a total agreement not to exceed $233,000.00. Payment shall be based upon Town approval of each task.

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

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

Town of Los Gatos Approved as to Consent:

By: _______________________________ By: ______________________________ Laurel Prevetti, Town Manager Robert Gray, CIO HdL Companies Department Approval:
_______________________________________
Gitta Ungvari
Finance Director
ATTACHMENT 1

2 Approved as to Form: Attest:
______________________________ ______________________________ Gabrielle Whelan, Town Attorney Wendy Wood, CMC, Town Clerk

ATTACHMENT 3

PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 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: 9
DATE: December 12, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Receive the Monthly Financial and Investment Report for October 2023 RECOMMENDATION:

Receive the Monthly Financial and Investment Report for October 2023.

BACKGROUND:

California Government Code Section 41004 requires that the Town Treasurer submit to the Town Clerk and the legislative body a written report and accounting of all receipts, disbursement, and fund balances. The Finance Director assumes the Town Treasurer role.

Attachment 1 contains the October 2023 Monthly Financial and Investment Report which fulfills this requirement. The October 2023 Monthly Financial and Investment Report was received by the Finance Commission at its December 11, 2023 regular meeting.

DISCUSSION:

The October 2023 Monthly Financial and Investment Report includes a Fund Balance Schedule, representing estimated funding available for all funds at the end of the month. The fund balances are estimated at a point in time and will be finalized at the final close of the fiscal year.

Please note that the amount in the Fund Schedule differs from the Portfolio Allocation and Treasurer’s Cash Fund Balances Summary schedule because assets and liabilities are components of the fund balance.

As illustrated in the summary below, Total Cash is adjusted by the addition of Total Assets less the amount of Total Liabilities to arrive at the Ending Fund Balance – which represents the actual amount of funds available.

PAGE 2 OF 3
SUBJECT: Monthly Financial and Investment Report for October 2023 DATE: December 12, 2023
DISCUSSION (continued):

As of October 31, 2023, the Town’s financial position (Assets $80.78M, Liabilities $28.96M, and Fund Equity $51.8M) remains strong and there are no issues meeting financial obligations in the near future.

As of October 31, 2023, the Town’s weighted portfolio yield for investments under management was 4.12% which was 45 basis points above the Local Agency Investment Fund (LAIF) yield of 3.67% for the same reporting period. Currently, the LAIF portfolio’s weighted average maturity (WAM) is 250 days versus the Town’s longer WAM of 579 days. The longer maturity (WAM) for Town assets under management reflects the Town’s strategy to take advantage of higher yields associated with longer maturities balanced with shorter term yields available on investments held with the State’s LAIF. The Town’s weighted average rate of return on investments under management of 4.12% at the close of October was 35 basis points higher when compared to the prior month’s return of 3.77 % reported as of September 30, 2023.

Since October 31, 2022, LAIF yields had climbed from 177 basis points (1.77%) to 367 basis points (3.67%) through the end of October 2023.

Staff, in coordination with the Town’s investment advisor, continued primarily replacing maturing investments with medium term maturities in the three- to four-year maturity range.

These investments capture current yields that exceed the rates expected to be earned in the LAIF pool during that same time period. The State LAIF pool typically lags the market when current market yields are either increasing or decreasing.

On March 22, 2023, the Federal Reserve voted to approve a ¼ percentage basis point increase from 4.75% to 5.00%. This action was followed with additional hikes in May 2023 from 5.00% to 5.25% and July from 5.25 % to 5.5 %. Through these actions over time, the Federal Open Market Committee’s (FOMC) goal is to bring year to year inflation to its targeted level of 2%.

The labor market remained tight overall. The US economy added 336,000 new jobs in Total Cash $ 64,959,590
Plus: Assets $ 15,819,862
Less: Liabilities $ (28,995,195)
Estimated Fund Balance $ 51,784,257
Reconciling Cash to Fund Balance - October 31, 2023

PAGE 3 OF 3
SUBJECT: Monthly Financial and Investment Report for October 2023 DATE: December 12, 2023
DISCUSSION (continued):

September, above consensus for 170,000. Hiring was strong across government and private sectors. The unemployment rate was unexpectedly unchanged at 3.8% as was the participation rate at 62.8%. Wage growth continued to cool at just 0.2% month-on-month and

4.2% year-on-year.

The Town's investments are in compliance with the Town's Investment Policy dated February 21, 2023, and also in compliance with the requirements of Section 53600 at seq. of the California State Code. Based on the information available, the Town has sufficient funds to meet the cash demands for the next six months.

CONCLUSION:

Receive Monthly Financial and Investment Report for October 2023.

Attachments:

1. Financial and Investment Report (October 2023)

Weighted Average YTM Portfolio Yield on Investments
under Management 4.12%
Weighted Average Maturity (days) 579
This Month Last Month One year ago
Portfolio Allocation & Treasurer's Cash Balances $64,959,590 $66,196,260 $62,569,240 Cert. of Participation 2002 Lease Payment Fund
Managed Investments $49,338,863
Local Agency Investment Fund $11,278,106
Reconciled Demand Deposit Balances $4,342,621
Portfolio Allocation & Treasurer's Cash Balances $64,959,590 Benchmarks/ References:

Town's Average Yield 4.12% 3.77% 1.82%
LAIF Yield for month 3.67% 3.53% 1.77%
3 mo. Treasury 5.48% 5.46% 4.09%
6 mo. Treasury 5.57% 5.55% 4.55%
2 yr. Treasury 5.09% 5.05% 4.49%
5 yr. Treasury (most recent) 4.86% 4.61% 4.23%
10 Yr. Treasury 4.93% 4.57% 4.05%
Town of Los Gatos
Summary Investment Information
October 31, 2023
0 - 1 year
53%
1 - 2 years
9%
2 - 3 years
14%
3 - 5 years
24%
Portfolio Maturity Profile
Compliance: The Town's investments are in compliance with the Town's investment policy dated February 21, 2023 and also in compliance with the requirements of Section 53600 at seq. of the California State Code. Based on the information available, the Town has sufficient funds to meet the cash demands for the next six months.

ATTACHMENT 1

Month YTD
Cash & Investment Balances - Beginning of Month/Period $ 66,196,259.64 $ 78,384,947.79 Receipts 3,368,781.49 20,419,734.82
Disbursements (4,605,450.81) (33,845,092.29)
Cash & Investment Balances - End of Month/Period $64,959,590.32 $64,959,590.32 Portfolio Allocation Amount % of Portfolio
Max. % or $ Allowed
per State Law or Policy
BNY MM $83,335.30 0.14% 20% of Town Portfolio
US Treasury Notes $17,721,904.21 29.24% No Max. on US Treasuries Government Agency Debenture Notes $17,528,739.65 28.92% No Max. on Non-Mortgage Backed Corporate Medium Term Bonds $14,004,884.01 23.10% 30% of Town Portfolio Local Agency Investment Fund $11,278,106.16 18.61% $75 M per State Law Subtotal - Investments 60,616,969.33 100.00%
Reconciled Demand Deposit Balances 4,342,620.99
Total Portfolio Allocation & Treasurer's Cash Balances $64,959,590.32 Town of Los Gatos
Portfolio Allocation & Treasurer's Cash Balances
October 31, 2023
BNY MM

0.14%
US Treasury Notes

29.24%
Government Agency Debenture
Notes

28.92%
Corporate Medium Term Bonds

23.1%
Local Agency Investment Fund

18.6%
Portfolio Investment Allocation
$62.6 M $65.0 M
$0.0 M
$10.0 M
$20.0 M
$30.0 M
$40.0 M
$50.0 M
$60.0 M
$70.0 M
$80.0 M
$90.0 M
Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Treasurer's Fund Balances

October 2023 October 2023 October 2023
Beginning Deposits Interest/ Ending
Balance Realized Gain/Adj. Earnings Withdrawals Balance Non-Treasury Funds:

Cert. of Participation 2002 Series A Reserve Fund $ 704,005.52 $ 2,789.89 $ 706,795.41 Note 1 Cert. Of Participation 2010 Ser A Lease Pymt Fund 783.89 3.35 787.24 Note 1 Cert. of Participation 2002 Lease Payment Fund 433.18 1.80 434.98 Note 1 Cert. of Participation 2010 Series Reserve Fund 1,335,686.18 5,731.37 1,341,417.55 Note 2 Total Restricted Funds: $ 2,040,908.77 $ - $ 8,526.41 $ - $ 2,049,435.18 CEPPT IRS Section 115 Trust 1,351,902.66 (29,242.70) $ 1,322,659.96 Grand Total COP's and CEPPT Trust $ 3,392,811.43 $ - $ (20,716.29) $ - $ 3,372,095.14 These accounts are not part of the Treasurer's fund balances reported elsewhere in this report, as they are for separate and distinct entities.

Note 1: The three original funds for the Certificates of Participation 2002 Series A consist of construction funds which will be expended over the next few years, reserve funds which will guarantee the payment of lease payments, and a third fund for the disbursement of lease payments and initial delivery costs.

Note 2: The 2010 COP Funds are all for the Library construction, reserves to guarantee lease payments, and a lease payment fund for the life of the COP issue. The COI fund was closed in September 2010.

Note 3: The CEPPT Section IRS Section 115 Trust was established as an irrevocable trust dedicated to accumulate resources to fund the Town's unfunded liabilities related to pension and other p Town of Los Gatos
Non-Treasury Restricted Fund Balances
October 31, 2023

July 2023 $ 133,845.42
August 2023 129,679.93
September 2023 158,361.71
October 2023 151,048.03
November 2023 -
December 2023 -
January 2024 -
February 2024 -
March 2024 -
April 2024 -
May 2024 -
June 2024 -
$ 572,935.09
Interest by Month
Town of Los Gatos
Statement of Interest Earned
October 31, 2023

Town of Los Gatos Investment Schedule
October 31, 2023
Market Value Maturity Yield to Interest Interest Interest Days Deposit Par Original Market Above (Under) Purchased Date or Maturity Received Earned Earned to Institution CUSIP # Security Coupon Date Value Cost Value Cost Interest Call Date or Call to Date Prior Yrs. Current FY Maturity FFCB 3133EKMX1 Gov. Agency Debenture 2.23% 8/2/2019 1,000,000.00 1,014,400.00 989,430.00 (24,970.00) 2/23/2024 1.90% $ 96,075.83 $ 74,902.07 $ 6,451.65 115 FFCB 3133EMBE1 Gov. Agency Debenture 0.30% 10/8/2020 1,600,000.00 1,598,000.00 1,565,504.00 (32,496.00) 3/28/2024 0.34% $ 14,253.34 $ 14,655.57 $ 1,811.69 149 Apple 037833DB3 Corporate Bond 2.90% 12/20/2022 1,300,000.00 1,228,591.00 1,196,000.00 (32,591.00) 6/21/2027 4.19% $ 27,437.22 $ 28,170.97 $ 18,047.03 1329 Cert. of Participation 2002 Le 437076BM3 Corporate Bond 3.00% 8/4/2022 1,000,000.00 991,960.00 945,580.00 (46,380.00) 1/1/2026 3.04% $ 34,750.00 $ 29,252.66 $ 10,903.26 793 US Treasury 912828ZW3 US Treasury Note 0.25% 8/9/2022 350,000.00 322,096.88 322,780.50 683.62 6/30/2025 3.16% $ 779.89 $ 9,366.72 $ 3,544.94 608 IBM 459200JY8 Corporate Bond 3.00% 3/25/2021 1,000,000.00 1,071,040.00 985,190.00 (85,850.00) 5/15/2024 0.71% $ 64,166.67 $ 16,751.96 $ 2,491.52 197 FFCB 3133EN5V8 Gov. Agency Debenture 4.13% 1/17/2023 236,000.00 239,174.20 229,712.96 (9,461.24) 1/11/2027 3.76% $ 4,705.25 $ 4,016.30 $ 3,012.23 1168 US Treasury 91282CBT7 US Treasury Note 0.75% 9/30/2022 800,000.00 712,565.18 724,528.00 11,962.82 3/31/2026 4.14% $ 6,000.00 $ 23,165.06 $ 10,437.01 882 FFCB 3133ENP95 Gov. Agency Debenture 4.25% 9/30/2022 900,000.00 900,939.60 882,495.00 (18,444.60) 9/30/2025 4.14% $ 38,250.00 $ 28,374.86 $ 12,784.28 700 US Treasury 91282CAW1 US Treasury Note 0.25% 7/15/2021 1,200,000.00 1,199,437.50 1,197,672.00 (1,765.50) 11/15/2023 0.27% $ 5,502.72 $ 6,348.21 $ 1,092.07 15 American Honda 02665WCZ2 Corporate Bond 2.40% 11/27/2019 1,000,000.00 1,012,410.01 977,810.00 (34,600.01) 6/27/2024 2.12% $ 96,733.34 $ 76,483.79 $ 7,175.82 240 JP Morgan Chase 46625HRS1 Corporate Bond 3.20% 9/23/2022 500,000.00 474,660.00 468,735.00 (5,925.00) 3/15/2026 4.70% $ 11,644.44 $ 17,865.15 $ 7,847.90 866 Honeywell Int'l. 438516BW5 Corporate Bond 2.30% 11/20/2019 1,000,000.00 1,014,660.00 974,100.00 (40,560.00) 7/15/2024 1.64% $ 85,483.33 $ 71,679.55 $ 6,689.37 258 Caterpillar Financial Serv 14913Q2V0 Corporate Bond 2.85% 2/23/2021 1,000,000.00 1,077,370.00 984,390.00 (92,980.00) 5/17/2024 0.44% $ 63,650.00 $ 10,677.18 $ 1,532.43 199 FNMA 3135G0V75 Gov. Agency Debenture 1.75% 10/17/2019 1,100,000.00 1,105,833.30 1,073,204.00 (32,629.30) 7/2/2024 1.63% $ 71,706.25 $ 66,718.86 $ 6,069.84 245 US Bancorp 91159HHV5 Corporate Bond 3.38% 12/24/2019 1,000,000.00 1,049,040.00 992,800.00 (56,240.00) 1/5/2024 2.12% $ 121,968.75 $ 75,978.33 $ 7,278.30 66 FFCB 3133EKQA7 Gov. Agency Debenture 2.08% 10/21/2019 1,000,000.00 1,019,780.00 969,310.00 (50,470.00) 9/10/2024 1.66% $ 80,831.11 $ 61,888.40 $ 5,647.09 315 FHLB 3135G05X7 Gov. Agency Debenture 0.38% 6/10/2022 1,200,000.00 1,102,952.40 1,100,844.00 (2,108.40) 8/25/2025 3.04% $ 5,437.50 $ 36,626.55 $ 11,701.47 664 US Treasury 912828ZL7 US Treasury Note 0.38% 4/12/2022 1,700,000.00 1,583,927.57 1,582,071.00 (1,856.57) 4/30/2025 2.72% $ 9,879.49 $ 54,017.06 $ 14,964.18 547 JP Morgan Chase 46625HJT8 Corporate Bond 3.88% 9/23/2019 1,400,000.00 1,485,414.00 1,393,126.00 (92,288.00) 2/1/2024 2.39% $ 209,163.89 $ 130,689.90 $ 11,682.31 93 US Treasury 912828V23 US Treasury Note 2.25% 11/29/2021 1,000,000.00 1,032,933.04 994,680.00 (38,253.04) 12/31/2023 0.66% $ 35,706.52 $ 10,649.43 $ 2,266.23 61 US Treasury 91282CBE0_2 US Treasury Note 0.13% 10/7/2021 1,000,000.00 994,768.98 989,380.00 (5,388.98) 1/15/2024 0.36% $ 2,214.67 $ 6,137.79 $ 1,196.43 76 FHLB 3130ALH98 Gov. Agency Debenture 0.25% 2/26/2021 1,000,000.00 997,610.00 983,320.00 (14,290.00) 2/26/2024 0.33% $ 6,250.00 $ 7,713.30 $ 1,110.93 118 FHLB 3130AQF65 Gov. Agency Debenture 1.25% 11/30/2022 1,300,000.00 1,160,559.40 1,160,549.00 (10.40) 12/21/2026 4.15% $ 9,072.92 $ 29,385.32 $ 17,049.03 1147 US Treasury 912828U57 US Treasury Note 2.13% 7/31/2019 1,000,000.00 1,011,875.00 997,390.00 (14,485.00) 11/30/2023 1.84% $ 81,458.33 $ 72,526.17 $ 6,238.26 30 US Treasury 912828X70 US Treasury Note 2.20% 12/30/2019 1,000,000.00 1,010,589.29 982,850.00 (27,739.29) 4/30/2024 1.75% $ 84,703.30 $ 68,481.11 $ 6,590.90 182 US Treasury 912828XT2 US Treasury Note 2.00% 10/31/2019 1,000,000.00 1,015,667.41 980,080.00 (35,587.41) 5/31/2024 1.64% $ 71,639.34 $ 60,792.37 $ 5,588.54 213 FFCB 3133EJ3Q0 Gov. Agency Debenture 2.88% 8/28/2019 1,500,000.00 1,587,503.75 1,494,540.00 (92,963.75) 12/21/2023 2.12% $ 164,473.96 $ 87,804.46 $ 7,703.24 51 US Treasury 91282CBE0 US Treasury Note 0.13% 9/15/2021 650,000.00 647,615.46 643,097.00 (4,518.46) 1/15/2024 0.28% $ 1,488.12 $ 3,281.18 $ 618.05 76 FHLB 3130APJH9 Gov. Agency Debenture 0.75% 1/17/2023 1,000,000.00 907,010.00 905,010.00 (2,000.00) 10/28/2026 4.17% $ 5,854.17 $ 14,420.85 $ 10,815.64 1093 FFCB 3133EN5N6 Gov. Agency Debenture 4.00% 2/8/2023 1,700,000.00 1,706,732.00 1,633,751.00 (72,981.00) 1/6/2028 3.91% $ 27,955.56 $ 25,921.64 $ 22,453.25 1528 Freddie Mac 3137EAEX3 Gov. Agency Debenture 0.04% 5/1/2023 750,000.00 689,032.50 685,845.00 (3,187.50) 156.26 9/23/2025 3.97% $ (156.26) $ 4,222.09 $ 8,655.28 693 American Honda 02665WED9 Corporate Bond 4.70% 5/11/2023 600,000.00 608,856.00 576,972.00 (31,884.00) 1/12/2028 4.34% $ 4,778.33 $ 3,603.61 $ 8,864.88 1534 US Treasury 91282CEF4 US Treasury Note 2.50% 6/9/2023 1,500,000.00 1,416,626.12 1,389,675.00 (26,951.12) 3/31/2027 4.09% $ 11,577.87 $ 3,416.23 $ 20,009.37 1247 US Treasury 91282CGA3 US Treasury Note 4.00% 6/20/2023 2,100,000.00 2,080,558.59 2,055,627.00 (24,931.59) 1,147.54 12/15/2025 4.40% $ (1,147.54) $ 2,515.25 $ 30,937.54 776 Colgate-Palmolive 194162AR4 Corporate Bond 4.60% 7/14/2023 500,000.00 504,655.00 489,990.00 (14,665.00) 2/1/2028 4.37% $ 3,002.79 $ - $ 6,563.38 1554 FannieMae 3135G06G3 Gov. Agency Debenture 0.50% 7/14/2023 500,000.00 455,157.00 455,815.00 658.00 465.28 11/7/2025 4.63% $ (465.28) $ - $ 6,517.40 738 FFCB 3133EPQC2 Gov. Agency Debenture 4.63% 7/17/2023 500,000.00 501,957.50 494,115.00 (7,842.50) 7/17/2026 4.48% $ - $ - $ 6,526.43 990 FFCB 3133EPBM6 Gov. Agency Debenture 4.13% 7/14/2023 600,000.00 596,220.00 581,172.00 (15,048.00) 8/23/2027 4.29% $ 2,681.25 $ - $ 7,665.59 1392 PNC Bank 69353RFJ2 Corporate Bond 3.25% 7/25/2023 1,000,000.00 921,490.00 894,400.00 (27,090.00) 270.83 12/23/2027 5.23% $ (270.83) $ - $ 13,498.97 1514 US Treasury 91282CFU0 US Treasury Note 4.13% 7/31/2023 1,300,000.00 1,290,660.60 1,265,160.00 (25,500.60) 10/31/2027 4.31% $ 13,406.25 $ - $ 14,069.71 1461 Toyota Motor Credit 89236TKL8 Corporate Bond 5.45% 8/25/2023 1,600,000.00 1,617,168.00 1,595,264.00 (21,904.00) 25,433.33 11/10/2027 5.16% $ (25,433.33) $ - $ 15,258.68 1471 US Treasury 912810FE3 US Treasury Note 5.50% 10/3/2023 1,200,000.00 1,238,207.14 1,233,564.00 (4,643.14) 8,788.04 8/15/2028 4.76% $ (8,788.04) $ - $ 4,461.33 1750 Pepsico Inc 713448DF2 Corporate Bond 2.85% 10/16/2023 1,000,000.00 947,570.00 947,740.00 170.00 4,116.67 11/24/2025 5.24% $ (4,116.67) $ - $ 2,192.60 755 FFCB 3133EPUW3 Gov. Agency Debenture 4.75% 10/13/2023 1,000,000.00 994,338.00 993,700.00 (638.00) 5,541.67 9/1/2026 4.96% $ (5,541.67) $ - $ 2,439.16 1036 Freddie Mac 3137EAEP0 Gov. Agency Debenture 1.50% 10/13/2023 1,000,000.00 951,540.00 953,030.00 1,490.00 2,541.67 2/12/2025 5.32% $ (2,541.67) $ - $ 2,527.19 470 US Treasury 91282CEW7 US Treasury Note 3.25% 10/16/2023 1,000,000.00 950,039.06 946,130.00 (3,909.06) 9,538.04 6/30/2027 4.73% $ (9,538.04) $ - $ 1,889.51 1338 US Treasury 91282CEN7 US Treasury Note 2.75% 10/31/2023 1,300,000.00 1,214,336.39 1,211,847.00 (2,489.39) 4/30/2027 4.82% $ - $ - $ - 1277 Subtotal $ 49,886,000.00 $ 49,255,527.87 $ 48,089,975.46 $ (1,165,552.41) $ 57,999.33 $ 1,516,683.08 $ 1,238,499.95 $ 384,871.92 BNY MM Money Market 83,335.30 83,335.30 0.00 0.00% 1
LAIF State Investment Pool 11,278,106.16 11,123,683.39 (154,422.77) 3.67% 174,356.80 1 $60,616,969.33 $59,296,994.15 ($1,319,975.18) $57,999.33 $ 1,516,683.08 $ 1,238,499.95 $ 559,228.72 Matured Assets
PNC Financial 69349LAM0 Corporate Bond 3.80% 2/7/2022 1,000,000.00 1,033,470.00 7/25/2023 1.49% $ 55,733.33 $ 20,987.56 $ 1,032.85 US Treasury 91282CCN9 US Treasury Note 0.13% 1/13/2022 1,200,000.00 1,188,375.00 7/31/2023 0.75% $ 2,323.37 $ 13,176.45 $ 766.36 Toyota Motor Credit 89236THA6 1 Corporate Bond 1.35% 4/12/2021 500,000.00 510,580.00 8/25/2023 0.45% $ 15,993.75 $ 5,065.91 $ 350.67 Toyota Motor Credit 89236THA6 Corporate Bond 1.35% 1/11/2022 1,100,000.00 1,107,315.00 8/25/2023 0.94% $ 24,090.00 $ 15,144.57 $ 1,585.23 US Treasury 91282CDA6 US Treasury Note 0.25% 1/31/2022 1,100,000.00 1,085,222.44 9/30/2023 1.07% $ 4,570.74 $ 16,417.94 $ 2,932.91 American Honda 02665WCQ2 Corporate Bond 3.63% 9/14/2021 950,000.00 1,012,871.00 10/10/2023 0.41% $ 71,362.15 $ 7,316.05 $ 1,141.03 FFCB 3133EMCQ3 Gov. Agency Debenture 0.28% 10/16/2020 2,000,000.00 1,998,000.00 10/13/2023 0.31% $ 16,753.33 $ 16,950.71 $ 1,803.27 US Treasury 91282CAP6 US Treasury Note 0.13% 6/30/2021 1,000,000.00 995,390.63 10/15/2023 0.33% $ 2,865.44 $ 6,520.12 $ 955.69 US Treasury 91282CDD0 US Treasury Note 0.38% 1/13/2022 1,100,000.00 1,090,675.78 10/31/2023 0.85% $ 7,406.77 $ 13,599.56 $ 3,138.36 Total Investments "Matured" $ 13,706.37
Total Interest FY 23_24 Matured and Current $ 572,935.09 Maturity Profile Amount Percent
0-1 year $ 32,307,389.20 53%
1-2 years $5,550,488.95 9%
2-3 years $8,065,776.27 13%
3-5 years $ 14,693,314.91 24%
$60,616,969.33

Town of Los Gatos
Investment Transaction Detail
10/31/2023
Date Cusip/Id Description Tran Type
Settlement
Date Par Coupon
Maturity
Date Price Principal Interest
Transaction
Total
10/2/2023 91282CDA6 USA TREASURY 0.25% 30SEP2023 BOND INTEREST 9/30/2023 1,100,000 0.250% 9/30/2023 - - 1,375.00 1,375.00 10/2/2023 91282CEF4 USA TREASURY 2.5% 31MAR2027 BOND INTEREST 9/30/2023 1,500,000 2.500% 3/31/2027 - - 18,750.00 18,750.00 10/2/2023 91282CBT7 USA TREASURY 0.75% 31MAR2026 BOND INTEREST 9/30/2023 800,000 0.750% 3/31/2026 - - 3,000.00 3,000.00 10/2/2023 3133ENP95 FEDERAL FARM CREDIT BANK 4.25% 30S BOND INTEREST 9/30/2023 900,000 4.250% 9/30/2025 - - 19,125.00 19,125.00 10/2/2023 437076BM3
HOME DEPOT INC 3% 01APR2026
(CALLABLE 01JAN26) BOND INTEREST 10/1/2023 1,000,000 3.000% 4/1/2026 - - 15,000.00 15,000.00 10/2/2023 91282CDA6 USA TREASURY 0.25% 30SEP2023 REDEMPTION 10/2/2023 1,100,000 0.250% 9/30/2023 100.00 1,100,000.00 - 1,100,000.00 10/3/2023 912810FE3 USA TREASURY 5.5% 15AUG2028 PURCHASE 10/3/2023 1,200,000 5.500% 8/15/2028 103.18 1,238,207.15 8,788.04 1,246,995.19 10/3/2023 Cash-USD Cash-USD S-T INV FUND INCOME 10/3/2023 514.77 0.000% 100.00 - - 514.77 10/10/2023 02665WCQ2
AMERICAN HONDA FINANCE 3.625%
10OCT2023 BOND INTEREST 10/10/2023 950,000 3.625% 10/10/2023 - - 17,218.75 17,218.75 10/10/2023 02665WCQ2
AMERICAN HONDA FINANCE 3.625%
10OCT2023 REDEMPTION 10/10/2023 950,000 3.625% 10/10/2023 100.00 950,000.00 - 950,000.00 10/13/2023 3137EAEP0 FREDDIE MAC 1.5% 12FEB2025 PURCHASE 10/13/2023 1,000,000 1.500% 2/12/2025 95.15 951,540.00 2,541.67 954,081.67 10/13/2023 3133EMCQ3
FEDERAL FARM CREDIT BANK 0.28%
13OCT2023 CALLABLE BOND INTEREST 10/13/2023 2,000,000 0.280% 10/13/2023 - - 2,800.00 2,800.00 10/13/2023 3133EMCQ3
FEDERAL FARM CREDIT BANK 0.28%
13OCT2023 CALLABLE REDEMPTION 10/13/2023 2,000,000 0.280% 10/13/2023 100.00 2,000,000.00 - 2,000,000.00 10/16/2023 3133EPUW3
FEDERAL FARM CREDIT BANK 4.75%
01SEP2026 PURCHASE 10/16/2023 1,000,000 4.750% 9/1/2026 99.43 994,338.00 5,541.67 999,879.67 10/16/2023 713448DF2
PEPSICO INC 2.85% 24FEB2026
(CALLABLE 24NOV25) PURCHASE 10/16/2023 1,000,000 2.850% 2/24/2026 94.76 947,570.00 4,116.67 951,686.67 10/16/2023 91282CEW7 USA TREASURY 3.25% 30JUN2027 PURCHASE 10/16/2023 1,000,000 3.250% 6/30/2027 95.00 950,039.06 9,538.04 959,577.10 10/16/2023 91282CAP6 USA TREASURY 0.125% 15OCT2023 BOND INTEREST 10/15/2023 1,000,000 0.125% 10/15/2023 - - 625.00 625.00 10/16/2023 91282CAP6 USA TREASURY 0.125% 15OCT2023 REDEMPTION 10/16/2023 1,000,000 0.125% 10/15/2023 100.00 1,000,000.00 - 1,000,000.00 10/30/2023 3130APJH9
FEDERAL HOME LOAN BANK 1%
28OCT2026 (CALLABLE 28JAN24) #0006 BOND INTEREST 10/28/2023 1,000,000 1.000% 10/28/2026 - - 5,000.00 5,000.00 10/31/2023 91282CEN7 USA TREASURY 2.75% 30APR2027 PURCHASE 10/31/2023 1,300,000 2.750% 4/30/2027 93.41 1,214,336.39 - 1,214,336.39 10/31/2023 912828X70 USA TREASURY 2% 30APR2024 BOND INTEREST 10/31/2023 1,000,000 2.000% 4/30/2024 - - 10,000.00 10,000.00 10/31/2023 912828ZL7 USA TREASURY 0.375% 30APR2025 BOND INTEREST 10/31/2023 1,700,000 0.375% 4/30/2025 - - 3,187.50 3,187.50 10/31/2023 91282CFU0 USA TREASURY 4.125% 31OCT2027 BOND INTEREST 10/31/2023 1,300,000 4.125% 10/31/2027 - - 26,812.50 26,812.50 10/31/2023 91282CDD0 USA TREASURY 0.375% 31OCT2023 BOND INTEREST 10/31/2023 1,100,000 0.375% 10/31/2023 - - 2,062.50 2,062.50 10/31/2023 91282CDD0 USA TREASURY 0.375% 31OCT2023 REDEMPTION 10/31/2023 1,100,000 0.375% 10/31/2023 100.00 1,100,000.00 - 1,100,000.00

Security Description Maturity Date Par/Shares Moody Rating S&P Rating Insight ESG Rating Environment Social Governance JPMORGAN CHASE & CO 3.875% 01FEB2024 2/1/2024 $ 1,400,000 A1 A- 3 1 3 4 US BANCORP 3.375% 05FEB2024 (CALLABLE 05JAN24) 2/5/2024 $ 1,000,000 A3 A 3 3 4 4 IBM CORP 3.0% 15MAY2024 5/15/2024 $ 1,000,000 A3 A- 2 1 2 3 CATERPILLAR FIN SERVICES 2.85% 17MAY24 5/17/2024 $ 1,000,000 A2 A 4 4 3 4 AMERICAN HONDA FINANCE 2.4% 27JUN2024 6/27/2024 $ 1,000,000 A3 A- 2 1 3 3 HONEYWELL INTERNATIONAL 2.3% 15AUG2024 (CALLABLE 15JUL24) 8/15/2024 $ 1,000,000 A2 A 4 3 4 3 PEPSICO INC 2.85% 24FEB2026 (CALLABLE 24NOV25) 2/24/2026 $ 1,000,000 A1 A+ 2 2 2 2 HOME DEPOT INC. 3% 01APR2026 (CALLABLE 01JAN2026) 4/1/2026 $ 1,000,000 A2 A 2 2 2 3 JPMORGAN CHASE & CO 3.2 15JUN2026 (CALLABLE 15MAR26) 6/15/2026 $ 500,000 A1 A- 3 1 3 4 APPLE INC. 2.9% 12SEP2027 (CALLABLE 12JUN27) 9/12/2027 $ 1,300,000 Aaa AA+ 4 1 4 5 TOYOTA MOTOR CREDIT CORP 5.45% 10NOV2027 11/10/2027 $ 1,600,000 A1 A+ 3 2 3 4 AMERICAN HONDA FINANCE 4.7% 12JAN2028 1/12/2028 $ 600,000 A3 A- 2 1 3 3 PNC BANK NA 3.25% 22JAN2028 (CALLABLE 01 FEB28) 1/22/2028 $ 1,000,000 A2 A 3 2 3 3 COLGATE-PALMOLIVE CO 4.6% 01MAR2028 (CALLABLE 01FEB28) 3/1/2028 $ 500,000 Aa3 AA- 3 3 3 3 Total/Average $ 13,900,000 2.9 1.9 3.0 3.4
*ESG ratings are from 1 to 5, with 1 as the highest rating and 5 as the lowest. All ratings are weighted by industry rankings, based on the importance of the category within the individual industry.

Town of Los Gatos
Insight ESG Ratings as of October 31, 2023

Fund Schedule
Fund
Number Fund Description
Current
Revenue
Current
Expenditure
Transfer
In Transfer Out

GENERAL FUND
Non-Spendable:

Loans Receivable 159,000 - - - - - 159,000
Restricted Fund Balances:

Pension 1,400,163 - - - - - 1,400,163
Land Held for Resale 44,338 - - - - - 44,338
Committed Fund Balances:

Budget Stabilization 6,129,774 - - - - - 6,129,774
Catastrophic 6,129,775 - - - - - 6,129,775
Pension/OPEB 300,000 - - - - - 300,000
Measure G District Sales Tax 590,581 - - - - - 590,581
Assigned Fund Balances:

Open Space 410,000 - - - - - 410,000
Sustainability 140,553 - - - - - 140,553
Capital/Special Projects 10,359,577 - - - - - 10,359,577 Carryover Encumbrances 37,698 - - - - - 37,698
Compensated Absences 1,580,623 - - - - - 1,580,623
ERAF Risk Reserve 689,608 - - - - - 689,608
Council Priorities - Economic Recovery 1,556,614 - - - - - 1,556,614 Unassigned Fund Balances:
111 Other Unassigned Fund Balance Reserve (Pre YE distribution) - (3,923,476) 2,954,406 (3,899,805) - - (4,868,875) General Fund Total 29,528,304 (3,923,476) 2,954,406 (3,899,805) - - 24,659,429.00 * Interfund transfers and ARPA funding allocation to be performed as part of the fiscal year end closing entries. ** Interfund transfers to be performed as part of the fiscal year end closing entries.

Oct 2023
Prior Year
Carryforward
7/1/2023*
Increase/
(Decrease)
July - Sept
Estimated Fund
Balance
10/31/2023**

Fund Schedule
Fund
Number Fund Description
Current
Revenue
Current
Expenditure Transfer In Transfer Out

SPECIAL REVENUE
211/212 CDBG 166,653 - - - - - 166,653
222 Urban Runoff (NPDES) 629,843 11,410 29,996 (17,371) - - 653,878 231-236 Landscape & Lighting Districts 176,964 (6,078) - (2,701) - - 168,185 241 ARPA - - - - - - -
251 Los Gatos Theatre 74,991 1,097 5,514 (429) - - 81,173 711-716 Library Trusts 530,173 72,307 111 (2,429) - - 600,162 Special Revenue Total 1,578,624 78,736 35,621 (22,930) - - 1,670,051

CAPITAL PROJECTS
411 GFAR - General Fund Appropriated Reserve 21,725,837 (1,574,042) 780,830 (343,858) - - 20,588,767 421 Grant Funded Projects (406,889) 303,442 29,620 (50,515) - - (124,342) 461-463 Storm Basin Projects 3,218,331 67,555 4,394 - - - 3,290,280 471 Traffic Mitigation Projects 431,079 - 1,253 (1,253) - - 431,079 472 Utility Undergrounding Projects 3,438,996 9,797 861 - - - 3,449,654 481 Gas Tax Projects 1,671,245 (128,520) 234,297 (860,053) - - 916,969 Capital Projects Total 30,078,599 (1,321,768) 1,051,255 (1,255,679) - - 28,552,407

INTERNAL SERVICE FUNDS
611 Town General Liability 212,022 (1,009,025) - (5,634) - - (802,637) 612 Workers Compensation 514,813 (536,612) 30,847 (188,861) - - (179,813) 621 Information Technology 2,474,618 (222,095) 8,947 (59,966) - - 2,201,504 631 Vehicle & Equipment Replacement 2,413,719 232,110 - - - - 2,645,829 633 Facility Maintenance 927,699 55,683 6,794 (90,940) - - 899,236 Internal Service Funds Total 6,542,871 (1,479,939) 46,588 (345,401) - - 4,764,119 Trust/Agency
942 RDA Successor Agency (6,187,789) (1,672,055) - (1,905) - - (7,861,749) Trust/Agency Fund Total (6,187,789) (1,672,055) - (1,905) - - (7,861,749) Total Town 61,540,609 4,087,870 (5,525,720) - - 51,784,257 * Interfund transfers and ARPA funding allocation to be performed as part of the fiscal year end closing entries. ** Interfund transfers to be performed as part of the fiscal year end closing entries.

Deposit Accounts of Interest:
111-23541 General Plan Update deposit account balance $1,030,658.57 111-23521 BMP Housing deposit account balance $4,021,280.60 Prior Year
Carryforward
7/1/2023*
Increase/
(Decrease)
July - Sept
Oct 2023
Estimated Fund
Balance
10/31/2023**

PREPARED BY: Bridgette Falconio
Administrative Technician
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 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: 10
DATE: December 8, 2023
TO: Mayor and Town Council
FROM: Gabrielle Whelan, Town Attorney
SUBJECT: Receive an Annual Report Regarding the Independent Police Auditor Function RECOMMENDATION:

Receive an annual report regarding the Independent Police Auditor function.

BACKGROUND:

The Los Gatos-Monte Sereno Police Department (LGMSPD) personnel are held to the highest standards of conduct both on and off duty. As a critical component of building and maintaining trust with the community, allegations from the community of misconduct by sworn members of the LGMSPD must be investigated in a manner that is fair, impartial, independent, thorough, and timely.

On September 8, 2020, the Town hosted a Community Workshop regarding Police practices and subsequently potential changes were reviewed and discussed with community input at the September 15, 2020, and November 3, 2020 Town Council meetings. On November 3, 2020, the Town Council voted to authorize the Town Manager to establish an Independent Police Auditor (IPA) function with a panel of diverse rotating independent investigators and requested the publication of quarterly IPA reports. Due to the low number of complaints, reports are provided to the Town Council annually. On May 18, 2021, the Town Council authorized the Town Manager to enter into agreements with three firms who responded to a Request for Qualifications and were determined to be the most qualified to serve as independent investigators.

The IPA function creates distance between the Police Department in the review, investigation, and analysis of community complaints regarding police activities. For this reason, complaints may be submitted to the Town Clerk or through an online complaint form. The Town Attorney

PAGE 2 OF 3
SUBJECT: Independent Police Auditor Function Annual Report DATE: December 8, 2023
BACKGROUND (continued):
then reviews the complaint and any applicable materials, such as video footage, in order to determine whether the complaint should be referred to an independent investigator who is overseen by the Town Attorney. This process has been documented in an Administrative Procedure which may be updated by the Town Manager consistent with Town procedures.

Revisions to the existing Procedure have been recommended by the Town Attorney, Town Manager, a Police Department consultant, and the Police Officer’s Association is preparing a response to the recommended revisions.

DISCUSSION:

The current Procedure provides that complaints may be made either in writing or verbally.

Town has received twelve complaints in 2023. Eight complaints were received by email, two were received by mail, and two were received in person. When a complaint is received, it is evaluated by the Town Attorney after review of back-up information. Of the complaints received this year, four resulted in Supervisory Referrals, four were unfounded, and the remainder (two of which are from the same person) are in process.

CONCLUSION:

Staff is giving Council an annual report regarding the Independent Police Auditor function.

Twelve complaints were received for this year 2023.

COORDINATION:

The Town Attorney’s Office, Town Manager’s Office, and Clerks Department coordinated this report.

FISCAL IMPACT:

Based upon recent experience, preparing and sending the required notices and handling of a complaint averages approximately 15 hours of staff time, which includes review of the complaint and any related body camera footage and communication with the complainant.

Additionally, about five hours of Police Department staff time is necessary per complaint to provide case documentation and footage, consult with the Town Attorney, State reporting requirements, and case retention. The work and the associated costs are absorbed into the Town Attorney’s and Police Department’s budget. Fees have not been established to recover these costs. The adopted budget contains funds to pay for consultant costs if an independent investigation is warranted.

PAGE 3 OF 3
SUBJECT: Independent Police Auditor Function Annual Report DATE: December 8, 2023
ENVIRONMENTAL ASSESSMENT:

This is not a project defined under CEQA, and no further action is required.

PREPARED BY: Janette Judd
Executive Assistant to the Town Manager and Town Council Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 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: 11
DATE: December 11, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Adopt Council Committee Appointments Effective January 1, 2024 RECOMMENDATION:

Adopt Council Committee Appointments Effective January 1, 2024 REMARKS:

Recommended Appointments:

The Mayor is recommending Council Members to Town Boards and Committees, and various regional Commissions, Boards, and Committees as shown on the attached 2024 Council Committee Appointment Roster (Attachment 1). While the Mayor makes the recommendations, the Council needs to consider and vote on them.

Role of Members and Alternates:

The appointed Member is the primary attendee and voting participant for the Committee(s) to which they are appointed. If a Member cannot attend, the Alternate should attend on the Member’s behalf as the Los Gatos representative and voting participant.

Alternates may attend a meeting as a member of the public in the audience when the Member is in attendance. In these circumstances, the Alternate may not vote or take other action that may affect the primary’s effectiveness on the Committee.

Attachments:

1. 2024 Council Committee Appointment Roster

*DRAFT* 2024 COUNCIL COMMITTEE APPOINTMENTS Rev.Dec.2023 Council Consideration December 19, 2023 - - Effective January 1, 2024 Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Community Health and
Senior Services
Committee (CHSSC)
Appointee serves as Council
liaison to the Commission
and not a voting member.

Matthew Hudes N.A. Town of Los
Gatos Council
Chambers, 110
East Main St.,
Los Gatos, CA
95030
Conceptual
Development Advisory
Committee
The Conceptual Development
Advisory Committee advises
prospective applicants about
their proposed projects'
compliance with Town
regulations prior to initiating
the development review
process. The Committee also
identifies potential issues
with proposals that should be
addressed in the review
process.

Two Appointees:

Mary Badame
and
Maria Ristow
N.A. Monthly
2nd Wed
4:30 p.m.

Town of Los
Gatos Council
Chambers, 110
East Main St.,
Los Gatos, CA
95030
Joel Paulson, Director
of Community
Development
(408) 354-6879
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 ATTACHMENT 1 1

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Council Policy
Committee
The Town Council Policy
Committee reviews and
recommends changes to
Town Council Policies,
ordinances, and other
documents.

Two Appointees:

Matthew Hudes
and
Maria Ristow
N.A. (2020 to 2023
schedule:

Monthly
4th Tuesday,
5:00 p.m.)
2024 Meeting
Schedule TBD
Town of Los
Gatos Council
Chambers, 110
East Main St.,
Los Gatos, CA
95030
Laurel Prevetti, Town
Manager
(408) 354-6832
Finance Commission Established December 2020,
the Finance Commission
advises the Town Council on
budgetary and fiscal matters.

Resident appointments
established January 19,
2021.

Two Appointees
(one of whom
needs to be
Mayor or Vice
Mayor)
Matthew Hudes
and
Rob Rennie

N.A. (2021 to 2023
schedule:

Monthly
2nd Monday,
5:00 p.m.)
2024 Schedule
anticipated to
continue 2nd
Monday, monthly
Town of Los
Gatos Council
Chambers, 110
East Main St.,
Los Gatos, CA
95030
Gitta Ungvari,
Finance Director
(408) 354-6805
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 2

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
General Plan
Committee
The Town General Plan
Committee is responsible for
developing land use policy
for the General Plan or any
specific plan.

Two Appointees:

Maria Ristow
and
Rob Moore
N.A. (Held/Cancelled as
needed*)
*Monthly,
2nd & 4th
Wednesdays,
5:30 p.m.

Town of Los
Gatos Council
Chambers, 110
East Main St.,
Los Gatos, CA
95030
Joel Paulson, Director
of Community
Development
(408) 354-6879
Housing Element
Advisory Board
Established 2021 to guide the
preparation of the Housing
Element.
(Same
Appointees as
GPC)
Maria Ristow
and
Rob Moore
N.A. Monthly,
1st and 3rd
Thursdays,
7:00 p.m.

Town of Los
Gatos Council
Chambers, 110
East Main St.,
Los Gatos, CA
95030
Joel Paulson, Director
of Community
Development
(408) 354-6879
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 3

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)

OUTSIDE AGENCIES' COMMITTEES
Association of Bay Area
Governments (ABAG)
General Assembly
The Association of Bay Area
Governments (ABAG)
General Assembly is a
regional agency that
represents 9 Bay Area
Counties and all cities within
those Counties. Membership
is voluntary and the Town is
a member. The ABAG
General Assembly determines
the fair share housing
allocations to each city and
county as required by the
State and other matters.

Rob Rennie Rob Moore Generally meets
twice annually
(Spring TBD
Fall TBD)
Special Meetings
as needed.

Spring and Fall
Locations TBD
Fred Castro
fcastro@bayareametro
.gov
(415) 820-7913
Town Staff Contact:

Laurel Prevetti, Town
Manager
(408) 354-6832
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 4

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
League of California
Cities
(Peninsula Division)
The League of California
Cities is a State-wide
organization that represents
the member cities, holds
conferences, provides
training sessions, and lobbies
the legislature. The League
Peninsula Division is the
regional division of the
League of California Cities
which discusses and
addresses legislative issues
from a regional perspective.

Rob Moore Matthew Hudes Quarterly Meeting:

January
March
May
September
Other:

April (Legislative
Action Day &
Reception)

June TBD
Mayors and Council
Members Executive
Forum
Location: TBD
October TBD
Annual Conference
Location: TBD
TBD (Varies) Seth Miller
[email protected]
(415) 595-8629
Town Staff Contact:

Laurel Prevetti, Town
Manager
(408) 354-6832
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 5

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Santa Clara County
Housing and
Community
Development Advisory
Committee
The Committee is composed
of City Council members of
the eight participating nonentitlement cities and one
member of the Board of
Supervisors who is the
chairperson. The Committee
makes policy
recommendations to the
Board of Supervisors on the
planning, monitoring, and
evaluation of the HCD
Program and the
development of a
comprehensive, coordinated
housing and community
development plan.

Mary Badame Rob Moore Scheduled as
needed.

Typically:

February
March
October
2310 N. 1st
Street (at
Charcot)
Charcot Training
Center, Suite 100
San Jose
Housing and
Community
Development
Offices of Santa Clara
County – Office of
Affordable Housing
70 West Hedding
Street, 7th Floor
San Jose, CA 95110
Town Staff Contact:

Laurel Prevetti, Town
Manager
(408) 354-6832

2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 6

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Santa Clara County
Cities Association -
Board of Directors
The Santa Clara County
Cities Association Board of
Directors provides a unified
voice for all member cities
with respect to regional,
state, and federal agency
activities that impact local
government. The Board
advocates for member cities
by monitoring and engaging
in the regional, state, and
federal legislation processes.

Matthew Hudes Rob Moore Monthly - 2nd
Thursday
7:00-9:00 p.m.

Note:

April TBD
(General
Membership
Meeting with
City Managers)
December TBD
(General
Membership –
Holiday Party)
TBD Shali Sirkay
(Acting) Executive
Director
Audin Leung, Office
Assistant/Board Clerk
Santa Clara County
Cities Association
505 W. Olive Avenue,
Suite 749
Sunnyvale, CA 94086
Executive_Director@
citiesassociation.org
(408) 730-7770
Town Staff Contact:

Laurel Prevetti, Town
Manager
(408) 354-6832
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 7

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Santa Clara County
Cities Association -
Legislative Action
Committee
The Santa Clara County
Cities Association Legislative
Action Committee reviews the
legislative priorities that the
Board of Directors sets for
the year. The Committee
tracks State/Federal
legislation related to those
priorities and makes
recommendations to the
Board.

Historically, the same
appointee serves on the
Cities Assoc. Board, as the
meetings occur back-to-back.

Rob Moore Matthew Hudes Meets as needed
(2nd Thursday of
each month prior
to SCCCA Board
Meeting
(See SCCCA
Board of Directors
meeting dates on
page 6)
TBD Shali Sirkay
(Acting) Executive
Director
Audin Leung, Office
Assistant/Board Clerk
Santa Clara County
Cities Association
505 W. Olive Avenue,
Suite 749
Sunnyvale, CA 94086
Executive_Director@
citiesassociation.org
(408) 730-7770
Town Staff Contact:

Laurel Prevetti, Town
Manager
(408) 354-6832
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 8

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Santa Clara County
Cities Association - City
Selection Committee
The City Selection Committee
makes appointments to
LAFCO, MTC, and the
Recycling and Waste
Reduction Commission, and
recommendations to the
County Board of Supervisors
for appointment to the Bay
Area Quality Management
District Board.

Historically, the same
appointee serves on the
Cities Assoc. Board, as the
meetings occur back-to-back.

Matthew Hudes Rob Moore Meets as needed
(2nd Thursday of
each month prior
to SCCCA Board
Meeting – 6:00 or
6:15 p.m.)
(See SCCCA
Board of Directors
meeting dates on
page 6)
TBD Shali Sirkay
(Acting) Executive
Director
Audin Leung, Office
Assistant/Board Clerk
Santa Clara County
Cities Association
505 W. Olive Avenue,
Suite 749
Sunnyvale, CA 94086
Executive_Director@
citiesassociation.org
(408) 730-7770
Town Staff Contact:

Laurel Prevetti, Town
Manager
(408) 354-6832
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 9

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Santa Clara Valley
Water District (Valley
Water) Commission
The Commission serves in an
advisory capacity to the
Valley Water Board
regarding water-related
matters. The Valley Water is
responsible for flood control,
water supply, and other
water-related infrastructure
for the County of Santa
Clara.

Rob Rennie Maria Ristow Quarterly
4th Wednesday
12:00 p.m. to 2:00
p.m.

Typically:

January
April
July
October
Santa Clara
Valley Water
District,
Headquarters
Building
Boardroom,
5700 Almaden
Expressway, San
Jose, California
95118
Glenna Branbill
Valley Water
5750 Almaden
Expressway
San Jose, CA 95118
GBrambill@valleywat
er.org
(408) 630-2408
Town Staff Contact:

Nicolle Burnham,
Director of Parks &
Public Works
(408) 399-5770
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 10

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Santa Clara Valley
Transportation
Authority (VTA) Policy
Advisory Committee
(PAC)
The VTA Policy Advisory
Committee provides policy
advice to the VTA Board.

The VTA Board is comprised
of elected officials from cities
and the County.

Maria Ristow Rob Rennie Monthly
2nd Thursday
4:00 p.m.

Santa Clara
Valley
Transportation
Authority
3331 N. First,
Building B -
Room B-104
San Jose, CA
95134-1906
Michelle Garza
Board Assistant
Santa Clara Valley
Transportation
Authority (CMP)
3331 N. First Street
San Jose, CA 95134
[email protected]
(408) 546-7977
Town Staff Contact:

Nicolle Burnham,
Director of Parks &
Public Works
(408) 399-5770
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 11

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Santa Clara Valley
Transportation
Authority (VTA) State
Route 85 Corridor
Policy Advisory Board
(SR85 PAB)
Formed in 2015, the VTA
State Route 85 Corridor
Policy Advisory Board (SR85
PAB) studies the long-term
transit and transportation
plans to serve the SR 85
Corridor and advises the
VTA Board of Directors on
the scope, funding and
construction of both nearand long-term transit and
transportation improvement
projects for this corridor.

Maria Ristow Rob Rennie Quarterly,
Mondays,
10:00 a.m. to
12:00 p.m.

Typically:

April
May
September
December
TBD Michelle Garza
Board Assistant
Santa Clara Valley
Transportation
Authority (CMP)
3331 N. First Street
San Jose, CA 95134
[email protected]
(408) 546-7977
Town Staff Contact:

Nicolle Burnham,
Director of Parks &
Public Works
(408) 399-5770
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 12

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Silicon Valley Clean
Energy
(SVCE)
Formed March 2016, the
Silicon Valley Clean Energy
is a local, public non-profit
that will purchase cleaner
energy on the open market
for residents and businesses
in participating communities.

Decisions are made through
the Board of Directors, which
is composed of a
representative from each
member community.

Participating jurisdictions
include Campbell, Cupertino,
Gilroy, Los Altos, Los Altos
Hills, Los Gatos, Monte
Sereno, Morgan Hill,
Mountain View, Saratoga,
Sunnyvale and the
unincorporated parts of
Santa Clara County.

Rob Rennie Maria Ristow Monthly 2nd
Wednesday
7:00 p.m.
(or as needed)
Cupertino
Community Hall
10350 Torre
Avenue,
Cupertino, CA
95014
Andrea Pizano, Board
Clerk/Executive
Assistant
333 W. El Camino
Real, Ste. 290
Sunnyvale, CA 94087
Andrea.Pizano@svcle
anenergy.org
(408) 721-5301x1005
or (844) 474-7823
Town Staff Contact:

Laurel Prevetti, Town
Manager
(408) 354-6832
and
Nicolle Burnham,
Director of Parks &
Public Works
(408) 399-5770
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 13

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
Solid Waste
Management Joint
Powers Agency (JPA)
Board of Directors
The Solid Waste Management
Joint Powers Agency (JPA)
Board of Directors reviews
issues related to the solid
waste management franchise,
disposal, recycling, and yard
waste agreement.

Mary Badame Maria Ristow Quarterly
1st Thursday of the
month
5:00 p.m.

February
May
September
November
Monte Sereno
City Hall
18041 SaratogaLos Gatos Road
Monte Sereno
Marva M. Sheehan,
CPA
Vice President
Hilton, Farnkopf &
Hobson (HF&H)
Consultants, LLC
201 North Civic
Drive, Suite 230
Walnut Creek, CA
94596
Phone (925) 977-6961
Fax (925) 977-6955
Email:
msheehan@hfhconsultants.com
Town Staff Contact:

Nicolle Burnham,
Director of Parks &
Public Works
(408) 399-5770
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 14

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
West Valley Clean
Water Program
Authority
(WVCWPA)
The West Valley Clean Water
Program Authority was
formed in early 2018 to
coordinate stormwater
pollution abatement, control
and management efforts to
assist public and private
entities in complying with
stormwater National
Pollutant Discharge
Elimination System
(“NPDES”) permits and
improving surface water
quality and enhancing water
supplies in California.

Member Agencies:

City of Campbell, Town of
Los Gatos, City of Monte
Sereno, City of Saratoga
Mary Badame Maria Ristow Quarterly meetings
immediately
preceding (4:00
p.m.)
the Solid Waste
Management JPA
Board of Directors.
2024 Meeting
Schedule to be
determined
Monte Sereno
City Hall
18041 SaratogaLos Gatos Road
Monte Sereno
Scott Holt, Senior
Associate,
Hilton, Farnkopf &
Hobson (HF&H)
Consultants, LLC
201 North Civic
Drive, Suite 230
Walnut Creek, CA
94596
Phone (925) 977-6967
Fax (925) 977-6955
Email: sholt@hfhconsultants.com
Town Staff Contact:

Nicolle Burnham,
Director of Parks &
Public Works
(408) 399-5770
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 15

Name of Committee Purpose 2024 Appointee 2024 Alternate 2024 Meeting Schedule
Location Contact Person(s)
West Valley Sanitation
District Board of
Directors
The West Valley Sanitation
District Board of Directors
oversees the treatment of
sewage for the cities of
Campbell, Cupertino, Los
Gatos, Monte Sereno, and
Saratoga.
...............................................
........

Board of Directors receive
$210 stipend per meeting.

Rob Moore Maria Ristow Monthly
2nd Wednesday
(or 4th Wednesday
if needed)
5:00 p.m.

West Valley
Sanitation
District
100 E.

Sunnyoaks
Avenue
Campbell, CA
95008
Lesha Luu
West Valley
Sanitation District
100 E. Sunnyoaks
Avenue
Campbell, CA 95008
[email protected]
(408) 378-2407
Town Staff Contact:

Nicolle Burnham,
Director of Parks &
Public Works
(408) 399-5770
2024 Council Committee Appointments.12-19-23 DRAFT working doc 12/14/2023 16

PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 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: 12
DATE: December 12, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Annual Comprehensive Financial Report (ACFR):
a. Receive the Annual Comprehensive Financial Report (ACFR) for the Fiscal Year Ended June 30, 2023, and
b. Adopt a Resolution Confirming June 30, 2023 Fund Balances in Accordance With Fiscal Year 2022/23 Final Audit and Town Council General Fund Reserve Policy
RECOMMENDATION:

Annual Comprehensive Financial Report (ACFR):
a. Receive the Annual Comprehensive Financial Report (ACFR) for the Fiscal Year Ended June 30, 2023 as recommended by the Finance Commission (Attachment 1), and b. Adopt a Resolution Confirming June 30, 2022 Fund Balances in Accordance with Fiscal Year 2022/23 Final Audit and Town Council General Fund Reserve Policy.(Attachment 2) BACKGROUND:

The Town contracts with an independent certified public accountant to examine the books, records, inventories, and reports of all officers and employees who receive, handle, or disburse public funds each fiscal year (FY). The FY 2022/23 audit was performed by Chavan and Associates, LLP an experienced firm specializing in audit services for California public agencies.

The firm also assisted with the Draft ACFR for the Town of Los Gatos.

The information contained in the ACFR provides detailed financial information which the Los Gatos community and others can use to better understand the fiscal standing of the Town. In addition, the financial information contained in the document is one element that the credit rating agencies review annually to affix a credit rating for the Town’s outstanding debt obligations.

PAGE 2 OF 5
SUBJECT: Receive 2023 Annual Comprehensive Financial Report DATE: December 12, 2023
BACKGROUND (continued):

With the passage of Measure A, the Finance Commission has been tasked with several mandated duties as described in the provisions of the adopted Ordinance. Section 2.50.225. – Duties states that:
(a) The Finance Commission shall:
(3) Review the Town Manager's draft Annual Comprehensive Financial Report (ACFR) for the preceding fiscal year and provide written comments and recommendations to the Town Manager.
(A) The Town Manager shall respond in writing to the Finance Commission providing his or her rationale for accepting or rejecting each of the Finance Commission's comments and recommendations prior to presenting the ACFR to the Town Council for formal consideration.
(B) The Town Manager may not present the ACFR to the Town Council for formal consideration unless or until he or she considers and responds in writing to all of the Finance Commission's comments and recommendations.

DISCUSSION:

On November 27, 2023, the Draft FY 2022/23 Annual Comprehensive Financial Report (ACFR) was posted to the Town’s website and the link was provided to the Finance Commission.

Finance Commissioners had an opportunity to submit written questions and comments to staff.

At the Finance Commission special meeting on December 4, 2023, the Town’s independent auditor and staff addressed the Commissioners’ questions and comments. The Finance Commission began to formulate its comments and recommendations to the Town Council. The Commission had a consensus on shortening and streamlining the Management Discussion and Analysis (MD&A).

Staff requested Commissioners to provide any additional comments before the December 11, 2023 regular Finance Commission meeting.

The Finance Commission concluded its review of the draft ACFR and unanimously recommended that the Town Council receive the Annual Comprehensive Financial Report (ACFR) for the Fiscal Year Ended June 30, 2023 with recommended modifications (see Attachment 3 for redlined version).

The redlined draft ACFR (Attachment 3) includes corrections of typos, clarifying language, additional details in schedules, summary presentation, graphs, and elimination of text based on Commissioners’ comments. The redlined ACFR balances requests for more information with brevity.

PAGE 3 OF 5
SUBJECT: Receive 2023 Annual Comprehensive Financial Report DATE: December 12, 2023
DISCUSSION (continued):

The Town Manager’s responses to Commissioners’ questions and comments are included in Attachment 4. The questions and comments are organized by 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.

While Commissioners wanted a more simplified presentation, there were additional questions raised regarding Town finances. In particular, there was an interest to normalize the data and the auditor suggested that a separate document would be more appropriate than the ACFR.

Detailed information regarding Town Finances, Pension and Other Post-Employment Benefits, Financial Policies, and the Forecast is available in the Town’s Adopted Budget and other Town reports.

The Finance Commission recommended to include in its 2024 workplan a discussion of the format and level of detail in the Management Discussion and Analysis (MD&A) to further improve the presentation for next ACFR.

The Finance Commission also recommended that the Town should hire a separate accounting firm to assist the Town with the preparation of financial statements contained in the Annual Comprehensive Financial Report. Staff will bring forward government best practices and cost analysis to Council consideration with the Proposed FY 2023/24 operating budget discussion.

Highlights of the draft audited financial results include:

Independent Auditor’s Report
The auditor has given the Town’s financial statements a “clean” audit opinion for the year ended June 30, 2023 giving reasonable assurance that the financial statements are “free of material misstatement” (Attachment 1).

Management’s Discussion and Analysis (MD&A)
The MD&A section of the report summaries for the Town on an entity-wide basis and fund type basis. Information is provided in this section with a year-to-year view, explaining how fund balances have changed between fiscal years ending June 30, 2022, and June 30, 2023.

Information is also presented on the adopted General Fund budget to actuals and any significant budget adjustments made during FY2022/23.

PAGE 4 OF 5
SUBJECT: Receive 2023 Annual Comprehensive Financial Report DATE: December 12, 2023
DISCUSSION (continued):

Statement of Net Position
The Statement of Net Position serves as a useful indicator of a government’s financial position.

The Town had net assets of $153.5 million at fiscal year-end as compared to $138.4 million the prior year, an overall increase of $15.1 million over the prior fiscal year. The increase was a result of genera revenue collection of 39.4 million and a $1.6 million litigation settlement combined with governmental activities expense of $25.8 million.

The largest portion of the net assets, $132.7million, represents the Town’s investment in its capital assets and infrastructure. Restricted assets of $11.1 million are resources that are subject to external restrictions on how they may be used. As of June 30, 2023, unrestricted net position is $11.8 million compared to $1.8 million the prior year.

Basic Financial Statements
This section contains basic financial statements, including the “entity-wide” Statement of Net Position and Statement of Activities, financial statements for the fund types including Governmental Funds (such as the General Fund), Proprietary Funds, and the Private Purpose Trust Funds (Redevelopment Successor Agency). The footnotes section provides details on significant items such as the Town’s cash and investments (Note 2), its long term obligations (Certificates of Participation) related to bonded debt (Note 7), Note 8 which illustrates the new implementation of GASB 96 for subscription-based information technology agreements, the net pension liability for both the Town’s miscellaneous and safety pension plans (Note 11), and a discussion of the Town’s other post-employment benefit plan (Note 12).

Required Supplementary Information
The Schedules of Pension Plan Contributions are provided in this section.

Supplementary Information
This section provides budget to actual information for “non-major” funds which represent less than 10% of the Town’s total assets/liabilities/revenues or expenditures.

Statistical Section
This section presents demographic statistics and ten-year historical financial data for the Town, including information on assessed valuations, fund balances, debt, property tax rates, personnel (full-time equivalent) history, principal employers, and other financial and demographic disclosures.

CONCLUSION:

As noted in the auditor’s opinion, the ACFR fairly presents the fiscal year ending June 30, 2023 financial activity for the Town of Los Gatos.

PAGE 5 OF 5
SUBJECT: Receive 2023 Annual Comprehensive Financial Report DATE: December 12, 2023
FISCAL IMPACT:

There is no fiscal impact associated with this item.

Attachments:

1. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2023

2. Fund Balance Resolution Establishing June 30, 2023 Fund Balances

3. Redlined Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2023

4. Town Manager’s Responses to Commissioners’ Questions and Comments

ATTACHMENT 1

TOWN OF LOS GATOS

CALIFORNIA

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

FOR THE FISCAL YEAR ENDED
JUNE 30, 2023

PREPARED BY THE

OFFICE OF THE TOWN MANAGER

TOWN HISTORY
Los Gatos is located at the base of the Santa Cruz Mountains at the southwest edge of Santa Clara County and approximately 50 miles south of San Francisco. The natural landscape includes picturesque hillsides, creeks, and valley flatlands. Los Gatos is in an area once occupied by Indigenous People, who lived sustainably in the area rich with fertile soils, abundant wildlife, and other natural resources.

The name Los Gatos comes from “El Rancho de Los Gatos,” a ranch established in 1839 by a Mexican land grant and so named because of the large number of mountain lions in the area. In 1854, James Alexander Forbes purchased some of this land and built a flour mill. In 1860, the first hotel was opened to provide a stage stop on the toll road which had been built between San Jose and Santa Cruz.

Wheat production gave way to orchards, and rapid growth ensued when the railroad reached Los Gatos in 1878. The residential subdivisions of Broadway, Bayview, Fairview, and Almond Grove were built in the 1880’s. By 1887, the population had grown to 1,500 and the Los Gatos community voted to incorporate.

Fruit industries faded slowly during the Depression and World War II, but the postwar period brought an influx of people, producing residential and commercial development. Highway 17 was constructed through the center of town, opening in 1940. Growth levelled off in the early 1970’s, leaving Los Gatos with its small-town atmosphere and pedestrian-oriented downtown.

Because of its distance from other centers of population, Los Gatos developed as a complete community including residential, business, and industrial elements. Preserving Los Gatos as a complete and wellbalanced community has been and remains a prominent goal of residents. From the first 100-acre town site in 1890 with a population of 1,652, Los Gatos grew slowly so that by 1963 the area was 6.3 square miles, with a population of 11,750. Today Los Gatos covers nearly 15 square miles and has a population of about 33,102. This growth over the first 80 years resulted in a human scale community with narrow streets and small buildings.

As it exists now, Los Gatos’ boundaries encompass a wide variety of terrain, ranging from level land to steep and densely wooded hillsides. The sharp visual contrasts among these features and charming architecture create the picturesque setting of the Town. In the midst of the growth of Silicon Valley, Los Gatos attracts people with a preference for the Town’s distinctive, high quality natural and urban environment.

TOWN VISON STATEMENT
The Town of Los Gatos’s Vision Statement articulates the future Los Gatos and reflects the high ideals identified by the community:

Residents are united in their desire to maintain a high quality of life and preserve the character of the Town. The overall community consensus is that Los Gatos be a full-service community that is also environmentally sensitive; that Los Gatos maintains a balanced, well-designed mix of residential, commercial, service and open space uses, fostering a pedestrian-oriented community with a small town, village-like character; that Los Gatos supports an active business community that provides a wide variety of goods and services and a broad range of employment opportunities, eliminating the need to travel to other communities; and that Los Gatos provides a well-run, efficient municipal government that is fiscally healthy, with high levels of public safety, recreational, art and cultural amenities and is connected to high quality education.

TOWN OF LOS GATOS, CALIFORNIA

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

TABLE OF CONTENTS
INTRODUCTORY SECTION:

Letter of Transmittal........................................................................................................................................... 1 Organization Chart ............................................................................................................................................. 7 Principal Officers................................................................................................................................................ 8 GFOA Award ..................................................................................................................................................... 9 FINANCIAL SECTION:

Independent Auditor’s Report........................................................................................................................... 13 Management’s Discussion and Analysis........................................................................................................... 18 Basic Financial Statements:

Government-Wide Financial Statements:.................................................................................................... 38 Statement of Net Position..................................................................................................................... 39 Statement of Activities......................................................................................................................... 40 Fund Financial Statements:

Governmental Funds: ........................................................................................................................... 41 Balance Sheet.................................................................................................................................... 42 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position.............................................................................................................. 43 Statement of Revenues, Expenditures and Changes in Fund Balances............................................. 44 Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities...................................................... 45 Statement of Revenue, Expenditures and Changes in Fund Balances – Budget and Actual (GAAP) General Fund.................................................................................... 46 Statement of Revenue, Expenditures and Changes in Fund Balances – Budget and Actual (GAAP) ARPA Fund...................................................................................... 47 Proprietary Funds – Internal Service Funds: ....................................................................................... 48 Statement of Net Position ................................................................................................................. 49 Statement of Revenue, Expenses and Changes in Net Position........................................................ 50 Statement of Cash Flows .................................................................................................................. 51 Fiduciary Funds: .................................................................................................................................. 52 Statement of Fiduciary Net Position ................................................................................................. 53 Statement of Changes in Fiduciary Net Position .............................................................................. 54 Notes to the Basic Financial Statements...................................................................................................... 57 REQUIRED SUPPLEMENTARY INFORMATION:

Schedule of Pension Plan Contributions...................................................................................................... 99 Schedule of Proportionate Share of Net Pension Liability – CalPERS Safety Cost Sharing Plan ................................................................................................................................. 100 Schedule of Proportionate Share of Net Pension Liability – CalPERS Misc.

Agent-Multiple Employer Plan ............................................................................................................ 101

TOWN OF LOS GATOS, CALIFORNIA

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

TABLE OF CONTENTS
Schedule of OPEB Contributions................................................................................................................ 102 Schedule of Changes in Net OPEB Liability............................................................................................... 103 SUPPLEMENTARY INFORMATION:

Major Governmental Fund Schedules (other than the General Fund):

Schedule of Revenue, Expenditures and Changes in Fund Balance – Budget and Actual (GAAP) Appropriated Reserves Fund................................................................... 107 Nonmajor Governmental Funds:

Combining Balance Sheets.......................................................................................................................... 108 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances...................................................................................................................................... 111 Budgeted Nonmajor Funds Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (GAAP) ................................................................... 114 Internal Service Funds:

Combining Statement of Fiduciary Net Position......................................................................................... 120 Combining Statement of Revenue, Expenses and Changes in Net Position................................................ 121 Combining Statement of Cash Flows.......................................................................................................... 122 STATISTICAL SECTION .............................................................................................................................. 125 Net Position by Component......................................................................................................................... 127 Changes in Net Position .............................................................................................................................. 128 Fund Balances, Governmental Funds.......................................................................................................... 130 Changes in Fund Balances, Governmental Funds....................................................................................... 132 Assessed Value and Estimated Actual Value of Taxable Property ............................................................. 134 Direct and Overlapping Property Tax Rates................................................................................................ 135 Principal Property Tax Payers..................................................................................................................... 136 Property Tax Levies and Collections........................................................................................................... 138 Ratios of Outstanding Debt by Type ........................................................................................................... 139 Direct and Overlapping Governmental Activities Debt............................................................................... 140 Legal Debt Margin ...................................................................................................................................... 141 Demographic and Economic Statistics........................................................................................................ 142 Principal Employers.................................................................................................................................... 143 Full-time Equivalent Town Government Employees by Function/Program ............................................... 145 Operating Indicators by Function/Program ................................................................................................. 146 Capital Assets Statistics by Function/Program............................................................................................ 148 OTHER INDEPENDENT AUDITOR’S REPORTS:

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................................................................................................................. 150

INTRODUCTORY SECTION

This Page Left Intentionally Blank

November 27, 2023
Honorable Mayor and Town Council and Residents of Los Gatos, I am pleased to submit the Town’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2023. In coordination with the Town Manager’s Office, this report was prepared by the Finance Department, which assumes responsibility for the accuracy of the data, the completeness and fairness of the presentation, and all disclosures. The information in this report presents the reader with a comprehensive view of the Town’s financial position and the results of its operations for the fiscal year ending June 30, 2023, along with additional disclosures and financial information designed to enable the reader to gain an understanding of the Town’s financial activities.

This report was prepared as prescribed in Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments (GASB 34). This GASB Statement requires management to provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of a Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the Independent Auditor’s Report.

This Annual Comprehensive Financial Report is organized into three sections:

I. The Introductory Section includes the table of contents, letter of transmittal, listing of elected officials, Town administrative personnel, and an organization chart delineating organizational structure.

II. The Financial Section includes the Independent Auditor’s opinion, the MD&A, the basic financial statements, notes to the financial statements, combining statements of non­major funds, and required supplemental information.

III. The Statistical Section includes both financial and non­financial data about the Town.

The Annual Comprehensive Financial Report is prepared in accordance with Generally Accepted Accounting Principles (GAAP) promulgated by the Governmental Accounting

Mayor and Town Council
November 27, 2023

Standards Board (GASB) and includesthe auditreport of Chavan&Associates,the Town’s independent certified public accountants.

This Annual Comprehensive Financial Report will be submitted to the Government Finance Officers Association for consideration of its Achievement of Excellence Award in financial reporting certification. This award is granted only to entities whose reports meet the highest standards of municipal financial reporting.

THE REPORTING ENTITY AND ITS SERVICES
Los Gatos is a general law Town, incorporated under the legal framework of California in 1887. The Town is located in the foothills and level terrain of southwestern Santa Clara Valley, referred to internationally as “Silicon Valley.” From the first 100­acre Town site and an 1890 population of 1,652, Los Gatos grew slowly so that by 1963 the area was 6.3 square miles with a population of 11,750.

Today Los Gatos covers approximately 15 square miles with a population of 33,102 (California Department of Finance, January 2023). The growth over the last 80 years resulted in a community with vibrant business districts, well-maintained neighborhoods, and lovely parks and open spaces.

Preserving the unique charm of Los Gatos as a complete and well-balanced community while meeting its economic and housing needs, has been, and remains a key goal for the Town.

The Town maintains a Council­Manager form of government which combines the strong political leadership of elected officials with the strong managerial experience of an appointed Town Manager.

Five Council members are elected at large for staggered four­year terms to govern the Town. The Mayor and Vice Mayor are appointed by the Council from its own ranks and serve one-yearterms. The Town Manager and Town Attorney are appointed and supervised directly by the Council. The Town Manager oversees all municipal services such as Public Safety, Parks and Public Works, Community Development, Library, and Town Administration includingHuman Resources, Information Technology, and Finance.

ECONOMIC CONDITIONS AND OUTLOOK
This past year, the Town continued to see a modest return to economic normalcy after the initial economic impacts associated with the pandemic. The Town closed FY 2022/23 with a net $5.7 million General Fund surplus due to a variety of factors discussed in the MD&A.

General Fund revenues (not including transfers in) increased 8.5% from the prior year. Property tax revenues remain the largest and most consistent source of support for General Fund operations, comprising approximately 44.9% of General Fund revenues in FY 2022/23. For FY 2022/23, property tax receipts of $22.7 million were $1.6 million higher than the prior year’s collection, reflecting the continued desirability of the Town, its environment, culture, and educational opportunities.

Mayor and Town Council
November 27, 2023

The Town also relies heavily on sales tax revenues to support General Fund operations, comprising approximately 17.4%ofGeneral Fund revenuesin FY 2022/23. For FY2022/23 salestax receipts of $8.8 million were $0.3 million higher than the prior year’s collection. Sales tax revenues were supported by the continued resurgence of the restaurant sector. The Town’s 1/8 cent District Sales Tax continued to perform well as the District Tax captures a larger share of the increase in online sales versus the County pool collections.

In addition to the Town’s revenue sources, the Town benefited from the federal American Rescue Plan Act (ARPA). The Act allocated $7,229,744 to the Town over a two-year period. The Town has received both payments. 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 expenditures under the provisions of the Act. For more information regarding the two federal programs please refer to Note 16.

As with most municipalities, services are provided directly by employees to the Town’s residents, businesses, and visitors. As a service delivery enterprise, the cost of salaries and benefits are a significant portion of the Town’s expenditures. Salaries are largely dictated by regional market forces as evidenced by fierce competition for talent in the San Francisco Bay Area, and inflationary pressures nationwide. During FY 2021/22, the Town successfully completed negotiations with all bargaining units. While important for the consistent delivery of high quality services for the Town, these actions exacerbated an already existing imbalance between revenues and expenditures.

The Town also continues to adjust and prepare for pension employer coststo continue to be a primary expense in conjunction with salaries. The Town’s pension plans over the past several decades, like all other CalPERS participants, have experienced changes in actuarial assumptions, demographic changes, and volatile investment returns which have outweighed any positive plan experiences. The outcome of these unfavorable economic and demographic conditions is the creation of unfunded pension and Other Post­Employment Benefits(OPEB) obligationsfor the Town. According to the 2022 CalPERS actuarial valuations, the unfunded actuarial liability for pensions was $59.9 million and $7.0 million for OPEB as of June 30, 2022.

To address the escalation in pension costs, current and previous Councils have allocated additional discretionary pension funding totaling $10.4 million in prior fiscal years. These additional discretionary payments will ultimately yield an approximate $12.7 million in pension contribution savings. In addition to the management of the Town’s pension obligations, prior Councils have worked to curb cost escalation in Other Post-Employment Benefits (OPEB). In 2009, the Town initiated prefunding of retiree healthcare benefits and has since established approximately $24.3 million in OPEB assets from zero in 2009.

In addition, it should be noted that the net pension obligation varies annually depending upon the plan’s actual investment earnings compared to the assumed rate of return during the plan’s measurement periods. The Net Pension Obligation (NPO) reported in the Town’s ACFRs has experienced a high degree of variability in recent years, with Net Pension Obligation reported in the

Mayor and Town Council
November 27, 2023

June 30, 2017 ACFR in the amount of $33.4 million rising to $58.02 million in fiscal year 2020/21, and decreasing to $27.48 million in FY 2021/22. The NPO reported in this year’s financial statements (ACFR 2022/23) has increased 52.6% to the current NPO of $59.86 million. Due to CalPERS preliminary returns of 5.8%, staff expects the NPO to rise in the next fiscal year reporting period.

Readers are cautioned that in considering the amount of the pension and OPEB liabilities and other actuarial data as reported by CalPERS and the Town’s actuary, this is “forward looking” information.

Such “forward looking” information reflects the judgment of the Board of Administration of CalPERS, its actuaries, and the Town’s actuary as to the amount of assets which the pension and OPEB plans will be required to accumulate to fund future benefits. These judgments are based upon a variety of assumptions, one or more of which may prove to be inaccurate or that may change with the future experience of the pension and OPEB plans. The actuarial methods and assumptions could be changed by CalPERS and the Town’s actuary at any time based on their professional judgement. Such changes could cause the Town’s obligations to the pension and OPEB plans to be higher or lower in any particular year. Thissensitivity to changesin actuarial assumptions is especially evident in changes to the Discount Rate as illustrated in Note 11 and changes to Healthcare Trend and Discount rates as illustrated in Note 12.

For detailed information about the Town employees’ retirement plan please refer to Note 11 of the Notes to Basic Financial Statements Section. For detailed information about the Town OPEB obligations please referto Note 12 of the Notesto Basic Financial Statements Section. In addition, the Town provides extensive information on pension and OPEB information on the Town’s website.

Despite revenue constraints and increasing costs associated with unfunded federal and state mandates, the Town has managed to maintain high service levels and balanced budget through prudent fiscal management. The Town continues its outreach to the community, the League of California Cities, and local legislators to prevent and limit any future revenue losses and mandated cost increases.

MAJOR CAPITAL PROJECT INITIATIVES
Major capital asset and infrastructure initiatives were once again the priority for the fiscal year.

Approximately $9.5 million in Town infrastructure and other capital asset improvements and contributions were invested in FY 2022/23, including $3.4 million in Town-wide street projects to improve the pavement condition, $0.7 million adding subscription right of use of assets by GASB 96 implementation, $0.6 million equipment adds, and $0.3 million for storm drain and park improvements. In addition, $4.5 million was invested in construction in progress including, roads, bridges, storm drains, park, pathways, building improvements, and downtown revitalization efforts.

Additional infrastructure improvements are scheduled in accordance with the Town’s approved Capital Improvement Plan, and will continue into future years. All of these improvements are funded either through grants, or via revenues accumulated from prior year budget savings and/or excess revenues per Town Council Policy.

Mayor and Town Council
November 27, 2023

ACCOUNTING SYSTEM AND BUDGETARY CONTROL
The effectiveness of internal controls is a primary consideration in the development and evaluation of the Town’s accounting system. Internal accounting controls are designed to provide reasonable but not absolute assurance regarding:
1) safeguarding of assets against loss from unauthorized loss or disposition, 2) accuracy and reliability of accounting data, and
3) adherence to managerial policy.

The concept of reasonable assurance recognizesthat the cost of internal controlsshould not outweigh the benefits, and that management must make estimates and judgmentsin evaluating these costs and benefits.

All governmental fund types use the modified accrual basis of accounting. This means that revenues are recorded when measurable and available rather than when received. Measurable means the amount can be determined and available means the cash is received within sixty days after the end of the fiscal year. Expenditures are recorded when the liability isincurred, rather than when paid. An exception to this rule is principal and interest on general long-term debt, which is not recognized by debt service funds until it is due.

Proprietary (internal service) funds are accounted for using the accrual basis of accounting, similar to that used by corporations. Proprietary fund revenues are recognized when they are earned rather than when the cash is received, even if the cash is not available and proprietary fund expenses are recognized when they are incurred. With the implementation of GASB 34, the Town prepares its Basic Financial Statements on the accrual basis. Internal accounting procedures have been developed to provide reasonable assurance regarding the safeguarding of assets and the reliability of financial records for preparing financial statements and maintaining asset accountability.

An annual operating budget, five-year budget forecast, and five-year capital improvement plan is adopted by the Town Council consistent with generally accepted accounting principles. All budget adjustments and transfers between funds must be approved by the Town Council during the fiscal year. The Town Manager is authorized to transfer unencumbered appropriations within a budget category, within a fund. Appropriations are valid for each fiscal year and lapse at year­end.

AWARDS
The Town’s Annual Comprehensive Financial Report for the fiscal year ended June 30, 2022 was awarded a Certificate of Achievement for Excellence in Financial Reporting by the national Government Finance Officers Association. This is the 28th consecutive year that the Town has received the award. This prestigious award recognizes the report’s conformance with strict accounting and reporting standards established by the Government Accounting Standards Board and

Mayor and Town Council
November 27, 2023

government finance organizations. This award is annual in nature and valid for one year only. This year’sreport will be submitted for award consideration by this organization, as we believe it continues to meet these standards.

INDEPENDENT AUDIT
State law requires an annual audit ofthe Town’s accounts by independent certified public accountants.

The accounting firm of Chavan & Associates LLP performs this function for the Town of Los Gatos, and their report is included in the financial section of the ACFR.

ACKNOWLEDGEMENTS
The preparation of this Annual Comprehensive Financial Report, as presented herein, is the result of the combined efforts and dedicated services of the excellent staff of the Department of Finance.

Special thanks to Eric Lemon, Finance and Accounting Manager; Mark Gaeta, Accountant; Eagled’Or Am Accountant, Melissa Ynegas, Finance Analyst; Diane Howard, Finance Analyst; and Wayne Chen, Administrative Technician for their efforts in preparing this report. The Town’s Finance Commission is also recognized for its contributions to strengthening the ACFR through its review, discussion, and comments.

Respectfully submitted,

Laurel Prevetti Gitta Ungvari
Town Manager Director of Finance

Town of Los Gatos
Organizational Structure

TOWN OF LOS GATOS

PRINCIPAL OFFICERS
JUNE 30, 2023

TOWN COUNCIL
Mayor Maria Ristow
Vice Mayor Mary Badame
Council Member Matthew Hudes
Council Member Rob Moore
Council Member Rob Rennie

COUNCIL APPOINTEES
Town Manager Laurel Prevetti
Town Attorney Gabrielle Whelan

APPOINTED OFFICIALS
Assistant Town Manager Katy Nomura
Chief of Police Jamie Field
Community Development Director Joel Paulson
Parks and Public Works Director Nicolle Burnham
Library Director Ryan Baker
Finance Director Gitta Ungvari
Human Resources Director Salina Flores

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FINANCIAL SECTION

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Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the
Town Council of the Town of Los Gatos
Los Gatos, California
Report on the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, each major fund, General Fund budgetary statement, and the aggregate remaining fund information 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 Town’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, General Fund budgetary statement, and the aggregate remaining fund information of the Town of Los Gatos, as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

Emphasis of a Matter
As discussed in Note 1 to the financial statements, for the year ended June 30, 2023, the Town adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 96, Subscription-Based Information Technology Arrangements. Our opinion is not modified with respect to this matter.

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

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

Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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

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

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements. The combining and individual fund financial statements, schedules, and other information listed in the supplementary information section of the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements.

Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 27, 2023 on our consideration of the Town’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.

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

Chavan & Associates, LLP
Certified Public Accountants
November 27, 2023
Morgan Hill, California

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Management’s Discussion and Analysis

MANAGEMENT’S DISCUSSION AND ANALYSIS
This section of the Town of Los Gatos’s Annual Comprehensive Financial Report (ACFR) presents Management’s Discussion and Analysis (MD&A) of the Town’s financial performance during the fiscal year that ended on June 30, 2023. This analysis should be read in conjunction with the Transmittal Letter at the front of this report and the accompanying Basic Financial Statements.

FINANCIAL HIGHLIGHTS
• Town assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources at the close of Fiscal Year (FY) 2022/23 by $153,522,262 (total net position). • The Town’s total net position increased by $15,115,281 in FY 2022/23 as a result of general revenue collection of $39.4 million and a $1.6 million litigation settlement combined with governmental activities expenses of $25.8 million.
• The increase in long-term liabilities was mostly attributed to the increase in net pension liabilities of $32.4 million. The increase was due to each plan’s actual investment earnings of negative 7.5%, which were significantly lower than the actuarial return assumptions during the plans’ measurement period (July 1, 2021 through June 30, 2022). • Total pension expense calculated for the Town’s miscellaneous and safety plans is $5,870,044. A more detailed discussion of the Town’s unfunded pension liabilities can be found in Note 11.
• Reported unrestricted net position is increased to $11,542,661 compared to $1,785,294 in the prior year. Unrestricted net position represents all resources not included as net investment in capital or restricted assets.
• A General Fund surplus of revenues over expenditures was $5.7 million in FY 2022/23. • During FY 2022/23, the Town implemented GASB Statement No. 96 Subscription-Based Information Technology Agreements. As a result, the Town recorded subscription right of use assets totaling $915,860 and subscription liabilities totaling $653,681. See Note 8 for additional information.
• 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 related to recovery of revenue loss.

• The Town’s economically sensitive major revenues of property tax, sales tax, and franchise fees were able to record gains from amounts reported the prior fiscal year. Property taxes collected increased $1.6 million, sales taxes and franchise fees increased $0.3 million.

Business License Tax increased by $0.9 million based on the new voter-approved business license tax ordinance.
• 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 FY 2018/19 (pre-pandemic) level of TOT collection. • Total expenses as reported in the Statement of Activities decreased $3.4 million from the prior year. The decrease was primarily driven by the fact that prior year General Government expenses included a one-time pass-through fire safety grant payment. In addition, other factors included Pension and OPEB expense credits of $2.0 million calculated under accounting standards and allocated for FY 2022/23 compared to a $4.4 million credit for the prior fiscal year.
• The cost of all governmental activities as presented in the Statement of Activities this year was $49.3 million. The Town’s governmental program revenues were $23.5 million including charges for services of $12.4 million, operating grants and contributions of $7.2 million, and capital grants and contributions of $3.9 million. After taking governmental program revenues into consideration, the net amount of taxpayer supported governmental activities was $25.8 million. The Town paid for the remaining “public benefit” portion of governmental activities from total taxes and general revenues of $39.4 million. • At the end of FY 2022/23, the General Fund balance was $29,528,304 compared to $26,896,789 in the prior year. The ending fund balance of $29,528,304 represents approximately 65.8% of General Fund expenditures for the current fiscal year excluding transfers-out to the Town’s capital projects funds and internal service funds. The $2.6 million increase in General Fund ending fund balances was primarily due to the combined effect of favorable year end increases in economically sensitive revenues coupled with operational savings, and approximately $3.1 million net transfer to the Town’s capital projects fund to provide resources for Town infrastructure improvements. • Fund balances for all governmental funds at year end were $61,185,528, an increase of approximately $10.3 million or (20.3%) from the prior year. Governmental fund balances increased primarily due to General Fund increases of $2.6 million and $7.5 million for the General Fund Appropriated Reserve, including the General Fund Support, Capital Grants received, litigation settlement, and 50% of the Measure G proceeds. • At fiscal year end, the Town’s General Fund restricted cash assets reported a $1.4 million balance in the Town’s IRS Section 115 Pension Trust.

• As of June 30, 2023, the Town’s investment in capital assets for its governmental activities was $132,679,773 net of accumulated depreciation/amortization ($106,613,671 depreciable/amortizable and $26,066,102 nondepreciable). During FY 2022/23, the Town’s investment and contribution in capitalized assets were $9.1 million with depreciation totaling $4.2 million. The Capital asset increased by $4.9 million for the current year.

OVERVIEW OF THE FINANCIAL STATEMENTS
The financial section of the ACFR contains the following information: Independent Auditor’s Report, Management’s Discussion and Analysis (this section), the Basic Financial Statements, and the Required Supplementary Information. The ACFR also includes a Supplementary Information section, which presents combining and budgetary schedules for individual nonmajor funds. The Basic Financial Statements are comprised of three components: 1) Government-Wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the Financial Statements. The Management’s Discussion and Analysis is intended to be an introduction to the Basic Financial Statements.

Government-Wide Financial Statements
The Government-Wide Financial Statements present the financial picture of the Town from an economic resources measurement focus using the accrual basis of accounting. An economic resources measurement focus is when a body of financial statements report all inflows, outflows, and balances affecting or reflecting an entity’s net position.

The Statement of Net Position presents information on all of the Town’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating.

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

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

Both of the Government-Wide Financial Statements distinguish functions of the Town that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business–type activity). The governmental activities of the Town include public safety, parks and public works, community development, library, community services, debt service, and general government. Governmental activities typically include financial data for all governmental funds. Internal service funds are typically incorporated into governmental

activities as well. Business-type activities typically include financial data for all enterprise funds.

The Town has no enterprise funds and therefore reports no business-type activities.

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

Governmental funds – The Town’s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using the modified accrual basis of accounting, which measures cash and other financial assets that can readily be converted to cash. The Governmental Fund Statements provide a detailed short-term view of the Town’s general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the Town’s operations. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

Proprietary funds – The Town maintains one type of proprietary fund: Internal Service Funds.

Proprietary funds are reported using the accrual basis of accounting. Internal Service Funds are an accounting tool used to accumulate and allocate costs internally among the Town’s various functions. The Town uses Internal Service Funds to account for its fleet of vehicles, computer equipment, risk management activities, and other items. Internal Service Funds help smooth the variability of certain expenses and insulate the Town from large unanticipated costs. The Internal Service Funds are included within governmental activities in the Government-Wide Financial Statements.

Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the Town. Fiduciary funds are not reflected in the Government-Wide Financial Statements because the resources of those funds are not available to support the Town’s own programs.

Included in fiduciary funds is the Redevelopment Successor Agency private-purpose Trust Fund created upon the dissolution of the former Redevelopment Agency (RDA) in 2012. The Trust Fund was created to hold the assets of the former Redevelopment Agency until they are transferred for governmental purposes to other entities or distributed to the underlying taxing jurisdictions in Santa Clara County after the payment of enforceable obligations. Additional information on the dissolution of the RDA and this fiduciary fund can be found in Note 15 in the notes to basic financial statements.

Notes to Basic Financial Statements
The notes provide additional information to facilitate a full understanding of the data provided in the Government-Wide and Fund Financial Statements.

Required Supplementary Information
In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Town’s progress in funding its obligation to provide Pension and Other Post Employment benefits to its employees.

ANALYSIS OF GOVERNMENT-WIDE FINANCIAL STATEMENTS
The Government-Wide Financial Statements provide long-term and short-term information about the Town’s overall financial condition. This analysis addresses the financial statements of the Town as a whole, utilizing data from throughout the ACFR to describe the changes between 2022 and 2023.

Net Position Discussion
As shown below, the Town’s combined net position for the year ended June 30, 2023 was $153.5 million, reflecting an increase of approximately $15.1 million to the prior year’s net position of $138.4 million. In general, net position can serve as an important indicator of whether the Town’s overall financial condition is improving or deteriorating over time. 2023 2022
Current and other Assets $ 85,489,167 $ 78,302,210
Capital Assets 132,679,773 127,770,566
Total Assets $ 218,168,940 $ 206,072,776
Deferred Outflows - Pension/OPEB 29,526,262 13,232,279
Current Liabilities 15,857,589 17,537,678
Long-Term Liabilities Outstanding 71,847,737 34,368,351 Total Liabilities $ 87,705,326 $ 51,906,029
Deferred Inflows - Pension/OPEB 6,467,614 28,992,045
Net Position
Net Investment in Capital Assets 130,623,654 126,418,275 Restricted 11,091,020 10,203,412
Unrestricted 11,807,588 1,785,294
Total Net Position $ 153,522,262 $ 138,406,981
Town of Los Gatos
Net Position
Governmental Activites
For the Year Ended June 30, 2023

Current and other assets increased $7.2 million from the prior year, primarily due to a $6.2 million increase in cash/restricted cash and investments, a $0.4 million increase in accounts receivable, and a $0.3 million increase in land held for resale.

Capital assets increased $4.9 million to $132.7 million for the year reflecting current year’s capital asset additions/retirements less the annual depreciation/amortization expense.

Deferred Outflows for Pension and Other Post-Employment Benefits (OPEB) increased $16.3 million primarily due to the difference between projected assumed investment returns and actual investment earnings on pension and OPEB investments, changes in assumptions, and the change in the Town’s proportionate share for the pooled safety pension plan.

Long-term liabilities increased by $37.5 million. The increase is primarily due to a pension liability increase of $32.4 million and an increase of OPEB liabilities of $4.5 million. See Note 11 and Note 12 in the Notes to the Financial Statements for more information on Town’s pension and OPEB plans.

In addition, the implementation of GASB 96 subscription right of use of asset added $0.4 million to the total liabilities.

Deferred Inflows decreased by $22.5 million, resulting primarily from the difference between projected assumed investment returns and actual investment earnings on pension and OPEB investments. The pension inflows decreased $19.0 million and the OPEB plan decreased $3.5 million.

The largest segment of the Town’s net position, representing $130.9 million of net position, reflects the net investment in capital assets (e.g., land, buildings, infrastructure, subscription, and equipment) less accumulated depreciation/amortization and related outstanding debt used to acquire those assets. The Town uses these capital assets to provide infrastructure and services to the residents. They do not represent a liquid financial resource to the Town and consequently are not readily available for funding current obligations.

Restricted net position totaled approximately $11.1 million representing approximately $8.8 million for capital projects and maintenance, $1.4 million for restricted pension trust, $0.5 million placed in a special revenue trust accounts for Library services, $0.2 million for Lighting and Landscaping Assessment Districts, and $0.1 million for workers’ compensation.

As of June 30, 2023, unrestricted net position reports an approximate $9.8 million increase from the prior year to an ending balance of $11.5 million.

Governmental Activities
Governmental activities are generally financed through taxes, intergovernmental revenues, and other non-exchange revenues. The Statement of Activities is intended to illustrate how the cost of governmental activities is financed and determine the annual change in net position. 2023 2022
Revenues:

Program revenues:

Charges for Services $ 12,390,750 $ 12,773,746
Operating Grants and Contributions 7,149,581 6,179,842
Capital Grants and Contributions 3,915,175 22,226,206
General Revenues:

Property Taxes 22,746,842 21,132,098
Sales Taxes 8,806,477 8,483,673
Franchise Taxes 3,074,624 2,822,515
Other Taxes 2,292,008 2,042,580
Motor Vehicle in Lieu 34,406 35,624
Developer Fee 614,820 1,735,571
Investment Earnings 794,390 736,523
Unrealized gains (losses) 3,197 (2,015,501)
Miscellaneous 1,045,214 755,400
Special Items
Litigation Settlement Proceeds 1,565,000 -
Total Revenues 64,432,484 76,908,277
Expenses:

Police Department 17,428,923 15,093,308
Parks and Public Works 12,258,626 12,969,615
General Government 10,522,568 15,681,345
Community Development 5,215,961 5,827,001
Library Services 3,653,642 2,969,954
Sanitation 208,262 178,575
Interest and Fees 29,221 -
Total Expenses 49,317,203 52,719,798
Change in Net Position 15,115,281 24,188,479
Net Position - Beginning 138,406,981 113,518,100
Prior Period Adjustment - Principal Payments - 13,003
Prior Period Adjustment - GASB 87 Leases - 687,399
Net Position - Beginning, Adjusted - 114,218,502
Net Position, Ending $ 153,522,262 $ 138,406,981
Town of Los Gatos
Statement of Activities
For the Year Ended June 30, 2023

Governmental Activities Revenue Discussion
The Statement of Activities shown above details how the $64.4 million in Governmental Activities revenues and contributions were derived. Approximately $12.4 million or 19.2% of the revenues were recorded from fees paid by residents/businesses who directly benefited from the respective

program or service. Another $11.1 million or 17.2% of the revenues were sourced from operating/capital grants and contributions. Significant grants and contributions include $3.6 million in recognized ARPA, $0.8 million gas tax, $0.7 million in Road Maintenance and Repair Account from the State proceeds, and $0.5 million Prop 172 Public Safety allocations. The Town has received a $1.6 million settlement from Santa Clara County and responsible contractors related to the Shannon Road litigation. The remaining $39.4 million or 61.2% represents general revenues of the Town, including taxes, intergovernmental revenues, and other miscellaneous revenues.

Program revenues decreased by approximately $17.7 million from the prior year. This is largely due to a $18.3 million decrease in capital grants and contributions, $0.4 million decreases from charges for services, and $1.0 million revenue increases in operating grants and contributions.

FY 2021/22 capital grants and contributions include the donated $12.2 million historic Los Gatos Theatre, and one-time $6.9 million State pass-through wildfire grant contributions.

The Town’s General Revenues related to Governmental Activities increased by approximately $3.7 million from the prior year. The increase is attributable to a combination of approximately $2.1 million increase in investment earnings including the mark-to-market value adjustments on the Town portfolio investment, $1.6 million increase in property taxes, a $0.3 million increase in sales tax, $0.3 million increase in franchise fees, $0.2 million increases in Transient Occupancy Tax (TOT). The increases were offset by $1.1 million decrease in pass-through developer contributions.

Property tax is the largest individual revenue source for the Town and collections finished the year $1.6 million higher than the previous year. This increase was mostly due to an increase of $1.8 million in general property tax collection, $0.3 million increase in Vehicle License Fee (VLF) Property Tax In-Lieu fee, a $73K decrease in secured taxes received as a rebate of excess property taxes collected and available from the State of California’s Educational Revenue Augmentation Fund (ERAF), and $0.4 million decrease in property transfer tax reflecting the current mortgage rate environment. It is important to note that assessed valuations for FY 2022/23 were established on the tax roll in January 2022 and collected in FY 2022/23.

At $8.8 million, sales taxes represent the second largest individual revenue source for the Town.

Sales taxes increased $0.3 million from the previous year largely due to the continued resurgence of the restaurant sector. The increase was aided by the Town’s 1/8 cent District Tax which captures a larger share of the increase in online sales versus those receipts provided by the County pool collections.

Franchise taxes, the Town’s third largest revenue source, finished the year at $3.1 million, reflecting an increase of $0.3 million from the previous fiscal year.

Investment earnings increased $2.1 million from the prior year. The primary factor responsible for this increase was the higher total mark-to-market value above historical investment cost than the prior year for the Town’s investment portfolio. These unrealized gains/losses are recognized

as investment income/loss as a result of the mark to market value procedure required by GASB

31. The FY 2021/22 actual GASB 31 adjustment reduced interest earnings by $1,577,168, while the FY 2022/23 GASB 31 adjustment was $1,573,971. After the reversal of the FY 2021/22 adjustments there was a gain of $3,197. Per the Town Council General Fund Reserve Policy, $10,000 or more of unrealized investment gains that have been recorded in the financial statement are required to be reserved.

Governmental Activities Expenses Discussion
The Town provides residents, businesses, and visitors with an array of high quality municipal services. General government strategic support is comprised of six Departments (Town Council, Town Clerk, Town Manager, Town Attorney, Human Resources, Information Technology, and Finance) which provide in information technology, executive management, economic vitality, legal, records management, risk management, human resources, finance, and accounting services. The Town’s Police Department (public safety) provides general law enforcement, crime prevention, dispatch, and responses to emergency and non-emergency calls for service. Parks and Public Works provides engineering, construction, and maintenance of public streets, street lighting, Town-owned buildings, parks, and related infrastructure; as well as traffic engineering and engineering evaluation of private development proposals. Community Development provides planning and zoning services; building plan checks and inspections; and code compliance services. The Library Department provides library, local history, and cultural services to the community.

Total expenses of $49.3 million as reported in the Statement of Activities decreased by $3.4 million from $52.7 million the prior year. The decrease was primarily driven by the fact that prior year General Government expenses included a $6.9 million one-time pass-through fire safety grant payment. In addition, other factors included Pension and OPEB expense credits of $2.0 million calculated under accounting standards and allocated to FY 2022/23 compared to a $4.4 million credit for the prior fiscal year. The calculated pension and OPEB expense credits of $2.0 million was applied across all operating Departments. Eliminating the prior year $6.9 million onetime pass-through grant payment, total expenses increased from $45.8 million to $49.3 million.

FINANCIAL ANALYSIS OF THE TOWN’S FUNDS
Governmental Funds
Recognizing the financial resources measurement focus, the Town’s Governmental Funds provide information on near-term inflows and outflows, and balances of spendable resources.

This information is useful in assessing the Town’s financing requirements and may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Unlike the Statement of Activities which does not include transfers, the Governmental Funds Balance Sheet does include transfers in and out.

Fund Balance – As discussed below, the Town’s Governmental Funds Balance Sheet reports the following fund balances.

Restricted Fund Balance – The Town has $11 million in fund balance classified as restricted to indicate that it has an externally imposed restrictions on how the money may be spent. Of the $11 million restricted fund balance, $8.6 million is restricted for capital projects, $1.4 million for pension, $0.5 million for Library special revenue trust accounts, and $0.2 million for maintenance and repairs.

Committed Fund Balance – The Town has $15.7 million in fund balance classified as committed to indicate that the Town Council previously committed how the money will be spent. Of the $15.7 million, $12.3 million is for budget stabilization ($6.13 million) and catastrophe response ($6.13 million).

Assigned Fund Balance – The Town has $34.3 million in fund balance which is not restricted or committed and is classified as assigned to indicate the Town Council’s intent to be used for specific purposes. The largest assignments of fund balance are the Reserve for Capital/Special Projects with a balance of approximately $10.4 million and the Capital Projects Reserve of $19.1 million which are the primary funding sources for the Town’s five-year capital improvement plan and special projects as budgeted by the Town.

Additional information on the Town’s Fund Balance can be found in Note 10 of the Notes to the Financial Statements.

Major Governmental Funds results for the year included the following:

Overall, total Governmental Funds revenues finished $2.0 million or 3.1% lower than the prior year, while total expenditures finished $7.1 million or 11.6% lower than the prior year. One of the main reasons for the decreases are because prior year revenues and expenses included the one-time State pass-through wildfire grant in the amount of $6.9 million. The approximate $10.3 million increase in Total Governmental Fund balance is the net result.

REVENUES 2023 2022
Property Taxes $ 22,781,248 $ 21,167,722
Sales Taxes 8,806,477 8,483,673
Other Taxes 2,263,686 1,976,198
Licenses & Permits 6,333,675 6,055,040
Intergovernmental 10,145,820 15,492,982
Charges for Services 5,718,714 6,925,359
Fines and Forfeitures 416,950 319,170
Franchise Fees 3,074,624 2,822,515
Developer Fees 614,820 1,735,571
Interest 797,582 (1,278,983)
Use of Property 237,647 144,901
Other 985,188 349,145
Total Revenues $ 62,176,431 $ 64,193,293

EXPENDITURES
Current:

Public Safety $ 18,446,048 $ 16,451,190
General Government 8,828,779 15,953,968
Parks and Public Works 9,084,406 8,639,128
Community Development 5,065,412 6,313,511
Library Services 3,208,027 2,827,210
Sanitation and Other 204,097 194,969
Capital Outlay 8,917,075 10,478,670
Debt Service
Principal 156,034 156,034
Total Expenditures $ 53,909,878 $ 61,014,680
Excess Revenues over Expenditures $ 8,266,553 $ 3,178,613 Settlement -Shannon Road 1,565,000 -
Proceeds from sales of assets 2,162 2,151
Proceeds from issuance of debt - -
Transfers in 11,886,022 8,154,307
Tranfers out (11,396,347) (8,310,685)
Total Other Financing Sources (Uses) $ 2,056,837 $ (154,227) Net Changes in Fund Balances 10,323,390 3,024,386
Beginning/Ending Fund Balances As Restated $ 50,862,138 $ 47,837,752 Ending Fund Balances $ 61,185,528 $ 50,862,138

TOWN OF LOS GATOS
FOR THE YEAR ENDED JUNE 30, 2023

TOTAL GOVERNMENTAL FUNDS REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

General Fund revenues totaled $50.6 million or nearly 81.4% of the total $62.2 million in Total Governmental Fund revenues.

Total Governmental Funds revenues decreased by $2.0 million.

Governmental Funds expenditures decreased by $7.1 million. General Fund expenditures represent approximately $44.9 million or 83.3% of the Total Governmental Fund expenditures of $53.9 million compared to $43.3 million of General Fund expenditures and total Governmental Funds expenditures of $61.0 million in the prior year.

Increases in Public Safety expenditures from the prior year of approximately $2.0 million were primarily due to salary and benefit cost increases resulting from labor negotiations and mandated increases in employer pension contribution rates.

Increases in Parks and Public Works and Library services expenditures from prior year of approximately $0.8 million were primarily due to salary and benefit cost increases resulting from labor negotiations and mandated increases in employer pension contribution rates.

Decreases in Community Development were primarily due to fact that prior year expensed the $1.2 million affordable housing loan through the Below Market Housing program.

The $7.1 million decrease in general governmental expenditures was mainly attributable to the fact that prior year included the one-time $6.9 million State pass-through wildfire safety grant.

Appropriated Reserves Fund capital projects fund balances increased $7.5 million from the prior year, reflecting increased capital activity during the fiscal year. The $1.4 million of general government and capital outlay expenditures above operating revenues was offset by $8.9 million from other financing sources, including $1.6 million in settlement, and $7.3 million net transfers.

Proprietary Funds
The Town’s Proprietary Funds (Internal Service Funds) presented in the Fund Financial Statements section provide similar information to the Government-Wide Financial Statements and include individual segment information.

Total net position in the Internal Service Funds decreased by $1.7 million, a combined effect of GASB 96 expense increase adjustment of $0.2 million, a $0.2 million increase in equipment replacement net position, a $1.7 million decrease in FY 2022/23 due to excess expenses over revenues for workers’ compensation, information technology, and general liability costs including administration, insurance premiums, and claims expense.

GENERAL FUND BUDGETARY HIGHLIGHTS
Changes to the Original Budget
Comparing the FY 2022/23 original budget (i.e., the Adopted Budget) General Fund revenues of $45,537,337 to the final adjusted budget of $50,272,274 indicates a net increase of approximately $4.7 million. Additions to the original revenue budget included adjustments approved by Town Council throughout the fiscal year.

The increase in General Fund revenue appropriations occurred primarily from the following sample of revenue budget adjustments made during the fiscal year:
 $1.6 million property tax revenue budget increase in line with the estimates and forecasts provided to the Town quarterly from Santa Clara County Assessor’s Office; • $1.3 million revenue increases for charges for services including $0.8 million development related pass-through revenues, $0.4 million revenue budget increase regarding the purchasing and the preparation of reselling the Bersano Lane Below Market Unit, $47K revenue budget increase from two local school districts for the School Resource Officer contract;
• $0.9 million Business License Tax revenue budget increase based on the estimated collection per the new business license tax;
• $0.7 million Transient Occupancy Tax (TOT) revenue budget increase based on actual receipts.

Comparing the FY 2022/23 original budget (i.e., the Adopted Budget) General Fund expenditures of $47,354,218 (excluding budgeted transfers-out and debt payments that are reimbursed) to the final adjusted budget of $50,204,894 indicates a net increase of approximately $2.9 million.

Additions to the original expenditure budget included adjustments approved by Town Council throughout the fiscal year.

Original Budget
General Fund (GF) Revenues
Misc. Adjustments &
Mid-Year Adjustments
Final Budget
GF Revenues
$45,537,337 $4,734,937 $50,272,274

The increase in General Fund expense appropriations occurred primarily from the following sample of budget adjustments made during the fiscal year. • $0.9 million increase expenditure related to legal expenses, recruitment services, traffic signalization, special studies, retire medical and other miscellaneous services town wide; • $0.7 million expenditure increase for development related pass through activities; • $0.4 million for the Bersano Lane affordable unit repurchase and preparation of resell; • $0.3 million expenditure increase for Community Grants to recognize Council authorized General Fund Council Priorities – Economic Recovery reserve spending in the FY 2022/23; • $0.3 million expenditure increase for redepositing the first affordable loan payment to the Below Market Housing Deposit account.

Variance with the Final General Fund Budget
The General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual (GAAP) for Fiscal Year Ended June 30, 2023 reports an approximate overall favorable variance with the final budget of approximately $5.7 million. This favorable variance was created largely by the net effect of the following factors:
• Actual revenues ended the fiscal year at $0.3 million above final budgeted revenues.

Original Budget
GF Expenditures
Misc. Adjustments &
Mid-Year Adjustments
Final
GF Expenditure Budget
$47,354,218 $2,850,676 $50,204,894

• Actual expenditures ended the fiscal year at $5.3 million below final budgeted expenditures. Significant factors affecting actual expenditures include: $2.7 million savings in salaries and benefits in limited term vacancies throughout the organization ($1.4 million in salaries, $0.6 million in pension benefits, and $0.7 million in other benefits), $1.4 million variance due to the timing of development and below market housing related pass-through activities, and $1.2 million operational savings Town-wide.

CAPITAL ASSETS
As of June 30, 2023, the Town’s investment in capital assets for its governmental activity is recorded at $132,679,773 (net of accumulated depreciation/amortization). The investment in capital assets includes land, buildings and improvements, infrastructure, construction in progress, subscription right of use asset, machinery and equipment. Capital assets increased $4.9 million net of depreciation expense totaling approximately $4.2 million for the year.

• $3.4 million in street repair and resurfacing and curb and gutter work Town-wide; • $0.9 million in subscription right of use of asset by implementing GASB 96 subscriptionbased information technology agreements; • $0.6 million equipment adds Town-wide;
• $0.3 million storm drain improvements;
• $36K for park improvements; and
• $4.5 million of construction in progress.

Additional information on the Town’s capital assets is found in Note 6 of this Financial Report.

LONG-TERM DEBT
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 Town long-term debt is related to the PG&E on-bill financing loan used for facility efficiency project updates, totaling $1.2 million at 6/30/2023. The long-term debt in the Successor Agency Trust Fund is related to the 2002 COP and 2010 COP, totaling $11.7 million. Additional information on the Town’s Long-Term Debt is found in Note 7 of this Financial Report.

ECONOMIC FACTORS, NEXT YEAR’S BUDGET, AND RATES
A product of an ongoing examination of how the Town provides cost-effective services, the Town’s budget emphasizes outcomes or results for the community and allows for longer-term financial planning decisions.

During the development and adoption of the Town’s FY 2023/24 budget, the Town Council and management considered the following factors:
• The FY 2023/24 Adopted Budget endeavored to maintain essential public services while controlling operational costs in light of the Five-Year Financial Forecast.

Governmental
Activities
Infrastructure $ 67,077,784
Subscription Right of Use Assets 713,438
Buildings 28,846,606
Land 26,066,103
Equipment 2,462,694
Construction in Progress 7,513,148
$ 132,679,773
For the Year Ended June 30, 2023
Capital Assets
Town of Los Gatos

• For FY 2023/24, the Adopted Operating Budget was balanced utilizing two primary budget balancing strategies. The first was direction to all Departments to develop a status quo budget. To that end, the Departments programmed existing resources by either maintaining current structures or realigning operations to remain effective. This proved exceptionally difficult as vendor, supply, and other costs rose beyond FY 2022/23 levels. In addition, Departments were provided guidance to enhance capacity where necessary through limitdated non-benefited personnel options when possible. The second strategy includes a 4.6% vacancy factor, while Council directed that staff continue to hire for all vacant positions. The

4.6% salary savings represents approximately $1.7 million projected saving. • In terms of capital projects, the Town Council stated its capital budget priorities to continue implementation of the Downtown Parking Roadmap, continue mobility improvements for all transportation modes, manage the vegetation on Town lands to protect against wildfire, and advance other needed improvements. All of these efforts support improving and enhancing transportation options, public safety, and quality of life within the context of prudent fiscal management.

REQUESTS FOR INFORMATION
This financial report is designed to provide residents, taxpayers, customers, investors, and creditors with a general overview of the Town’s finances and to demonstrate the Town’s accountability for the money it receives. Questions about this report or requests for any additional information, should be directed to Gitta Ungvari, Finance Director, at 110 East Main Street, Los Gatos, California, 95030; email at [email protected]; or phone at (408) 354- 6805.

Basic Financial Statements

TOWN OF LOS GATOS, CALIFORNIA

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

GOVERNMENT-WIDE FINANCIAL STATEMENTS

STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITIES

The Statement of Net Position, Statement of Activities, fund financial statements, and the notes to financial statements comprise the Basic Financial Statements of the Town.

The purpose of the Statement of Net Position and the Statement of Activities is to summarize the entire financial activities and financial position of the Town. They are prepared on the same basis of accounting (accrual) used by most businesses, which means they include all the Town’s assets and liabilities, as well as its revenues and expenses. The effect of the entire Town’s transactions is accounted for, regardless of when cash changes hands, and all material internal transactions between funds have been eliminated.

The Statement of Net Position report the Town’s total assets, deferred outflows of resources, liabilities, and deferred inflows of resources, including capital assets and long-term debt, and presents similar information to the old balance sheet format while focusing the reader on the composition of the Town’s net position (assets minus liabilities). The Statement of Net Position summarizes the financial position of the Town’s governmental activities in a single column.

The Town’s governmental activities include the activities of the General Fund, Special Revenue Funds, Capital Projects Funds, and Debt Service Funds. These funds are serviced by the Town’s Internal Service Funds; therefore internal service activities are consolidated with governmental activities after eliminating inter-fund transactions and balances.

The Statement of Activities reports increases and decreases in the Town’s net position and is prepared on the full accrual basis of accounting, which means it includes all the Town’s revenues and expenses regardless of when cash changed hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.

The format of the Statement of Activities presents the Town’s expenses before revenues and by program. Program revenues (revenues generated directly by specific programs) are deducted from program expenses to arrive at the net expense of each governmental program, which is offset by general revenues as listed before the change in net position. From these components, the change in net position is computed and reconciled to the Statement of Net Position.

Both of these statements include the financial activities of the Town.

TOWN OF LOS GATOS, CALIFORNIA

STATEMENT OF NET POSITION
JUNE 30, 2023

Governmental
ASSETS Activities
Cash and investments $ 74,859,048
Restricted cash and investments 1,574,488
Receivables:

Accounts 2,721,849
Interest 349,806
Intergovernmental 2,438,400
Other assets 153,868
Land held for resale 344,338
Long-term leases receivable 1,909,618
Long-term notes receivables 1,137,752
Capital Assets:

Nondepreciable 26,066,102
Depreciable, net of accumulated depreciation 106,613,671 Total Assets $ 218,168,940

DEFERRED OUTFLOWS OF RESOURCES
Pension adjustments $ 25,220,232
OPEB adjustments 4,306,030
Total Deferred Outflows of Resources $ 29,526,262

LIABILITIES
Accounts payable $ 2,134,177
Accrued payroll and benefits 447,965
Interest payable 27,915
Due to other governments 69,895
Unearned Revenue 4,201,551
Deposits 6,849,378
Claims payable 2,126,708
Long-term liabilities:

Due within one year
Compensated absences 292,795
Subscription liabilities 149,154
Loans payable 156,034
Due in more than one year
Net OPEB liability 7,028,633
Net pension liabilities 59,866,665
Compensated absences 2,868,452
Subscription liabilities 445,781
Loans payable 1,040,223
Total Liabilities $ 87,705,326

DEFERRED INFLOWS OF RESOURCES
Leases 1,222,981
Pension adjustments 3,126,711
OPEB adjustments 2,117,922
Total Deferred Inflows of Resources $ 6,467,614

NET POSITION
Net investment in capital assets $ 130,888,581
Restricted for:

Library 530,174
Capital projects 8,328,572
Land held for resale 44,338
Lighting and landscape repairs and maintenance 176,966
Pensions 1,400,163
VTA 494,826
Worker's compensation claims 115,981
Total Restricted Net Position 11,091,020
Unrestricted 11,542,661
Total Net Position $ 153,522,262
The notes to the financial statements are an integral part of this statement.

TOWN OF LOS GATOS, CALIFORNIA

STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

Net (Expense)
Revenues and
Changes in
Net Position
Operating Capital
Charges for Grants and Grants and Governmental
Functions/Programs Expenses Services Contributions Contributions Total Activities Governmental Activities:

General government $ 10,522,568 $ 2,635,527 $ - $ - $ 2,635,527 $ (7,887,041) Public safety 17,428,923 1,846,312 4,622,373 - 6,468,685 (10,960,238) Parks and public works 12,258,626 3,590,936 1,735,608 3,915,175 9,241,719 (3,016,907) Community development 5,215,961 3,971,336 616,937 - 4,588,273 (627,688) Library services 3,653,642 2,039 174,663 - 176,702 (3,476,940) Sanitation 208,262 359,950 - - 359,950 151,688
Interest and fees 29,221 - - - - (29,221)
Total Governmental Activities $ 49,317,203 $ 12,406,100 $ 7,149,581 $ 3,915,175 $ 23,470,856 (25,846,347) General revenues:

Taxes:

Property taxes 22,746,842
Sales taxes 8,806,477
Franchise taxes 3,074,624
Transient occupancy taxes 2,228,190
Other taxes 63,818
Motor vehicle in lieu 34,406
Developer fees 614,820
Investment earnings:

Investment earnings 794,390
Unrealized gains (losses) 3,197
Miscellaneous 1,029,864
Total general revenues 39,396,628
Special items:

Settlements 1,565,000
Total general revenues and special items 40,961,628
Change in Net Position 15,115,281
Net Position - Beginning 138,406,981
Net Position - Ending $ 153,522,262
The notes to the financial statements are an integral part of this statement.

Program Revenues

TOWN OF LOS GATOS, CALIFORNIA

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

FUND FINANCIAL STATEMENTS &

MAJOR GOVERNMENTAL FUNDS

Fund Financial Statements:

The Fund Financial Statements only present major funds individually while nonmajor funds are combined in a single column. Major funds are generally defined as having significant activities or balances in the current year.

Major Governmental Funds:

The Town determined that the following funds were major funds for the year ended June 30, 2023.

Individual non-major funds can be found in the supplemental section.

General Fund is the general operating fund of the Town and is used to account for all financial resources except those required to be accounted for in another fund.

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

ARPA Fund was established to account for monies received under the American Rescue Plan Act of 2021 to respond to the COVID19 emergency.

TOWN OF LOS GATOS, CALIFORNIA

GOVERNMENTAL FUNDS

BALANCE SHEET
JUNE 30, 2023

Other
Nonmajor Total
Appropriated Governmental Governmental
General Reserves ARPA Funds Funds
ASSETS
Cash & investments $ 33,591,832 $ 23,752,014 $ - $ 9,514,805 $ 66,858,651 Restricted cash & investments 1,400,163 - - 58,344 1,458,507 Receivables:

Accounts 1,482,426 1,078,834 - 85,151 2,646,411
Interest 349,806 - - - 349,806
Intergovernmental 1,885,545 347,316 - 205,539 2,438,400 Other assets 153,868 - - - 153,868
Due from other funds 1,832 - - - 1,832
Land held for resale 344,338 344,338
Leases receivable - 241,506 - 319,957 561,463
Long term note receivable 1,059,000 - - 78,752 1,137,752 Total Assets $ 40,268,810 $ 25,419,670 $ - $ 10,262,548 $ 75,951,028

LIABILITIES
Accounts payable $ 616,131 $ 1,257,903 $ - $ 16,718 $ 1,890,752 Accrued payroll and benefits 445,631 - - 2,334 447,965
Due to other governments 69,836 - - - 69,836
Unearned revenue 2,759,530 1,377,226 - 64,795 4,201,551 Deposits 6,849,378 - - - 6,849,378
Due to other funds - - - 1,832 1,832
Total Liabilities 10,740,506 2,635,129 - 85,679 13,461,314

DEFERRED INFLOWS OF RESOURCES
Leases - 235,816 - 269,670 505,486
Unavailable revenue - 798,700 - - 798,700
Total Deferred Inflows of Resources - 1,034,516 - 269,670 1,304,186

FUND BALANCE
Nonspendable:

Loans receivable 159,000 - - - 159,000
Leases receivable - 5,690 - 50,287 55,977
Restricted for:

Library - - - 530,174 530,174
Capital projects - - - 8,328,572 8,328,572
Land held for resale 44,338 - - - 44,338
Repairs and maintenance - - - 176,966 176,966
Pensions 1,400,163 - - - 1,400,163
VTA - 494,826 - - 494,826
Committed to:

Budget stabilization 6,129,774 - - - 6,129,774
Catastrophic 6,129,775 - - - 6,129,775
Pensions/OPEB 300,000 - - - 300,000
Measure G 2018 district sales tax 590,581 1,769,057 - - 2,359,638 Special revenue funds - - - 821,200 821,200
Assigned to:

Open Space 410,000 152,000 - - 562,000
Parking - 100,000 - - 100,000
Sustainability 140,553 - - - 140,553
Capital/Special projects 10,359,577 19,178,452 - - 29,538,029 Carryover encumbrances 37,698 - - - 37,698
Comcast PEG - 50,000 - - 50,000
ERAF Risk 689,608 - - - 689,608
Economic recovery 1,556,614 - - - 1,556,614
Compensated Absences 1,580,623 - - - 1,580,623
Total Fund Balances 29,528,304 21,750,025 - 9,907,199 61,185,528 Total Liabilities, Deferred Inflows
of Resources and Fund Balances $ 40,268,810 $ 25,419,670 $ - $ 10,262,548 $ 75,951,028 The notes to the financial statements are an integral part of this statement.

TOWN OF LOS GATOS, CALIFORNIA

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE GOVERNMENT-WIDE STATEMENT OF NET
POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2023

Fund Balance - Total Governmental Funds $ 61,185,528
Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds because of the following:

CAPITAL ASSETS
Capital assets used in the Governmental Activities are not financial resources and, therefore, are not reported in the Governmental Funds. 131,966,335

ALLOCATION OF INTERNAL SERVICE FUND NET POSITION
Internal service funds are used by management to charge the cost of management of certain activities such as insurance, central services and maintenance to individual governmental funds. The net current assets of the internal service funds are therefore included as Governmental Activities in the Statement of Net Position. 6,542,872

DEFERED OUTFLOWS AND INFLOWS OF RESOURCES
The differences from benefit plan assumptions and estimates versus actuals are not included in the plan's actuarial study until the next fiscal year and are reported as deferred inflows or deferred outflows of resources in the statement of net position.

Deferred outflows of resources:

PERS Miscellaneous Plan adjustments $ 10,459,160
PERS Safety Plan adjustments 14,761,072
OPEB plan adjustments 4,306,030 29,526,262
Deferred Inflows of resources:

PERS Miscellaneous Plan adjustments $ (160,064)
PERS Safety Plan adjustments (2,966,647)
OPEB plan adjustments (2,117,922) (5,244,633)

DEFERRED INFLOWS OF RESOURCES
Revenues from grants that are funded in this fiscal year that will not be collected for several months after the Town's fiscal year end are not considered available and are classified as deferreed inflows of resources in the governmental funds. 798,700

LONG-TERM LIABILITIES
Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the Governmental Funds.

Loans payable $ (1,196,257)
Net Pension Liabilities (59,866,665)
Net OPEB Liability (7,028,633)
Compensated absences (3,161,247) (71,252,802)
Net Position - Governmental Activities $ 153,522,262
The notes to the financial statements are an integral part of this statement.

TOWN OF LOS GATOS, CALIFORNIA

GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

Other
Nonmajor Total
Appropriated Governmental Governmental
General Reserves ARPA Funds Funds

REVENUES
Property Taxes $ 22,743,087 $ - $ - $ 38,161 $ 22,781,248 Sales Taxes 8,806,477 - - - 8,806,477
Transient Occupancy Taxes 2,228,190 - - - 2,228,190
Other Taxes 6,454 - - 29,042 35,496
Licenses & Permits 5,630,362 181,533 - 521,780 6,333,675 Intergovernmental 1,553,396 3,358,063 3,614,872 1,619,489 10,145,820 Charges for Services 4,646,705 1,072,009 - - 5,718,714
Fines and Forfeitures 416,950 - - - 416,950
Franchise Fees 3,074,624 - - - 3,074,624
Developer Fees - 614,820 - - 614,820
Interest 605,789 44,198 - 147,595 797,582
Use of Property 38,126 91,284 - 108,237 237,647
Other 859,571 - - 125,617 985,188
Total Revenues 50,609,731 5,361,907 3,614,872 2,589,921 62,176,431

EXPENDITURES
Current:

General Government 8,828,779 - - - 8,828,779
Public Safety 18,446,048 - - - 18,446,048
Parks and Public Works 8,998,088 - - 86,318 9,084,406
Community Development 5,065,412 - - - 5,065,412
Library Services 3,096,486 - - 111,541 3,208,027
Sanitation and Other - - - 204,097 204,097
Capital Outlay 300,000 6,722,633 - 1,894,442 8,917,075
Debt service:

Principal 156,034 - - - 156,034
Total Expenditures 44,890,847 6,722,633 - 2,296,398 53,909,878

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 5,718,884 (1,360,726) 3,614,872 293,523 8,266,553

OTHER FINANCING SOURCES (USES)
Settlements - 1,565,000 - - 1,565,000
Gain from sale of assets 2,162 - - - 2,162
Transfers in 4,153,408 7,732,614 - - 11,886,022
Transfers (out) (7,242,939) (427,616) (3,614,872) (110,920) (11,396,347) Total Other Financing Sources (Uses) (3,087,369) 8,869,998 (3,614,872) (110,920) 2,056,837 NET CHANGES IN FUND BALANCES 2,631,515 7,509,272 - 182,603 10,323,390 BEGINNING FUND BALANCES 26,896,789 14,240,753 - 9,724,596 50,862,138 ENDING FUND BALANCES $ 29,528,304 $ 21,750,025 $ - $ 9,907,199 $ 61,185,528 The notes to the financial statements are an integral part of this statement.

TOWN OF LOS GATOS, CALIFORNIA

RECONCILIATION OF THE GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES TO THE GOVERNMENT-WIDE
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $ 10,323,390 Amounts reported for Governmental Activities in the Statement of Activities are different because of the following:

CAPITAL ASSET TRANSACTIONS
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense.

Expenditures for capital assets (additions) $ 8,598,811 Current year depreciation (3,950,198) 4,648,613
Gains and losses from the disposal of capital assets are not considered current financial resources and are not recorded in the governmental fund statement of revenues and expenditures but are recorded in the government-wide statement of activities because they are economic resources. (452,844)

LONG-TERM DEBT PROCEEDS AND PAYMENTS
Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position.

Certificates of participation 156,034

UNAVAILABLE REVENUE
Revenues from grants that are funded in this fiscal year that will not be collected for several months after the Town's fiscal year end are not considered available and are classified as deferred inflows of resources in the governmental funds. 293,000

COMPENSATED ABSENCES
In governmental funds, compensated absences such as vacations and sick leave are expenditures (122,954)

OPEB PLAN CONTRIBUTIONS AND EXPENSE
In governmental funds, actual contributions to OPEB plans are reported as expenditures in the year incurred. However, in the Government-Wide Statement of Activities, only the current year OPEB expense as noted in the plans' valuation reports is reported as an expense, as adjusted for deferred inflows and outflows of resources. 719,946

PENSION PLAN CONTRIBUTIONS AND EXPENSE
In governmental funds, actual contributions to pension plans are reported as expenditures in the year incurred. However, in the Government-Wide Statement of Activities, only the current year pension expense as noted in the plans' valuation reports is reported as an expense, as adjusted for deferred inflows and outflows of resources. 1,247,506

ALLOCATION ON INTERNAL SERVICE FUND ACTIVITY
Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of the internal service fund is reported with governmental activities. (1,697,410) CHANGE IN NET POSITION - GOVERNMENTAL ACTIVITIES $ 15,115,281 The notes to the financial statements are an integral part of this statement. when taken. However, in the Government Wide Statement of Activities, the current year change in the compensated absences liability is reported.

TOWN OF LOS GATOS, CALIFORNIA

GENERAL FUND

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

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

Variance With
Final Budget
Original Final Positive
Budget Budget Actual (Negative)

REVENUES
Property Taxes $ 20,907,894 $ 22,484,118 $ 22,743,087 $ 258,969 Sales Taxes 9,174,944 8,959,134 8,806,477 (152,657)
Transient Occupancy Taxes 1,642,460 2,348,547 2,228,190 (120,357) Other Taxes 7,000 7,000 6,454 (546)
Licenses & Permits 4,122,529 5,140,684 5,630,362 489,678 Intergovernmental 1,051,814 1,273,910 1,553,396 279,486 Charges for Services 4,257,261 5,540,465 4,646,705 (893,760) Fines and Forfeitures 201,750 226,750 416,950 190,200
Franchise Fees 2,493,870 2,716,470 3,074,624 358,154
Interest 432,947 670,021 605,789 (64,232)
Use of Property 41,211 41,211 38,126 (3,085)
Other 1,203,657 863,964 859,571 (4,393)
Total Revenues 45,537,337 50,272,274 50,609,731 337,457

EXPENDITURES
Current:

General Government:

Town Council 217,238 217,240 186,337 30,903
Town Attorney 707,555 811,427 699,143 112,284
Administrative Services 5,298,494 5,759,393 5,302,281 457,112 Non-Departmental 3,194,526 3,334,931 2,641,018 693,913
Total General Government 9,417,813 10,122,991 8,828,779 1,294,212 Public Safety 19,225,985 19,331,330 18,446,048 885,282
Parks & Public Works 9,798,967 10,368,194 8,998,088 1,370,106 Community Development 5,772,004 6,543,199 5,065,412 1,477,787 Library Services 3,139,449 3,247,730 3,096,486 151,244
Capital Outlay - 435,416 300,000 135,416
Debt Service:

Principal - 156,034 156,034 -
Total Expenditures 47,354,218 50,204,894 44,890,847 5,314,047

EXCESS (DEFICIT) OF REVENUES
OVER EXPENDITURES (1,816,881) 67,380 5,718,884 5,651,504

OTHER FINANCING SOURCES (USES)
Gain from sale of assets 600 600 2,162 1,562
Transfers In 2,183,817 3,381,544 4,153,408 771,864
Transfers Out (3,006,978) (5,842,011) (7,242,939) (1,400,928) Total Other Financing Sources (Uses) (822,561) (2,459,867) (3,087,369) (627,502) NET CHANGES IN FUND BALANCE $ (2,639,442) $ (2,392,487) 2,631,515 $ 5,024,002 BEGINNING FUND BALANCE 26,896,789
ENDING FUND BALANCE $ 29,528,304
The notes to the financial statements are an integral part of this statement.

TOWN OF LOS GATOS, CALIFORNIA

ARPA FUND

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

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

Variance With
Final Budget
Original Final Positive
Budget Budget Actual (Negative)

REVENUES
Intergovernmental $ 1,304,696 $ 3,614,872 $ 3,614,872 $ - Total Revenues 1,304,696 3,614,872 3,614,872 -

EXPENDITURES
Current: - - - -
Total Expenditures - - - -

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 1,304,696 3,614,872 3,614,872 -

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - -
Operating transfers (out) (1,304,696) (3,614,872) (3,614,872) - Total Other Financing Sources (Uses) (1,304,696) (3,614,872) (3,614,872) - CHANGE IN FUND BALANCE $ - $ - - $ -

BEGINNING FUND BALANCE -
ENDING FUND BALANCE $ -
The notes to the financial statements are an integral part of this statement.

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 account for Town operations financed and operated in a manner similar to a private business enterprise. The intent of the Town is that the cost of providing goods and services to other Town funds be financed through user charges to those funds.

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.

TOWN OF LOS GATOS, CALIFORNIA

PROPRIETARY FUNDS -

STATEMENT OF NET POSITION
JUNE 30, 2023

Governmental
Activities
Internal Service
Funds
ASSETS
Current Assets:

Cash & investments $ 8,000,397
Restricted cash & investments 115,981
Accounts Receivable 75,438
Total current assets 8,191,816
Noncurrent Assets:

Leases receivable 1,348,155
Subscription assets, net 713,438
Total noncurrent assets 2,061,593
Total Assets $ 10,253,409

LIABILITIES
Current Liabilities:

Accounts payable $ 243,425
Due to other governments 59
Interest payable 27,915
Subscription liabilities - Current 149,154
Total current liabilities 420,553
Noncurrent liabilities:

Claims payable 2,126,708
Subscription liabilities 445,781
Total noncurrent liabilities 2,572,489
Total Liabilities $ 2,993,042

DEFERRED INFLOWS OF RESOURCES
Leases $ 717,495

NET POSITION
Net Investment in capital assets $ 118,503
Restricted for workers compensation claims 115,981
Unrestricted 6,308,388
Total Net Position $ 6,542,872
The notes to the financial statements are an integral part of this statement.

TOWN OF LOS GATOS, CALIFORNIA

PROPRIETARY FUNDS -

STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN NET POSITION
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

Governmental
Activities
Internal Service
Funds

OPERATING REVENUES
Charges for services $ 3,695,444
Interest 5
Use of money and property 122,317
Other local taxes 28,322
Other revenue and reimbursements 247,409
Total Operating Revenues 4,093,497

OPERATING EXPENSES
Insurance expenses 2,901,632
Services and Supplies 2,167,957
Depreciation/amortization 202,422
Total Operating Expenses 5,272,011
Operating Income (Loss) (1,178,514)

NONOPERATING EXPENSES
Interest expense (29,221)
Income (loss) before transfers (1,207,735)
Transfers in 243,325
Transfers out (733,000)
Net transfers (489,675)
Change in Net Position (1,697,410)
BEGINNING NET POSITION 8,240,282
ENDING NET POSITION $ 6,542,872
The notes to the financial statements are an integral part of this statement.

TOWN OF LOS GATOS, CALIFORNIA

PROPRIETARY FUNDS -

STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

Governmental
Activities
Internal Service
Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 3,932,853
Payments to suppliers (4,843,598)
Insurance reimbursements 165,757
Claims paid 529,919
Net cash provided (used) by operating activities (215,069)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers In 243,325
Transfers Out (733,000)
Net cash provided (used) by noncapital financing activities (489,675)

CASH FLOWS FROM CAPITAL RELATED FINANCING ACTIVITIES
Interest paid (1,306)
Acquisition of subscription assets (320,925)
Net cash provided (used) by capital related financing activities (322,231) Net Increase(Decrease) in Cash and Investments (1,026,975) Cash and investments - beginning of year 9,143,353
Cash and investments - end of year $ 8,116,378
Reconciliation of Operating Income to Cash Flows
from Operating Activities:

Operating Income $ (1,178,514)
Adjustments to reconcile operating income to cash flows from operating activities:

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

Accounts receivables (29,636)
Leases receivable 146,566
Deferred inflows of resources (111,817)
Accounts payable 13,308
Due to other governments 9
Claims payable 742,593
Cash Flows From Operating Activities $ (215,069)
Cash and cash equivalents:

Cash and investments $ 8,000,397
Restricted cash and investments 115,981
Total cash and cash equivalents $ 8,116,378
The notes to the financial statements are an integral part of this statement.

TOWN OF LOS GATOS, CALIFORNIA

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

FIDUCIARY FUNDS

Trust funds are used to account for assets held by the Town as a trustee agent for individuals, private organizations and other governments. The financial activities of these funds are excluded from the government-wide financial statements but are presented in separate Fiduciary Fund financial statements.

RDA Successor Agency Private Purpose Trust Fund was established to account for the assets and liabilities transferred from the dissolution of the Town’s former Redevelopment Agency and the continuing operations related to existing Redevelopment Agency obligations.

RDA
Successor
Agency
ASSETS
Cash and investments $ 1,954,332
Restricted cash and investments 2,023,185
Loans receivable 622,082
Capital assets:

Depreciable, net of accumulated depreciation 1,118,623
Total Assets $ 5,718,222

LIABILITIES
Accounts payable $ 24
Interest payable 212,406
Long-term debt:

Due within one year 1,415,000
Due in more than one year 10,278,580
Total Liabilities $ 11,906,010

NET POSITION
Restricted for RDA $ (6,187,788)
Total Net Position $ (6,187,788)
The notes to the financial statements are an integral part of this statement.

TOWN OF LOS GATOS

FIDUCIARY FUNDS

STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2023

RDA
Successor
Agency

ADDITIONS
Property taxes $ 1,942,119
Investment earnings 80,795
Total Additions 2,022,914

DEDUCTIONS
Program expenses of former RDA 5,640
Interest and fiscal agency expenses of RDA 495,843
Depreciation expense 101,693
Total Deductions 603,176
CHANGE IN NET POSITION 1,419,738
NET POSITION - BEGINNING OF YEAR (7,607,526)
NET POSITION - END OF YEAR $ (6,187,788)
The notes to the financial statements are an integral part of this statement.

TOWN OF LOS GATOS

PRIVATE PURPOSE TRUST FUNDS

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

This Page Left Intentionally Blank

Notes to Basic Financial Statements

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Description of the Financial Reporting Entity
The Town of Los Gatos (the “Town”) operates under a Council-Manager form of government and provides the following services; public safety (including police and emergency management), parks and public works, community development, library, public improvements, planning and zoning, and general administration services. Redevelopment services were provided primary through the Redevelopment Agency of the Town which was dissolved on February 1, 2012.

The Town is largely a residential community located in the foothills of the Santa Cruz Mountains and was incorporated as a municipal corporation in 1887. The Town’s population as of January 1, 2023, was 33,102.

As required by generally accepted accounting principles, these financial statements present the Town as the Primary Government and any component units for which the Town is considered financially accountable.

B. Description of Blended Component Units
The Town did not report any component units as a part of the primary government because the Town Council was not the governing body of any entities and no separate entity provided services entirely to the Town.

C. Description of Joint Ventures and Public Entity Risk Pool As described in Note 11, the Town participates in two joint ventures and public entity risk pool activities through formally organized separate legal entities. The financial activities of the Pooled Liability Assurance Network Joint Powers Authority (PLAN JPA) and the Local Agency Workers’ Compensation Excess Joint Powers Authority (“LAWCX”) are not included in the accompanying basic financial statements as boards separate from and independent of the Town administer them.

D. Basis of Presentation
The Town’s Basic Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board (“GASB”) is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the U.S.A.

The accompanying financial statements are presented on the basis set forth in Government Accounting Standards Board Statements No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, No. 36, Recipient Reporting for Certain Non-exchange Revenues, an Amendment of GASB Statement No. 33, No. 37, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments; Omnibus, and No. 38, Certain Financial Statement Note Disclosures.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

These Statements require that the financial statements described below be presented.

Government-wide Statements: The Statement of Net Position and the Statement of Activities display information about the primary government (the Town). These statements include the financial activities of the overall Town government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. These statements present governmental activities of the Town. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.

The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Town’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meet the operational needs of a particular program, and (c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

Fund Financial Statements: The fund financial statements provide information about the Town's funds, including fiduciary funds and blended component units. Separate statements for each fund category—governmental, proprietary and fiduciary—are presented. The emphasis of fund financial statements is on major individual governmental funds, each of which is displayed in a separate column. All remaining governmental are aggregated and reported as nonmajor funds.

Internal service funds of the Town (which provide services primarily to other funds of the Town) are presented, in summary form, as part of the proprietary fund financial statements. Since the principal users of the internal services are the Town’s governmental activities, financial activities of the internal service funds are presented in the governmental activities column when presented at the government-wide level. The costs of these services are allocated to the appropriate function/program in the Statement of Activities.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities.

E. Major Funds
GASB defines major funds and requires that the Town’s major governmental funds be identified and presented separately in the fund financial statements. All other funds, called nonmajor funds, are combined and reported in a single column, regardless of their fund-type.

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

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

The Town reported the following major governmental funds in the accompanying financial statements:

General Fund is the general operating fund of the Town and is used to account for all financial resources except those required to be accounted for in another fund.

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

ARPA Fund was established to account for monies received under the American Rescue Plan Act of 2021 to respond to the COVID19 emergency.

The Town also reports the following fund types:

Internal Service Funds are used to account for services that are provided to other departments on a cost-reimbursement basis. Those services include workers compensation, self-insurance, facilities maintenance, information technology, and equipment.

Fiduciary Funds include Private-Purpose Trust Funds and agency funds used to account for assets held by the Town as an agent for individuals, private organizations, and other governments. The financial activities of this fund are excluded from the government-wide financial statement but are presented in a separate Fiduciary Fund financial statement.

The Town reported the following Fiduciary Funds in the accompanying financial statements:

RDA Successor Agency Private Purpose Trust Fund accounts for the assets, liabilities, and operations transferred from the dissolution of the Town’s Redevelopment Agency, which includes the following:
• Certificates of Participation issued to finance several capital improvement projects throughout the Town.
• Redevelopment projects and related property tax revenue. • Affordable Housing Set-Aside Program obligations.
• Repayment of obligations incurred by the Town’s Redevelopment Agency prior to its dissolution.

F. Basis of Accounting
The government-wide and fiduciary fund (except for agency funds) financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

and available. The Town considers property tax revenues reported in the governmental funds to be available if the revenues are collected or are reasonably expected to be collected within sixty days after year-end. For revenues other than property taxes, the Town generally applies the sixty-day period rule when considering the measurable and available criteria. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which is recognized upon becoming due and payable; and except for claims, judgments, and compensated absences, which are recognized when estimable and probable. Governmental capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of governmental long-term debt and acquisitions under capital leases are reported as other financing sources.

Those revenues susceptible to accrual are property and sales taxes, certain intergovernmental revenues, and interest revenue. Fines, forfeitures, licenses and permits, and charges for services are not susceptible to accrual because they are not measurable until received in cash.

Non-exchange transactions, in which the Town gives or receives value without directly, receiving or giving equal value in exchange, include taxes, grants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed.

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

The Town may fund programs with a combination of cost-reimbursement grants, categorical block grants and/or general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The Town’s policy is to first apply restricted grant resources to such programs followed by general revenues as necessary.

Certain indirect costs are included in program expenses reported for individual functions and activities.

The Town applies all applicable GASB pronouncements for certain accounting and financial reporting guidance including those applicable to accounting and reporting for proprietary operations.

In December of 2010, GASB issued GASB No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. This statement incorporates pronouncements issued on or before November 30, 1989 into GASB authoritative literature. This includes pronouncements by the Financial Accounting Standards Board (FASB), Accounting Principles Board Opinions (APB), and the Accounting Research Bulletins of the American Institute of Certified Public Accountants' (AICPA) Committee on Accounting Procedure, unless those pronouncements conflict with or contradict with GASB pronouncements.

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

Investments are reported at fair value.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
Other Postemployment Benefit (OPEB) Expense
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense information about the fiduciary net position of the Town’s Retiree Benefits Plan (the OPEB Plan) and additions to/deductions from the OPEB Plan's fiduciary net position have been determined on the same basis as they are reported by the OPEB Plan. For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value. Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
Cash and Cash Equivalents - The Town’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

State of California statutes and the Town’s investment policy authorize the Town to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, collateralized, non-negotiable certificates of deposits, commercial paper rated A-1/P-1, medium-term corporate notes rated A or its equivalent or better by Moody’s or Standard & Poor’s, asset backed corporate notes, bankers’ acceptances, mutual funds, and the State Treasurer’s investment pool (Local Agency Investment Fund).

The Town does not enter into repurchase or reverse repurchase agreements.

Restricted Cash and Investments - Certain restricted cash and investments are held by fiscal agents for pension stabilization, worker’s compensation insurance, and Successor Agency debt service obligations.

Investments - Investments are recorded at fair value in accordance with GASB Statement No. 72, Fair Value Measurement and Application. Accordingly, the change in fair value of investments is recognized as an increase or decrease to investment assets and investment income.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction. In determining this amount, three valuation techniques are available:
• Market approach - This approach uses prices generated for identical or similar assets or liabilities.

The most common example is an investment in a public security traded in an active exchange such as the NYSE.
• Cost approach - This technique determines the amount required to replace the current asset. This approach may be ideal for valuing donations of capital assets or historical treasures. • Income approach - This approach converts future amounts (such as cash flows) into a current discounted amount.

Each of these valuation techniques requires inputs to calculate a fair value. Observable inputs have been maximized in fair value measures, and unobservable inputs have been minimized.

Materials, Supplies and Deposits (Other Assets) - These assets are held for consumption and are stated at cost using the first-in, first-out method. The costs are recorded as expenditures at the time the item is consumed.

Interfund Receivables and Payables - Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “advances to/advances from other funds.” All other outstanding balances between funds are reported as “due to/from other funds.”
Advances - Advances between funds and due from/to other funds are offset by a nonspendable fund balance in applicable Town funds to indicate the extent to which they are not available for appropriation and are not expendable available financial resources.

Capital Assets - Capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets or donated works of art and similar items should be reported at acquisition value rather than fair value. Also, note that capital assets received in a service concession arrangement should be reported at acquisition value rather than fair value.

Capital assets, including infrastructure, are recorded if acquisition or construction costs exceeds $10,000.

As required by GASB, the Town depreciates and amortizes capital assets with limited useful lives over their estimated useful lives. The purpose of depreciation/amortization is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year’s pro rata share of the cost of capital assets. The Town depreciates/amortizes using the straight-line method which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated.

Intangible right-to-use lease assets are amortized over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase option that the university has determined is reasonably certain of being exercised, then the lease asset is amortized over the useful life of the

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;

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

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

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.

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

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

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.

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.

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 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:

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.

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 Transfers In