Los Gatos City Council
December 16, 2025

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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 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.

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ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
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, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
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.

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ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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 Town has determined is reasonably certain of being exercised, then the lease asset is amortized over the useful life of the Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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 - The Town recognizes a liability for compensated absences for leave time that (1) has been earned for services previously rendered by employees, (2) accumulates and is allowed to be carried over to subsequent years, and (3) is more likely than not to be used as time off or settled during or upon separation from employment. Based on the criteria listed, two types of leave qualify for liability recognition for compensated absences – vacation and sick leave. The liability for compensated absences is reported as incurred in the government-wide and proprietary fund financial statements. The liability for compensated absences includes salary-related taxes and benefits, where applicable.

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 Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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; 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 Beginning Balance $ 3,110,957
Net change (72,470)
Ending Balance $ 3,038,487
Compensated Absences Current Portion $ 484,551
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ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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.

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.

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ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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 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 19, 2025, 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.

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ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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.

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, 2025.

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.

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ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

G. Accounting and Reporting Changes
GASB Statement No. 102, Certain Risk Disclosures
This Statement requires a government to assess whether a concentration or constraint makes the primary government reporting unit or other reporting units that report a liability for revenue debt vulnerable to the risk of a substantial impact. Additionally, this Statement requires a government to assess whether an event or events associated with a concentration or constraint that could cause the substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of the date the financial statements are issued.

If a government determines that those criteria for disclosure have been met for a concentration or constraint, it should disclose information in notes to financial statements in sufficient detail to enable users of financial statements to understand the nature of the circumstances disclosed and the government’s vulnerability to the risk of a substantial impact. The disclosure should include descriptions for (1) the concentration or constraint (2) each event associated with the concentration or constraint that could cause a substantial impact if the event had occurred or had begun to occur prior to the issuance of the financial statements (3) actions taken by the government prior to the issuance of the financial statements to mitigate the risk.

The implementation of this standard did not have a material impact on the Town’s financial statements and management determined there were no were concentrations or constraints that make the Town vulnerable to the risk of substantial impact.

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. 103, Financial Reporting Model Improvements This Statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government’s accountability.

This Statement establishes new accounting and financial reporting requirements or modifies existing requirements related to (a) Management’s discussion and analysis (MD&A) (b) Unusual or infrequent items (c) Presentation of the proprietary fund statement of revenues, expenses, and changes in fund net position (d) Information about major component units in basic financial statements (5) Budgetary comparison information (6) Financial trend information in the statistical section
The requirements of this Statement are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter.

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ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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 $8,687,744 and the carrying amount was $9,807,078 as of June 30, 2025. The bank balance and the carrying amount differed due to deposits in transit and outstanding checks.

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.

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ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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, 2025, LAIF had approximately $178 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.

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, 2025.

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ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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 $75 million
Money Market Funds NA 20%
The following is a summary of the Town’s Cash and Investments (stated at fair value) as of June 30, 2025:

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.

Available Concentration Time to Weighted
for of Credit Input Mature Average
Operations Restricted Total Risk Rating Level (Years) Maturity Government Bonds $ 19,937,294 - $ 19,937,294 27.28% AA+ 2 .08-4.92 2.39 Government Agencies 17,930,643 - 17,930,643 24.53% AA+ 2 .15-4.47 1.72 Corporate Bonds 15,039,365 - 15,039,365 20.58% A- to AA+ 2 .53-4.10 2.27 Mutual Funds 15,229 - 15,229 0.02% Not Rated 2 n/a n/a
LAIF 20,168,601 - 20,168,601 27.59% Not Rated n/a n/a n/a Total Investments 73,091,132 - 73,091,132 100.00%
Cash Deposits with Banks 9,789,372 2,332,431 12,121,803 Money Market Accounts 17,706 - 17,706
Pension Trust - 3,090,731 3,090,731
Cash on Hand at Town 2,400 - 2,400
Total Cash and Investments $ 82,900,610 $ 5,423,162 $ 88,323,772 Description
Fiduciary
Description Total Town Funds Totals
Cash and Investments Available for Operations $ 80,767,941 $ 2,132,669 $ 82,900,610 Restricted Cash and Investments 3,255,657 2,167,505 5,423,162 Total Cash and Investments $ 84,023,598 $ 4,300,174 $ 88,323,772 Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

NOTE 3 - LONG-TERM NOTES RECEIVABLE
The Town had the following long-term notes receivable as of June 30, 2025:

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 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, 2025, 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%.

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 645,410
Total Long-Term Notes Receivable $ 1,783,162
Community Development Block Grant Fund (CDBG):

Description
Successor Agency Affordable Housing:

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ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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%.

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%.

In January of 2016, the Town entered into a twenty-year lease with New Museum Los Gatos (NUMU) to use the property at 106 East Main Street. Under the lease, NUMU pays the Town $25,000 per year.

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 5.86%.

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 following summarizes the lease balances as of June 30, 2025:

Lease Receivable Beginning Additions Deletions Ending
Tesla $ 149,496 $ - $ (93,867) $ 55,629
LGS 123 E. Main St 131,006 - (19,623) 111,383
LGS 208 E. Main St 1,055,502 - (158,086) 897,416
NUMU 221,175 - (12,368) 208,807
Los Gatos Threatre 304,129 - (78,477) 225,652
1,861,308$ $ - $ (362,420) 1,498,888$
Deferred Inflows of Resources Beginning Additions Deletions Ending Tesla $ 144,532 $ - $ (91,284) $ 53,248
LGS 123 E. Main St 70,402 - (12,997) 57,405
LGS 208 E. Main St 535,276 - (98,820) 436,456
NUMU 215,594 - (17,247) 198,347
Los Gatos Threatre 202,252 - (67,418) 134,834
1,168,056$ $ - $ (287,766) $ 880,290
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

The following summarizes the future lease collections as of June 30, 2025:

NOTE 5 - INTERFUND TRANSACTIONS
Inter-fund Receivables and Payables - Amounts due to or due from other funds reflect inter-fund balances for services rendered or short-term loans expected to be repaid in the next fiscal year. Advances to or from other funds are long-term loans between funds that are to be repaid in their entirety over several years.

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, 2025 were as follows:

For the Year
Ending June 30, Principal Interest Total
2026 $ 363,791 $ 82,970 $ 446,761
2027 352,973 64,266 417,239
2028 248,138 45,815 293,953
2029 270,392 30,536 300,928
2030 128,730 16,319 145,049
2031-2035 99,049 25,952 125,001
2036-2037 35,815 1,685 37,500
Total Future Collections 1,498,888$ $ 267,543 1,766,431$ Opinion Unit Program Title Amount Opinion Unit Program Title Description General Fund Non-Departmental $ 1,110,000 Appropriated Reserves GFAR Adopted Budget Support General Fund Non-Departmental 60,000 Internal Service Liability Program Internal Service Fund General Fund Non-Departmental 20,684 Appropriated Reserves ARC Interim Community Center Capital Project General Fund Measure G Program 652,396 Appropriated Reserves GFAR Capital projects Nonmajor Blackwell District 460 General Fund Non-Departmental Admin Support Nonmajor Kennedy Meadows 1,510 General Fund Non-Departmental Admin Support Nonmajor Gemini Court 610 General Fund Non-Departmental Admin Support Nonmajor Santa Rosa Heights 660 General Fund Non-Departmental Admin Support Nonmajor Vasona Heights 1,430 General Fund Non-Departmental Admin Support Nonmajor Hillbrook Drive 250 General Fund Non-Departmental Admin Support Appropriated Reserves Non-Departmental 102,000 General Fund Non-Departmental Vehicle Impact Fees Appropriated Reserves Non-Departmental 250,000 General Fund Non-Departmental Community Grants Appropriated Reserves GFAR 217,808 General Fund PPW Admin Engineering Support Appropriated Reserves GFAR 121,683 General Fund Town Engineering Engineering Support Appropriated Reserves Traffic Mitigation 10,000 General Fund Non-Departmental Admin Support Nonmajor Gas Tax 106,000 General Fund Non-Departmental Admin Support Total Transfers $ 2,655,491
Transfers Out Transfers In
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

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

Beginning Additions Deletions Ending
Nondepreciable/Amortizable Capital Assets:

Land $ 26,064,735 $ 40,657 $ - $ 26,105,392
Construction in Progress 15,491,043 8,464,443 (3,097,303) 20,858,183 Total Nondepreciable/Amortizable 33,579,251 8,505,100 (3,097,303) 46,963,575 Depreciable/Amortizable Capital Assets:

Subscription Right of Use Assets 1,622,573 - - 1,622,573 Buildings and Improvements 42,862,716 158,685 - 43,021,401 Equipment & Vehicle 12,893,445 1,153,864 (531,434) 13,515,875 Infrastructure - All Other 28,491,627 3,127,389 - 31,619,016 Infrastructure - Streets 86,301,911 3,556,897 (113,684) 89,745,124 Total Depreciable/Amortizable 172,172,272 7,996,835 (645,118) 179,523,989 Less Accumulated Depreciation/Amortization for:

Subscription Right of Use Assets 422,512 273,093 - 695,605 Buildings and Improvements 11,995,280 1,263,825 - 13,259,105 Equipment & Vehicle 10,870,937 738,557 (530,542) 11,078,952 Infrastructure - All Other 10,552,383 879,263 - 11,431,646 Infrastructure - Streets 40,509,975 2,791,126 (113,684) 43,187,417 Total Acccumulated Depreciation/Amortization 74,351,087 5,945,864 (644,226) 79,652,725 Net Depreciable/Amortizable Capital Assets 97,821,185 2,050,971 (892) 99,871,264 Capital Assets, Net $ 139,376,963 $ 10,556,071 $ (3,098,195) $ 146,834,839 Depreciation/
Amortization
Expense
General Government $ 485,905
Public Safety 503,948
Parks & Public Works 4,864,643
Community Development 53,448
Library 37,665
Sanitation 255
Total Governmental Activities $ 5,945,864
Governmental Activities
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

NOTE 7 - 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 following summarizes the changes in long-term debt in the Town during the fiscal year ended June 30, 2025:

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

Beginning Additions Deletions Ending
Depreciable/Amortizable Capital Assets:

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

Buildings and Improvements 3,050,778 120,823 - 3,171,601 Net Depreciable/Amortizable Capital Assets 1,016,930 (120,823) - 896,107 Capital Assets, Net $ 1,016,930 $ (120,823) $ - $ 896,107 Interest Maturity Original Beginning Additions/ Ending
Long-Term Debt Rate Date Issue Balance Adjustments Deletions Balance Direct Borrowings:

PG&E Loan 0% 2031 1,560,336 $ $ 1,040,223 $ - $ 156,034 $ 884,189 Due Within One Year 156,034
Due in More Than One Year $ 728,155
For the Year
Ending June 30, Principal Interest Total
2026 $ 156,034 $ - $ 156,034
2027 156,034 - 156,034
2028 156,034 - 156,034
2029 156,034 - 156,034
2030 156,034 - 156,034
2031-2035 104,019 - 104,019
Total Debt Service $ 884,189 $ - $ 884,189
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

The following summarizes the changes in long-term debt in the Successor Agency trust fund during the fiscal year ended June 30, 2025:
2002 Certificates of Participation (2002 COPs) - On July 18, 2002, the Town and the Los Gatos Redevelopment Agency issued $10,725,000 in 2002 COPs, Series A, to finance the acquisition, construction, rehabilitation, equipping, and improvement of several capital improvement projects. The Town had pledged lease payments of real property and facilities comprised of the Parks and Public Works Service Center and Baseball Field, as well as Parking Lot No. 1, 2, and 3, as collateral for the repayment of the Certificates. Principal payments are due annually on August 1st, with interest payments due semi-annually on February 1st and August 1st.
2010 Certificates of Participation (2010 COPs) - On June 1, 2010, $15,675,000 of 2010 COPs were issued to finance the acquisition, construction, and improvement of a library on the Town’s Civic Center campus, to be owned and operated by the Town. Principal payments are due annually on August 1, with interest payments due semi-annually on February 1 and August 1.

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

Interest Maturity Original Beginning Ending
Long-Term Debt Rate Date Issue Balance Deletions Balance 2002 COP 2.5-5% 2031 10,725,000 $ $ 4,420,000 $ 465,000 $ 3,955,000 2010 COP 2.5-4.25% 2028 15,675,000 5,595,000 1,020,000 4,575,000 Subtotal COP's 26,400,000 10,015,000 1,485,000 8,530,000 Premiums 753,095 225,926 37,655 188,271
Total Long-Term Debt $ 27,153,095 $ 10,240,926 $ 1,522,655 $ 8,718,271 Due Within One Year 1,550,000
Due in More Than One Year $ 7,168,271
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

The Successor Agency must maintain a required amount of cash and investments with the trustee under the terms of the COPs issues. These funds are pledged as reserves to be used if the Successor Agency fails to meet its obligations under the COPs issue and totaled $2,167,505 as of June 30, 2025. The California Government Code requires these funds to be invested in accordance with Town ordinance, bond indentures or State statues. All these funds have been invested as permitted under the Code.

NOTE 8 - SUBSCRIPTION-BASED INFORMATION TECHNOLOGY AGREEMENTS The following summarizes the terms of the Town’s subscription-based information technology agreements as of June 30, 2025:

The following summarizes the Town’s subscription right of use assets as of June 30, 2025:

For the Year
Ending June 30, Principal Interest Total
2026 $ 1,550,000 $ 351,850 $ 1,901,850
2027 1,625,000 283,375 1,908,375
2028 1,705,000 210,819 1,915,819
2029 1,790,000 133,156 1,923,156
2030 590,000 78,250 668,250
2031-2035 1,270,000 64,250 1,334,250
Total Debt Service $ 8,530,000 $ 1,121,700 $ 9,651,700
Terms Accela Microsoft Axon
Start 7/1/2021 7/1/2022 4/1/2024
End 6/30/2026 7/1/2025 4/1/2034
Annual Rate 4.66% 4.92% 6.31%
Prepayments $ 227,179 $ - $ -
Implementation Cost $ 35,000 $ - $ -
Principal Paid $ 111,986 $ 49,344 $ 50,347
Interest Paid $ 17,320 $ 13,073 $ 3,716
Amortization $ 149,337 $ 53,085 $ 17,668
Subscription Right of Use Assets Accela Microsoft Axon Total Beginning $ 597,350 $ 318,510 $ 706,713 $ 1,622,573
Additions - - - -
Deletions - - - -
Ending 597,350 318,510 706,713 1,622,573
Accumulated Amortization (448,011) (159,255) (88,339) (695,605) Subscription ROA, Net $ 149,339 $ 159,255 $ 618,374 $ 926,968 Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

The following summarizes the Town’s subscription liabilities as of June 30, 2025:

The following summarizes the Town’s future payments for subscription liabilities as of June 30, 2025:

NOTE 9 - SPECIAL ASSESSMENT DISTRICT DEBT WITHOUT COMMITMENT Special assessment districts are established in various parts of the Town to provide improvements to properties located in those districts. Properties are assessed for the cost of the improvements. These assessments are payable over the term of the debt issued to finance the improvements and are used to pay debt service on debt issued to fund the improvements. The Town is acting only as an agent and has no legal liability with respect to the payment of any indebtedness of the Downtown Parking Assessment District. There was no non-obligated debt outstanding as of June 30, 2025.

Subscription Liabilities Accela Microsoft Axon Total
Beginning $ 232,997 $ 212,784 $ 637,377 $ 1,083,158
Additions - - - -
Deletions (111,986) (49,344) (50,349) (211,679)
Ending 121,011 163,440 587,028 871,479
Due Within One Year 121,011 51,828 53,618 226,457
Due in More Than One Year $ - $ 111,612 $ 533,410 $ 645,022 For the Year
Ending June 30, Principal Interest Total
2026 $ 226,456 $ 52,120 $ 278,576
2027 111,536 40,265 151,801
2028 117,985 33,817 151,802
2029 67,512 26,990 94,502
2030 74,733 22,604 97,337
2030-2034 273,257 36,628 309,885
Total Debt Service $ 871,479 $ 212,424 $ 1,083,903
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

NOTE 10 - FUND BALANCES
Fund balance for governmental funds is reported in classifications (nonspendable, restricted, committed, assigned, and unassigned) that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. As of June 30, 2025, fund balances were classified as follows:

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

Beginning Ending
Balance Additions Deletions Balance
Nonspendable
Loans Receivable $ 159,000 $ - $ - $ 159,000
Total Nonspendable 159,000 - - 159,000
Restricted:

Library 556,848 85,760 (82,864) 559,744
Capital projects 9,043,666 2,352,685 (2,676,656) 8,719,695 Land held for resale 344,338 - (344,338) -
Repairs and maintenance 182,625 46,575 (35,594) 193,606 Pensions 2,188,659 905,776 (3,704) 3,090,731
VTA 577,887 1,973,860 (2,288,686) 263,061
Total Restricted 12,894,023 5,364,656 (5,431,842) 12,826,837 Committed:

Budget stabilization and catastrophes 6,736,781 1,133,858 - 7,870,639 Catastrophic 6,736,781 1,133,858 - 7,870,639
Pension/OPEB Reserve 300,000 1,300,000 (300,000) 1,300,000 Measure G 2018 District Sales Tax - Residual 590,581 - (590,581) - Measure G 2018 District Sales Tax - Capital 1,572,619 - (196,438) 1,376,181 Special revenue funds 1,091,822 2,960,396 (2,840,275) 1,211,943 Total Committed 17,028,584 6,528,112 (3,927,294) 19,629,402 Assigned:

Open Space 562,000 - - 562,000
Parking 292,000 - - 292,000
Sustainability 140,553 - - 140,553
Capital/Special projects 25,072,120 10,738,047 (19,066,538) 16,743,629 Carryover encumbrances 85,861 - (79,494) 6,367
Comcast PEG 50,000 - - 50,000
ERAF Risk 1,430,054 - (1,430,054) -
Economic recovery 20,684 - (20,684) -
Compensated Absences 1,555,478 - (36,235) 1,519,243
Market fluctuations 1,712,246 - (510,422) 1,201,824
Total Assigned 30,920,996 10,738,047 (21,143,427) 20,515,616 Unassigned - 10,211,049 - 10,211,049
Total Fund Balance - Gov't Funds $ 61,002,603 $ 32,841,864 $ (30,502,563) $ 63,341,904 Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

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

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

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

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

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

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

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

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

Pension/OPEB Reserve committed fund balance will be used to fund net pension liabilities for the Town's Miscellaneous and Safety pension plans administered by CALPERS. Town policy provides, to Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

the extent possible, that additional annual deposits be calculated committed with the goal of moving the payment of the unfunded pension liability from a 29-year to a 20-year amortization period.

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

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

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

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

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

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

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

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

Compensated Absences assigned fund balance will be used for vacation and sick-pay benefits owed to employees as of June 30, 2025 that were not a liability of the General Fund because of their long-term nature.

Market Fluctuations assigned fund balance will be used for fair value adjustments that are not immediately realizable but included in investment earnings.

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

Plan Descriptions
All qualified employees are eligible to participate in the Town’s pooled Safety Plan, a cost-sharing multiple-employer defined benefit pension plan and the Town’s Miscellaneous (all other) Plan, an agent Misc Safety Total
Deferred outflows of resources $ 7,066,321 $ 9,822,629 $ 16,888,950 Deferred inflows of resources $ - $ 809,446 $ 809,446
Net pension liabilities $ 27,934,019 $ 33,469,333 $ 61,403,352 Pension expense (credit) $ 5,488,565 $ 6,534,580 $ 12,023,145 Defined Benefit Plans
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

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

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

Employees Covered
At June 30, 2025, the following employees were covered by the benefit terms for the Plans:

Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rates Tier 1 Tier 1 PEPRA Police PEPRA
Benefit formula 2.5% @ 55 2% @ 60 2% @ 62 3.0% @ 50 2.7% @ 57 Benefit vesting schedule 5 Years 5 Years 5 Years 5 Years 5 Years Benefit payments Monthly for Life Monthly for Life Monthly for Life Monthly for Life Monthly for Life Retirement age 55 60 62 50 57
Monthly benefits as a
% of eligible compensation 2.0% to 2.5% 1% to 2.5% 1.5% to 2.5% 3.00% 2-2.70% Required employee contribution rates 8% 7% 7.75% 9% 14.5% Required employer contribution rates 11.15% 11.15% 11.15% 29.30% 14.72% Miscellaneous Safety (Police)
Miscellaneous Safety
Active 123 48
Transferred 107 19
Separated 106 9
Retired 264 91
Total 600 167
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

are the estimated amount necessary to finance the costs of benefits earned by employees during the year.

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

For the year ended June 30, 2025, pension contributions for each Plan was as follows:

Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions Pension Liability
As of June 30, 2025, the Town reported net pension liabilities for each plan as follows:

The Town’s net pension liability for the Safety Plan is measured as the proportionate share of the net pension liability while the Miscellaneous plan’s net pension liability is a direct calculation based on its actuarial study and is not proportionate. The net pension liability of all the Plans are measured as of June 30, 2024, and the total pension liability for the Plans used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2023. The Town’s proportion of the net pension liability for the Safety Plan was based on a projection of the Town’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The Town’s proportionate share of the net pension liability for the Safety Plan as of June 30, 2024 and 2025 was as follows:

For the year ended June 30, 2025, the Town recognized a pension expense of $12,023,145.

Employer
Contributions
Miscellaneous $ 4,348,001
Safety 3,929,739
Total Employer Contributions $ 8,277,740
Miscellaneous
Safety
Total
Proportionate Share of
Net Pension
Liability/(Asset)
$ 27,934,019
33,469,333
$ 61,403,352
Safety
Proportion - June 30, 2024 0.45458%
Proportion - June 30, 2025 0.45906%
Change - Increase/(Decrease) 0.00448%
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

The following is a summary of the changes in the total pension liability, fiduciary net position and net pension liability of the Town’s Miscellaneous Plan as of June 30, 2025:

At June 30, 2025, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

The Town reported $8,277,740 as deferred outflows of resources related to contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ended June 30, 2026.

Total Fiduciary Net
Pension Net Pension
Liability Position Liability
Beginning Balance $ 128,233,325 $ 99,184,743 $ 29,048,582 Service Costs 2,365,384 2,365,384 -
Interest on Total Pension Liability 8,809,282 8,809,282 - Changes of Assumptions - - -
Difference Actual and Expected Experience 1,923,906 1,923,906 - Employer Contributions - 3,876,932 (3,876,932)
Employee Contributions - 996,934 (996,934)
Net Investment Income - 9,419,976 (9,419,976)
Benefit Payments (7,338,359) (7,338,359) -
Administrative Expenses - (80,707) 80,707
Net Changes 5,760,213 6,874,776 (1,114,563)
Ending Balance $ 133,993,538 $ 106,059,519 $ 27,934,019 Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of Assumptions $ - $ - $ 824,616 $ -
Differences between Expected and Actual Experience 1,079,463 - 2,731,395 88,809 Differences between Projected and Actual Investment Earnings 1,638,857 - 1,617,755 - Differences between Employer's Contributions and
Proportionate Share of Contributions - - 401,233 415,900 Change in Employer's Proportion - - 341,199 304,702
Pension Contributions Made Subsequent to Measurement Date 4,348,001 - 3,929,739 - Total $ 7,066,321 $ - $ 9,845,937 $ 809,411
Miscellaneous Safety
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

Actuarial Assumptions
The total pension liabilities in the June 30, 2023 actuarial valuations were determined using the following actuarial assumptions:

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2023 valuation are based on CalPERS experience studies which can found on the CalPERS website.

Miscellaneous Safety Total
$ 837,457 $ 1,924,705 $ 2,762,162
2,817,540 3,747,701 6,565,241
(403,583) (12,128) (415,711)
(533,094) (553,491) (1,086,585)
- - -
- - -
$ 2,718,320 $ 5,106,787 $ 7,825,107
2026
2030
Total
2027
2028
2029
Thereafter
Deferred Outflows/(Inflows) of
Fiscal Year Ending Resources
June 30:

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method Entry-Age
Normal Cost
Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Payroll Growth 2.80%
Projected Salary Increase (1)
Investment Rate of Return 6.8% (2)
Mortality (3)
(1) Varies by entry age and service
(2) Net of pension plan investment expenses, including inflation (3) Derived using CalPERS' membership data for all funds Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

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

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

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

Assumed Long-Term
Asset Expected Real
Asset Class (a) Allocation Return (1)(2)
Global Equity Cap Weighted 30.00% 4.54%
Global Equity NonCap Weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
Total 100.00%
(1) An expected inflation of 2.3% used for this period. (2) Figures are based on the 2021-22 Asset Liability Study.

Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the Town’s net pension liability for the Plans, calculated using the discount rate for the Plans, as well as what the Town’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

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

Payable to the Pension Plans
As of June 30, 2025, the Town reported a payable of $33,474 and $30,506 for the outstanding amount of contributions to the Miscellaneous Agent Multiple Employer Plan and the Safety Cost Sharing Plan.

IRS Section 115 Trust
During the fiscal year ending June 30, 2020, the Town established an IRS Section 115 Trust with the CalPERS California Employer’ Pension Prefunding Trust (CEPPT) program. In fiscal year 2025, the Town reported $3,090,731 as restricted cash with fiscal agent within the General Fund. Per GASB, amounts placed in trusts for CalPERS plans are treated as side trusts that do not directly reduce the net pension liability.

NOTE 12 - OTHER POSTEMPLOYMENT BENEFITS

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

Miscellaneous Safety
1% Decrease 5.90% 5.90%
Net Pension Liability $ 45,258,401 49,708,639
Current 6.90% 6.90%
Net Pension Liability $ 27,934,019 33,469,333
1% Increase 7.90% 7.90%
Net Pension Liability $ 13,675,961 20,187,864
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

In accordance with the Public Employees' Medical and Hospital Care Act (PEMHCA), employees qualify for retiree health benefits upon five (5) years of service if they meet the vesting requirements as set forth by CalPERS and take a service or disability retirement from Town employment. Additionally, the employee must actually draw a CalPERS pension within ninety (90) days of separation from the Town, provided the employee remains with the Town's health plan through COBRA. For employees who retire on or after February 1, 2016, at Medicare eligibility, the Town will align contributions to the full cost of the employee’s enrollment, including enrollment of family members, in a health benefits plan or plans up to a maximum of 100% Single Party and 90% Dependents for Kaiser Bay Area Basic/Medicare/Combo per month. During negotiations in fiscal year 2018/19, the Town’s discretionary retiree medical benefit contribution was eliminated for all future hires.

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

Employees Covered by Benefit Terms
At June 30, 2025 (the measurement date), the benefit terms covered the following employees:

Contributions
The contribution requirements of Plan members and the Town are established and may be amended by the Town. The required contribution is based on projected pay-as-you-go financing requirements, with additional amounts to prefund benefits as determined annually by the Town Council. For the fiscal year ended June 30, 2025, the Town contributed $2,081,717 from the General Fund. During the measurement period ended June 30, 2024, the Town contributed $1,818,298 to the Plan and benefit payments were $1,801,144. Plan members receiving benefits contributed did not make any contributions.

Active employees 158
Inactive employees - receiving benefits 145
Inactive employees - not receiving benefits 36
Total employees 339
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

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

Valuation Date: June 30, 2023
Measurement Date: June 30, 2024
Actuarial Cost Method: Entry-Age Normal
Amortization Period:

Asset Valuation Method:

Actuarial Assumptions:

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

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

None
15 year fixed
Medicare (Kaiser) - 4.60% for 2023,
decreasing to an ultimate rate of 3.75% in 2076
Investment gains and losses spread over 5-year rolling period CalPERS 2000-2019 Experience Study
CalPERS 2000-2019 Experience Study
Non-Medicare - 6.50% for 2023,
decreasing to an ultimate rate of 3.75% in 2076
Mortality projected fully generational with Scale MP-2021 Medicare (Non-Kaiser) - 5.65% for 2023,
decreasing to an ultimate rate of 3.75% in 2076
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

Net OPEB Liability
The Town's net OPEB liability was measured as of June 30, 2024 (measurement date) and was determined by an actuarial valuation as of June 30, 2024 (valuation date) for the fiscal year ended June 30, 2025 (reporting date).

Changes in the Net OPEB Liability
The following summarizes the changes in the net OPEB liability during the year ended June 30, 2025:

Deferred Inflows and Outflows of Resources
At June 30, 2025, the Town reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Fiscal Year Ended June 30, 2025
(Measurement Date June 30, 2024)
Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability
(Asset)
Balance at June 30, 2024 $ 33,331,226 $ 24,321,780 $ 9,009,446 Service cost 865,285 - 865,285
Interest in Total OPEB Liability 2,080,996 - 2,080,996
Employer contributions - 1,818,298 (1,818,298)
Net investment income - 2,672,858 (2,672,858)
Administrative expenses - (25,082) 25,082
Benefit payments (1,801,144) (1,801,144) -
Net changes 1,145,137 2,664,930 (1,519,793)
Balance at June 30, 2025 $ 34,476,363 $ 26,986,710 $ 7,489,653 Covered Employee Payroll $ 20,375,284
Total OPEB Liability as a % of Covered Employee Payroll 169.21% Plan Fid. Net Position as a % of Total OPEB Liability 78.28% Service Cost as a % of Covered Employee Payroll 4.25%
Net OPEB Liability as a % of Covered Employee Payroll 36.76% Contributions as a % of Cov. Emp. Payroll 8.92%
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Difference between actual and expected experience $ 102,621 $ 840,500 Difference between actual and expected earnings 279,365 - Change in assumptions 1,812,256 81,430
OPEB contribution subsequent to measurement date 2,081,717 - Totals $ 4,275,959 $ 921,930
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

Of the total amount reported as deferred outflows of resources related to OPEB, $2,081,717 were the result of Town contributions subsequent to the measurement date and before the end of the fiscal year.

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

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

Year Ended June 30,
2026 $ 21,973
2027 937,782
2028 152,324
2029 160,233
2030 -
Thereafter -
Total $ 1,272,312
Asset Class
Percentage of
Portfolio
Long-Term
Expected Rate of
Return
Global Equity 49.00% 4.56%
Fixed Income 23.00% 1.56%
TIPS 5.00% -0.08%
Commodities 3.00% 1.22%
REITs 20.00% 4.06%
Total 100.00%
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

OPEB Expense
The following summarizes the OPEB expense by source during the year ended June 30, 2025:

The following summarizes changes in the net OPEB liability as reconciled to OPEB expense during the year ended June 30, 2025:

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

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

Service cost $ 865,285
Interest in TOL 2,080,996
Expected investment income (1,519,863)
Difference between actual and expected experience (417,366) Difference between actual and expected earnings 74,618
Change in assumptions 390,570
Administrative expenses 25,082
OPEB Expense $ 1,499,322
$ 7,489,653
(9,009,446)
(1,519,793)
Changes in deferred outflows 1,794,219
Changes in deferred inflows (593,402)
Employer contributions and implicit subsidy 1,818,298
OPEB Expense $ 1,499,322
Net OPEB liability ending
Net OPEB liability beginning
Change in net OPEB liability
(1% Decrease ) 6.25% (1% Increase )
Net OPEB Liability (Asset) $ 11,538,514 $ 7,489,653 $ 4,106,816 Discount Rate
(1% Decrease ) Current (1% Increase )
Net OPEB Liability (Asset) $ 3,561,702 $ 7,489,653 $ 12,266,003 Trend Rate
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

Pooled Liability Assurance Network Joint Powers Authority (PLAN JPA) The Town participates in PLAN, which covers general liability claims in the amount up to $1,000,000 plus $34,000,000 in excess liability for total coverage of $35,000,000 per occurrence. The Town has a deductible or uninsured liability of up to $50,000 per claim. PLAN also provides all risk property coverage of $1,000,000,000, excluding flood and earthquake coverage. The Town has a $5,000 deductible for property and vehicle damage. Once the Town’s deductible is met, PLAN becomes responsible for payment of all claims up to the limit. Financial statements may be obtained from PLAN at 1750 Creekside Drive, Suite 200, Sacramento, CA, 95833.

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

Liability for Uninsured Claims
The Town is required to record its liability for uninsured claims and to reflect the current portion of this liability as an expenditure in its financial statements. As discussed above, the Town has coverage for such claims, but it has retained the risk for the deductibles, or uninsured portion of these claims. The change in Workers’ Compensation and Self-Insurance Service Funds’ claims liabilities, is based on historical trend information provided by its third party administrator and was computed as follows as of June 30, 2025:

Workers' SelfCompensation Insurance
Internal Internal
Service Fund Service Fund Total
Claims payable balance - June 30, 2023 $ 1,968,979 $ 157,729 $ 2,126,708 Claims incurred - 124,525 124,525
Claims paid (253,382) (107,859) (361,241)
Claims payable balance - June 30, 2024 1,715,597 174,395 1,889,992 Claims incurred - - -
Claims paid (429,543) (92,520) (522,063)
Claims payable balance - June 30, 2025 $ 1,286,054 $ 81,875 $ 1,367,929 Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

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

Successor Agency - As of June 30, 2025, the Successor Agency trust fund reported a net deficit of $3,037,145.

Encumbrances - As of June 30, 2025, the town had the following encumbered balances that were carried into the next fiscal year:

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

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

General Fund $ 1,600,572
Appropriated Reserves Fund 4,149,910
Internal Service Fund 178,927
Total Encumbrances $ 5,929,410
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2025

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

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

NOTE 16 – JOINT POWERS AGREEMENT
The Town participates in one joint power agreements (JPA), with The Silicon Valley animal Control Authority. The relationship between the Town and the JPA is such that the JPA is not a component unit of the Town for financial reporting purposes. The JPA arranges for and/ or provides animal control services for its members. The JPA is governed by a board consisting of a representative from each member town/city. The board controls the operations of its JPA, including selection of management and approval of operating budgets independent of any influence by the member town/city beyond their representation on the Board. Each member town/city pays the JPA Authority its allocated proportional share of the total estimated annual costs and expenses.

NOTE 17 – DEFINED CONTRIBUTION PLAN

The Town offers its Town Manager a deferred compensation plan in accordance with Internal Revenue Code Section 401a. The deferred compensation plan is available only to the Town Manager of the Town.

Under the plan, the employee may elect to defer a portion of their salaries and avoid paying taxes on the deferred portion until the withdrawal date. The deferred compensation amount is not available for withdrawal by employees until termination, death, or unforeseeable emergency. The Town contributes to the plan an amount equal to the participants’ 457(b) plan deferrals. In fiscal year 2024-25, the Town paid $11,750 to the plan.

Draft

ITEM NO. 7.

Required Supplementary Information
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

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

BENEFIT PLAN SCHEDULES

Schedule of Pension Plan Contributions

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

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

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

SCHEDULE OF PENSION PLAN CONTRIBUTIONS

Miscellaneous Plan
Plan Measurement Date 2015 2016 2017 2018 2019
Fiscal Year Ended 2016 2017 2018 2019 2020
Contractually Required Contributions $ 2,223,782 $ 2,407,496 $ 2,669,133 $ 3,049,748 $ 3,366,304 Contributions in Relation to
Contractually Required Contributions 2,223,782 2,407,496 2,669,133 3,049,748 8,146,791 Contribution Deficiency (Excess) $ - $ - $ - $ - $ (4,780,487) Covered Payroll $ 9,198,318 $ 9,024,370 $ 9,576,157 $ 10,211,967 $ 11,188,927 Contributions as a % of Covered Payroll 24.18% 26.68% 27.87% 29.86% 72.81% Miscellaneous Plan
Plan Measurement Date 2020 2021 2022 2023 2024
Fiscal Year Ended 2021 2022 2023 2024 2025
Contractually Required Contributions $ 3,529,373 $ 3,472,727 $ 2,687,213 $ 3,878,991 $ 4,348,001 Contributions in Relation to
Contractually Required Contributions 9,160,680 3,472,727 2,687,213 3,878,991 4,348,001 Contribution Deficiency (Excess) $ (5,631,307) $ - $ - $ - $ - Covered Payroll $ 12,082,520 $ 12,305,265 $ 11,094,190 $ 13,817,826 $ 15,008,562 Contributions as a % of Covered Payroll 75.82% 28.22% 24.22% 28.07% 28.97% Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

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

SCHEDULE OF PENSION PLAN CONTRIBUTIONS

Safety Plan
Plan Measurement Date 2015 2016 2017 2018 2019
Fiscal Year Ended 2016 2017 2018 2019 2020
Contractually Required Contributions $ 1,586,129 $ 1,738,150 $ 1,951,711 $ 2,325,357 $ 2,565,205 Contributions in Relation to
Contractually Required Contributions 1,586,129 1,738,150 1,951,711 2,325,357 2,565,205 Contribution Deficiency (Excess) $ - $ - $ - $ - $ -
Covered Payroll $ 5,022,498 $ 4,941,138 $ 5,079,440 $ 4,445,061 $ 4,928,821 Contributions as a % of Covered Payroll 31.58% 35.18% 38.42% 52.31% 52.05% Safety Plan
Plan Measurement Date 2020 2021 2022 2023 2024
Fiscal Year Ended 2021 2022 2023 2024 2025
Contractually Required Contributions $ 2,853,764 $ 3,072,032 $ 3,409,275 $ 3,554,897 $ 3,929,739 Contributions in Relation to
Contractually Required Contributions 2,853,764 3,072,032 3,409,275 3,554,897 3,929,739 Contribution Deficiency (Excess) $ - $ - $ - $ - $ -
Covered Payroll $ 5,178,418 $ 5,603,211 $ 5,863,101 $ 6,557,458 $ 6,180,009 Contributions as a % of Covered Payroll 55.11% 54.83% 58.15% 54.21% 63.59% Notes to Schedule:

Valuation Date: June 30, 2023
Assumptions Used: Entry Age Method used for Actuarial Cost Method Level Percentage of Payroll and Direct Rate Smoothing
Remaining Amortization Period no more than 26 years
Inflation Assumed at 2.30%
Investment Rate of Returns set at 6.8%
The CalPERS mortality assumptions was adjusted in fiscal year 2021.

The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing morality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.

The CalPERS discount rate was increased from 7.50% to 7.65% in FY2016, to 7.15% in FY2018, and then decreased to 6.90% in FY2022.

Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

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

SCHEDULE OF PROPORTIONARE SHARE OF NET PENSION LIABILITY

CALPERS SAFETY COST SHARING PLAN

Safety Plan
Plan Measurement Date 2015 2016 2017 2018 2019
Fiscal Year Ended 2016 2017 2018 2019 2020
Proportion of Net Pension
Liability (Safety) 0.14860% 0.22394% 0.22603% 0.23583% 0.24100% Proportionate Share of
Net Pension Liability $ 10,199,904 $ 19,377,843 $ 22,415,954 $ 22,725,267 $ 24,695,687 Covered Payroll $ 4,897,104 $ 5,022,498 $ 4,941,138 $ 5,079,440 $ 4,445,061 Proportionate Share of NPL
as a % of Covered Payroll 208.28% 385.82% 453.66% 447.40% 555.58% Plan's Fiduciary Net Position
as a % of the TPL 74.89% 74.89% 73.87% 74.52% 73.61%
Safety Plan
Plan Measurement Date 2020 2021 2022 2023 2024
Fiscal Year Ended 2021 2022 2023 2024 2025
Proportion of Net Pension
Liability (Safety) 0.24953% 0.30994% 0.27474% 0.27237% 0.27598% Proportionate Share of
Net Pension Liability $ 27,149,916 $ 16,762,598 $ 31,734,686 $ 33,979,087 $ 33,469,333 Covered Payroll $ 4,928,821 $ 5,178,418 $ 5,603,211 $ 5,863,101 $ 6,557,458 Proportionate Share of NPL
as a % of Covered Payroll 550.84% 323.70% 566.37% 579.54% 510.40% Plan's Fiduciary Net Position
as a % of the TPL 72.46% 83.55% 71.34% 70.17% 71.85%
The CalPERS discount rate was increased from 7.50% to 7.65% in FY2016, to 7.15% in FY2018, and then decreased to 6.90% in FY2022.

The CalPERS mortality assumptions was adjusted in fiscal year 2021.

Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

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

SCHEDULE OF PROPORTIONARE SHARE OF NET PENSION LIABILITY

CALPERS MISCELLANEOUS AGENT-MULTPLE EMPLOYER PLAN

Measurement Date 2015 2016 2017 2018 2019
Total Pension liability
Service cost $ 1,491,925 $ 1,560,679 $ 1,651,550 $ 1,700,438 $ 1,771,368 Interest 6,483,032 6,697,247 6,820,536 7,073,843 7,381,846 Diff. between expected and actual exp. (623,495) (357,870) (892,479) 994,994 1,082,289 Changes of assumptions (1,513,132) - 5,481,432 (655,541) - Changes of benefits - - - - -
Benefit payments (including refunds) (4,748,786) (4,953,756) (5,138,083) (5,448,374) (5,720,232) Net change in Total Pension Liability 1,089,544 2,946,300 7,922,956 3,665,360 4,515,271 Total Pension Liability - beginning 88,510,577 89,600,121 92,546,421 100,469,377 104,134,737 Total Pension Liability - ending $ 89,600,121 $ 92,546,421 $ 100,469,377 $ 104,134,737 $ 108,650,008 Plan fiduciary net position
Employer contributions $ 1,941,765 $ 2,223,782 $ 2,407,496 $ 2,669,104 $ 3,049,748 Employee contributions 679,796 691,770 682,891 761,705 846,125 Plan to plan resource movement 22,561 (28,866) - (170) - Net investment income 1,470,873 369,185 7,171,443 5,883,868 4,759,034 Benefit payments (including refunds) (4,748,786) (4,953,756) (5,138,083) (5,448,374) (5,720,232) Administrative expense (74,706) (40,462) (95,455) (108,582) (52,260) Adjsutments - - - (206,199) 170
Net change in plan fiduciary net position (708,497) (1,738,347) 5,028,292 3,551,352 2,882,585 Plan fiduciary net position - beginning 67,099,375 66,390,878 64,652,531 69,680,823 73,232,175 Plan fiduciary net position - ending $ 66,390,878 $ 64,652,531 $ 69,680,823 $ 73,232,175 $ 76,114,760 Net Pension liability (asset) $ 23,209,243 $ 27,893,890 $ 30,788,554 $ 30,902,562 $ 32,535,248 Plan fiduciary net position as a percentage
of the total Pension liability 74.10% 69.86% 69.36% 70.32% 70.05% Covered Payroll $ 8,487,940 $ 9,198,318 $ 9,024,370 $ 9,576,157 $ 10,211,967 Net Pension liability % of covered payroll 273.44% 303.25% 341.17% 322.70% 318.60% Continued
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

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

SCHEDULE OF PROPORTIONARE SHARE OF NET PENSION LIABILITY

CALPERS MISCELLANEOUS AGENT-MULTPLE EMPLOYER PLAN

Measurement Date 2020 2021 2022 2023 2024
Total Pension liability
Service cost $ 1,930,090 $ 2,062,486 $ 2,264,169 $ 2,092,786 $ 2,365,384 Interest 7,729,269 7,943,404 8,142,881 8,437,589 8,809,282 Diff. between expected and actual exp. 1,465,653 (581,801) (108,166) 631,264 1,923,906 Changes of assumptions - - 3,399,004 - -
Changes of benefits - - - 164,628 -
Benefit payments (including refunds) (5,958,101) (6,339,615) (6,623,114) (7,069,109) (7,338,359) Net change in Total Pension Liability 5,166,911 3,084,474 7,074,774 4,257,158 5,760,213 Total Pension Liability - beginning 108,650,008 113,816,919 116,901,393 123,976,167 128,233,325 Total Pension Liability - ending $ 113,816,919 $ 116,901,393 $ 123,976,167 $ 128,233,325 $ 133,993,538 Plan fiduciary net position
Employer contributions $ 8,146,791 $ 9,160,680 $ 3,472,727 $ 3,687,226 $ 3,876,932 Employee contributions 834,145 889,649 871,063 916,606 996,934 Plan to plan resource movement - - - - -
Net investment income 3,913,294 19,606,360 (7,988,150) 5,876,311 9,419,976 Benefit payments (including refunds) (5,958,101) (6,339,615) (6,623,114) (7,069,109) (7,338,359) Administrative expense (107,303) (82,856) (66,142) (70,479) (80,707) Adjsutments - - - - -
Net change in plan fiduciary net position 6,828,826 23,234,218 (10,333,616) 3,340,555 6,874,776 Plan fiduciary net position - beginning 76,114,760 82,943,586 106,177,804 95,844,188 99,184,743 Plan fiduciary net position - ending $ 82,943,586 $ 106,177,804 $ 95,844,188 $ 99,184,743 $ 106,059,519 Net Pension liability (asset) $ 30,873,333 $ 10,723,589 $ 28,131,979 $ 29,048,582 $ 27,934,019 Plan fiduciary net position as a percentage
of the total Pension liability 72.87% 90.83% 77.31% 77.35% 79.15% Covered Payroll $ 11,188,927 $ 12,082,520 $ 12,305,265 $ 11,404,827 $ 13,817,826 Net Pension liability % of covered payroll 275.93% 88.75% 228.62% 254.70% 202.16% Concluded
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

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

SCHEDULE OF OPEB CONTRIBUTIONS

Fiscal Year Ended 2018 2019 2020 2021 2022 2023 2024 2025 Actuarially determined contribution (ADC) $ 2,129,000 $ 2,108,000 $ 2,172,000 $ 1,859,000 $ 1,860,000 $ 1,372,000 $ 1,427,000 $ 1,579,000 Less: actual contribution in relation to ADC (2,935,000) (2,406,636) (2,508,306) (2,096,847) (1,754,922) (1,733,337) (2,081,717) (2,081,717) Contribution deficiency (excess) $ (806,000) $ (298,636) $ (336,306) $ (237,847) $ 105,078 $ (361,337) $ (654,717) $ (502,717) Covered payroll $ 16,192,060 $ 17,338,201 $ 17,406,541 $ 17,982,237 $ 16,987,042 $ 17,809,965 $ 18,225,114 $ 20,512,356 Contrib. as a % of covered employee payroll 18.13% 13.88% 14.41% 11.66% 10.33% 9.73% 11.42% 10.15% Notes to Schedule:

Assumptions and Methods
Valuation Date:

Measurement Date:

Actuarial Cost Method:

Amortization Period:

Asset Valuation Method: Investment gains and losses spread over 5-year rolling period Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Investment Rate of Return
Healthcare Trend Rate
Mortality
Retirement
Other Notes
In FY 2022, the discount rate was updated based on newer capital market assumptions In FY 2022, decreased medical trend rate for Kaiser Senior Advantage In FY 2022, demographic assumptions were updated to CalPERS 2000-2019 Experience Study in FY 2022, the inflation rate decreased 25 basis points, decreasing discount rate, medical trend, and salary increases in FY 2022, retiree and family participation rates at retirement updated In FY 2022, the implicit subsidy was added for Tier 1 Medicare eligible In FY 2022, the mortality improvement scale was updated to Scale MP-2021 June 30, 2024
June 30, 2024
Entry-Age Normal Cost
15 year fixed period for 2023/24
GASB 75 requires a schedule of contributions for the last ten fiscal years, or for as many years as are available if less than ten years are available. GASB 75 was adopted as of June 30, 2018.

CalPERS 2000-2019 Experience Study
CalPERS 2000-2019 Experience Study

6.25%

2.50%

2.75%
Non-Medicare - 6.50% for 2023,
decreasing to an ultimate rate of 3.75% in 2076

6.25%
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

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

SCHEDULE OF CHANGES IN NET OPEB LIABILITY

Measurement Date 2017 2018 2019 2020 2021 2022 2023 2024 Total OPEB liability
Service cost $ 1,134,000 $ 1,168,227 $ 1,203,274 $ 1,159,152 $ 1,115,309 $ 955,115 $ 940,674 $ 865,285 Interest 1,607,000 1,706,270 1,814,072 1,887,105 1,956,034 1,804,972 1,873,207 2,080,996 Differences between expected & actual exp. - - (149,297) - (2,521,500) - 153,933 - Changes of assumptions - - (392,681) (533,825) 1,054,638 - 2,191,064 - Benefit payments (1,269,000) (1,326,313) (1,298,623) (1,399,933) (1,494,906) (1,591,150) (1,716,592) (1,801,144) Net change in Total OPEB Liability 1,472,000 1,548,184 1,176,745 1,112,499 109,575 1,168,937 3,442,286 1,145,137 Total OPEB Liability - beginning 23,301,000 24,773,000 26,321,184 27,497,929 28,610,428 28,720,003 29,888,940 33,331,226 Total OPEB Liability - ending $ 24,773,000 $ 26,321,184 $ 27,497,929 $ 28,610,428 $ 28,720,003 $ 29,888,940 $ 33,331,226 $ 34,476,363 Plan fiduciary net position
Employer contributions $ 3,878,000 $ 2,935,313 $ 2,406,636 $ 2,508,306 $ 2,096,847 $ 1,754,922 $ 1,733,337 $ 1,818,298 Net investment income 1,049,000 1,082,977 1,009,315 652,656 5,529,824 (3,510,434) 1,468,115 2,672,858 Benefit payments (1,269,000) (1,326,313) (1,298,623) (1,399,933) (1,494,906) (1,591,150) (1,716,592) (1,801,144) Administrative expense (14,000) (34,261) (11,502) (17,357) (18,556) (21,454) (23,387) (25,082) Net change in plan fiduciary net position 3,644,000 2,657,716 2,105,826 1,743,672 6,113,209 (3,368,116) 1,461,473 2,664,930 Plan fiduciary net position - beginning 9,964,000 13,608,000 16,265,716 18,371,542 20,115,214 26,228,423 22,860,307 24,321,780 Plan fiduciary net position - ending $ 13,608,000 $ 16,265,716 $ 18,371,542 $ 20,115,214 $ 26,228,423 $ 22,860,307 $ 24,321,780 $ 26,986,710 Net OPEB liability (asset) $ 11,165,000 $ 10,055,468 $ 9,126,387 $ 8,495,214 $ 2,491,580 $ 7,028,633 $ 9,009,446 $ 7,489,653 Plan fiduciary net position as a percentage
of the total OPEB liability 54.93% 61.80% 66.81% 70.31% 91.32% 76.48% 72.97% 78.28% Covered payroll $ 14,985,716 $ 16,192,060 $ 17,338,201 $ 17,406,541 $ 17,982,237 $ 16,987,042 $ 17,809,965 $ 18,225,114 NOL as a % of cov. emp. payroll 74.50% 62.10% 52.64% 48.80% 13.86% 41.38% 50.59% 41.10% Other Notes
GASB 75 requires a schedule of contributions for the last ten fiscal years, or for as many years as are available if less than ten years are available. GASB 75 was adopted as of June 30, 2018.

Draft

ITEM NO. 7.

Supplementary Information
Draft

ITEM NO. 7.

This Page Left Intentionally Blank
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

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

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

NONMAJOR GOVERNMENTAL FUNDS

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

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

Capital Projects Funds:

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

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

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

Special Revenue Funds:

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

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

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

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

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

Draft

ITEM NO. 7.

Variance
Original Final Positive
Budget Budget Actual (Negative)

REVENUES
Licenses & permits $ 120,000 $ 120,000 $ 158,732 $ 38,732 Intergovernmental 1,701,196 8,003,839 7,830,241 (173,598) Charges for services 958,381 898,553 898,553 -
Interest - - 200,349 200,349
Use of Property 96,000 96,000 91,284 (4,716)
Other 50,000 722,581 477,300 (245,281)
Total Revenues 2,925,577 9,840,973 9,656,459 (184,514)

EXPENDITURES
Capital outlay 4,883,046 19,161,577 12,910,018 6,251,559 Total Expenditures 4,883,046 19,161,577 12,910,018 6,251,559

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (1,957,469) (9,320,604) (3,253,559) 6,067,045

OTHER FINANCING SOURCES (USES)
Transfers in 1,765,416 1,765,416 1,783,080 17,664
Transfers (out) (451,491) (673,356) (701,491) (28,135)
Total Other Financing Sources (Uses) 1,313,925 1,092,060 1,081,589 (10,471) CHANGE IN FUND BALANCE $ (643,544) $ (8,228,544) (2,171,970) $ 6,056,574 BEGINNING FUND BALANCE 19,065,570
ENDING FUND BALANCE $ 16,893,600

BUDGET AND ACTUAL (GAAP)
FOR THE FISCAL YEAR ENDED JUNE 30, 2025

TOWN OF LOS GATOS

APPROPRIATED RESERVES FUND

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE
Draft

ITEM NO. 7.

Total
Capital
Storm Construction Gas Projects
Drains Tax Tax Funds
ASSETS
Cash & investments $ 3,105,895 $ 3,763,913 $ 2,046,207 $ 8,916,015 Restricted cash & investments - - - -
Receivables:

Accounts - - - -
Intergovernmental receivable - - 84,341 84,341
Leases receivable - - - -
Long term notes receivable - - - -
Total Assets $ 3,105,895 $ 3,763,913 $ 2,130,548 $ 9,000,356

LIABILITIES
Accounts payable $ 280,661 -$ -$ 280,661 $
Accrued payroll and benefits - - - -
Unearned revenue - - - -
Total Liabilities 280,661 - - 280,661

DEFERRED INFLOWS OF RESOURCES
Leases - - - -

FUND BALANCE
Restricted for:

Library - - - -
Repairs and maintenance - - - -
Capital projects 2,825,234 3,763,913 2,130,548 8,719,695 Committed to:

Special revenue funds - - - -
Total Fund Balances 2,825,234 3,763,913 2,130,548 8,719,695 Total Liabilities and Fund Balances $ 3,105,895 $ 3,763,913 $ 2,130,548 $ 9,000,356 (Continued)

CAPITAL PROJECTS FUNDS

TOWN OF LOS GATOS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS
JUNE 30, 2025
Draft

ITEM NO. 7.

Non-Point
Community Source Lighting and
Development Maintenance Landscaping
ASSETS
Cash & investments $ 94,352 $ 634,028 $ 196,901
Restricted cash & investments 58,344 - -
Receivables:

Accounts - 34,173 -
Intergovernmental receivable - - -
Leases receivable - - -
Long term notes receivable 78,752 - -
Total Assets $ 231,448 $ 668,201 $ 196,901

LIABILITIES
Accounts payable $ - $ 1,540 $ 3,295
Accrued payroll and benefits - 2,493 -
Unearned revenue 64,795 - -
Total Liabilities 64,795 4,033 3,295

DEFERRED INFLOWS OF RESOURCES
Leases - - -

FUND BALANCE
Restricted for:

Library - - -
Repairs and maintenance - - 193,606
Capital projects - - -
Committed to:

Special revenue funds 166,653 664,168 -
Total Fund Balances 166,653 664,168 193,606
Total Liabilities and Fund Balances $ 231,448 $ 668,201 $ 196,901 (Continued)

SPECIAL REVENUE FUNDS

TOWN OF LOS GATOS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS
JUNE 30, 2025
Draft

ITEM NO. 7.

Total
Total Nonmajor
LG Library Special Revenue Governmental
Theatre Trust Funds Funds
ASSETS
Cash & investments $ 119,336 $ 561,166 $ 1,605,783 $ 10,521,798 Restricted cash & investments - - 58,344 58,344
Receivables:

Accounts 176,991 - 211,224 211,224
Intergovernmental receivable - - - 84,341
Leases receivable 225,652 - 225,652 225,652
Long term notes receivable - - 78,752 78,752
Total Assets $ 521,979 $ 561,166 $ 2,179,755 $ 11,180,111

LIABILITIES
Accounts payable $ 6,022 $ 1,422 $ 12,339 $ 293,000
Accrued payroll and benefits - - 2,493 2,493
Unearned revenue - - 64,795 64,795
Total Liabilities 6,022 1,422 79,627 360,288

DEFERRED INFLOWS OF RESOURCES
Leases 134,835 - 134,835 134,835

FUND BALANCE
Restricted for:

Library - 559,744 559,744 559,744
Repairs and maintenance - - 193,606 193,606
Capital projects - - - 8,719,695
Committed to:

Special revenue funds 381,122 - 1,211,943 1,211,943
Total Fund Balances 381,122 559,744 1,965,293 10,684,988 Total Liabilities and Fund Balances $ 521,979 $ 561,166 $ 2,179,755 $ 11,180,111 (Concluded)

TOWN OF LOS GATOS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS
JUNE 30, 2025

SPECIAL REVENUE FUNDS
Draft

ITEM NO. 7.

Total
Storm Construction Gas Capital Projects
Drain Tax Tax Funds

REVENUES
Property Taxes $ - $ - $ - $ -
Other Taxes - 22,516 - 22,516
License and permits 97,939 - - 97,939
Intergovernmental - 1,850,488 - 1,850,488
Interest 146,669 157,146 77,927 381,742
Use of property - - - -
Other - - - -
Total Revenues 244,608 179,662 1,928,415 2,352,685

EXPENDITURES
Current:

Parks and public works - - - -
Library services - - - -
Sanitation and other - - - -
Capital Outlay 950,622 1,620,034 - 2,570,656
Total Expenditures 950,622 1,620,034 - 2,570,656

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (706,014) 179,662 308,381 (217,971)

OTHER FINANCING SOURCES (USES)
Transfers (out) - - (106,000) (106,000)
Total Other Financing Sources (Uses) - - (106,000) (106,000) Changes in Fund Balances (706,014) 179,662 202,381 (323,971) Fund Balances - Beginning of year 3,531,248 3,584,251 1,928,167 9,043,666 Fund Balances - End of year $ 2,825,234 $ 3,763,913 $ 2,130,548 $ 8,719,695 (Continued)

TOWN OF LOS GATOS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE FISCAL YEAR ENDED JUNE 30, 2025

CAPITAL PROJECTS FUNDS
Draft

ITEM NO. 7.

Non-Point
Community Source Lighting and
Development Maintenance Landscaping

REVENUES
Property Taxes $ - $ - $ 38,650
Other Taxes - - -
License and permits - 163,690 -
Intergovernmental - - -
Interest - - 7,926
Use of property - - -
Other - 20,532 -
Total Revenues - 184,222 46,576

EXPENDITURES
Current:

Parks and public works - 10,300 30,675
Library services - - -
Sanitation and other - 263,888 -
Capital Outlay - - -
Total Expenditures - 274,188 30,675

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES - (89,966) 15,901

OTHER FINANCING SOURCES (USES)
Transfers (out) - - (4,920)
Total Other Financing Sources (Uses) - - (4,920)
Changes in Fund Balances - (89,966) 10,981
Fund Balances - Beginning of year 166,653 754,134 182,625 Fund Balances - End of year $ 166,653 $ 664,168 $ 193,606 (Continued)

NONMAJOR GOVERNMENTAL FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

TOWN OF LOS GATOS

AND CHANGES IN FUND BALANCES

SPECIAL REVENUE FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2025
Draft

ITEM NO. 7.

Total
LG Library Special Revenue
Theatre Trust Funds Total

REVENUES
Property Taxes $ - $ - $ 38,650 $ 38,650
Other Taxes - - - 22,516
License and permits - - 163,690 261,629
Intergovernmental - - - 1,850,488
Interest - 25,436 33,362 415,104
Use of property 291,155 - 291,155 291,155
Other - 60,322 80,854 80,854
Total Revenues 291,155 85,758 607,711 2,960,396

EXPENDITURES
Current:

Parks and public works 81,068 - 122,043 122,043
Library services - 82,862 82,862 82,862
Sanitation and other - - 263,888 263,888
Capital Outlay - - - 2,570,656
Total Expenditures 81,068 82,862 468,793 3,039,449

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 210,087 2,896 138,918 (79,053)

OTHER FINANCING SOURCES (USES)
Transfers (out) - - (4,920) (110,920)
Total Other Financing Sources (Uses) - - (4,920) (110,920) Changes in Fund Balances 210,087 2,896 133,998 (189,973) Fund Balances - Beginning of year 171,035 556,848 1,831,295 10,874,961 Fund Balances - End of year $ 381,122 $ 559,744 $ 1,965,293 $ 10,684,988 (Concluded)

AND CHANGES IN FUND BALANCES

TOWN OF LOS GATOS

NONMAJOR GOVERNMENTAL FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

SPECIAL REVENUE FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2025
Draft

ITEM NO. 7.

TOWN OF LOS GATOS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (GAAP)
FOR THE FISCAL YEAR ENDED JUNE 30, 2025
Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)

REVENUES
Property taxes $ - $ - $ - $ - $ - $ -
Other taxes - - - 30,000 22,516 (7,484)
License and permits 94,350 97,939 3,589 - - -
Intergovernmental - - - - - -
Interest 12,480 146,669 134,189 15,590 157,146 141,556
Use of property - - - - - -
Other - - - - - -
Total Revenues 106,830 244,608 137,778 45,590 179,662 134,072

EXPENDITURES
Current:

Parks and public works - - - - - -
Library services - - - - - -
Sanitation and other - - - - - -
Capital outlay 1,100,623 950,622 150,001 299,573 - 299,573 Total Expenditures 1,100,623 950,622 150,001 299,573 - 299,573

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (993,793) (706,014) 287,779 (253,983) 179,662 433,645

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - - -
Operating transfers (out) - - - - - -
Total Other Financing Sources (Uses) - - - - - -
CHANGE IN FUND BALANCE $ (993,793) (706,014) $ 287,779 $ (253,983) 179,662 $ 433,645 BEGINNING FUND BALANCE 3,531,248 3,584,251
ENDING FUND BALANCE $ 2,825,234 $ 3,763,913
(Continued)

STORM DRAIN CONSTRUCTION TAX
Draft

ITEM NO. 7.

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

REVENUES
Property taxes $ - $ - $ - $ - $ - $ -
Other taxes - - - - - -
License and permits - - - - - -
Intergovernmental 1,783,113 1,850,488 67,375 - - -
Interest 1,472 77,927 76,455 - - -
Use of property - - - - - -
Other - - - - - -
Total Revenues 1,784,585 1,928,415 143,830 - - -

EXPENDITURES
Current:

Parks and public works - - - - - -
Library services - - - - - -
Sanitation and other - - - - - -
Capital outlay 1,620,034.00 1,620,034 - - - -
Total Expenditures 1,620,034 1,620,034 - - - -

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 164,551 308,381 143,830 - - -

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - - -
Operating transfers (out) (106,000) (106,000) - - - -
Total Other Financing Sources (Uses) (106,000) (106,000) - - - - CHANGE IN FUND BALANCE $ 58,551 202,381 $ 143,830 $ - - $ - BEGINNING FUND BALANCE 1,928,167 166,653
ENDING FUND BALANCE $ 2,130,548 $ 166,653
(Continued)

GAS TAX
FOR THE FISCAL YEAR ENDED JUNE 30, 2025

COMMUNITY DEVELOPMENT

TOWN OF LOS GATOS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (GAAP)
Draft

ITEM NO. 7.

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

REVENUES
Property taxes $ - $ - $ - $ 38,220 $ 38,650 $ 430
Other taxes - - - - - -
License and permits 163,690 163,690 - - - -
Intergovernmental - - - - - -
Interest - - - 1,010 7,926 6,916
Use of property - - - - - -
Other - 20,532 20,532 - - -
Total Revenues 163,690 184,222 20,532 39,230 46,576 7,346

EXPENDITURES
Current:

Parks and public works - - - 35,480 30,675 4,805
Library services - - - - - -
Sanitation and other 294,706 274,188 20,518 - - -
Capital outlay - - - - - -
Total Expenditures 294,706 274,188 20,518 35,480 30,675 4,805

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (131,016) (89,966) 41,050 3,750 15,901 12,151

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - - -
Operating transfers (out) - - - (4,920) (4,920) -
Total Other Financing Sources (Uses) - - - (4,920) (4,920) - CHANGE IN FUND BALANCE $ (131,016) (89,966) $ 41,050 $ (1,170) 10,981 $ 12,151 BEGINNING FUND BALANCE 754,134 182,625
ENDING FUND BALANCE $ 664,168 $ 193,606
(Continued)
FOR THE FISCAL YEAR ENDED JUNE 30, 2025

NON-POINT

SOURCE MAINTENANCE LIGHTING AND LANDSCAPING

TOWN OF LOS GATOS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (GAAP)
Draft

ITEM NO. 7.

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

REVENUES
Property taxes $ - $ - $ - $ - $ - $ -
Other taxes - - - - - -
License and permits - - - - - -
Intergovernmental - - - - - -
Interest - - - 5,900 25,436 19,536
Use of property 117,960 291,155 173,195 - - -
Other - - - 60,500 60,322 (178)
Total Revenues 117,960 291,155 173,195 66,400 85,758 19,358

EXPENDITURES
Current:

Parks and public works 119,685 81,068 38,617 - - -
Library services - - - 118,002 82,862 35,140
Sanitation and other - - - - - -
Capital outlay - - - - - -
Total Expenditures 119,685 81,068 38,617 118,002 82,862 35,140

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (1,725) 210,087 211,812 (51,602) 2,896 54,498

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - - -
Operating transfers (out) - - - - - -
Total Other Financing Sources (Uses) - - - - - -
CHANGE IN FUND BALANCE $ (1,725) 210,087 $ 211,812 $ (51,602) 2,896 $ 54,498 BEGINNING FUND BALANCE 171,035 556,848
ENDING FUND BALANCE $ 381,122 $ 559,744
(Continued)

TOWN OF LOS GATOS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (GAAP)
LG Theatre Library Trust
FOR THE FISCAL YEAR ENDED JUNE 30, 2025
Draft

ITEM NO. 7.

Variance
Positive
Budget Actual (Negative)

REVENUES
Property taxes $ 38,220 $ 38,650 $ 430
Other taxes 30,000 22,516 (7,484)
License and permits 258,040 261,629 3,589
Intergovernmental 1,783,113 1,850,488 67,375
Interest 36,452 431,626 395,174
Use of property 117,960 274,633 156,673
Other 60,500 80,854 20,354
Total Revenues 2,324,285 2,960,396 636,111

EXPENDITURES
Current:

Parks and public works 155,165 111,743 43,422
Library services 118,002 82,862 -
Sanitation and other 294,706 274,188 20,518
Capital outlay 3,020,230 2,570,656 449,574
Total Expenditures 3,588,103 3,039,449 513,514

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (1,263,818) (79,053) 1,184,765

OTHER FINANCING SOURCES (USES)
Operating transfers in - - -
Operating transfers (out) (110,920) (110,920) -
Total Other Financing Sources (Uses) (110,920) (110,920) - CHANGE IN FUND BALANCE $ (1,374,738) (189,973) $ 1,184,765 BEGINNING FUND BALANCE 10,874,961
ENDING FUND BALANCE $ 10,684,988
(Concluded)
TOTALS
FOR THE FISCAL YEAR ENDED JUNE 30, 2025

TOWN OF LOS GATOS

BUDGETED NONMAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (GAAP)
Draft

ITEM NO. 7.

TOWN OF LOS GATOS, CALIFORNIA

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

PROPRIETARY FUNDS

INTERNAL SERVICE FUNDS

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

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

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

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

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

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

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

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

Draft

ITEM NO. 7.

Workers' Self Information Facilities
Equipment Comp Insurance Technology Maintenance Total
ASSETS
Cash & Investments $ 3,893,502 $ 2,443,408 $ 313,777 $ 2,620,971 $ 400,250 $ 9,671,908 Restricted Cash & Investments - 106,582 - - - 106,582
Accounts receivable 4,553 - - 3,365 86,570 94,488
Leases receivable - - - - 1,217,607 1,217,607
Subscription assets, net - - - 308,593 - 308,593
Total Assets $ 3,898,055 $ 2,549,990 $ 313,777 $ 2,932,929 $ 1,704,427 $ 11,399,178

LIABILITIES
Accounts Payable $ 7,626 $ 3,964 $ 23,155 $ 50,581 $ 192,035 $ 277,361 Due to Other Governments - - - - 86 86
Interest payable - - - 12,795 - 12,795
Claims Payable - 1,286,054 81,875 - - 1,367,929
Subscription liabilities - - - 284,449 - 284,449
Total Liabilities $ 1,290,018 7,626 $ $ 105,030 $ 347,825 $ 192,121 $ 1,942,620 Deferred Inflows of Resources
Leases $ - $ - $ - $ 692,207 - $ $ 692,207

NET POSITION
Net investment in capital assets -$ -$ -$ 24,144 $ -$ $ 24,144 Restricted for:

Wokers compensation claims - 106,582 - - - 106,582
Unrestricted 3,890,429 1,153,390 208,747 2,560,960 820,099 8,633,625 Total Net Position $ 3,890,429 $ 1,259,972 $ 208,747 $ 2,585,104 $ 820,099 $ 8,764,351

TOWN OF LOS GATOS

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF NET POSITION
JUNE 30, 2025
Draft

ITEM NO. 7.

Workers' Self Information Facilities
Equipment Comp Insurance Technology Maintenance Total

OPERATING REVENUES
Charges for services $ 1,123,659 $ 1,474,500 $ 1,291,328 $ 948,821 $ 1,052,961 $ 5,891,269 Use of money and property - - - - 137,633 137,633
Other local taxes - - - - 22,516 22,516
Other revenue & reimbursements 43,409 330,789 - - - 374,198 Total Operating Revenues 1,167,068 1,805,289 1,291,328 948,821 1,213,110 6,425,616

OPERATING EXPENSES
Insurance expenses - 1,114,555 1,320,458 - - 2,435,013
Services and supplies 563,191 17,009 - 684,644 1,439,205 2,704,049 Depreciation/amortization expense - - - 202,422 - 202,422 Total Operating Expenses 563,191 1,131,564 1,320,458 887,066 1,439,205 5,341,484 Operating Income (loss) 603,877 673,725 (29,130) 61,755 (226,095) 1,084,132

NONOPERATING REVENUE (EXPENSES)
Investment earnings - - - - 85,669 85,669
Income (loss) before transfers 603,877 673,725 (29,130) 61,755 (140,426) 1,169,801

TRANSFERS
Transfers in - - 60,000 - - 60,000
Change in Net Position 603,877 673,725 30,870 61,755 (140,426) 1,229,801 BEGINNING NET POSITION 3,286,552 586,247 177,877 2,523,349 960,525 7,534,550 ENDING NET POSITION $ 3,890,429 $ 1,259,972 $ 208,747 $ 2,585,104 $ 820,099 $ 8,764,351

TOWN OF LOS GATOS

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE FISCAL YEAR ENDED JUNE 30, 2025
Draft

ITEM NO. 7.

Workers' Self Information Facilities
Equipment Comp Insurance Technology Maintenance Total

CASH FLOWS FROM OPERATING

ACTIVITIES
Receipts from customers $ 1,167,068 $ 1,474,500 $ 1,291,328 $ 949,860 $ 1,218,005 $ 6,100,761 Payments to suppliers and providers (556,540) (1,144,331) (1,329,462) (656,659) (1,402,097) (5,089,089) Insurance reimbursements - 330,789 - - - 330,789
Claims paid (429,543) - (82,622) - (512,165) -
Net Cash Provided (Used) by
Operating Activities 610,528 231,415 (120,756) 293,201 (184,092) 830,296

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Transfers in - - 60,000 - - 60,000
Net Cash Provided (Used) by
Noncapital Financing Activities - - 60,000 - - 60,000

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES
Interest paid - - - (7,148) - (7,148)
Principal paid - - (161,332) - (161,332) -
Net Cash Used by Capital and
Related Financing Activities - - (168,480) - (168,480) -

CASH FLOWS FROM INVESTING ACTIVITIES
Collections from investment earnings - - - - 85,669 85,669 Net Cash Provided by Investing Activities - - - - 85,669 85,669 Net Increase(Decrease) in Cash and Investments 610,528 231,415 (60,756) 124,721 (98,423) 807,485 Cash and investments - beginning of year 3,282,974 2,318,575 374,533 2,496,250 498,673 8,971,005 Cash and investments - end of year $ 3,893,502 $ 2,549,990 $ 313,777 $ 2,620,971 $ 400,250 $ 9,778,490 Reconciliation of Operating Income to Cash
Flows from Operating Activities:

Operating Income $ 603,877 $ 673,725 $ (29,130) $ 61,755 $ (226,095) $ 1,084,132 Adjustments to reconcile operating income to
cash flows from operating activities:

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

Accounts receivable - - - 1,039 (56,116) (55,077)
Leases receivable - - - - 190,076 190,076
Deferred inflows of resources - - - (129,065) - (129,065) Accounts payable 6,651 (12,767) 894 27,985 37,081 59,844 Claims payable - (429,543) (92,520) - (522,063) -
Cash Flows From Operating Activities $ 610,528 $ 231,415 $ (120,756) $ 293,201 $ (184,092) $ 830,296

TOWN OF LOS GATOS

INTERNAL SERVICE FUNDS

COMBINING STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEAR ENDED JUNE 30, 2025
Draft

ITEM NO. 7.

Statistical Section
Draft

ITEM NO. 7.

This Page Left Intentionally Blank
Draft

ITEM NO. 7.

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

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

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

Debt Capacity
These schedules present information to help the reader assess the affordability of the Town’s current levels of outstanding debt and its ability to issue additional debt in the future (Schedule 9, Schedule 10, and Schedule 11)
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the Town’s financial activities take place (Schedule 12, Schedule 13, and schedule 14).

Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the Town’s ACFR relates to the services the Town provides and activities it performs (Schedule 15 and Schedule 16).

Draft

ITEM NO. 7.

This Page Left Intentionally Blank
Draft

ITEM NO. 7.

Net Position by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
Fiscal Net Investment Total
Year in Capital Assets Restricted Unrestricted Net Position 2016 93,383,855 6,386,014 12,744,637 112,514,506
2017 96,265,652 5,627,707 15,134,420 117,027,779
2018 102,098,729 8,199,598 170,590 110,468,917 (1)
2019 107,542,588 11,918,688 (4,642,167) 114,819,109 (2) 2020 111,700,225 7,117,984 (3,967,178) 114,851,031
2021 109,894,936 8,358,267 (4,735,103) 113,518,100
2022 126,418,275 10,203,412 1,785,294 138,406,981
2023 130,888,581 11,091,020 11,542,661 153,522,262
2024 137,253,582 13,015,461 9,137,174 159,406,217
2025 145,079,170 12,933,419 8,676,121 166,688,710
(1) Net position was restated for FY 2018 for amounts placed into fiduciary funds, reclassified to General Fund Restricted Asset. (2) The decrease in unrestricted net position resulted largely from the use of approximately $8.0 million in unrestricted cash balances in the Town’s GFAR fund during the year to invest in the Town’s infrastructure and equipment. (15,000,000)
(10,000,000)
(5,000,000)
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
55,000,000
60,000,000
65,000,000
70,000,000
75,000,000
80,000,000
85,000,000
90,000,000
95,000,000
100,000,000
105,000,000
110,000,000
115,000,000
120,000,000
125,000,000
130,000,000
135,000,000
140,000,000
145,000,000
150,000,000
155,000,000
Net Investment in Capital Assets Restricted Unrestricted Draft

ITEM NO. 7.

Town of Los Gatos Schedule 2
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2015-16 2016-17 2017-18 2018-19 2019-20
Expenses
Governmental Activities:

General Government $ 6,993,661 $ 6,771,628 $ 7,948,918 $ 8,163,991 $ 7,405,368 Public Safety 12,825,688 14,587,597 15,545,521 16,635,726 20,446,188 Parks and Public Works 8,320,623 9,502,707 10,047,003 10,627,716 11,803,005 Community Development 3,227,224 5,093,459 4,667,609 5,064,637 5,001,958 Library Services 2,522,142 2,868,748 3,087,684 3,059,294 3,347,523 Sanitation 528,580 466,762 536,296 684,673 3,041
Interest - - - - -
Total Governmental Activities 34,417,918 39,290,901 41,833,031 44,236,037 48,007,083 Program Revenues
Charges for Services:

General Government 1,517,012 1,669,020 1,701,146 1,562,683 1,470,324 Public Safety 3,278,585 2,076,688 1,888,359 1,745,889 1,549,207 Parks and Public Works 1,516,108 2,155,841 4,150,068 2,910,936 3,674,222 Community Development 4,359,146 3,803,626 3,456,390 4,155,231 3,351,753 Library Services 46,192 46,746 14,702 9,476 11,522
Sanitation 368,813 410,626 771,442 966,130 231,323
Operating Grants and Contributions:

General Government 15,291 - - - 12,290
Public Safety 98,138 837,329 895,730 826,643 952,045
Parks and Public Works 749,300 665,779 953,294 1,301,152 2,824,638 Community Development - - - - 15,864
Library Services 12,228 - 57,200 47,482 49,351
Capital Grants and Contributions:

General Government - - - - 8,258
Public Safety - - - - 9,100
Parks and Public Works 1,610,657 770,600 348,437 146,792 832,755 Community Development - 9,280 - - -
Total Program Revenues 13,571,470 12,445,535 14,236,768 13,672,414 14,992,652 General Revenues and Special Items:

Property Taxes 13,763,458 14,756,214 15,958,406 17,321,347 18,330,426 Sales Taxes 7,501,175 8,925,276 7,466,253 8,158,152 7,531,425 Franchise Taxes 2,258,892 2,366,908 2,474,814 2,475,916 2,495,792 Other Taxes 1,997,497 2,351,223 2,667,840 2,726,743 1,911,774 Motor Vehicle in Lieu 12,308 14,056 16,483 14,689 24,526 Developer Assessments - - - - -
Investment Earnings 698,324 192,260 333,120 1,809,128 2,428,470 Miscellaneous 598,170 528,946 622,105 2,407,840 323,940 Insurance recoveries - - - - -
Total General Revenues and Special Items 26,829,824 29,134,883 29,539,021 34,913,815 33,046,353 Change in Net Position $ 5,983,376 $ 2,289,517 $ 1,942,758 $ 4,350,192 $ 31,922 Continued
Fiscal Year
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 2
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2020-21 2021-22 2022-23 2023-24 2024-25
Expenses
Governmental Activities:

General Government $ 7,086,377 $ 15,681,345 $ 10,522,568 $ 11,113,238 $ 11,122,319 Public Safety 19,808,230 15,093,308 17,428,923 23,783,313 24,095,151 Parks and Public Works 13,141,034 12,969,615 12,258,626 14,075,171 17,745,141 Community Development 6,846,834 5,827,001 5,215,961 5,481,765 5,734,087 Library Services 3,496,153 2,969,954 3,653,642 3,853,748 3,716,806 Sanitation 185,981 178,575 208,262 263,706 276,528
Interest - - 29,221 26,137 41,403
Total Governmental Activities 50,564,609 52,719,798 49,317,203 58,597,078 62,731,435 Program Revenues
Charges for Services:

General Government 1,894,080 1,725,857 2,635,527 2,694,162 5,809,508 Public Safety 1,288,358 1,596,313 1,846,312 1,980,431 1,793,058 Parks and Public Works 4,209,048 5,090,014 3,590,936 4,211,420 4,095,474 Community Development 4,063,776 4,129,718 3,971,336 4,247,279 6,055,131 Library Services - 521 2,039 2,514 2,515
Sanitation 299,478 231,323 359,950 359,950 163,690
Operating Grants and Contributions:

General Government - 2,766,833 - 63,088 112,216
Public Safety 1,061,344 1,144,226 4,622,373 917,317 869,926 Parks and Public Works 1,547,102 1,482,896 1,735,608 1,828,050 1,902,414 Community Development 223,129 670,929 616,937 692,151 95,126 Library Services 55,181 114,958 174,663 167,303 118,472 Capital Grants and Contributions:

General Government 2,365 12,205,050 - - -
Public Safety - - - - -
Parks and Public Works 843,980 10,021,156 3,915,175 5,668,252 6,710,310 Community Development - - - - -
Total Program Revenues 15,487,841 41,179,794 23,470,856 22,831,917 27,727,840 General Revenues and Special Items:

Property Taxes 19,878,835 21,132,098 22,746,842 24,224,142 25,252,782 Sales Taxes 7,933,604 8,483,673 8,806,477 8,071,735 8,330,978 Franchise Taxes 2,499,463 2,822,515 3,074,624 2,547,011 1,057,483 Other Taxes 1,126,887 2,042,580 2,292,008 2,422,849 2,417,630 Motor Vehicle in Lieu 23,058 35,624 34,406 41,461 50,036 Developer Assessments - 1,735,571 614,820 12,880 52,733 Investment Earnings 227,136 (1,278,978) 797,587 3,129,616 3,783,217 Miscellaneous 1,528,039 755,400 1,029,864 1,199,422 1,341,229 Insurance recoveries - - 1,565,000 - -
Total General Revenues and Special Items 33,217,022 35,728,483 40,961,628 41,649,116 42,286,088 Change in Net Position $ (1,859,746) $ 24,188,479 $ 15,115,281 $ 5,883,955 $ 7,282,493 Concluded
Fiscal Year
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 3
Fund Balance, Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2015-16 2016-17 2017-18 2018-19 2019-20
General Fund
Nonspendable $ - $ - $ - $ - $ -
Restricted - - 1,206,851 5,015,316 669,978
Committed 20,019,187 15,129,925 12,953,399 15,070,944 15,387,706 Assigned 9,555,085 14,050,699 17,475,285 18,256,895 13,277,813 Unassigned - - - - -
Total General Fund 29,574,272 29,180,624 31,635,535 38,343,155 29,335,497 All Other Governmental Funds
Restricted 6,386,014 5,627,707 6,992,747 6,903,372 6,448,006 Committed 3,696,000 10,354,584 5,571,087 2,579,997 -
Assigned 11,099,076 7,928,994 6,361,403 6,180,930 14,181,679 Unassigned - - - - -
Total All Other Governmental Funds 21,181,090 23,911,285 18,925,237 15,664,299 20,629,685 Total Fund Balances $ 50,755,362 $ 53,091,909 $ 50,560,772 $ 54,007,454 $ 49,965,182 Continued
Fiscal Year
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 3
Fund Balance, Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2020-21 2021-22 2022-23 2023-24 2024-25
General Fund
Nonspendable $ 159,000 $ 159,000 $ 159,000 $ 159,000 $ 159,000 Restricted - 690,000 1,444,501 2,532,997 3,090,731
Committed 11,220,970 12,283,132 13,150,130 14,364,143 17,041,278 Assigned 12,534,648 13,764,657 14,774,673 14,005,932 5,261,258 Unassigned - - - - 10,211,049
Total General Fund 23,914,618 26,896,789 29,528,304 31,062,072 35,763,316 All Other Governmental Funds
Restricted 8,562,653 9,383,483 9,530,538 10,361,026 9,736,106 Committed - 637,711 2,590,257 2,664,441 2,588,124
Assigned 15,360,481 13,944,155 19,536,429 16,915,064 15,254,358 Unassigned - - - - -
Total All Other Governmental Funds 23,923,134 23,965,349 31,657,224 29,940,531 27,578,588 Total Fund Balances $ 47,837,752 $ 50,862,138 $ 61,185,528 $ 61,002,603 $ 63,341,904 Concluded
Fiscal Year
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 4
Changes in Fund Balances, Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2015-16 2016-17 2017-18 2018-19 2019-20
Revenues:

Taxes $ 23,269,892 $ 25,945,129 $ 26,253,026 $ 28,244,329 $ 27,811,665 Licenses & Permits 5,442,133 5,075,503 5,937,044 5,173,876 4,818,671 Intergovernmental 2,573,475 1,715,580 2,124,903 2,310,655 4,498,153 Charges for Services 4,773,001 4,210,174 5,395,057 5,584,504 5,309,470 Fines and Forfeitures 879,277 917,105 676,212 510,266 271,117 Franchise Fees 2,258,892 2,366,908 2,474,814 2,475,916 2,495,792 Developer Fees - - - - -
Investment Income 698,308 192,978 332,938 1,809,164 2,428,453 Use of Property 31,723 32,096 32,206 32,960 31,039
Other 2,396,992 1,011,939 640,844 579,755 376,922
Total Revenues 42,323,693 41,467,412 43,867,044 46,721,425 48,041,282 Expenditures:

Current
General Government 9,144,797 8,390,959 8,770,082 8,004,254 13,024,146 Public Safety 13,763,316 13,251,288 14,423,554 14,945,407 15,793,815 Parks and Public Works 6,307,266 6,633,748 7,125,686 7,962,135 8,168,599 Community Development 3,695,504 3,793,930 4,192,165 4,577,495 4,473,790 Library Services 2,332,268 2,508,677 2,529,017 2,493,617 2,700,802 Sanitation & Other 452,726 466,762 521,147 628,240 162,837 Capital Outlay 3,241,657 6,867,034 9,778,058 7,888,914 7,861,972 Debt Service
Principal Repayment - - - - -
Interest - - - - -
Total Expenditures 38,937,534 41,912,398 47,339,709 46,500,062 52,185,961 Excess (Deficiency) of Revenues
Over (Under) Expenditures 3,386,159 (444,986) (3,472,665) 221,363 (4,144,679) Other Financing Sources(Uses):

Transfers In 3,315,846 7,907,692 3,176,760 4,264,131 8,935,260 Transfers Out (1,284,514) (7,612,012) (3,880,131) (3,323,756) (8,628,719) Gain from Sale of Property - - 378,219 1,912,316 1,566
Insurance Recoveries - - - - -
Issuance of Debt - 4,435 - - -
Total Other Financing Sources(Uses) 2,031,332 300,115 (325,152) 2,852,691 308,107 Net Change in Fund Balances $ 5,417,491 $ (144,871) $ (3,797,817) $ 3,074,054 $ (3,836,572) Capitalized Capital Outlay $ 3,241,657 $ 6,867,034 $ 9,778,058 $ 7,861,972 $ 7,861,972 Debt Service as a Percentage
of Non Capital Expenditures 0.00% 0.00% 0.00% 0.00% 0.00% Continued
Fiscal Year
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 4
Changes in Fund Balances, Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2020-21 2021-22 2022-23 2023-24 2024-25
Revenues:

Taxes $ 28,977,919 $ 31,627,593 $ 33,851,411 $ 34,735,349 $ 36,081,643 Licenses & Permits 5,212,831 6,055,040 6,333,675 6,227,298 10,077,688 Intergovernmental 3,746,587 15,492,982 10,145,820 6,317,644 11,038,323 Charges for Services 6,035,659 6,925,359 5,718,714 7,051,179 6,648,503 Fines and Forfeitures 103,468 319,170 416,950 480,634 420,127 Franchise Fees 2,499,463 2,822,515 3,074,624 2,547,011 1,057,483 Developer Fees - 1,735,571 614,820 12,880 -
Investment Income 227,940 (1,278,983) 797,582 3,108,100 3,783,218 Use of Property 40,372 144,901 237,647 297,501 442,078
Other 423,115 349,145 985,188 604,493 748,259
Total Revenues 47,267,354 64,193,293 62,176,431 61,382,089 70,297,322 Expenditures:

Current
General Government 14,040,134 15,953,968 8,828,779 9,573,022 10,884,414 Public Safety 16,570,836 16,451,190 18,446,048 20,718,781 20,827,888 Parks and Public Works 8,229,944 8,639,128 9,084,406 9,899,083 10,828,974 Community Development 5,195,302 6,313,511 5,065,412 5,246,729 5,637,742 Library Services 2,847,988 2,827,210 3,208,027 3,335,389 3,651,358 Sanitation & Other 166,173 194,969 204,097 252,605 274,188 Capital Outlay 5,707,439 10,478,670 8,917,075 12,366,255 15,545,674 Debt Service
Principal Repayment 39,008 156,034 156,034 225,370 206,380 Interest - - - 3,716 41,403
Total Expenditures 52,796,824 61,014,680 53,909,878 61,620,950 67,898,021 Excess (Deficiency) of Revenues
Over (Under) Expenditures (5,529,470) 3,178,613 8,266,553 (238,861) 2,399,301 Other Financing Sources(Uses):

Transfers In 4,053,535 8,154,307 11,886,022 3,666,235 2,595,491 Transfers Out (3,940,015) (8,310,685) (11,396,347) (4,317,235) (2,655,491) Gain from Sale of Property 1,201,369 2,151 2,162 223 -
Insurance Recoveries - - 1,565,000 - -
Issuance of Debt 1,560,336 - - 706,713 -
Total Other Financing Sources(Uses) 2,875,225 (154,227) 2,056,837 55,936 (60,000) Net Change in Fund Balances $ (2,654,245) $ 3,024,386 $ 10,323,390 $ (182,925) $ 2,339,301 Capitalized Capital Outlay $ 5,707,439 $ 9,180,716 $ 8,598,811 $ 12,016,644 $ 13,404,632 Debt Service as a Percentage
of Non Capital Expenditures 0.08% 0.30% 0.35% 0.46% 0.38% Concluded
Fiscal Year
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 5
Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years
Utility
and Total
Fiscal Unsecured Percent Secured Percent Total Estimated Direct Year Property Change Property Change Assessed Full Market Tax Rate 2016 217,035,545 -4.53% 10,417,804,357 6.65% 10,634,839,902 41,671,217,428 1.0533 2017 304,443,013 40.27% 11,240,554,198 7.90% 11,544,997,211 44,962,216,792 1.0560 2018 330,504,877 8.56% 11,969,049,272 6.48% 12,299,554,149 47,876,197,088 1.0659 2019 359,276,665 8.71% 12,795,393,103 6.90% 13,154,669,768 51,181,572,412 1.0607 2020 331,517,212 -7.73% 13,510,676,336 5.59% 13,842,193,548 54,042,705,344 1.0614 2021 308,749,655 -6.87% 14,599,669,332 8.06% 14,908,418,987 58,398,677,328 1.0509 2022 304,460,199 -1.39% 15,255,884,284 4.49% 15,560,344,483 61,023,537,136 1.0642 2023 357,370,065 17.38% 16,404,930,826 7.53% 16,762,300,891 65,619,723,304 1.0616 2024 432,381,651 20.99% 17,623,641,576 7.43% 18,056,023,227 70,494,566,304 1.0591 2025 326,140,681 -24.57% 18,478,666,192 4.85% 18,804,806,873 73,914,664,768 1.0540 Source: Santa Clara County Assessed Value Report
0 2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Millions
Unsecured Property Series2
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 6
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
Santa Clara School
Fiscal Basic County County Bonds Special District Bonds Year Wide Levy and Levies Districts and Loans Total
2016 1.0000 0.0476 0.0065 0.1373 1.1914
2017 1.0000 0.0474 0.0092 0.1217 1.1783
2018 1.0000 0.0597 0.0071 0.1168 1.1836
2019 1.0000 0.0565 0.0060 0.0988 1.1613
2020 1.0000 0.0557 0.0057 0.0919 1.1533
2021 1.0000 0.0457 0.0052 0.0944 1.1453
2022 1.0000 0.0576 0.0066 0.0887 1.1529
2023 1.0000 0.0559 0.0057 0.0841 1.1457
2024 1.0000 0.0538 0.0053 0.0720 1.1311
2025 1.0000 0.0486 0.0054 0.0716 1.1256
Source: Santa Clara County Book of Tax Rates

0.00 0.25

0.50 0.75

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

ITEM NO. 7.

Town of Los Gatos Schedule 7
Principle Property Tax Payers
Last Ten Fiscal Years *
Percentage Percentage Percentage Percentage Percentage
of Total City of Total City of Total City of Total City of Total City Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed ASSESSEE NAME Value Value Value Value Value Value Value Value Value Value 750 University LLC $ 19,379,620 0.19% $ 19,675,159 0.18% $ 25,241,863 0.21% 25,746,699 $ 0.20% 26,261,632 $ 0.19% 980 JR LLC $ 19,277,879 0.15%
140 Toll House Hotel LLC
17443 Farley Rd LLC
Alberto Way Holdings LLC 24,188,966 0.23% 24,557,845 0.22% 25,048,998 0.21% 25,549,975 0.20% 24,158,350 0.18% Ann R. Desantis
A W Los Gatos LLC
Boccardo Corporation 21,617,318 0.21% 21,918,921 0.20% 22,211,650 0.19% 22,651,732 0.18% 23,099,314 0.17% CH Realty IV Downing LP
CHL Ventures LP
D&K Los Gatos LLC 16,293,163 0.16%
David A. and Shari Flick Trustee
Donahue Schriber Realty Group LP 53,872,083 0.45% 56,370,186 0.44% 57,497,587 0.43% DS Downing Los Gatos LLC 21,980,568 0.21% 22,315,770 0.20% DS Village Square 22,799,599 0.20%
El Camino Hospital 26,477,160 0.25% 26,880,933 0.24% 23,353,576 0.20% 28,596,104 0.22% 30,789,155 0.23% EL Gato 15 LLC
Equestrian 3 Investments LLC 29,584,251 0.25% 28,563,864 0.22% 25,525,880 0.19% Fox Creek Fund LLC 21,558,664 0.17%
Good Samaritan Hospital LP 19,880,366 0.19% 22,402,756 0.20% 22,516,823 0.19% 22,934,274 0.18% 23,391,289 0.17% Grade Way Associations VI
Green Eyes LLC
Grosvenor USA Ltd. 23,449,975 0.23%
Health Care REIT Inc, 20,089,903 0.19% 20,396,274 0.18% Hercules Holding II LLC
International Hotel 30,144,617 0.25% 30,747,509 0.24% 31,362,458 0.23% Kay K. & Go Sasaki Sr., Trustee 24,744,983 0.24% 25,122,131 0.22% 25,624,027 0.21% 26,135,962 0.20% 28,864,942 0.21% Knowles Los Gatos LLC 49,167,836 0.47% 49,917,644 0.44% 50,915,995 0.43% 51,934,313 0.41% 52,972,998 0.39% KSL Capital Partners 30,134,614 0.29% 30,105,945 0.27% 25,893,946 0.22% 26,411,820 0.21% 33,069,058 0.24% Leland E Lester, Trustee 29,004,169 0.26%
LG Business Park Bldg 3 LLC 61,947,284 0.59% 53,465,724 0.45% LG Business Park Bldg 4 LLC 43,937,857 0.37%
LG Business Park LLC 17,507,261 0.17% 31,070,572 0.28%
LG Hotel LLC 15,497,395 0.15%
Los Gatos Hotel Corp. 15,676,113 0.15%
Lyon Baytree Apartments LLC
Paul H. Roskoph
Preylock Los Gatos LLC 89,141,472 0.66%
Safeway Inc. 24,394,468 0.20% 25,752,231 0.19%
San Jose Water Works 37,081,049 0.36% 38,710,728 0.34% 41,202,805 0.34% 46,150,577 0.36% 47,777,432 0.35% Serramonte Corporate Center LLC 200,844,610 1.57% 204,861,501 1.52% SF Los Gatos LLC
SHP Newark LLC
SI 32 LLC 141,348,894 1.36% 143,442,269 1.28% 146, 317,944 1.22% 149,208,182 1.17% 152,166,578 1.13% Sobrato Interests IV LLC 44,930,482 0.43% 42,240,994 0.38% 43,071,837 0.36% 43,919,879 0.34% 44,781,377 0.33% SRI Old Town LLC 31,744,252 0.30% 32,228,351 0.29% 32,872,917 0.27% 33,530,374 0.26% 34,200,980 0.25% Summerhill N40 LLC 56,244,782 0.42%
Summerhill Prospect Avenue LLC 18,274,508 0.16%
Wealthcap Los Gatos 121 109,100,000 0.97% 111,282,000 0.93% 113,507,640 0.89% 115,777,792 0.86% Wealthcap Los Gatos 31 84,000,000 0.75% 85,680,000 0.72% 87,393,600 0.68% Oaks at Los Gatos LP
Total - Principal taxpayers $ 1,296,723,012 6.37% 814,164,568.00 $ 7.24% 916,633,381 $ 7.66% 1,061,033,843 $ 8.29% 1,127,696,808 $ 8.35% Total - All real properties assessed by the Town (1) $10,416,786,877 $11,239,536,718 $11,968,031,792 $12,793,751,423 $13,509,034,656 (1) Assessed value includes only net secured real properties. (2) Excludes the value of tax-exempt properties
Source Data: California Municipal Statistics, Inc. Continued 2015-16 2016-17 2017-18 2018-19 2019-20
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 7
Principle Property Tax Payers
Last Ten Fiscal Years *
Percentage Percentage Percentage Percentage Percentage
of Total City of Total City of Total City of Total City of Total City Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed Assessed ASSESSEE NAME Value Value Value Value Value Value Value Value Value Value 750 University LLC $ 26,786,863 0.18% 27,064,374 $ 0.19% 27,605,660 $ 0.17% 28,157,772 0.16% 28,720,926 0.16% 980 JR LLC
140 Toll House Hotel LLC 35,043,180 0.24% 35,499,104 0.24% 34,808,066 0.21% 35,490,590 0.20% 28,677,162 0.16% 17443 Farley Rd LLC 29,000,000 0.16% 29,580,000 0.16%
Alberto Way Holdings LLC 24,641,514 0.17% 24,896,799 0.17% Ann R. Desantis
A W Los Gatos LLC 26,749,500 0.16%
Boccardo Corporation 24,268,078 0.15%
CH Realty IV Downing LP
CHL Ventures LP
D&K Los Gatos LLC
David A. and Shari Flick Trustee
Donahue Schriber Realty Group LP 58,647,535 0.40% 59,255,121 0.41% 60,440,222 0.37% 61,649,025 0.35% 62,882,002 0.34% DS Downing Los Gatos LLC
DS Village Square
El Camino Hospital 42,611,768 0.29% 50,456,560 0.35% 43,379,731 0.26% 42,156,737 0.24% 75,699,788 0.41% EL Gato 15 LLC 36,719,999 0.21% 37,454,398 0.20%
Equestrian 3 Investments LLC 26,036,395 0.18% 26,306,130 0.18% 26,832,251 0.16% 27,368,894 0.16% 27,916,270 0.15% Fox Creek Fund LLC 27,231,335 0.19% 27,078,255 0.17% 28,331,465 0.16% Good Samaritan Hospital LP 23,846,402 0.16% 24,111,608 0.17% 24,569,780 0.15% Grade Way Associations VI
Green Eyes LLC
Grosvenor USA Ltd.

Health Care REIT Inc,
Hercules Holding II LLC
International Hotel 31,989,706 0.22%
Kay K. & Go Sasaki Sr., Trustee 27,190,951 0.19% 27,471,495 0.19% 28,020,326 0.17% 28,585,258 0.16% 29,151,822 0.16% Knowles Los Gatos LLC 54,032,455 0.37% 54,592,229 0.37% 55,684,072 0.34% 56,797,751 0.32% 57,933,704 0.31% KSL Capital Partners 33,118,759 0.23% 33,037,818 0.23% 32,098,542 0.20% 31,484,883 0.18% 34,126,554 0.18% Leland E Lester, Trustee
LG Business Park Bldg 3 LLC
LG Business Park Bldg 4 LLC
LG Business Park LLC
LG Hotel LLC
Los Gatos Hotel Corp.

Lyon Baytree Apartments LLC
Paul H. Roskoph
Preylock Los Gatos LLC 95,880,000 0.66% 96,873,316 0.66% 98,810,782 0.60% 96,498,189 0.55% 98,428,152 0.53% Safeway Inc. 25,577,034 0.18%
San Jose Water Works 49,649,154 0.34% 53,320,614 0.37% 51,657,625 0.31% 52,511,158 0.30% 66,462,434 0.36% Serramonte Corporate Center LLC 208,958,729 1.43% 211,123,540 1.45% 215,346,008 1.31% 219,652,926 1.25% 224,045,983 1.21% SF Los Gatos LLC 33,214,527 0.23%
SHP Newark LLC 32,435,541 31,799,550 0.18% 32,435,541 0.18% SI 32 LLC 155,181,793 1.06% 158,132,236 1.08% 159,929,209 0.97% 163,243,322 0.93% 166,484,193 0.90% Sobrato Interests IV LLC 45,682,006 0.31% 46,155,127 0.32% 47,067,863 0.29% 48,004,098 0.27% 48,969,831 0.27% SRI Old Town LLC 34,884,999 0.24% 35,246,406 0.24% 35,951,333 0.22% 36,670,359 0.21% 37,403,765 0.20% Summerhill N40 LLC 57,369,661 0.39% 59,462,462 0.41% 71,006,795 0.43% 42,705,086 0.24% 28,816,212 0.16% Summerhill Prospect Avenue LLC
Wealthcap Los Gatos 121 118,093,347 0.81% 119,316,793 0.82% 121,703,128 0.74% 124,137,190 0.70% 126,619,932 0.69% Wealthcap Los Gatos 31
Oaks at Los Gatos LP 33,020,269 0.18%
Total - Principal taxpayers $ 1,175,222,251 8.05% 1,202,767,594 $ 8.24% 1,245,442,767 $ 7.39% 1,220,964,252 $ 6.93% 1,274,828,938 $ 6.90% Total - All real properties assessed by the Town (1) $14,598,027,652 $15,254,242,604 $16,403,289,146 $17,621,748,976 $18,476,773,592 (1) Assessed value includes only net secured real properties. (2) Excludes the value of tax-exempt properties
Source Data: California Municipal Statistics, Inc. Concluded 2020-21 2021-22 2022-23 2023-24 2024-25
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 8
Property Tax Levies and Collections
Last Ten Fiscal Years
Value of
Redevelopment
Agency Value of
Town Redevelopment Total Property Value of Town Property Property Property Tax Property Tax Tax Levied Property subject Subject to Subject to Fiscal Levied and Levied and and to Local Tax Local Local Year Collected Collected Collected Rate Tax Rate Tax Rate 2016 10,388,424 - 10,388,424 10,634,839,902 1,395,509,489 12,030,349,391 2017 11,345,588 - 11,345,588 11,544,997,211 1,537,577,241 13,082,574,452 2018 12,060,228 - 12,060,228 12,299,554,149 1,650,746,473 13,950,300,622 2019 12,924,592 - 12,924,592 13,154,669,768 1,717,358,555 14,872,028,323 2020 13,559,587 - 13,559,587 13,842,193,548 1,715,982,555 15,651,922,606 2021 13,864,271 - 13,864,271 14,908,418,987 1,809,729,058 16,718,148,045 2022 14,566,808 - 14,566,808 15,560,344,483 1,891,297,788 17,451,642,271 2023 16,300,797 - 16,300,797 16,762,300,891 2,047,530,717 18,809,831,608 2024 17,431,668 - 17,431,668 18,056,023,227 2,162,668,731 20,218,691,958 2025 18,178,096 - 18,178,096 18,804,806,873 2,238,952,783 21,043,759,656 Sources: Santa Clara County Auditor-Controller Office and the Town of Los Gatos $7.0
$8.0
$9.0
$10.0
$11.0
$12.0
$13.0
$14.0
$15.0
$16.0
$17.0
$18.0
$19.0
$20.0
$21.0
$22.0
Billions
Value of Property
$9.0
$10.0
$11.0
$12.0
$13.0
$14.0
$15.0
$16.0
$17.0
$18.0
$19.0
Millions
Tax Levied
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 9
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Total Total Percentage of
Fiscal PG&E Governmental Primary Personal Per
Year Loan SBITA's Activities Government Income Capita
2016 $ - $ - $ - $ - 0.0% 0.00
2017 $ - $ - $ - $ - 0.0% 0.00
2018 $ - $ - $ - $ - 0.0% 0.00
2019 $ - $ - $ - $ - 0.0% 0.00
2020 $ - $ - $ - $ - 0.0% 0.00
2021 1,508,325 $ $ - $ 1,508,325 $ 1,508,325 56.2% 48.91 2022 1,352,291 $ $ - $ 1,352,291 $ 1,352,291 44.3% 40.90 2023 1,196,257 $ $ - $ 1,196,257 $ 1,196,257 34.7% 36.14 2024 1,040,223 $ $ 1,083,158 $ 2,123,381 $ 2,123,381 53.0% 63.90 2025 $ 884,190 $ 871,479 $ 1,755,669 $ 1,755,669 43.7% 52.64 Governmental Activities
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 10
Direct and Overlapping Governmental Activities Debt
As of June 30, 2025
2024-25 Assessed Valuation: $18,804,806,873 Estimated Share of Direct and
Total Debt at Overlapping Debt
DIRECT AND OVERLAPPING BONDED DEBT: % Applicable (1) June 30, 2025 at June 30, 2025 Overlapping Tax & Assesment Debt
Santa Clara County 2.704% $ 1,217,905,000 $ 32,932,151
West Valley-Mission Community College District 9.385% $ 631,255,000 $ 59,243,282 Campbell Union High School District 7.614% $ 318,105,000 $ 24,220,515 Los Gatos-Saratoga Joint Union High School District 36.825% $ 72,445,000 $ 26,677,871 Cambrian School District 0.464% $ 113,749,944 $ 527,800 Campbell Union School District 7.363% $ 240,714,324 $ 17,723,796 Los Gatos Union School District 74.199% $ 116,965,000 $ 86,786,860 Saratoga Union School District 0.048% $ 10,336,159 $ 4,961 Union School District 20.077% $ 134,454,631 $ 26,994,456 Midpeninsula Regional Open Space District 4.399% $ 114,920,000 $ 5,055,331 Santa Clara Valley Water District Benefit Assessment District 2.704% $ 24,940,000 $ 674,378 Total Overlapping Tax and Assesmet Debt $ 280,841,401
Overlapping General Fund Debt
Santa Clara County General Fund Obligations 2.704% $ 1,002,458,930 $ 27,106,489 Santa Clara County Pension Obligation Bonds 2.704% $ 317,654,990 $ 8,589,391 Santa Clara County Board of Education Certificates of Participation 2.704% $ 12,072,417 $ 326,438 West Valley-Mission Community College District General Fund Obligations 9.385% $ 2,520,000 $ 236,502 Campbell Union High School District General Fund Obligations 7.614% $ 12,500,000 $ 951,750 Campbell Union School District General Fund Obligations 7.363% $ 855,000 $ 62,954 Saratoga Union School District Certificates of Participation 0.048% $ 990,000 $ 475 Town of Los Gatos 100% $ 2,123,381 $ 2,123,381
Santa Clara County Central Fire Protection District Certificates of Participation 26.116% $ 26,475,000 $ 6,914,211 Midpeninsula Regional Open Space Park District General Fund Obligations 4.399% $ 74,065,600 $ 3,258,146 Total Gross Overlapping General Fund Debt $ 49,569,737
Less: Santa Clara County Supported Obligations $ 65,437 Total Overlapping General Fund Debt $ 49,504,300
Overlapping Tax Increment Debt ( Successor Agency)
Town of Los Gatos Certificated of Participations $ 8,530,000 Total of Overlapping Tax Increment Debt $ 8,530,000
Total Direct Debt $ 2,123,381
Total Gross Overlapping Dept $ 338,941,138
Total Net Overlapping Debt $ 338,875,701
Gross Combined Total Debt $ 338,941,138 (2)
Net Combined Total Debt $ 338,875,701
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue bonds and non-bonded capital lease obligations.

Ratios to 2024-25 Assessed Valuation:

Total Overlapping Tax and Assessment Debt: 1.49%
Total Direct Debt: 0.01%
Gross Combined Total Debt: 1.79%
Net Combined Total Debt: 1.79%
Ratios to Redevelpment Incremental Valuation ( $1,992,831,755):

Total Overlapping Tax Increment Debt: 0.43%
Source Data: California Municipal Statistics, Inc.
(1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable asessed value.

Draft

ITEM NO. 7.

Town of Los Gatos Schedule 11
Legal Debt Margin Information,
Last Ten Fiscal Years
(In Thousands of Dollars)
Legal Debt Margin Calculation
for Fiscal Year 2024-25
Assessed Value
Debt Limit
Debt Applicable to Limit:

Legal Debt Margin
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Debt Limit $ 1,444,943 $ 1,556,252 $ 1,679,736 $ 1,789,097 $ 2,076,329 $ 2,236,263 $ 2,334,052 $ 2,514,345 $ 2,708,403 $ 2,820,721 Debt Applicable to Limit - - - - - - 1,352 1,196 1,040 1,756 Legal Debt Margin $ 1,444,943 $ 1,556,252 $ 1,679,736 $ 1,789,097 $ 2,076,329 $ 2,236,263 $ 2,332,699 $ 2,513,149 $ 2,707,363 $ 2,818,965 Total Net Debt
Applicable to the Limit
as a Percentage
of Debt Limit 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.06% 0.05% 0.04% 0.06% Notes:
(1) The Town of Los Gatos is a general law city and has a debt limit of 15%. (2) Excludes RDA asessed valuation and debt transferred to the Successor Agency trust as a part of the RDA dissolution.

Fiscal Year
$ 18,804,806,873
2,820,721,031
-
$ 2,820,721,031
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 12
Demographic and Economic Statistics
Last Ten Fiscal Years
Personal
Income Per Capita Public County
Fiscal (thousands Personal Median School Unemployment
Year Population of dollars) Income Age Enrollment Rate
Ended (1) (2) (3) (4) (5) (6)
2016 31,376 $ 2,286,087 72,861 46.30 6,646 3.5%
2017 31,314 $ 2,281,569 72,861 46.50 6,631 3.8%
2018 30,601 $ 2,290,638 74,855 46.81 6,588 2.6%
2019 30,998 $ 2,365,178 76,301 46.72 6,544 2.6%
2020 31,439 $ 2,546,748 81,006 46.83 6,520 10.7%
2021 30,836 $ 2,686,155 87,111 46.83 6,180 5.2%
2022 33,062 $ 3,055,987 92,432 46.67 6,000 2.2%
2023 33,102 $ 3,443,767 104,035 47.55 5,895 3.7%
2024 33,230 $ 4,006,242 120,561 47.03 5,856 4.1%
2025 33,355 $ 4,021,312 120,561 (7) 47.55 5,860 4.6%
Source and Footnotes:
(1) California State Dept. of Finance - Population Research Unit (January 2025) (2) California State Dept. of Finance - Estimate equals county per capita average times population (3) US Census Bureau - QuickFacts
(4) Claritas demographic snapshot report
(5) Los Gatos Saratoga Joint Union and Los Gatos Union Elementary School Districts (6) State of California, Employment Development Dept., Labor Market Info. Div. (7) US Census data was unavailable. Prior fiscal year's per capita personal income used.

Draft

ITEM NO. 7.

Town of Los Gatos Schedule 13
Principal Employers
Last Ten Fiscal Years
Percentage Percentage Percentage Percentage Percentage
of Total Town of Total Town of Total Town of Total Town of Total Town Principal Employers Emp. Employment Emp. Employment Emp. Employment Emp. Employment Emp. Employment Columbia Health Care Assoc/Mission Oaks Hospital - 0.00% - 0.00% 0.00% 0.00% 0.00% El Camino Hospital, Los Gatos 560 3.53% 560 3.49% 560 3.43% 560 3.49% 560 3.49% Los Gatos Union School District 280 1.76% 274 1.71% 267 1.64% 281 1.75% 281 1.75% Los Gatos-Saratoga High School District 157 0.99% 370 2.30% 367 2.25% 367 2.28% 367 2.28% Netflix 1,976 12.45% 1,864 11.61% 2,117 12.98% 2,314 14.41% 2,314 14.41% Safeway 314 1.98% 314 1.95% 314 1.92% 314 1.95% 314 1.95% Alain Pinel Realtors 146 0.92% 148 0.92% 131 0.80% 131 0.82% 131 0.82% Courtside Tennis Club 440 2.77% 468 2.91% 542 3.32% 542 3.37% 542 3.37% Town of Los Gatos 158 1.00% 160 1.00% 159 0.97% 160 1.00% 160 1.00% Whole Foods 179 1.13% 179 1.11% 179 1.10% 125 0.78% 125 0.78% Vasona Creek Health Care Center 233 1.47% 233 1.45% 233 1.43% 233 1.45% 233 1.45% Good Samaritan Regional Cancer Center 200 1.26% 200 1.25% 200 1.23% 200 1.25% 200 1.25% Roku 487 3.07% 554 3.45% 664 4.07% 516 3.21% 516 3.21%
Terraces of Los Gatos 228 1.44% 228 1.42% 228 1.40% 228 1.42% 228 1.42% Source: Town of Los Gatos, Finance
Department and Muniservices Continued
2015-16 2016-17 2017-18 2018-19 2019-20
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 13
Principal Employers
Last Ten Fiscal Years
Percentage Percentage Percentage Percentage Percentage
of Total Town of Total Town of Total Town of Total Town of Total Town Principal Employers Emp. Employment Emp. Employment Emp. Employment Emp. Employment Emp. Employment Columbia Health Care Assoc/Mission Oaks Hospital 0.00% 0.00% 0.00% 0.00% 0.00% El Camino Hospital, Los Gatos 560 3.35% 517 3.20% 509 3.04% 548 3.45% 556 3.48% Los Gatos Union School District 281 1.68% 281 1.74% 281 1.68% 287 1.81% 325 2.03% Los Gatos-Saratoga High School District 320 1.92% 320 1.98% 320 1.91% 320 2.01% 320 2.00% Netflix 2,524 15.11% 2,278 14.10% 2,263 13.53% 2444 15.39% 2503 15.65% Safeway 314 1.88% 314 1.94% 314 1.88% 314 1.98% 314 1.96% Alain Pinel Realtors 0.00% 0.00% 0.00% 0.00% 0.00%
Courtside Tennis Club 542 3.24% 542 3.36% 542 3.24% 342 2.15% 354 2.21% Town of Los Gatos 161 0.96% 165 1.02% 163 0.97% 165 1.04% 208 1.30% Whole Foods 125 0.75% 180 1.11% 132 0.79% 133 0.84% 140 0.88% Vasona Creek Health Care Center 250 1.50% 250 1.55% 250 1.49% 250 1.57% 250 1.56% Good Samaritan Regional Cancer Center 200 1.20% 200 1.24% 200 1.20% 111 0.70% 111 0.69% Roku 0.00% 0.00% 0.00% 0.00% 0.00%
Terraces of Los Gatos 228 1.36% 200 1.24% 200 1.20% 230 1.45% 230 1.44% Source: Town of Los Gatos, Finance
Department and Muniservices Concluded
2020-21 2021-22 2022-23 2023-24 2024-25
Draft

ITEM NO. 7.

Town of Los Gatos Schedule 14
Full-time-Equivalent Employees by Function/Program
Last Ten Fiscal Years
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Function/Program
General Government 20.97 21.35 21.97 22.16 21.80 21.80 22.06 22.05 22.06 23.06 Police 59.00 59.00 59.00 59.00 60.00 60.00 60.00 60.00 60.00 60.00 Economic Development 0.63 0.63 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 Library 11.00 12.25 12.25 12.50 12.50 12.50 12.50 13.50 13.50 13.50 Planning 19.00 19.26 19.63 20.08 20.08 20.20 20.20 20.20 20.45 20.45 Public Works 33.50 33.50 34.50 34.50 34.50 34.75 34.75 36.75 35.75 34.75 Total 144.10 145.98 148.10 148.99 149.63 150.00 150.26 153.25 152.51 152.51 Full-time equivalent employment is calculated as one or more employee positions totaling one full year of service or approximately 2,080 hours a year.

Page C-46 of Town Budget FY 2024-25
Full-time-Equivalent Employees as of June 30
Draft

ITEM NO. 7.

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

FUNCTION/PROGRAM
General government 2015-16 2016-17 2017-18 2018-19 2019-20 Building Permits Issued
Residential Permits Issued 899 744 849 814 898
Residential Permits Value 85,000,754 53,625,891 63,083,249 80,030,846 47,961,529 Commercial Permits Issued 147 135 105 122 92
Commercial Permits Value 20,185,884 50,024,177 16,626,196 13,295,999 12,389,688 Publically Owned Permits Issued - - - - -
Publically Owned Permits Value - - - - -
Residential Parking Permits
Number of Special Event Permits Issued 107 118 113 78 - Number of Annual Permits Issued 1,363 1,251 1,342 1,395 1,400 City Clerk
Number of Council Resolutions Passed 61 69 69 59 57
Number of Ordinances Passed 11 5 17 11 24
Number of Contracts Passed 283 240 262 245 242
General Services
Number of Purchase Orders Issued 334 331 322 343 359
Police
Physical Arrests 987 1,030 1,164 1,138 616
Parking Violations 13,975 12,863 11,784 6,817 4,023
Traffic Violations 5,400 4,634 4,757 2,877 1,225
DUI Arrests 58 60 51 70 64
Library
Number of Library Visits - - - - -
Annual Circulation - - - - -
Number of Library Card holders - - - - -
Circulated e-audiobooks ( 7,761 10,006 8,844 12,130 57,839 Other Public Works
Street Resurfacing/Overlay/Reconstruction (miles) 8.0 10.0 2.6 5.8 16.2 ADA Compliance: Curb Ramps 11 30 68 49 68
Traffic Circles 1 1 1 1 1
Street Poles 1,609 1,609 1,762 1,830 1,830
Planning and Development Department
Building & Safety Inspections Performed 8,655 14,722 13,918 13,966 13,633 Redevelopment: Number of active projects - - - - -
Source: Town of Los Gatos, Finance Department Continued Fiscal Year
Draft

ITEM NO. 7.

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

FUNCTION/PROGRAM
General government 2020-21 2021-22 2022-23 2023-24 2024-25 Building Permits Issued
Residential Permits Issued 1,128 1,144 1,118 957 912
Residential Permits Value 111,242,724 132,784,439 73,432,645 63,352,925 74,306,221 Commercial Permits Issued 68 117 84 62 68
Commercial Permits Value 37,285,259 23,442,964 19,422,918 31,245,689 28,715,444 Publically Owned Permits Issued - - - - -
Publically Owned Permits Value - - - - -
Residential Parking Permits
Number of Special Event Permits Issued - - - - - (1)
Number of Annual Permits Issued 1,568 1,958 1,827 1,847 2,204 City Clerk
Number of Council Resolutions Passed 50 64 71 69 53
Number of Ordinances Passed 9 14 10 14 15
Number of Contracts Passed 205 296 275 322 297
General Services
Number of Purchase Orders Issued 376 306 296 302 281
Police
Physical Arrests 360 504 522 642 635
Parking Violations 1,584 4,678 8,569 8,644 9,859
Traffic Violations 764 1,245 1,427 1,787 1,640
DUI Arrests 23 49 42 51 156
Library
Number of Library Visits - 150,198 206,874 249,120 250,527 (3) Annual Circulation - 432,707 397,517 422,733 484,462 (3) Number of Library Card holders - 29,322 29,815 33,551 34,048 (3) Circulated e-audiobooks ( 54,614 - - - - (2)
Other Public Works
Street Resurfacing/Overlay/Reconstruction (miles) 10.0 9.9 10.9 10.1 2.7 ADA Compliance: Curb Ramps 91 59 50 69 47
Traffic Circles 1 1 1 1 1
Street Poles 2,113 2,113 2,113 2,113 2,113
Planning and Development Department
Building & Safety Inspections Performed 13,806 16,906 16,641 14,696 14,560 Redevelopment: Number of active projects - - - - -
(3) New metrics being presented in FY 2021/22.

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

ITEM NO. 7.

Town of Los Gatos Schedule 16
Capital Asset Statistics by Function/Program
Last Ten Fiscal Years
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Function/Program
Police
Number of Stations 2 2 2 2 2 2 2 2 2 2
Number of Patrol Units 14 14 14 14 14 14 14 14 14 14
Parking Enforcement Vehicles 2 2 2 2 2 2 2 2 2 2
Other Public Works
Streets (miles) 132 132 132 132 132 132 132 112 112 112 (1) Streetlights 1,609 1,609 1,762 1,830 1,830 2,113 2,113 2,113 2,113 2,113 Traffic Signals 30 30 30 31 31 31 31 31 31 31
Parks and Recreation
Number of Parks 12 12 12 N/A N/A N/A N/A N/A N/A N/A
Number of Community Centers 1 1 1 1 1 1 1 1 1 1
Number of Parks & Open Spaces N/A N/A N/A 17 17 17 17 17 17 17 Parking
Number of Parking Garages 1 1 1 1 1 1 1 1 1 1
Number of Parking Lots 22 22 22 22 22 22 22 22 22 22
Number of Off Street Parking Garage Spaces 1,126 1,126 1,126 N/A N/A N/A N/A N/A N/A N/A Number of Downtown Off-Street Parking Spaces N/A N/A N/A 1,269 1,269 1,269 1,269 1,269 1,269 1,269 Source: Town of Los Gatos, Finance Department
Fiscal Year

Commission (MTC) funded Pavement Technical
Assistance Program
(P-TAP) inventory for year 2022.

Draft

ITEM NO. 7.

Other Independent Auditor’s Reports
Draft

ITEM NO. 7.

Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the
Town Council of the Town of Los Gatos
Los Gatos, California
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Town of Los Gatos (the “Town”) as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the Town’s basic financial statements, and have issued our report thereon dated November 19, 2025.

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

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

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

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

ITEM NO. 7.

Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

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

Morgan Hill, California
November 19, 2025
Draft

ITEM NO. 7.

Draft

ITEM NO. 7.
1 ATTACHMENT 4
Comments and questions on the FY 2024-25 Draft Annual
The following are comments, questions, and recommendations made by members of the Finance Commission. In accordance with Section 2.50.225 (a)(3), the Finance Commission is to review the [Annual Comprehensive Financial Report] and the Town Manager is to respond in writing regarding their rationale for accepting or rejecting each comment and recommendation.

The following responses as well as the changes proposed in Attachment 1 represent the Town Manager’s written response.

In addition to the written comments submitted before the meeting, the Commissioners requested further clarification and a more detailed explanation of the Transmittal Letter, the Management Discussion and Analysis (MD&A), and other sections of the Annual Comprehensive Financial Report (ACFR). In addition, questions were raised that were either answered at the meeting verbally or were not relevant to the ACFR.

Questions, Comments related to the Transmittal Letter

1. On page 16, Letter of Transmittal, a comment is made that “current and previous Councils have allocated additional discretionary pension funding totaling $10.4 million”.

It may be helpful to provide a schedule of payments made in Note 11. There is reference on the Town website but the latest entry appears to be in June 2014. If there has been more recent activity it should be noted.

Added. Staff removed the obsolete language from the Transmittal Letter. Staff will update the website with all the relevant information. All the CalPERS actuarial reports are available on the Town website.

2. Along the same lines in the Letter of Transmittal, there is reference to the Town providing “extensive information on pension and OPEB information on the Town’s website”. Can you confirm the Town website is up to date? When I viewed the Town Pension and OPEB Plans Information on the website the Unfunded Accrued Liability data was as of 2021.

Not Added. Staff will review and update the website to ensure that the most upto-date information is available.

To address the escalation in pension costs, current and previous Councils have allocated additional discretionary pension funding totaling $10.4 million. These additional discretionary payments should 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 $30.3 million in OPEB assets from zero in 2009.

ITEM NO. 7.
2 ATTACHMENT 4

3. Transmittal Letter - Provide a year-over-year comparison and remove any reference to the current year.

Added. Please see the updated language below.

4. Transmittal Letter – Clarify the Sales Tax year-over-year comparison; the explanation is not consistent.

Added. Staff removed non-relevant language. See updated information.

5. Transmittal Letter – Add information related to the growth in the pension expense.

Added. See updated information.

The Town also depends on sales tax revenues to fund General Fund operations, which made up about

14.4% of total General Fund revenues in FY 2024–25. Sales tax receipts for the year reached $8.3 million, a $0.3 million increase from the previous year, indicating modest growth. This trend reflects broader changes in the local economy and shopping habits, such as increased use of electric vehicles, which has led to decreased fuel purchases.

The Town also continues to adjust and prepare for pension employer coststo continue to be a primary expense in conjunction with salaries. Pension-related benefits increased by $0.8 million compared to the previous year. For the year ended June 30, 2025, the Town recognized a pension expense of $12 million compared to $11.2 million in the prior fiscal year. 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 Post-Employment Benefits (OPEB) obligations for the Town. According to the 2024 CalPERS actuarial valuations, the unfunded actuarial liability for pensions was $ 62.2 million and $7.5 million for OPEB, as determined by an actuarial valuation as of June 30, 2023.

ITEM NO. 7.
3 ATTACHMENT 4
Questions, Comments related to the MD&A

6. MD&A – Net Position Change – Provide a more detailed explanation.

Added. See updated information.

7. MD&A – Statement of Activity - Charges for Services - Provide a more detailed explanation.

Added. See updated information.
 The Town’s total net position increased by $7.3 million in FY 2024-25. The overall increase of $7.3 million is primarily due to the combined effects of the $7.5 million increase in Capital Assets infrastructure capitalization and changes in pension expense, $7.8 million decrease in Deferred Outflows, and $1.8 million decrease in Deferred Inflows related to Pension and OPEB expenses; and $5.3 million decrease in liabilities. These combined changes reflect the Town’s continued investment in infrastructure and the impact of variability in net pension and OPEB obligations. This variability is influenced by the difference between the plans’ actual investment earnings and the assumed rate of return during the measurement period.

Total Government-Wide Revenues increased by $5.5 million.

Program revenues increased by approximately $4.9 million compared to the prior fiscal year. A key component of this increase—$1.5 million—is due to a reclassification of fees collected from the garbage hauler company. In FY 2023–24, these fees were reclassified from franchise fees to license and permit fees as a result of changes in the JPA agreement, and are now reported under the Charges for Services category in the Statement of Activities. This reclassification resulted in a $1.5 million decrease in franchise fees and a corresponding $1.5 million increase in Charges for Services, with no net change in total collections from the garbage hauler company; however, it does affect year-over-year comparability. The remaining $2.9 million increase in program revenues is primarily attributable to a $1.5 million increase in business license tax collections, due to timing differences in license payments crossing fiscal years, and a $1.7 million increase from increased development activity, partially offset by a $0.3 million decrease in revenues from street sweeping and crossing guard services, which were contracted out in FY 2024–25.

The majority of this increase, $4.4 million, was due to higher charges for services driven by a rise in development activity and increased encroachment fee collections from the Town’s garbage hauler.

ITEM NO. 7.
4 ATTACHMENT 4

8. MD&A – Break out the $2.3 million Salaries and Benefits increases components Added. See updated information. Please note, information included in multiple areas, all of these were updated.

Total Governmental Funds revenues increased by $8.9 million, or 14.5%, compared to the prior year, primarily due to higher capital grant activity and increased collections from property taxes, interest income, sales taxes, and business license taxes. On the expenditure side, total spending rose by $6.3 million, or 10.2%, mainly driven by a $3.2 million increase in capital outlay, a $2.3 million rise in salaryies ($0.8 million) and benefits ($1.5 million) costs, and $0.9 million in additional internal service charges combined with operational changes.

The Town’s general revenues related to governmental activities increased by approximately $0.6 million compared to the prior year. This increase was primarily driven by a $1.0 million rise in property tax revenues, a $0.7 million increase in investment earnings, including mark-to-market adjustments on the Town’s investment portfolio—and a $0.3 million increase in sales tax collections. These gains were partially offset by a $1.5 million decrease in franchise fee collections. Starting in March 2024, due to a change in the JPA agreement, Garbage Franchise Fees were categorized as Licenses and Permits under Charges for Services. The total amount of the Encroachment Fee was $2.3 million in FY 2024-25 and $0.8 million in FY 2023-24.

Property tax is the Town's largest individual revenue source, and collections for the year were $1.0 million more than the previous year. This increase was primarily due to a $0.8 million rise in general property tax collection and a $0.2 million increase in the Vehicle License Fee (VLF) Property Tax In-Lieu fee. It is important to note that assessed valuations for FY 2024-25 were established on the tax roll in January 2024 and collected during FY 2024-25.

Sales taxes totaled $8.3 million for the fiscal year, making them the second-largest individual General Fund revenue source for the Town. This represents an increase of $0.3 million from the prior year. The modest growth reflects stable sales tax collections from business-to-business transactions. Additionally, reduced activity at gas service stations, attributed to the growing adoption of electric vehicles—also contributed to the slower pace of sales tax growth.

Franchise taxes finished the year at $1.1 million, reflecting a decrease of $1.5 million from the previous fiscal year. Franchise fee collected from the garbage hauler company was reclassified as license and permit fees during FY 2023-24. In the statement of activity, the license and permit fees are categorized as charges for services.

ITEM NO. 7.
5 ATTACHMENT 4

9. MD&A – Expand and clarify the interest income comparison, emphasize the nonspendable nature of the mark-to-market adjustment.

Added. See updated information.

10. In the MD&A section regarding the change in the JPA agreement, is there any further explanation that can be provided? Because this generates a significant increase in License & Permits, it may be useful to offer some additional details for the shift in contract or policy.

Added. Staff rewrote sections of the explanation to ensure that the reclassification and related year-over-year change explanation is clear. Please see the redlined version under Question 7.

11. Further down the MD&A discussion, there is comments made on investment earnings.

Given the potential for variability in this category, it might be beneficial to include a disclosure addressing the non-spendable nature and the risk of reversal of this item.

Expand and clarify the interest income comparison, emphasizing the non-spendable nature of the mark-to-market adjustment.

Added. Staff clarified the language regarding the item's non-spendable nature.

Please note that the Market fluctuation reserve is explained in Note 10. See redlined version below.

Investment earnings for the fiscal year ended June 30, 2025, totaled $2.6 million, representing an increase of $1.2 million from the prior year. This growth reflects improved interest income from the Town’s investment portfolio, due to a higher interest rate environment. Additionally, the Town recorded $1.2 million in unrealized gains from mark-to-market adjustments, which, while positive, were $0.5 million lower than the prior year’s unrealized gains of $1.7 million.

Overall, the combined increase in realized earnings and moderate unrealized gains contributed positively to the Town’s general revenues and financial position. The $1.2 million unrealized gain is an increase in the value of the asset that has not been sold and is not available for spending.

ITEM NO. 7.
6 ATTACHMENT 4

12. There is an entry for “Miscellaneous Revenue” in the Statement of Activities on page

35. I was not able to determine the components. Would staff be able to provide a breakdown of the items included or direct me to the appropriate disclosure? The amount seems material enough to specify.

Added. Please see the added language.

13. Provide clarification regarding the total expenses change in the Statement of Activities Added. Please see the added language.

Questions, Comments related to the Required Supplementary Information

14. Page 111, Schedule of Pension Plan Contributions, details the Safety Plan and a substantial increase in the "Contributions as a % of Covered Payroll”. Can staff explain the primary drivers of this increase and how these factors are reflected in the Town’s long-term financial projections?
Not added. The covered payroll figure reflects the actual payroll reported to CalPERS. The Pension Plan Contribution includes both the normal cost and the CalPERS-required lump sum payment. It is important to note that the Police Department experienced significant vacancies, which contributed to a decrease in the covered payroll. However, despite the reduction in payroll, both the normal contribution rate and the required lump sum payment have increased.

The Town anticipates that pension costs will increase in the future, as highlighted in the ACFR.

Miscellaneous Revenue increased by $0.1 million from the prior year. This category includes many different items, primarily $0.5 million in revenue recognized for Capital Projects, received through developer contributions and cost-sharing agreements with local governments and utility companies. Additionally, the Town received $0.4 million in insurance reimbursements related to property damage and workers’ compensation claims. Another $0.2 million was contributed by nonprofit organizations, including the Friends of the Library and the Police Foundation.

Total expenses for the year, as reported in the Statement of Activities, were $62.7 million, an increase of $4.1 million from the prior year’s total of $58.6 million. The primary driver of this increase was in $3.5 million in capital expenses in the capital program that did not meet the criteria for capitalization is not capitalizable and reported under Parks and Public Works expenses in the Statement of Activities. These expenditures included costs related to vegetation management, implementation of the parking program, and the creation of storm drain system maps.

ITEM NO. 7.
7 ATTACHMENT 4
Additional Questions

15. Were there any adjustments or reclassifications to the statements as prepared by the Town's staff in the accounting department?
Not added. The Independent Auditor addressed the Commissioner's question, and there were no significant adjustments or reclassifications per the Auditor.

16. Were there any recommendations for improving the internal accounting controls? Not added. The Independent Auditor confirmed that there were no recommendations for improving internal accounting controls by the Auditor

17. In Note 13, I learned we have two JVs. These are PLAN JPA and LAWCX. These are not integrated into our financial statements because different boards administer them.

However, we, as the Finance Commission, we are advising on the size and purpose of the catastrophic and stabilization reserves… so it would be very helpful to understand how these JVs could protect us in a crisis… such as in the case of a forest fire? Not Added. Staff addressed this question verbally during the meeting. This is essential information, and staff will review it with the Consultant and the Finance Commission during the Asset Liability Management (ALM) Study.

18. Why only 0.75 FTE in economic development? I’d welcome the chance to see what this person is working on whether a more robust ED team might find ways to increase town revenues.IE Can we think of an economic development person (FTE) as an investment in the future? With an expected return in terms of future revenues? Not Added. This is not relevant to the ACFR. The Town verbally addressed this question at the meeting. The Town FY 2025-26 Adopted Budget, starting on page D-51, describes the Town’s Economic and Community Vitality Department Work.

Together with the Community Development Department and other Town Departments, Economic Vitality staff strives to provide high-quality customer assistance and cross-departmental coordination that is tailored to the needs of individual businesses with the end goal of assisting each business with finding a successful path forward in Los Gatos. Additionally, Economic Vitality staff facilitates contact for services with the Los Gatos Chamber of Commerce for the implementation of Visit Los Gatos, the Town’s visitor information center, website, and destination marketing program; and coordinates and implements the Town’s Leadership Los Gatos program. Increasing the team and effort is a good question to consider in future budgetary planning.

ITEM NO. 7.
8 ATTACHMENT 4
Changes recommended by additional staff review.

Staff identified additional updates to the draft ACFR to ensure consistency throughout the document. One such update corrects the 2024–25 Contractually Required Contribution to $3,929,739 on page 98, aligning it with the presentation on page 82. This correction was previously shared with the Finance Commission in the December 1, 2025, Desk Item.

Another update adjusts the Market Fluctuation Reserve from $1,340,098 to $1,201,824 and increases the Pension/OPEB Reserve from $1,000,000 to $1,300,000, in accordance with the General Fund Reserve Policy. The Unassigned Fund Balance is also revised—reflecting both an increase of $238,274 and a decrease of $300,000—resulting in a new total of $10,211,049. These changes are reflected across multiple schedules, including the Governmental Funds Balance Sheet (page 41), Note 11 – Fund Balance, the Governmental Funds Statistical Schedule (page 131), and related graphs and references in the MD&A.

Additionally, footnotes in the Statistical Section – Net Position by Component were updated to match the prior year’s schedule, correcting a portion of the footnote that was unintentionally omitted on page 127. All updates have been redlined in the attached ACFR.

ITEM NO. 7.

PREPARED BY: Dan Keller
Facilities and Fleet Operations Manager
Reviewed by: Town Manager, Town Attorney, Parks and Public Works Director 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: 12/16/2025
ITEM NO: 8
DATE: December 16, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Authorize the Town Manager to Execute a Notice of Completion for the Civic Center HR Offices and ADA Ramp Project (CIP No. 821-2117) and Authorize Staff to Record the Notice of Completion
RECOMMENDATION: Accept the Civic Center Human Resources Offices and ADA Ramp Project (CIP No. 821-2117) and authorize the Town Manager to execute a Notice of Completion; and direct staff to record the Notice of Completion.

FISCAL IMPACT:

There are no fiscal impacts associated with this action. The contract amount and associated expenses are accounted for within the adopted Capital Improvement Program Budget for the Civic Center HR Offices Project (CIP No. 821-2117).

STRATEGIC PRIORITY:

This item is not associated with a strategic priority. However, the project supports the Town’s Core Goal of Quality Public Infrastructure by providing an entryway to the lower level of the Civic Center that is compliance with the Americans with Disabilities Act, creating new offices for the Town’s Human Resources staff.

BACKGROUND:

Construction bids were opened on September 18, 2024, and eight contractors submitted bids.

On October 15, 2024, Town Council authorized the Town Manager to execute a Construction Agreement with Alex Kushner General Inc. for this project in the amount of $540,000, including a 20% contingency for unforeseen services.

ITEM NO. 8.

PAGE 2 OF 2
SUBJECT: Civic Center Tenant Improvements (CIP No. 821-2117) DATE: December 16, 2025
DISCUSSION:

Construction of this project was completed on November 18, 2025. The work has been completed to the satisfaction of the Fleet and Facilities Operations Manager and the Director of Parks and Public Works as noted in Attachment 2. A summary of project accounting is below.

CONCLUSION:

With Council’s authorization of the recommended action, the construction contract with Alex Kushner General Inc. will be formally closed and staff will proceed with the remaining project closeout steps.

COORDINATION:

This staff report was coordinated with the Town Attorney and Finance Director.

ENVIRONMENTAL ASSESSMENT:

This is not a project as defined under CEQA; therefore, no environmental review is required.

Attachments:

1. Certificate of Acceptance and Notice of Completion

2. Verification of Work
Budget
Existing Appropriations
GFAR $ 980,000
Subtotal $ 980,000
Expenditures
Existing Expenditures including Encumbrances
Construction Services - Alex Kushner General Inc $ 517,620 Consultation Services - SHI International Corp $ 10,174 Consultation Services -The KPA Group $ 205,759
Other Project Costs $ 33,757
Subtotal $ 767,310
Balance $ 212,690
Civic Center Improvements
CIP Project 821-2117 (4118710)

ITEM NO. 8.

Town of Los Gatos Civic Center Tenant Improvement 2025 Form

NOTICE OF COMPLETION

Recording Requested By:

Town of Los Gatos
When Recorded Mail To:

Town Clerk
Town of Los Gatos
110 E Main St
Los Gatos, CA 95030

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE § 27383
SPACE ABOVE THIS LINE IS FOR RECORDER’S USE

NOTICE OF COMPLETION
Civil Code §§ 9204 and 9208
NOTICE IS HEREBY GIVEN THAT:

1. The undersigned is the agent of the owner of the Project described below.

2. Owner’s full name is: Town of Los Gatos

3. Town’s address is: 110 E. Main St., Los Gatos, CA, 95030

4. The nature of Town’s interest in the Project is:
_____ Fee Ownership __X___ Other:_____________

5. Construction work on the Project performed on Town’s behalf is generally described as follows:

Furnishing all labor, materials, tools, equipment, and services required for completion of the Los Gatos Civic Center Human Resources Office Expansion and Re-building the lower-level ADA Ramp, Located in the Town of Los Gatos, County of Santa Clara, State of California.

6. The name of the original Contractor for the Project is: Alex Kushner General Inc. located at 2364 Funston Ave, San Francisco, CA 94116.

7. The Project was accepted as complete on: November 18, 2024.

8. The Project is located at: The lower level Civic Center at 110 E. Main St. Los Gatos CA, 95030 Verification: In signing this document, I, the undersigned, declare under penalty of perjury under the laws of the State of California that I have read this notice, and I know and understand the contents of this notice, and that the facts stated in this notice are true and correct. __________________________ ________________________________ Date and Place Signature
________________________________
Chris Constantin, Town Manager

EXEMPT FROM NOTARY ACKNOWLEDGMENT REQUIREMENTS PER
GOVERNMENT CODE § 27287 AND CIVIL CODE § 9208
ATTACHMENT 1

ITEM NO. 8.

TOWN OF LOS GATOS

PARKS AND PUBLIC WORKS COMMENTS
Parks and Public Works Department • Engineering Division 41 Miles Ave, Los Gatos, CA 95030 • 408.399.5771 • www.losgatosca.gov ATTACHMENT 2 To:

From:

Date:

Subject:

Chris Constantin
Nicolle Burnham
December 9, 2025
Notice of Acceptance
Acceptance of Work for the Civic Center Improvements Project (CIP No. 821-2117). The work performed under this contract was inspected by authorized representatives of the Town, Contractor and Architect, and determined to be complete. The Parks and Public Works Director acknowledges the completion of this project and requests the Town Manger to sign the Certificate of Acceptance form.

Date of Final Inspection: 11/18/2025
Project Participants: Dan Keller, Joseph Gamboa, Danny Murdock, Ross Bayer, Sai Kim, Jeffrey Cheung (Town of Los Gatos), KPA Architects, Alex Kushner General Contractor Inc.

1. All construction and punch list items have been completed? Yes

2. All change orders have been executed? Yes

3. Claims if any have been resolved? Yes
REVIEWED AND APPROVED BY:

FLEET AND FACILITIES OPERATIONS MANAGER
DATE:

DIRECTOR OF PUBLIC WORKS DATE:
12/9/2025
Nicolle Burnham 12/9/25

ITEM NO. 8.

TOWN OF LOS GATOS

PARKS AND PUBLIC WORKS COMMENTS
Parks and Public Works Department • Engineering Division 41 Miles Ave, Los Gatos, CA 95030 • 408.399.5771 • www.losgatosca.gov Page 407 ITEM NO. 8.

PREPARED BY: Cheryl Parkman
Human Resources Director
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: 12/16/2025
ITEM NO: 9
DATE: December 11, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Adopt a Resolution Setting the Compensation and Benefits for Management and Confidential Employees
RECOMMENDATION: Adopt a resolution setting the salary and benefits for employees in the Management and Confidential employee groups.

FISCAL IMPACT:

This resolution does not have an additional fiscal impact as the majority of the terms of the resolution have already been approved by Town Council, and this action will codify certain salaries and benefits for the Management and Confidential employee groups that they are already receiving and therefore already in the Fiscal Year 2025/26 Operating Budget. The exception to this is granting the Town Manager the ability to grant additional personal leave to employees in increments up to five (5) days in a calendar year. This action does not carry an additional fiscal impact as the leave does not accrue, so it is not paid out when an employee separates or retires from Town service, leaving the impact as a potential loss of productivity should the Town Manager decide to grant this benefit.

STRATEGIC PRIORITY:

This item does not relate to a strategic priority.

BACKGROUND:

Management and Confidential employees are considered at-will employees under the Town’s Personnel Rules, and they are not represented by a bargaining unit. In the past, Council approved the “Management Compensation Plan” for employees who were unrepresented in the Management Employee Group. However, it does not appear that Council approved a plan for employees in the Confidential employee group. Since 2008, there does not appear to be a

ITEM NO. 9.

PAGE 2 OF 2
SUBJECT: Management and Confidential Salary and Benefit Resolution DATE: December 11, 2025
source resolution or plan that collectively refers to the compensation and benefits for these two employee groups. This has made it difficult to research the history of changes and determine when the Town Manager was given discretion to grant certain benefits, such as management administrative leave.

DISCUSSION:

To provide a comprehensive governing document, the Resolution includes all standard compensation and benefit provisions currently provided to these employee groups, including medical, dental, vision, vacation, sick leave, disability insurance, tuition reimbursement, out of classification pay, and other existing benefits.

While the document serves to codify existing compensation and benefits that employees are currently receiving, there are two distinctions with the resolution. The first is that the resolution adds the ability of the Town Manager to grant up to five (5) days or forty (40) hours of personal leave to employees who have performed exceptionally in their duties as a Town employee. This is a new benefit that would be at the discretion of the Town Manager for exemplary service. The second is that the resolution does not outline retirement benefits (pension and other post employment benefits). Those benefits are contained in other resolutions and the contract with CalPERS.

CONCLUSION:

It is recommended that the Management and Confidential Salary and Compensation Resolution be adopted by Town Council.

COORDINATION:

This report was coordinated with the Finance Department and the Town Attorney’s Office.

ENVIRONMENTAL ASSESSMENT:

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

Attachments:

1. Management and Confidential Salary and Benefits Resolution

ITEM NO. 9.
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Resolution 20 - December 16, 2025
RESOLUTION 20 -xx

RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS SETTING THE

COMPENSATION AND BENEFITS FOR MANAGEMENT AND CONFIDENTIAL EMPLOYEES WHEREAS, the Town Manager has presented to Town Council of the Town of Los Gatos a recommended set of salary ranges and benefits for the Management and Confidential employees; and
WHEREAS, the Town Council has reviewed said recommendations; NOW, THEREFORE, BE IT RESOLVED that the Town Council of the Town of Los Gatos does hereby declare, determine, and order as follows:

Section 1 – Salary Ranges
A. Effective July 6, 2025, base salaries for the Management employee group will increase by 3%, except for those in the Police Chief and Police Captain Classifications whose salaries will increase by 5%. See Salary Schedules attached as Exhibit A.

B. Effective July 5, 2026, base salaries for the Confidential employee group will increase by 3%. See Salary Schedules attached as Exhibit B.

C. The Town Manager will establish the monthly compensation for the classifications in Management and will have final approval for the salaries of the classifications in Confidential before the final offer is made to the employee.

D. The Salary Schedules referred to in this Resolution may from time to time be revised and amended by the Town Council.

E. Employees in Management and Confidential employee groups are eligible for step or salary increases based on the completion of performance evaluation. The narrative of the performance evaluation must warrant an increase in compensation.

ATTACHMENT 1

ITEM NO. 9.
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Resolution 20 - December 16, 2025
Section 2 – General Benefit Provisions
A. Holidays
a. The Town will grant the following paid holidays to employees in Management and Confidential. All holidays are paid at 8 hours unless otherwise noted:
i. New Year's Day
ii. Martin Luther King, Jr. Day
iii. Presidents’ Day
iv. Memorial Day
v. Juneteenth
vi. Independence Day
vii. Labor Day
viii. Veterans Day
ix. Thanksgiving Day
x. Day after Thanksgiving
xi. Christmas Eve (4 hours)
xii. Christmas Day
xiii. New Year’s Eve (4 hours)
b. Holidays are paid at a rate of eight hours of time off; employees on an Alternate Work Schedule must use additional leave balances to receive full pay on a holiday.

B. Sick Leave Accrual
a. Employees in Management and Confidential will accrue sick leave on the basis of 8 hours of sick leave per month (96 hours per year) i. Management employees have a cap of 1,100 hours of sick leave. ii. Confidential employees have a cap of 1,000 hours of sick leave. b. Employees hired before August 22, 2018, may cash out their accumulated sick leave based on the employee’s hourly rate of pay at retirement as follows:

ITEM NO. 9.
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Resolution 20 - December 16, 2025
i. 1 - 59 months of service at 25%
ii. 60 - 119 months of service at 37.5%
iii. 120 months or more of service at 50%
c. Active employees may make an irrevocable election to cash out sick leave in accordance with the above amounts and the requirements of the Irrevocable Cash Out Program. Eligible cash out hours will be cashed out in whole hour increments which will be earned in the following calendar year at the employee’s base rate of pay. In the first payroll check of December in the following year, the employee will receive cash for the amount of the eligible sick leave the employee irrevocably elected to cash out in the prior year.

However, if the employee’s sick leave balance is less than the amount the employee elected to cash out in the prior calendar year the employee will receive cash for the amount of sick leave the employee has accrued at the time of the cash out. An employee must have a sick leave balance of at least 150 hours after the annual cash-out to qualify.
d. All employees hired prior to November 15, 2004 who retire may convert up to 100% of this accumulated sick leave to a dollar equivalent at their hourly rate of pay at the time of retirement. This amount shall be held in an account.

C. Vacation Leave Accrual
a. Each employee in Management will accrue vacation at the following intervals based on Town Service:

Vacation Accrual Caps
0 to 60 months of service 15 Days = 120 hrs
61 to 120 months of service 20 Days = 160 hrs
121 to 180 months of service 23 Days = 184 hrs
181 months of service and over 25 Days = 200 hrs

ITEM NO. 9.
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Resolution 20 - December 16, 2025
i. The maximum vacation accrual for an employee in Management will be 500 hours.
ii. The Town Manager may approve and negotiate with new employees or rehired employees to determine if prior public service will be taken into account for the months of service related to vacation accrual. b. Each employee in Confidential will accrue vacation at the following intervals based on Town service:

Vacation Accrual Caps
0 to 36 months of service 10 Days = 80 hrs
37 to 60 months of service 16 Days = 128 hrs
61 to 120 months of service 21 Days = 168 hrs
121 to 180 months of service 23 Days = 184 hrs
181 months of service and over 25 Days = 200 hrs
i. The maximum vacation accrual for an employee in Confidential will be 320 hours.
ii. The Town Manager may approve and negotiate with new employees or rehired employee to determine if prior public service will be taken into account for the months of service related to vacation accrual. c. Employees in Management and Confidential may cash out their accrued vacation at separation and twice per year. Employees in Management may cash up to 200 hours cumulatively, and Employees in Confidential may cash out at 160 hours cumulatively.

D. Personal Leave
a. Employees in Management will receive 48 hours of personal leave on a calendar year basis. These hours do not accrue and must be used in the calendar year in which they are given.
b. Employees in Confidential will receive 24 hours of personal leave on a calendar year basis. These hours do not accrue and must be used in the calendar year in which they are given.

ITEM NO. 9.
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Resolution 20 - December 16, 2025
c. Should the Town Manager decide that an employee in Management and Confidential performed exceptionally, the Town Manager may grant up to 5 additional personal leave (40 hours) days to an employee. These hours must be used in the calendar year they were received.
d. Personal leave is pro-rated based on an employee’s date of hire.

E. Compensatory Leave
a. Employees in Confidential who work in excess of 40 hours in a designated workweek may be permitted by their Department Director to take compensatory time in lieu of paid overtime. It shall not be regarded as hours worked for the purposes of overtime calculations. There is a maximum of 80 hours.

F. Management Administrative Leave
a. On an annual basis, the Town Manager may authorize up to 40 hours of management administrative leave based on performance to the employees in Management. These hours are granted in the calendar year and must be taken within that calendar year.

G. Bereavement Leave
a. A maximum of 40 paid leave hours is available upon the death of a family member for employees in Management and Confidential. For the purposes of this section, family member is defined as parent, step-parent, parent-inlaw, spouse/domestic partner, child, stepchild, foster child, dependent, sibling, sibling-in-law, grandparent, step-grandparent, grandparent-in-law, and grandchild. Days of bereavement leave need not be consecutive but shall be completed within three (3) months of the date of the death of the family member. If requested by the Town, the employee shall provide documentation of the death of the family member within 30 days of the first day of the leave. Appropriate documentation for this purpose is defined in the California Government Code section 12945.7(f).

ITEM NO. 9.
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Resolution 20 - December 16, 2025
H. Tuition Reimbursement
a. The Town will reimburse employees in Management and Confidential the cost of books, university/school fees (except parking) and tuition up to the maximum reimbursable rate of $3,000 per fiscal year.
i. The reimbursement shall be only for courses that are directly related to the employee’s position as determined by the Town Manager, including general education courses that are generally related to attainment of a job-related degree or certification. General education courses not generally related to the employee’s position will not be eligible for reimbursement. Reimbursement shall be taxed pursuant to State and Federal regulations.
b. Application for tuition reimbursement shall be made to the Town before the course begins. Prior to reimbursement of costs, all course work must be completed with a passing grade of “C” or equivalent when numerical score or pass/fail is given.
c. Any employee who terminates employment with the Town within one year from the completion of a class or classes, for which tuition reimbursement was paid shall refund all tuition paid under this provision, unless required to attend by the appointing authority.

I. Life and Disability Insurance
a. The Town shall pay the premiums for the short-term disability, long-term disability and group life insurance plans. The Town Manager shall have the discretion to change these contributions or the provider for employees in Management and Confidential.

J. Deferred Compensation Plan
a. The Town will offer a voluntary 457(b) deferred compensation plan to Management and Confidential Employees. The contributions into the deferred compensation plan will be voluntary for each employee.

K. Out-of-Classification Pay

ITEM NO. 9.
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Resolution 20 - December 16, 2025
a. Compensation for out-of-classification work shall be an additional 5% of the regular pay of the employee's permanent classification or the first step of the higher classification, whichever is greater.
b. Out-of-Classification Pay applies only to actual time worked and does not apply to paid leaves. Employees appointed to work out-of-class will receive out-of-classification pay beginning the first day of the out-of-classification assignment. Performance of duties as a vacation relief does not automatically qualify as out-of-classification.
c. For purposes of this section, an out-of-classification assignment is defined as the full-time performance of the essential functions of an authorized, funded, permanent position in another classification by a qualified employee. "Essential functions" shall be as defined in the Essential Functions section of the appropriate job specification.
d. Any employee who believes they are working out-of-class may request a review of their classification.

L. Cell Phone Stipend
a. The Town Manager established a cell phone stipend that is available to Employees in Management and Confidential. It may be changed from time to time based on the Town Manager’s discretion.

M. Bilingual Pay
a. Employees in the Confidential employee group may be certified as bilingual.

They may receive bilingual pay if they are in a classification that requires bilingual ability and pass the certified examination. The Town may discontinue an employee’s bilingual pay at any time dependent on operational need. Bilingual pay is compensated at 2.5% above the employee’s current pay. This is special compensation and shall be reported as such to CalPERS, pursuant to Title 2 CCR Section 571(a)(4) and 571.1(b)(3) as Bilingual Premium.

ITEM NO. 9.
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Resolution 20 - December 16, 2025
N. Medical Benefits
a. The Town contracts with CalPERS for the purpose of providing employees and their eligible dependents with medical insurance benefits. The Town will provide active employees with a medical allowance equal to 100% of the cost of the Kaiser Bay Area Medical Insurance Program premium offered by the Public Employees’ Retirement System Health Benefit Medical Program at the Employee Only level of participation. For dependents, the Town will pay 90% of the difference between Kaiser Employee Only and Kaiser level of participation (Employee Plus One or Employee Family, depending on family status). If the employee chooses medical coverage under a program more expensive than Kaiser Bay Area, the employee will pay the difference between the Town-provided medical allowance and the cost of the more expensive program through payroll deduction. The Town’s contribution towards medical insurance set forth in Section 13 (the PEMHCA minimum) will be deducted from the amount of contribution provided by this Section.

O. Dental Benefits
a. Employees will be provided 100% of the Delta Dental DPO Plan premium less a $15.00 employee contribution. If the premium cost of the dental plan exceeds the Town contribution, the employee shall pay through payroll deductions the difference between the monthly premium and the amount contributed by the Town. The Town will pay 100% of the premium for employees choosing to participate in the DeltaCare USA Plan.

P. Vision Benefits
a. The Town shall pay for employee-only coverage under the Town’s Vision Service Plan (VSP). Employees may enroll eligible dependents at their own cost.

Q. Cash-In-Lieu Plan
a. Employees have the option of choosing all available coverages or, upon providing proof of other medical coverage, may choose to opt out of the

ITEM NO. 9.
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Resolution 20 - December 16, 2025
Town’s coverage and be provided with cash-in-lieu. Employees who choose to receive the cash-in-lieu must first show proof of alternative minimum essential medical coverage for the employee and employee’s tax family (individuals for whom the employee expects to claim a personal exemption deduction). Individual coverage, and individual coverage from Covered California does not qualify as alternative minimum essential coverage under this section. Employees must provide reasonable evidence of alternative minimum essential coverage each plan year, during open enrollment. The Town will not make the cash payment if it knows or has reason to know that the employee or tax family does not have alternative minimum essential coverage. Any amount received in cash is taxable. Employees choosing to receive taxable cash will have the option of receiving it in two equal amounts in December and June, or the first two paychecks of each month (24 times a year).
i. For Management employees hired before November 15, 2004, the Town contribution to the Cash-In-Lieu program will be equal to Nine Hundred and Fifty Dollars ($950) per month.
ii. For Management employees hired after November 15, 2004, the Town contribution to the Cash-In-Lieu program will be Four Hundred Dollars ($400) per month.
iii. For Confidential employees hired before November 15, 2004, the Town contribution to the Cash-In-Lieu program will be equal to Eight Hundred Dollars ($800) per month.
iv. For Confidential employees hired after November 15, 2004, the Town contribution to the Cash-In-Lieu program will be Four Hundred Dollars ($400) per month.

ITEM NO. 9.
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Resolution 20 - December 16, 2025
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 16th day of December 2025 by the following vote:

COUNCIL MEMBERS:

AYES:

NAYS:

ABSENT:

ABSTAIN:

SIGNED:
_______________________________

MAYOR OF THE TOWN OF LOS GATOS

LOS GATOS, CALIFORNIA
ATTEST:
___________________________________

TOWN CLERK OF THE TOWN OF LOS GATOS

LOS GATOS, CALIFORNIA

ITEM NO. 9.

PREPARED BY: Gary Heap
Town Engineer
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: 12/16/2025
ITEM NO: 10
DATE: December 16, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Authorize the Town Manager to Reopen the Los Gatos Creek Trailhead Connector Project (4118503, 4218503; CIP 832-4505), Authorize Associated Budget Adjustments, and Authorize the Town Manager to Execute an Amendment to the Agreement for Services with Zoon Engineering RECOMMENDATION: Authorize an expenditure budget adjustment in the amount of $89,726 from previously awarded One Bay Area Grant
funds; authorize an expenditure budget adjustment in the amount of $421 from previously awarded Transportation
Fund for Clean Air Grant funds; authorize an expenditure budget adjustment in the amount of $3,188 from the General Fund Appropriations Reserve; and authorize the Town
Manager to execute the Second Amendment to the
Agreement with Zoon Engineering to extend the agreement date to March 31, 2026.

FISCAL IMPACT:

This item reopens the Los Gatos Creek Trailhead Connector Project (4118503, 4218503, CIP 832-4505) including an expenditure budget adjustment for One Bay Area Grant (OBAG) funding in the amount of $89,726, an expenditure adjustment of previously awarded but unallocated TFCA grant funding in the amount of $421, and an expenditure adjustment from the General Fund Appropriations Reserve for the Capital Improvement Program projects in the amount of $3,188.

STRATEGIC PRIORITY:

The recommended action is not associated with a strategic priority. However, it does support the Town’s Core Goals of Community Character and Quality Public Infrastructure.

ITEM NO. 10.

PAGE 2 OF 4
SUBJECT: Actions Related to the Extension of the Zoon Engineering Agreement for the Los Gatos Creek Trailhead Connector to Highway 9 Project (CIP 832-4505) DATE: December 16, 2025
BACKGROUND:

The Los Gatos Creek Trailhead Connector to Highway 9 Project resulted in the construction of switchback trail access from the north side of Highway 9 and the Los Gatos Creek Trail and bicycle/pedestrian trail access on the south side of Highway 9 from University Avenue.

Construction bids were opened on April 6, 2023, and five contractors submitted bids. On August 1, 2023, the Town Council authorized the Town Manager to execute a construction agreement with Granite Construction in the amount of $6,529,396 and authorized a 10% construction contingency in the amount of $652,940. At that same meeting, the Town Council authorized the Town Manager to execute an agreement with Zoon Engineering in the amount of $1,220,822 and authorized a 2.39% construction contingency in the amount of $29,178. Zoon was contracted to provide construction management and construction inspection services on behalf of the Town. This service is critically important given the complexity of the project and associated funding sources.

Construction was completed on April 5, 2025. On June 3, 2025, the Town Council accepted the Los Gatos Creek Trailhead Connector project construction, directed staff to record a Notice of Competition with the County of Santa Clara, and approved the first amendment to the agreement for services with Zoon Engineering. The First Amendment to the Agreement for Consultant Services moved funding within tasks of the agreement but did not add funding or extend the time. The First Amendment was executed on July 24, 2025.

DISCUSSION:

The June action by the Town Council accepted the project, but there were remaining close-out tasks to be completed prior to the closure of the project. It was anticipated that the close-out activities would be completed by December 31, 2025. The Town Council action to accept the project was reflected in the adopted FY25-26 budget, which closed and defunded the project on June 30, 2025. Post-acceptance discussions with Granite and the filing of Caltrans project documentation have delayed the anticipated project close-out date until early 2026. Due to the delay, there have been invoices received from vendors after June 30, 2025, including those from Mott McDonald, Zoon, and Clare Gibson Attorney at Law. The recommended budget adjustments are needed to re-allocate the original project budget and pay the outstanding invoices.

Zoon continues to provide project management services and has remaining project close-out work that is expected to be completed in early 2026, after the current agreement expiration date of December 31, 2025. Staff recommends that the agreement performance period with Zoon Engineering be extended to March 31, 2026, to accommodate this remaining close-out work, which primarily consists of the submittal of various Caltrans forms and final invoicing. No additional funds are necessary to complete this work.

ITEM NO. 10.

PAGE 3 OF 4
SUBJECT: Actions Related to the Extension of the Zoon Engineering Agreement for the Los Gatos Creek Trailhead Connector to Highway 9 Project (CIP 832-4505) DATE: December 16, 2025
CONCLUSION:

Staff recommend that Town Council reopen the Los Gatos Creek Trailhead Connector Project (4118503, 4218503, CIP 832-4505) to complete previously planned construction and consultation services that were delayed due to unforeseen circumstances. The recommendation includes an expenditure budget adjustment of OBAG grant funding in the amount of $89,726, an expenditure adjustment of previously awarded but as yet unallocated Budget
Existing Appropriations
GFAR $ 1,428,127
Grant - OBAG $ 6,536,000
Grant - TFCA $ 755,500
Grant - Measure B $ 693,500
Grant - TDA $ 68,884
GFAR - project closeout 6/30 $ (143,209)
Grants -project closeout 6/30 $ (164,294)
Appropriations Recommended with this Staff Report
GFAR $ 3,188
Grant - OBAG $ 89,305
Grant - TFCA $ 421
Subtotal $ 9,267,422
Expenditures
Existing Expenditures
Consultation Services - Mott MacDonald Group $ 813,680
Construction Contract - Granite Construction $ 6,897,041 Consultation Services - Zoon $ 1,167,961
Staff Labor $ 252,450
Other Project Costs $ 43,376
Expenditures Recommended with this Staff Report
Consultation Services - Mott MacDonald Group $ 7,687
Consultation Services - Zoon $ 82,039
Legal Expenses $ 3,188
Subtotal $ 9,267,422
Balance $ 0
Trailhead Connector to Highway 9 Project
CIP Project 832-4505 (4118503, 4218503)

ITEM NO. 10.

PAGE 4 OF 4
SUBJECT: Actions Related to the Extension of the Zoon Engineering Agreement for the Los Gatos Creek Trailhead Connector to Highway 9 Project (CIP 832-4505) DATE: December 16, 2025
TFCA grant funding in the amount of $421, and an expenditure adjustment from the General Fund Appropriations Reserve for CIP Projects in the amount of $3,188. The item also extends the term of the Agreement with Zoon Engineering to March 31, 2026.

COORDINATION:

This project has been coordinated with the Town Manager’s Office, the Town Clerk’s Office, the Town’s Finance Department, and the vendor.

ENVIRONMENTAL ASSESSMENT:

This is a project as defined under CEQA but is Categorically Exempt (Section 15301). A Notice of Exemption was filed.

Attachments:

1. Second Amendment to the Agreement for Services – Zoon Engineering

2. Original Agreement and First Amendment

ITEM NO. 10.

AMENDMENT TO AGREEMENT

PREAMBLE
This AMENDMENT TO AGREEMENT amends that certain agreement titled Agreement for Consultant Services dated August 1, 2023, made by and between the Town of Los Gatos, ("Town,") and Zoon Engineering (“Consultant.”), identified as an S Corporation and whose address is 3960 Adeline Street, Suite 3, Emeryville, CA 94608.

I. RECITALS
A. Town and Consultant entered into an Agreement for Consultant Services on August 1, 2023, (“Agreement”)
B. First Amendment to Agreement for Consultant Services on July 24, 2025 C. The parties desire to amend the Agreement in order to extend the performance period end date from December 31, 2025 to March 31, 2026
II. AMENDMENT
A. Article IV (A) Performance Period is amended to read:

This AGREEMENT shall go into effect on August 01, 2023 contingent upon approval by LOCAL AGENCY, and CONSULTANT shall commence work after notification to proceed by LOCAL AGENCY’S Contract Administrator. The AGREEMENT shall end at the earlier of the final project construction and close out activities, or on March 31, 2026 unless extended by an amendment to the AGREEMENT.

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

Amendment to Agreement
Zoon Engineering ATTACHMENT 1

ITEM NO. 10.

TOWN OF LOS GATOS CONTRACTOR: Zoon Engineering

SIGNATURE SIGNATURE
Chris Constantin

FULL NAME
Nabil Hissen

CONTRACTOR SIGNATORY'S FULL NAME
Town Manager
TITLE
CEO

CONTRACTOR SIGNATORY'S TITLE

DATE SIGNED DATE SIGNED
Approved as to form:

SIGNATURE
Gabrielle Whelan

FULL NAME
Town Attorney
TITLE

DATE SIGNED
The execution date is the date on which the last party has signed.

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Los Gatos Creek Trail to Highway 9 Trailhead Connector Project TLG 18-832-4505 Federal Project No. CML-5067(021)

AGREEMENT FOR CONSULTANT SERVICES

TABLE OF CONTENTS PAGE
ARTICLE I INTRODUCTION.................................................................................................................A2-3 ARTICLE II CONSULTANT’S REPORTS OR MEETINGS...................................................................A2-4 ARTICLE III STATEMENT OF WORK ..................................................................................................A2-4 ARTICLE IV PERFORMANCE PERIOD................................................................................................A2-5 ARTICLE V ALLOWABLE COSTS AND PAYMENTS..........................................................................A2-5 ARTICLE VI TERMINATION .................................................................................................................A2-7 ARTICLE VII COST PRINCIPLES AND ADMINISTRATIVE REQUIREMENTS...................................A2-7 ARTICLE VIII RETENTION OF RECORD/AUDITS ..............................................................................A2-7 ARTICLE IX AUDIT REVIEW PROCEDURES .....................................................................................A2-8 ARTICLE X SUBCONTRACTING .........................................................................................................A2-9 ARTICLE XI EQUIPMENT PURCHASE AND OTHER CAPITAL EXPENDITURES ............................A2-10 ARTICLE XII STATE PREVAILING WAGE RATES..............................................................................A2-11 ARTICLE XIII CONFLICT OF INTEREST..............................................................................................A2-13 ARTICLE XIV REBATES, KICKBACKS OR OTHER UNLAWFUL CONSIDERATION ......................A2-14

ARTICLE XV PROHIBITION OF EXPENDING LOCAL AGENCY, STATE, OR FEDERAL FUNDS FOR LOBBYING ....................................................................................................A2-14 ARTICLE XVI NON-DISCRIMINATION CLAUSE AND STATEMENT OF COMPLIANCE...................A2-14 ARTICLE XVII DEBARMENT AND SUSPENSION CERTIFICATION..................................................A2-15 ARTICLE XVIII DISADVANTAGED BUSINESS ENTERPRISES (DBE) PARTICIPATION.................A2-16 ARTICLE XIX INSURANCE ..................................................................................................................A2-19 ARTICLE XX FUNDING REQUIREMENTS …………………………………………………………………A2-24 DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458 ATTACHMENT 2

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ARTICLE XXI CHANGE IN TERMS ....................................................................................................A2-24 ARTICLE XXII CONTINGENT FEE .....................................................................................................A2-24 ARTICLE XXIII DISPUTES.................................................................................................................. A2-24 ARTICLE XXIV INSPECTION OF WORK ........................................................................................... A2-25 ARTICLE XXV SAFETY....................................................................................................................... A2-25 ARTICLE XXVI OWNERSHIP OF DATA............................................................................................. A2-25 ARTICLE XXVII CLAIMS FILED BY LOCAL AGENCY’s CONSTRUCTION CONTRACTOR........... A2-26 ARTICLE XXVIII CONFIDENTIALITY OF DATA................................................................................. A2-26 ARTICLE XXIX NATIONAL LABOR RELATIONS BOARD CERTIFICATION....................................A2-26 ARTICLE XXX EVALUATION OF CONSULTANT...............................................................................A2-27 ARTICLE XXXI PROMPT PAYMENT FROM THE LOCAL AGENCY TO CONSULTANT..................A2-27 ARTICLE XXXII TITLE VI ASSURANCES ...........................................................................................A2-27 ARTICLE XXXIII NOTIFICATION..........................................................................................................A2-31 ARTICLE XXXIV CONTRACT...............................................................................................................A2-31 ARTICLE XXXV SIGNATURES ...........................................................................................................A2-31 ATTACHMENTS :

EXHIBIT A – SCOPE OF SERVICES
EXHIBIT B – COST PROPOSALS
EXHIBIT C – CONSULTANT CONTRACT DBE COMMITMENT – EXHIBITS 10-O1 and 10-O2 DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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ARTICLE I INTRODUCTION
This AGREEMENT is made and entered into on 1st day of August 2023 by and between the TOWN OF LOS GATOS, a California municipal corporation, hereinafter referred to as LOCAL AGENCY and ZOON ENGINEERING, INC, hereinafter referred to as, CONSULTANT, identified as an S Corporation and whose address is 3960 Adeline Street, Suite 3, Emeryville, CA 94608 A. The CONSULTANT is incorporated in the State of CALIFORNIA.

The Project Manager for the “CONSULTANT” will be NABIL HISSEN.

The Contract Administrator for the LOCAL AGENCY will be the Town Engineer.

B. The work to be performed under this AGREEMENT is described in Article III Statement of Work and “Exhibit A – Scope of Services” attached hereto and incorporated by reference and the approved CONSULTANT’s Cost Proposals dated July 3 2023. The approved CONSULTANT’s Cost Proposal is attached hereto as “Exhibit B” and incorporated by reference. If there is any conflict between the approved Cost Proposal and this AGREEMENT, this AGREEMENT shall take precedence.

C. CONSULTANT agrees to the fullest extent permitted by law, to indemnify, protect, defend, and hold harmless LOCAL AGENCY, its officers, officials, agents, employees and volunteers from and against any and all claims, damages, demands, liability, costs, losses and expenses, including without limitation, court costs and reasonable attorneys’ and expert witness fees, arising out of any failure to comply with applicable law, any injury to or death of any person(s), damage to property, loss of use of property, economic loss or otherwise arising out of the performance of the work described herein, to the extent caused by a negligent act or negligent failure to act, errors, omissions, recklessness or willful misconduct incident to the performance of this AGREEMENT on the part of CONSULTANT, except such loss or damage which was caused by the sole negligence, or willful misconduct of LOCAL AGENCY, as determined by a Court of competent jurisdiction.

The provisions of this section shall survive termination or suspension of this AGREEMENT.

D. CONSULTANT in the performance of this AGREEMENT, shall act in an independent capacity. It is understood and agreed that CONSULTANT (including CONSULTANT's employees) is an independent Contractor and that no relationship of employer-employee exists between the Parties hereto.

CONSULTANT's assigned personnel shall not be entitled to any benefits payable to employees of City.

E. LOCAL AGENCY is not required to make any deductions or withholdings from the compensation payable to CONSULTANT under the provisions of the AGREEMENT, and is not required to issue W-2 Forms for income and employment tax purposes for any of CONSULTANT's assigned personnel. CONSULTANT, in the performance of its obligation hereunder, is only subject to the control or direction of the LOCAL AGENCY as to the designation of tasks to be performed and the results to be accomplished.

F. Any third party person(s) employed by CONSULTANT shall be entirely and exclusively under the direction, supervision, and control of CONSULTANT. CONSULTANT hereby indemnifies and holds LOCAL AGENCY harmless from any and all claims that may be made against City based upon any contention by any third party that an employer-employee relationship exists by reason of this AGREEMENT.

G. Except as expressly authorized herein, CONSULTANT's obligations under this AGREEMENT are not assignable or transferable, and CONSULTANT shall not subcontract any work, without the prior written approval of the LOCAL AGENCY. However, claims for money due or which become due to CONSULTANT from City under this AGREEMENT may be assigned to a financial institution or to a trustee in bankruptcy, without such approval. Notice of any assignment or transfer whether voluntary or involuntary shall be furnished promptly to the LOCAL AGENCY.

H. CONSULTANT shall be as fully responsible to the LOCAL AGENCY for the negligent acts and omissions of its Contractors and subcontractors or subconsultants, and of persons either directly or indirectly employed by them, in the same manner as persons directly employed by CONSULTANT.

DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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I. No alteration or variation of the terms of this AGREEMENT shall be valid, unless made in writing and signed by the parties authorized to bind the parties; and no oral understanding or agreement not incorporated herein, shall be binding on any of the parties hereto.

J. The consideration to be paid to CONSULTANT as provided herein, shall be in compensation for all of CONSULTANT’s expenses incurred in the performance hereof, including travel and per diem, unless otherwise expressly so provided.

ARTICLE II CONSULTANT’S REPORTS OR MEETINGS
A. CONSULTANT shall meet weekly with project team and submit progress reports following each meeting. The reports should be sufficiently detailed for the LOCAL AGENCY’s Contract Administrator to determine, if CONSULTANT is performing to expectations, or is on schedule; to provide communication of interim findings, and to sufficiently address any difficulties or special problems encountered, so remedies can be developed.

B. CONSULTANT’s Construction Manager/Resident Engineer shall meet with LOCAL AGENCY’s Project Manager, as needed, to discuss progress on the AGREEMENT.

C. This AGREEMENT requires conferences, meetings, daily site inspection of the construction project as the LOCAL AGENCY’S representative, to ensure compliance with local, State and Federal requirements. These costs are to be included in the Consultant’s Cost Proposal for the AGREEMENT Scope of Services.

ARTICLE III STATEMENT OF WORK
A. CONSULTANT agrees to perform the services as outlined in “Exhibit A – Scope of Services” within the time frames specified therein, and accept payment as outlined in “Exhibit B – CONSULTANT’S Cost Proposal” which are hereby incorporated by reference and attached. In the performance of the Scope of Services for this AGREEMENT, the responsible CONSULTANT Construction Manager/Resident Professional Engineer shall sign and stamp with registration number, any plans, certifications, and other engineering reports as required.

B. Right of Way – Not applicable to this AGREEMENT. All construction work shall be performed by the construction contractor within the existing Caltrans right of way per the construction contract documents under the supervision of the CONSULTANT per Exhibit A – Scope of Services.

C. Surveys – Not applicable to this AGREEMENT. Survey work for the construction contract shall be performed by the construction contractor per the construction contract documents, under the supervision of CONSULTANT per Exhibit A – Scope of Services.

D. Subsurface Investigations, where needed, are to be performed by the construction contractor per the construction documents, under the supervision of the CONSULTANT per Exhibit A – Scope of Services.

E. Local Agency Obligations - All data applicable to the project and in possession of LOCAL AGENCY, another agency, or government agency that are to be made available to CONSULTANT are referred to in the AGREEMENT, Exhibit A – Scope of Services. Any other assistance or services to be furnished to CONSULTANT are to be stated clearly.

F. Conferences, Site Visits, Inspection of Work. This AGREEMENT provides for conferences as needed, visits to the site, and inspection of the work by representatives of the LOCAL AGENCY, State, and/or FHWA. Costs incurred by CONSULTANT for meetings, subsequent to the initial meeting shall be included in the fee per the AGREEMENT.

G. Checking Shop Drawings. CONSULTANT shall provide shop drawing review per this AGREEMENT, Exhibit A -Scope of Services.

DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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H. CONSULTANT Services During Construction - CONSULTANT’s services during the course of construction, including construction management, resident engineering, inspection, and material testing, are to be specified in the AGREEMENT – Exhibit A Scope of Services together with Exhibit B – Cost Proposals for the method of payment for such services.

I. Documentation and Schedules – This AGREEMENT provides that CONSULTANT document the results of the work to the satisfaction of LOCAL AGENCY, and if applicable, the State and FHWA. This may include preparation of progress and final reports, plans, specifications and estimates, or similar evidence of attainment of the AGREEMENT objectives
J. Deliverables and Number of Copies - The number of copies or documents to be furnished, such as reports, brochures, sets of plans, specifications, or Right of Way parcel maps shall be as specified in this AGREEMENT Exhibit A – Scope of Services.

ARTICLE IV PERFORMANCE PERIOD
A. This AGREEMENT shall go into effect on August 01, 2023 contingent upon approval by LOCAL AGENCY, and CONSULTANT shall commence work after notification to proceed by LOCAL AGENCY’S Contract Administrator. The AGREEMENT shall end at the earlier of the final project construction and Close out activities, or on 12/31/2025 unless extended by an amendment to the AGREEMENT.

B. CONSULTANT is advised that any recommendation for AGREEMENT award is not binding on LOCAL AGENCY until the AGREEMENT is fully executed by the LOCAL AGENCY.

ARTICLE V ALLOWABLE COSTS AND PAYMENTS
Task 3 – Materials Testing
A. The method of payment for the following items shall be at the rate specified for each item, as described in this Article. The specified rate shall include full compensation to CONSULTANT for the item as described, including but not limited to, any repairs, maintenance, or insurance, and no further compensation will be allowed therefore.

B. The specified rate to be paid for vehicle expense for CONSULTANT’s field personnel shall be $(0) per approved Cost Proposal. This rate shall be for fully equipped vehicle(s) specified in Article III Statement of Work, as applicable. The specified rate to be paid for equipment shall be, as listed in the approved Cost Proposal.

C. The method of payment for Task 3 –Materials Testing of this AGREEMENT, except those items to be paid for on a specified rate basis, will be based on cost per unit of work. LOCAL AGENCY will reimburse CONSULTANT for actual costs (including labor costs, employee benefits, travel, equipment-rental costs, overhead and other direct costs) incurred by CONSULTANT in performance of the work. CONSULTANT will not be reimbursed for actual costs that exceed the estimated wage rates, employee benefits, travel, equipment rental, overhead and other estimated costs set forth in the approved Cost Proposal, unless additional reimbursement is provided for, by AGREEMENT amendment. In no event, will CONSULTANT be reimbursed for overhead costs at a rate that exceeds LOCAL AGENCY approved overhead rate set forth in the approved Cost Proposal. In the event, LOCAL AGENCY determines that changed work from that specified in the approved Cost Proposal and AGREEMENT is required; the actual costs reimbursable by LOCAL AGENCY may be adjusted by AGREEMENT amendment to accommodate the changed work. The maximum total cost as specified in Paragraph “I,” of this article shall not be exceeded unless authorized by AGREEMENT amendment
D. In addition to the allowable incurred costs, LOCAL AGENCY will pay CONSULTANT a fixed fee of $(0) zero dollars. The fixed fee is nonadjustable for the term of the AGREEMENT, except in the event of a significant change in the scope of work and such adjustment is made by AGREEMENT amendment.

E. Reimbursement for transportation and subsistence costs shall not exceed the rates specified in the approved Cost Proposal.

F. When milestone cost estimates are included in the approved Cost Proposal, CONSULTANT shall DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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obtain prior written approval for a revised milestone cost estimate from the Contract Administrator before exceeding such cost estimate.

G. Progress payments will be made monthly in arrears based on services provided and allowable incurred costs. A pro rata portion of CONSULTANT’s fixed fee will be included in the monthly progress payments.

If CONSULTANT fails to submit the required deliverable items according to the schedule set forth in Article III Statement of Work, LOCAL AGENCY shall have the right to delay payment or terminate this AGREEMENT.

H. No payment will be made prior to approval of any work, nor for any work performed prior to approval of this AGREEMENT.

I. CONSULTANT will be reimbursed promptly according to California Regulations upon receipt by LOCAL AGENCY’s Contract Administrator of itemized invoices in duplicate. Invoices shall be submitted no later than thirty (30) calendar days after the performance of work for which CONSULTANT is billing. Any changes to the progress payment process must be pre-approved in writing by the Town and Consultant.

Invoices shall detail the work performed on each milestone and each project as applicable. Invoices shall follow the format stipulated for the approved Cost Proposal and shall reference this AGREEMENT number and project title. Progress payments shall made accordance with Exhibit B – Cost Proposal by Task for Progress Payment Purposes. Final invoice must contain the final cost and all credits due LOCAL AGENCY including any equipment purchased under the provisions of Article XI Equipment Purchase. The final invoice should be submitted within sixty (60) calendar days after completion of CONSULTANT’s work. Invoices shall be mailed to LOCAL AGENCY’s Contract Administrator at the following address:

Town of Los Gatos – Parks and Public Works Department
ATTN: Nicolle Burnham, Parks and Public Works Director
41 Miles Avenue
Los Gatos, CA 95030
J. The total amount payable by LOCAL AGENCY including the fixed fee for TASK 3 shall not exceed $(265,115.64).

K. For personnel subject to prevailing wage rates as described in the California Labor Code, all salary increases, which are the direct result of changes in the prevailing wage rates are reimbursable.

Task 1 – Construction Management; Task 2 – Construction Inspection; Task 4- Labor, DBE, Federal Trainee Compliance; Task 5 - Supplemental Reports and Services A. The method of payment for Tasks 1, 2, 4, and 5 of this AGREEMENT will be based on lump sum. The total lump sum price paid to CONSULTANT will include compensation for all work and deliverables, including travel and equipment described in Article III Statement of Work. No additional compensation will be paid to CONSULTANT, unless there is a change in the scope of the work or the scope of the project.

In the instance of a change in the scope of work or scope of the project, adjustment to the total lump sum compensation will be negotiated between CONSULTANT and LOCAL AGENCY. Adjustment in the total lump sum compensation will not be effective until authorized by AGREEMENT amendment and approved by LOCAL AGENCY.

B. Progress payments may be made monthly in arrears based on the percentage of work completed by CONSULTANT. If CONSULTANT fails to complete the work or submit the required deliverable items according to the schedule set forth in Article III Statement of Work, LOCAL AGENCY shall have the right to delay payment or terminate this AGREEMENT in accordance with the provisions of Article VI Termination. Progress payments shall made accordance with Exhibit B – Cost Proposal by Task for Progress Payment Purposes. Any changes to the progress payment process must be pre-approved in writing by the Town and Consultant.

C. CONSULTANT shall not commence performance of work or services until this AGREEMENT has been approved by LOCAL AGENCY and notification to proceed has been issued by LOCAL AGENCY’S Contract Administrator. No payment will be made prior to approval of any work, or for any work performed prior to approval of this AGREEMENT.

D. CONSULTANT will be reimbursed within thirty (30) days upon receipt by LOCAL AGENCY’S Contract Administrator of itemized invoices in duplicate. Invoices shall be submitted no later than thirty (30) calendar days after the performance of work for which CONSULTANT is billing. Invoices shall detail the DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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Los Gatos Creek Trail to Highway 9 Trailhead Connector Project TLG 18-832-4505 Federal Project No. CML-5067(021)
work performed on each milestone, on each project as applicable. Invoices shall follow the format stipulated for the approved Cost Proposal and shall reference this AGREEMENT number and project title. Final invoice must contain the final cost and all credits due LOCAL AGENCY that include any equipment purchased under the provisions of Article XI Equipment Purchase. The final invoice must be submitted within sixty (60) calendar days after completion of CONSULTANT’s work unless a later date is approved by the LOCAL AGENCY. Invoices shall be mailed to LOCAL AGENCY’s Contract Administrator at the following address:

Town of Los Gatos – Parks and Public Works Department
ATTN: Parks and Public Works Director
Los Gatos Creek Trail to Highway 9 Trailhead Connector Project 41 Miles Avenue
Los Gatos, CA 95030
E. The total amount payable by LOCAL AGENCY for TASKS 1, 2, 4 and 5 shall not exceed $(955,706.43).

ARTICLE VI TERMINATION
A. This AGREEMENT may be terminated by LOCAL AGENCY, provided that LOCAL AGENCY gives not less than thirty (30) calendar days’ written notice (delivered by certified mail, return receipt requested) of intent to terminate. Upon termination, LOCAL AGENCY shall be entitled to all work, including but not limited to, reports, investigations, appraisals, inventories, studies, analyses, drawings and data estimates performed to that date, whether completed or not.

B. LOCAL AGENCY may temporarily suspend this AGREEMENT, at no additional cost to LOCAL AGENCY, provided that CONSULTANT is given written notice (delivered by certified mail, return receipt requested) of temporary suspension. If LOCAL AGENCY gives such notice of temporary suspension, CONSULTANT shall immediately suspend its activities under this AGREEMENT. A temporary suspension may be issued concurrent with the notice of termination.

C. Notwithstanding any provisions of this AGREEMENT, CONSULTANT shall not be relieved of liability to LOCAL AGENCY for damages sustained by City by virtue of any breach of this AGREEMENT by CONSULTANT, and City may withhold any payments due to CONSULTANT until such time as the exact amount of damages, if any, due City from CONSULTANT is determined.

D. In the event of termination, CONSULTANT shall be compensated as provided for in this AGREEMENT.

Upon termination, LOCAL AGENCY shall be entitled to all work, including but not limited to, reports, investigations, appraisals, inventories, studies, analyses, drawings and data estimates performed to that date, whether completed or not.

ARTICLE VII COST PRINCIPLES AND ADMINISTRATIVE REQUIREMENTS A. The CONSULTANT agrees that 48 CFR 31, Contract Cost Principles and Procedures, shall be used to determine the allowability of individual terms of cost.

B. The CONSULTANT also agrees to comply with Federal procedures in accordance with 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

C. Any costs for which payment has been made to the CONSULTANT that are determined by subsequent audit to be unallowable under 48 CFR 31 or 2 CFR 200 are subject to repayment by the CONSULTANT to LOCAL AGENCY.

D. When a CONSULTANT or subconsultant is a Non-Profit Organization or an Institution of Higher Education, the Cost Principles for Title 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards shall apply.

ARTICLE VIII RETENTION OF RECORD/AUDITS
For the purpose of determining compliance with Gov. Code § 8546.7, the CONSULTANT, subconsultants, and LOCAL AGENCY shall maintain all books, documents, papers, accounting records, Independent CPA Audited Indirect Cost Rate workpapers, and other evidence pertaining to the performance of the AGREEMENT including, but not limited to, the costs of administering the AGREEMENT. All parties, including the CONSULTANT’s Independent CPA, shall make such workpapers and materials available at their respective offices at all DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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Los Gatos Creek Trail to Highway 9 Trailhead Connector Project TLG 18-832-4505 Federal Project No. CML-5067(021)
reasonable times during the AGREEMENT period and for three (3) years from the date of final payment under the AGREEMENT and records for real property and equipment acquired with federal funds must be retained for three (3) years after final disposition. LOCAL AGENCY, Caltrans Auditor, FHWA, or any duly authorized representative of the Federal government having jurisdiction under Federal laws or regulations (including the basis of Federal funding in whole or in part) shall have access to any books, records, and documents of the CONSULTANT,,subconsultants, and the CONSULTANT’s Independent CPA, that are pertinent to the AGREEMENT for audits, examinations, workpaper review, excerpts, and transactions, and copies thereof shall be furnished if requested without limitation.

ARTICLE IX AUDIT REVIEW PROCEDURES
A. Any dispute concerning a question of fact arising under an interim or post audit of this AGREEMENT that is not disposed of by AGREEMENT, shall be reviewed by LOCAL AGENCY’S Chief Financial Officer.

B. Not later than thirty (30) calendar days after issuance of the final audit report, CONSULTANT may request a review by LOCAL AGENCY’S Chief Financial Officer of unresolved audit issues. The request for review will be submitted in writing.

C. Neither the pendency of a dispute nor its consideration by LOCAL AGENCY will excuse CONSULTANT from full and timely performance, in accordance with the terms of this AGREEMENT.

D. CONSULTANT and subconsultant AGREEMENTs, including cost proposals and Indirect Cost Rates (ICR), may be subject to audits or reviews such as, but not limited to, an AGREEMENT audit, an incurred cost audit, an ICR Audit, or a CPA ICR audit work paper review. If selected for audit or review, the AGREEMENT, cost proposal and ICR and related work papers, if applicable, will be reviewed to verify compliance with 48 CFR 31 and other related laws and regulations. In the instances of a CPA ICR audit work paper review it is CONSULTANT’s responsibility to ensure federal, LOCAL AGENCY, or local government officials are allowed full access to the CPA’s work papers including making copies as necessary. The AGREEMENT, cost proposal, and ICR shall be adjusted by CONSULTANT and approved by LOCAL AGENCY Contract Administrator to conform to the audit or review recommendations. CONSULTANT agrees that individual terms of costs identified in the audit report shall be incorporated into the AGREEMENT by this reference if directed by LOCAL AGENCY at its sole discretion. Refusal by CONSULTANT to incorporate audit or review recommendations, or to ensure that the federal, LOCAL AGENCY or local governments have access to CPA work papers, will be considered a breach of AGREEMENT terms and cause for termination of the AGREEMENT and disallowance of prior reimbursed costs.

E. Consultant’s Cost Proposal may be subject to a CPA ICR Audit Work Paper Review and/or audit by the Independent Office of Audits and Investigations (IOAI). IOAI, at its sole discretion, may review and/or audit and approve the CPA ICR documentation. The Cost Proposal shall be adjusted by the CONSULTANT and approved by the LOCAL AGENCY Contract Administrator to conform to the Work Paper Review recommendations included in the management letter or audit recommendations included in the audit report. Refusal by the CONSULTANT to incorporate the Work Paper Review recommendations included in the management letter or audit recommendations included in the audit report will be considered a breach of the AGREEMENT terms and cause for termination of the AGREEMENT and disallowance of prior reimbursed costs.

1. During IOAI’s review of the ICR audit work papers created by the CONSULTANT’s independent CPA, IOAI will work with the CPA and/or CONSULTANT toward a resolution of issues that arise during the review. Each party agrees to use its best efforts to resolve any audit disputes in a timely manner. If IOAI identifies significant issues during the review and is unable to issue a cognizant approval letter, LOCAL AGENCY will reimburse the CONSULTANT at an accepted ICR until a FAR (Federal Acquisition Regulation) compliant ICR {e.g. 48 CFR Part 31; GAGAS (Generally Accepted Auditing Standards); CAS (Cost Accounting Standards), if applicable; in accordance with procedures and guidelines of the American Association of State Highways and Transportation Officials (AASHTO) Audit Guide; and other applicable procedures and guidelines}is received and approved by IOAI.

DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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Accepted rates will be as follows:
a. If the proposed rate is less than one hundred fifty percent (150%) -the accepted rate reimbursed will be ninety percent (90%) of the proposed rate.
b. If the proposed rate is between one hundred fifty percent (150%) and two hundred percent (200%) -the accepted rate will be eighty-five percent (85%) of the proposed rate. c. If the proposed rate is greater than two hundred percent (200%) -the accepted rate will be seventy-five percent (75%) of the proposed rate.

2. If IOAI is unable to issue a cognizant letter per paragraph E.1. above, IOAI may require CONSULTANT to submit a revised independent CPA-audited ICR and audit report within three (3) months of the effective date of the management letter. IOAI will then have up to six (6) months to review the CONSULTANT’s and/or the independent CPA’s revisions.

3. If the CONSULTANT fails to comply with the provisions of this paragraph E, or if IOAI is still unable to issue a cognizant approval letter after the revised independent CPA audited ICR is submitted, overhead cost reimbursement will be limited to the accepted ICR that was established upon initial rejection of the ICR and set forth in paragraph E.1. above for all rendered services. In this event, this accepted ICR will become the actual and final ICR for reimbursement purposes under this AGREEMENT.

4. CONSULTANT may submit to LOCAL AGENCY final invoice only when all of the following items have occurred: (1) IOAI accepts or adjusts the original or revised independent CPA audited ICR; (2) all work under this AGREEMENT has been completed to the satisfaction of LOCAL AGENCY; and, (3) IOAI has issued its final ICR review letter. The CONSULTANT MUST SUBMIT ITS FINAL INVOICE TO LOCAL AGENCY no later than sixty (60) calendar days after occurrence of the last of these items. The accepted ICR will apply to this AGREEMENT and all other agreements executed between LOCAL AGENCY and the CONSULTANT, either as a prime or subconsultant, with the same fiscal period ICR.

5. The ICR period shall extend beyond the one-year period and shall be fixed for the life of the contract.

ARTICLE X SUBCONTRACTING
A. Nothing contained in this AGREEMENT or otherwise, shall create any contractual relation between the LOCAL AGENCY and any subconsultants, and no subagreement shall relieve the CONSULTANT of its responsibilities and obligations hereunder. The CONSULTANT agrees to be as fully responsible to the LOCAL AGENCY for the acts and omissions of its subconsultants and of persons either directly or indirectly employed by any of them as it is for the acts and omissions of persons directly employed by the CONSULTANT. The CONSULTANT's obligation to pay its subconsultants is an independent obligation from the LOCAL AGENCY's obligation to make payments to the CONSULTANT.

B. The CONSULTANT shall perform the work contemplated with resources available within its own organization and no portion of the work shall be subcontracted without written authorization by the LOCAL AGENCY Contract Administrator, except that which is expressly identified in the CONSULTANT’s approved Cost Proposal.

C. Any subagreement entered into as a result of this AGREEMENT, shall contain all the provisions stipulated in this entire AGREEMENT to be applicable to subconsultants unless otherwise noted.

D. CONSULTANT shall pay its subconsultants within Fifteen (15) calendar days from receipt of each payment made to the CONSULTANT by the LOCAL AGENCY.

E. Any substitution of subconsultants must be approved in writing by the LOCAL AGENCY Contract Administrator in advance of assigning work to a substitute subconsultant.

F. Prompt Progress Payment
CONSULTANT or subconsultant shall pay to any subconsultant, not later than fifteen (15) days after receipt of each progress payment, unless otherwise agreed to in writing, the respective amounts allowed CONSULTANT on account of the work performed by the subconsultants, to the extent of each subconsultant’s interest therein. In the event that there is a good faith dispute over all or any portion of the amount due on a progress payment from CONSULTANT or subconsultant to a subconsultant, CONSULTANT or subconsultant may withhold no more than 150 percent of the disputed amount. Any violation of this requirement shall constitute a cause for disciplinary action and shall subject the licensee to a penalty, payable to the subconsultant, of 2 percent of the amount due per month for every month that payment is not made.

In any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to his or her attorney’s fees and costs. The sanctions authorized under this requirement shall be separate DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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from, and in addition to, all other remedies, either civil, administrative, or criminal. This clause applies to both DBE and non-DBE subconsultants.

G. Prompt Payment of Withheld Funds to subconsultants
The LOCAL AGENCY may hold retainage from CONSULTANT and shall make prompt and regular incremental acceptances of portions, as determined by the LOCAL AGENCY, of the contract work, and pay retainage to CONSULTANT based on these acceptances. The LOCAL AGENCY shall designate one of the methods below in the contract to ensure prompt and full payment of any retainage kept by CONSULTANT or subconsultant to a subconsultant.

No retainage will be held by the LOCAL AGENCY from progress payments due to CONSULTANT.

CONSULTANTS and subconsultants are prohibited from holding retainage from subconsultants. Any delay or postponement of payment may take place only for good cause and with the LOCAL AGENCY’s prior written approval. Any violation of these provisions shall subject the violating CONSULTANT or subconsultant to the penalties, sanctions, and other remedies specified in Section 3321 of the California Civil Code. This requirement shall not be construed to limit or impair any contractual, administrative or judicial remedies, otherwise available to CONSULTANT or subconsultant in the event of a dispute involving late payment or nonpayment by CONSULTANT, deficient subconsultant performance and/or noncompliance by a subconsultant. This clause applies to both DBE and non-DBE subconsultants.

Any violation of these provisions shall subject the violating CONSULTANT or subconsultant to the penalties, sanctions and other remedies specified therein. These requirements shall not be construed to limit or impair any contractual, administrative, or judicial remedies otherwise available to CONSULTANT or subconsultant in the event of a dispute involving late payment or nonpayment by CONSULTANT, deficient subcontract performance, or noncompliance by a subconsultant.

ARTICLE XI EQUIPMENT PURCHASE AND OTHER CAPITAL EXPENDITURES A. Prior authorization in writing by LOCAL AGENCY’s Contract Administrator shall be required before CONSULTANT enters into any unbudgeted purchase order, or subcontract exceeding five thousand dollars ($5,000) for supplies, equipment, or CONSULTANT services. CONSULTANT shall provide an evaluation of the necessity or desirability of incurring such costs.

B. For purchase of any item, service, or consulting work not covered in CONSULTANT’s approved Cost Proposal and exceeding five thousand dollars ($5,000), with prior authorization by LOCAL AGENCY’s Contract Administrator, three competitive quotations must be submitted with the request, or the absence of proposal must be adequately justified.

C. Any equipment purchased with funds provided under the terms of this AGREEMENT is subject to the following:

1. CONSULTANT shall maintain an inventory of all nonexpendable property. Nonexpendable property is defined as having a useful life of at least two years and an acquisition cost of five thousand dollars ($5,000) or more. If the purchased equipment needs replacement and is sold or traded in, LOCAL AGENCY shall receive a proper refund or credit at the conclusion of the AGREEMENT, or if the AGREEMENT is terminated, CONSULTANT may either keep the equipment and credit LOCAL AGENCY in an amount equal to its fair market value, or sell such equipment at the best price obtainable at a public or private sale, in accordance with established LOCAL AGENCY procedures; and credit LOCAL AGENCY in an amount equal to the sales price. If CONSULTANT elects to keep the equipment, fair market value shall be determined at CONSULTANT’s expense, on the basis of a competent independent appraisal of such equipment. Appraisals shall be obtained from an appraiser mutually agreeable to by LOCAL AGENCY and CONSULTANT, if it is determined to sell the equipment, the terms and conditions of such sale must be approved in advance by LOCAL AGENCY.

2. Regulation 2 CFR 200 requires a credit to Federal funds when participating equipment with a fair market value greater than five thousand dollars ($5,000) is credited to the project DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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ARTICLE XII STATE PREVAILING WAGE RATES
A. No CONSULTANT or subconsultant may be awarded an AGREEMENT containing public work elements unless registered with the Department of Industrial Relations (DIR) pursuant to Labor Code §1725.5. Registration with DIR must be maintained throughout the entire term of this AGREEMENT, including any subsequent amendments.

B. The CONSULTANT shall comply with all of the applicable provisions of the California Labor Code requiring the payment of prevailing wages. The General Prevailing Wage Rate Determinations applicable to work under this AGREEMENT are available and on file with the Department of Transportation's Regional/District Labor Compliance Officer (https://dot.ca.gov/programs/construction/labor-compliance). These wage rates are made a specific part of this AGREEMENT by reference pursuant to Labor Code §1773.2 and will be applicable to work performed at a construction project site. Prevailing wages will be applicable to all inspection work performed at LOCAL AGENCY construction sites, at LOCAL AGENCY facilities and at off-site locations that are set up by the construction Contractor or one of its subcontractors solely and specifically to serve LOCAL AGENCY projects. Prevailing wage requirements do not apply to inspection work performed at the facilities of vendors and commercial materials suppliers that provide goods and services to the general public C. General Prevailing Wage Rate Determinations applicable to this project may also be obtained from the Department of Industrial Relations website at http://www.dir.ca.gov D. Payroll Records

1. Each CONSULTANT and subconsultant shall keep accurate certified payroll records and supporting documents as mandated by Labor Code §1776 and as defined in 8 CCR §16000 showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the CONSULTANT or subconsultant in connection with the public work. Each payroll record shall contain or be verified by a written declaration that it is made under penalty of perjury, stating both of the following:
a. The information contained in the payroll record is true and correct. b. The employer has complied with the requirements of Labor Code §1771, §1811, and §1815 for any work performed by his or her employees on the public works project.

2. The payroll records enumerated under paragraph (1) above shall be certified as correct by the CONSULTANT under penalty of perjury. The payroll records and all supporting documents shall be made available for inspection and copying by LOCAL AGENCY representatives at all reasonable hours at the principal office of the CONSULTANT. The CONSULTANT shall provide copies of certified payrolls or permit inspection of its records as follows:
a.A certified copy of an employee's payroll record shall be made available for inspection or furnished to the employee or the employee's authorized representative on request.
b.A certified copy of all payroll records enumerated in paragraph (1) above, shall be made available for inspection or furnished upon request to a representative of LOCAL AGENCY, the Division of Labor Standards Enforcement and the Division of Apprenticeship Standards of the Department of Industrial Relations. Certified payrolls submitted to LOCAL AGENCY, the Division of Labor Standards Enforcement and the Division of Apprenticeship Standards shall not be altered or obliterated by the CONSULTANT.
c.The public shall not be given access to certified payroll records by the CONSULTANT. The CONSULTANT is required to forward any requests for certified payrolls to the LOCAL AGENCY Contract Administrator by both email and regular mail on the business day following receipt of the request.

3. Each CONSULTANT shall submit a certified copy of the records enumerated in paragraph (1) above, to the entity that requested the records within ten (10) calendar days after receipt of a written request.

DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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4. Any copy of records made available for inspection as copies and furnished upon request to the public or any public agency by LOCAL AGENCY shall be marked or obliterated in such a manner as to prevent disclosure of each individual's name, address, and social security number. The name and address of the CONSULTANT or subconsultant performing the work shall not be marked or obliterated.

5. The CONSULTANT shall inform LOCAL AGENCY of the location of the records enumerated under paragraph (1) above, including the street address, city and county, and shall, within five (5) working days, provide a notice of a change of location and address.

6. The CONSULTANT or subconsultant shall have ten (10) calendar days in which to comply subsequent to receipt of written notice requesting the records enumerated in paragraph (1) above. In the event the CONSULTANT or subconsultant fails to comply within the ten (10) day period, he or she shall, as a penalty to LOCAL AGENCY, forfeit one hundred dollars ($100) for each calendar day, or portion thereof, for each worker, until strict compliance is effectuated. Such penalties shall be withheld by LOCAL AGENCY from payments then due.

CONSULTANT is not subject to a penalty assessment pursuant to this section due to the failure of a subconsultant to comply with this section.

E. When prevailing wage rates apply, the CONSULTANT is responsible for verifying compliance with certified payroll requirements. Invoice payment will not be made until the invoice is approved by the LOCAL AGENCY Contract Administrator
F. Penalty

1. The CONSULTANT and any of its subconsultants shall comply with Labor Code §1774 and §1775. Pursuant to Labor Code §1775, the CONSULTANT and any subconsultant shall forfeit to the LOCAL AGENCY a penalty of not more than two hundred dollars ($200) for each calendar day, or portion thereof, for each worker paid less than the prevailing rates as determined by the Director of DIR for the work or craft in which the worker is employed for any public work done under the AGREEMENT by the CONSULTANT or by its subconsultant in violation of the requirements of the Labor Code and in particular, Labor Code §§1770 to 1780, inclusive.

2. The amount of this forfeiture shall be determined by the Labor Commissioner and shall be based on consideration of mistake, inadvertence, or neglect of the CONSULTANT or subconsultant in failing to pay the correct rate of prevailing wages, or the previous record of the CONSULTANT or subconsultant in meeting their respective prevailing wage obligations, or the willful failure by the CONSULTANT or subconsultant to pay the correct rates of prevailing wages. A mistake, inadvertence, or neglect in failing to pay the correct rates of prevailing wages is not excusable if the CONSULTANT or subconsultant had knowledge of the obligations under the Labor Code. The CONSULTANT is responsible for paying the appropriate rate, including any escalations that take place during the term of the AGREEMENT.

3. In addition to the penalty and pursuant to Labor Code §1775, the difference between the prevailing wage rates and the amount paid to each worker for each calendar day or portion thereof for which each worker was paid less than the prevailing wage rate shall be paid to each worker by the CONSULTANT or subconsultant.

4. If a worker employed by a subconsultant on a public works project is not paid the general prevailing per diem wages by the subconsultant, the prime CONSULTANT of the project is not liable for the penalties described above unless the prime CONSULTANT had knowledge of that failure of the subconsultant to pay the specified prevailing rate of wages to those workers or unless the prime CONSULTANT fails to comply with all of the following requirements:
a.The AGREEMENT executed between the CONSULTANT and the subconsultant for the performance of work on public works projects shall include a copy of the requirements in Labor Code §§ 1771, 1775, 1776, 1777.5, 1813, and 1815. b.The CONSULTANT shall monitor the payment of the specified general prevailing rate of per diem wages by the subconsultant to the employees by periodic review of the DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458

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certified payroll records of the subconsultant.
c.Upon becoming aware of the subconsultant’s failure to pay the specified prevailing rate of wages to the’s workers, the CONSULTANT shall diligently take corrective action to halt or rectify the failure, including but not limited to, retaining sufficient funds due the subconsultant for work performed on the public works project d.Prior to making final payment to the subconsultant for work performed on the public works project, the CONSULTANT shall obtain an affidavit signed under penalty of perjury from the subconsultant that the subconsultant had paid the specified general prevailing rate of per diem wages to the subconsultant’s employees on the public works project and any amounts due pursuant to Labor Code §1813.

5. Pursuant to Labor Code §1775, LOCAL AGENCY shall notify the CONSULTANT on a public works project within fifteen (15) calendar days of receipt of a complaint that a subconsultant has failed to pay workers the general prevailing rate of per diem wages.

6. If LOCAL AGENCY determines that employees of a subconsultant were not paid the general prevailing rate of per diem wages and if LOCAL AGENCY did not retain sufficient money under the AGREEMENT to pay those employees the balance of wages owed under the general prevailing rate of per diem wages, the CONSULTANT shall withhold an amount of moneys due the subconsultant sufficient to pay those employees the general prevailing rate of per diem wages if requested by LOCAL AGENCY
G. Hours of Labor: Eight (8) hours labor constitutes a legal day's work. The CONSULTANT shall forfeit, as a penalty to the LOCAL AGENCY, twenty-five dollars ($25) for each worker employed in the execution of the AGREEMENT by the CONSULTANT or any of its subconsultants for each calendar day during which such worker is required or permitted to work more than eight (8) hours in any one calendar day and forty (40) hours in any one calendar week in violation of the provisions of the Labor Code, and in particular §§1810 to 1815 thereof, inclusive, except that work performed by employees in excess of eight (8) hours per day, and forty (40) hours during any one week, shall be permitted upon compensation for all hours worked in excess of eight (8) hours per day and forty (40) hours in any week, at not less than one and one-half (1.5) times the basic rate of pay, as provided in §1815.

H. Employment of Apprentices

1. Where either the prime AGREEMENT or the subagreement exceeds thirty thousand dollars ($30,000), the CONSULTANT and any subconsultants under him or her shall comply with all applicable requirements of Labor Code §§ 1777.5, 1777.6 and 1777.7 in the employment of apprentices.

2. CONSULTANTs and subconsultants are required to comply with all Labor Code requirements regarding the employment of apprentices, including mandatory ratios of journey level to apprentice workers. Prior to commencement of work, CONSULTANT and subconsultants are advised to contact the DIR Division of Apprenticeship Standards website at https://www.dir.ca.gov/das/, for additional information regarding the employment of apprentices and for the specific journey-to-apprentice ratios for the AGREEMENT work. The CONSULTANT is responsible for all subconsultants’ compliance with these requirements.

Penalties are specified in Labor Code §1777.7

ARTICLE XIII CONFLICT OF INTEREST
A. During the term of this AGREEMENT, the CONSULTANT shall disclose any financial, business, or other relationship with LOCAL AGENCY that may have an impact upon the outcome of this AGREEMENT or any ensuing LOCAL AGENCY construction project. The CONSULTANT shall also list current clients who may have a financial interest in the outcome of this AGREEMENT or any ensuing LOCAL AGENCY construction project which will follow.

B. CONSULTANT certifies that it has disclosed to LOCAL AGENCY any actual, apparent, or potential conflicts of interest that may exist relative to the services to be provided pursuant to this AGREEMENT.

CONSULTANT agrees to advise LOCAL AGENCY of any actual, apparent or potential conflicts of interest DocuSign Envelope ID: F2C6D6F1-1C15-4021-9C55-DD59BCAE728E Docusign Envelope ID: 23669FB5-9646-416D-9149-AAC7DDE90458