Agenda packet — Los Gatos City Council, April 7, 2026 (part 6 of 8)

ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C zero. As the sensitivity analysis will demonstrate, reasonable fluctuations in the operating costs impact and revenue impact can generate a negative fiscal impact.

Figure 1: Fiscal Impact of New Growth, 2020- 2040
Fiscal Impact= $ 776, 000
60%
50%
40%
30% 3, 278, 000
20%
10%
0%
10%
20% 2, 502, 000)
30%
40%
50%
Revenue Operating Costs
Source: BAE, 2020
This relatively marginal impact is owed to the largely residential development program assumed in the comprehensive plan. Job growth over the over the next 20 years is projected to be 82 in total, which is a small overall percentage of the increase in the service population, meaning that growth in residents is driving demand for services. Not only this, but also despite the relatively small increase in nonresidential development projected, this development accounts for 16 percent of the increase in property tax revenues. Therefore, residential development is about fiscally neutral, or potentially an overall cost to the City by 2040 based on the level of service provided in 2020, and new nonresidential development is critical to ensuring fiscal sustainability.

Given this finding about the importance of nonresidential development, it would be wise for the city to consider flexibility in zoning as well as assessing the fiscal impact of growth of significant new developments.

Sensitivity Analysis of Fiscal Impacts
The analysis in this report suggests that Annapolis can expect to generate a fiscal impact of 776, 000 over the next 20 years. Given the assumptions in the methodology, there is some error inherent it. However, we can test realistic limits for vulnerable assumptions to evaluate a range of potential fiscal impacts. As public safety costs may be underestimated, a range of growth rates is applied to operating costs held variable for Police and Fire to assess the impact on growth- related operating costs by 2040. Furthermore, given the recent COVID- 19 outbreak 20

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C and its potential effects on the economy, various property tax revenue scenarios are tested for impact on the overall growth- related revenue estimate.

Public safety costs are unlikely to grow in relation to the growth in the service population and is more likely to be related to development. However, some of the population growth in Annapolis will come from existing development, so projecting public safety costs by household growth alone may be an underestimate if the public safety departments continues to provide the level of service assumed in this analysis. Thus, the current estimate of the percentage increase to Public Safety costs, which at 2. 65 percent is lower than household growth rate, is almost certainly an underestimate. As a result, the sensitivity analysis shows the impact by scaling public safety costs from the current estimated increase of 2. 65 percent to an increase of 10. 8 percent, which is the population growth rate projected over the next 20 years.

Realistically, public safety costs should increase from somewhere between the household growth rate ( 3.43 percent) and the service population growth rate ( 7. 87 percent). If public safety costs increase by 4. 64 percent, the fiscal impact will be exactly $ 0. Table 11 shows the fiscal impact of new growth if the revenue estimate is fixed and costs are adjusted to account for variability in public safety costs.

Table 11: Fiscal Impact Analysis with Public Safety Costs Adjustments Current Estimate - 2. 65% Low Estimate- 3. 43% $ O Estimate- 4.64% High Estimate- 10. 8% Non- Public Safety Public Safety Costs Public Safety Costs Public Safety Costs Public Safety Costs Growth- related Projected byI-HGrowth Increase byHH Increase by4. 641 Increase by Pop.

Fiscal Impact Impact by 2040 with Fixed Costs Growth Rate 0 Fiscal Impact) Growth Rate Revenue 3, 278, 000 $ 3, 278, 000 $ 3, 278, 000 $ 3, 278, 000 $ 3, 278, 000 Operating Costs $ 1472, 000) $ 2, 502, 000) $ 2, 805, 543) $ ( 3, 278, 000) $ 5, 672, 666) Total Fiscal Impact $ 1, 806, 000 $ 776, 000 $ 472, 457 $ 2, 394, 666) Source: BAE, 2020.

Alternatively, the fiscal impacts assuming the operating costs estimate is fixed accounts for adjustments to revenue estimate Table 12. The current COVID- 19 public health emergency represents a significant threat to the economy. If the effects of COVI D- 19 on home values were to have the same effect that the 2008 recession had on home values and the operating costs estimate in this study is held fixed, the fiscal impact of new growth would range between 107, 000 and $ 266, 887. In Annapolis, based on data obtained from Zillow, the peak of home values was in June 2007, and reached its nadir in June 2012. During this period, home values fell by 25.4 percent. Between June 2007 and June 2009, home values fell by 19.4 percent in Annapolis before levelling off for a few months and declining again overall until June 2012. The revenue estimate in this fiscal impact analysis is adjusted by applying these 21

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C respective declines in home values to the real property tax revenue estimate of$ 2. 5 million by 2040.

Table 12: Fiscal Impact Analysis with Revenue Adjustments Total Projected Scenario: Market Scenario: Market
Growth- related Value of New Growth Value of New Growth Fiscal Im pact Im pact by 2040 Declines by 25.4%( a) Declines by 19.4%( b) Revenue 3, 278, 000 $ 2, 609, 353 $ 2, 768, 887
Operating Costs 2, 502, 000) $ 2, 502, 000) $ 2, 502, 000) Total Fiscal Im pact 776, 000 $ 107, 353 $ 266, 887
Increase over FY20 Adopted Budget82, 590, 000 0. 9% 0. 1% 0. 3% Notes:
a) In this scenario, the market value of new growth is adjusted by the decline in market value in Annapolis from the peak sale price in June 2007 to the lowest sale price in June 2012(- 25. 43%). This reflects the decline in residential sale prices only, but will be applied to the overall market value of new development that includes new retail and office development. b) In this scenario, the market value of new growth is adjusted by the decline in market value in Annapolis from the peak sale price in June 2007 to the sale prince in June 2009, when prices stabilized briefly before falling again. This decline was- 19. 37%.

This reflects the decline in residential sale prices only but will be applied to the overall market value of new development that includes new retail and office development.

Source: Zillow; BAE, 2020.

In Figure 2, the sensitivity analysis of operating costs and revenues are combined to show the range of potential impacts. By showing the change in operating costs resulting from increasing growth- related public safety costs from the household growth as well as the three revenue estimates, the ranges of error that generate a fiscally neutral or fiscally positive impact are revealed. The lowest estimate ( 2. 65 percent) of the increase in public safety costs and the low estimate of revenues that assumes peak recession declines in home values would generate essentially a fiscally neutral result. If new growth generates the revenues estimated in this analysis with no recession- related impacts, public safety costs can increase by up to

4.64 percent in order to generate a fiscally neutral result, which would be higher than the 22

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1 D6- 2ABE915A0C1C growth in public safety costs currently assumed, but still below the rate of growth in both the service ( 7. 9 percent) and residential population ( 10.8 percent).

Figure 2: Sensitivity Analysis
7, 000, 000
6, 000, 000
1o. aow°
5, 000, 000

7. 87%
CD112
t $4, 000, 000
yO

4. 64% 3, 278, 000
w• $ 3, 000, 000 2. 65% 3. 43% 2. 768. 887
O 2, 609, 353
2, 000, 000
1, 000, 000

2. 0% 2. 6% 3. 0% 3. 4% 4. 0% 4. 6% 5. 0% 6. 0% 7. 0% 7. 9% 8. 0% 9. 0% 10. 0% 10. 8% 11. 0% 12. 0% Increase in Variable Public Safety Costs by 2040
Operating Impact — Prop Tax. Minus 25. 4% Prop. Tax Minus 19. 4% — Current Revenue Estimate Source: BAE, 2020
Therefore, it is reasonable to expect that public safety could increase by enough to generate fiscally neutral, or potentially negative results as public safety costs are likely to be increase somewhere between the rates of growth in households and the residential population, and any increase in public safety costs over 4.64 percent would generate negative fiscal result.

Indeed, if COVID- 19 negatively affects property values, the margin by which public safety costs can increase relative to the household growth rates becomes slimmer. Based on the analysis of the effect the Great Recession had on Annapolis property values, public safety costs increasing at a rate greater than 3.4 percent would yield a negative fiscal result. Notably, the margins of fiscally negative results are still relatively small, and they do not vastly exceed to the magnitude of the marginally positive results that seem likely. 23

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ITEM NO. 11.

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OTHER COST CONSIDERATIONS
While excluded from the fiscal impact analysis, it was determined that identifying an order of magnitude for growth- related capital costs would be a useful metric for the city to consider, based on discussion with staff. There is no capital outlay in the General Fund, and growth is not expected to generate a need for new major capital infrastructure, such as new water and sewer systems of roads classified as arterial or above. Additionally, while public schools are provided by Anne Arundel County, a high- level cost estimate of students from new growth in Annapolis is provided.

Capital Costs Impact
In a fiscal impact analysis of a comprehensive plan, capital costs considered are limited to major infrastructure. This includes new, additional roads classified as arterials or higher, as well as new water and sewer lines, pump stations, schools, and vehicles. The reason arterials are the smallest road- type to be considered is that these are the roads for which regular maintenance occurs and can trigger the need for additional staff. Smaller roads and road connections as required by any given development project may or may not accrue as one-time construction costs to the city, and these can be evaluated in more detail with specific assumptions about proposed development projects and their location within the city.

Furthermore, the additional inventory of these kinds of transportation improvements do not trigger the need for new staff on their own. That is, projecting staffing costs based on the number of staff employed today is enough to keep up with additional maintenance costs generated by roads smaller than arterials.

In addition, based on discussion with the Department of Public Works, it was determined that the water and sewer systems have adequate capacity to manage the growth projected in this analysis. While new development requires connection to the system, the utilities charge connections fees and ultimately operate as enterprise funds that generated a net profit in FY20. Vehicles are managed through an internal revenue fund and thus growth- related vehicle needs are captured in the analysis of operating costs. As discussed in the next subsection, school- related capital costs are borne by Anne Arundel County Public Schools.

Nonetheless, there may be growth- related capital costs generated by the additional demand for existing infrastructure. Indeed, roads smaller than arterials can require some capital costs based on wear and tear, even if not as regularly as arterials. The FY20 Five-Year Capital Improvement Plan ( CIP) provides a useful estimate of the capital costs associated with the existing service population. As shown in Table 13, the average size of the CIP between FY20 and FY25 is $ 6. 3 million. The average size of the service population served between 2020 and 2025 is 56,020. Dividing the average annual CIP by the average size of the population of the 5-year CIP yields an average capital cost per service population of$ 113, which multiplied by the projected growth in the service population between 2020 and 2040 equals a growth24

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C related increase to the CIP of$ 553,600. This is notably less than the net revenues estimated in this fiscal impact analysis ($ 776, 000), which implies that if the cost and revenue estimates in this analysis are considered accurate, including this estimate of capital costs would still yield a marginal, fiscally positive result.

Table 13: Estimate of Growth- Related Capital Costs
Five- Year Capital Improvement Program
FY20 FY21 FY22 FY23 FY24 FY25
4, 856, 220 $ 5, 675, 700 $ 7, 397, 500 $ 11, 993, 800 $ 4, 050, 000 $ 4, 050, 000 Average CIP, Average Service Population,
FY20- FY25 FY20- FY40
6, 337, 200 56, 020
CIP Spending Growth in Service Pop.,
per Service Pop. 2020- 2040
113 4, 894
Growth- related
Increase to CIP
553, 600
School Costs Impact
Anne Arundel County Public Schools ( AACPS), which serves Annapolis residents, determines a yield rate for elementary, middle, and high school students based on development type. On average, for the Annapolis High School feeder system, each new household is assumed to generate 0. 142 elementary school students, 0.054 middle school students and 0.063 high school students. Applying these rates to the projected 582 new households yields 151 new students. The AACPS budget is based on developing a cost- per-pupil and in FY20, the costper-pupil was $ 14,473, based on guidelines recommended by the Maryland State Department of Education. The number in new students in Annapolis over the next 20 years will not generate the need for an additional school at any level, so there are no capital costs associated with new growth- related students in Annapolis, although the system overall may 25

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C add more schools. As shown in Table 14, multiplying the cost per pupil by the estimated yield from new growth generates an estimated cost of$ 2. 2 million.

Table 14: Growth- Related Public School Costs
New Households, by 2040 582
ES Student Yield( a) 83
MS Student Yield( b) 31
HS Student Yield( c) 37
Total 151
Cost per Pupil( d) 14, 473
Growth- Related Cost, by 2040 $ 2, 181, 390
Notes:
a) Average Elementary School Student Yield Rate for the Annapolis HS Feeder System: 0. 142 b) Average Middle School Student Yield Rate for the Annapolis HS Feeder System: 0. 054 c) Average High School Student Yield Rate for the Annapolis HS Feeder System: 0. 063 d) The cost per pupil is obtained from the FY20 Anne Arundel Public Schools Operating& Capital Budgets. It is calculated following the guidelines recommended by the Maryland State Department of Education Source: Student Yield Study for Anne Arundel County Public Schools, November 2019; FY2020 Anne Arundel County Public Schools Approved Operating& Capital Budgets; BAE, 2020 26

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ITEM NO. 11.

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CONCLUSION
Based on the methodology and assumptions in this fiscal impact analysis, Annapolis is projected to generate a marginally net positive fiscal impact based on the taxes received by new development and the costs it incurs. While the real property tax is large enough to generate most of the revenues needed to accommodate new growth, new growth incurs enough costs that the City will be unable to increase the level of service it provides. However, if there is more nonresidential development than currently projected, even more revenue will be generated without the incurring the same level of costs, as nonresidential development demands fewer services from the City. Therefore, the City may be more fiscally resilient if it increases the amount of nonresidential development projected over the next 20 years, although the current residential program yields more or less fiscally neutral results. Critically, over 80.2 percent of the revenues estimated in the fiscal impact come from property taxes paid by new development, even though most of the growth in Annapolis over the next 20 years is explained by the increase to the size of the average Annapolis household.

Nonetheless, the overall marginal findings suggest that, as currently projected, new growth itself is neither a huge winner nor a huge loser for the City based on the current levels of service the City provides. With the skew towards residential development, development itself is not an opportunity for the City, although new growth will help to generate economic activity that will promote economic growth, which is ultimately unaccounted for in a fiscal analysis.

Fiscal impact analysis does not consider the impact of growth on income levels, the number of jobs and other measures that reflect the state of the private sector economy, which if positively impacted by growth, would in turn have some effect on the fiscal impact. This dynamic relationship is difficult to model and as a result, fiscal impacts and economic impacts are typically evaluated independently.
27

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1 D6- 2ABE915A0C1 C bae urban economics
DRAFT 2020 Comprehensive Plan Fiscal Impact Analysis
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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C Contents

EXECUTIVE SUMMARY I
Methodology Overview
Summary of Findings
INTRODUCTION 3
METHODOLOGY 5
PROJECTIONS 9
OPERATING COSTS IMPACT 9
REVENUE IMPACT 12
Property Tax Revenue Impact of New Growth, 2020- 2040 12 Income Tax Revenue Impact of New Growth, 2020- 2040 16
Overall Growth- related Impact to General Fund Revenues, 2020- 2040 18 FISCAL IMPACT ANALYSIS OF NEW GROWTH 19
Sensitivity Analysis of Fiscal Impacts 20
OTHER COST CONSIDERATIONS 24
Capital Costs Impact 24
CONCLUSION 27

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ITEM NO. 11.

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EXECUTIVE SUMMARY
As part of the Annapolis Comprehensive Plan update, BAE Urban Economics has prepared a fiscal impact analysis of new growth in Annapolis between 2020 and 2040. Among the key features of the Comprehensive Plan are the development and growth projections that serve as the basis for the policies and strategies set forth in it. A fiscal impact analysis is a powerful tool to assess whether the new growth assumed in the plan will strain government services or generate net revenues that allow the government to improve and expand services and invest in economic growth. By 2040, Annapolis is projected to grow by 583 new households and 4,347 new residents. The service population is projected to grow by 4, 388. Growth projections are based on population, jobs, and household projections from the Baltimore Metropolitan Council ( BMC), Round 9 projections, published in 2016.

Methodology Overview
This fiscal impact analysis evaluates operating costs and revenues in the General Fund. The analysis uses the Fiscal Year 2020 ( FY20) Adopted Budget as a baseline to estimate the current level of service provided by the city government in terms of operating costs. Operating cost projections are based on the growth in either the residential population demand base or the service population demand base, which is the residential population plus 50 percent of jobs. Revenues other than real property tax and income tax revenue were projected similarly, based on an average revenue per chosen demand base. Real property tax and income tax revenue were calculated based on the development assumptions in the Comprehensive Plan.

The Annapolis property tax rate is applied to the assumed assessed values of new development. Income tax revenue is based on the property values of new residential development and calculating a minimum income required to purchase or rent a given unit.

An estimate of capital costs is provided, but it is not incorporated into the fiscal impact analysis, as the assumptions behind the calculations are more tenuous and less reliable than the evaluation of operating costs and revenues. However, to the extent that growth will generate capital costs, these are expected to be minimal as Annapolis will not require new, additional major capital infrastructure.

Given the recent COVID- 19 outbreak and its potential effects on the economy, various property tax revenue scenarios are tested for impact on the overall growth- related revenue estimate.

Although the crisis may impact the fiscal resiliency of the City, it is important to note the fiscal impact is calculated for the next 20 years.

Summary of Findings
This analysis finds that the growth projected in the Comprehensive Plan update will have an estimated net fiscal impact totaling $ 776, 000 to the City of Annapolis General Fund by 2040, which is calculated by adding approximately$ 3. 3 million in new revenues and subtracting

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ITEM NO. 11.

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2. 5 million in new operating costs. Capital costs are estimated to be $ 553, 600. This is a marginally positive fiscal impact and a sensitivity analysis suggests the fiscal impact could reasonably turn out negative, although this would also be marginal relative to the size of the FY20 adopted budget. This result is explained by the heavily residential development program assumed in the model, which serves as the basis for the fiscal impact.

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ITEM NO. 11.

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INTRODUCTION
This report presents an analysis of the projected net fiscal impact that the population and employment growth envisioned in the City of Annapolis Comprehensive Plan update will have on the City of Annapolis General Fund between 2020 and 2040. Fiscal impact analysis is a powerful tool to assess the revenues and costs associated with new development within a jurisdiction. New homeowners and businesses generate revenues to local governments by paying taxes, fees, and fines. They also bring about new costs for a jurisdiction in the form of new or improved roads, more schools and parks, and increased investment in public safety.

These costs are comprised of both operating and capital components; growth can require both new infrastructure and an increase in operating capacity to maintain a given level of service.

Fiscal impact analysis allows a jurisdiction to compare the revenues and costs from new growth, which can inform decisions ranging from assessing the feasibility of a new development to updating tax rates and reevaluating existing services.

Fiscal impacts are calculated in terms of impact on the annual budget. In general, the formula for calculating the fiscal impact per land use ( i. e. low-density residential, mixed use, etc.) or development type ( single-family detached, multi-family, office, etc.) is:

Annual Fiscal
Impact Revenues - Operating Costs - Capital Costs
of new growth) of new growth) of new growth) of new growth) fiA fiscal impact analysis of a comprehensive plan allows jurisdictions to assess the feasibility of the new growth projected in the plan. In coordination with the city and the comprehensive planning team, BAE Urban Economics conducted a thorough fiscal impact analysis for the City of Annapolis to estimate the revenues and costs associated with new growth based on the FY20 adopted budget, the Capital Improvement Program ( CIP), and detailed discussions with city department heads and staff. Discussions with city staff focused on how department operations would change in response to new growth, as measured in the revenues and expenditures of each department. These discussions were the basis of deciding how to model revenues and costs with respect to the growth in the Comprehensive Plan.

Critically, a fiscal impact analysis does not account for the economic impacts of the Comprehensive Plan. Most components of the plan are intended to improve the Annapolis economy, whether directly or indirectly. Whether it is through improved environmental and social outcomes or directly through economic development policies, the Comprehensive Plan seeks to make Annapolis a desirably place to live. The economic impacts of the Comprehensive Plan will ultimately be based on more specific notions of, for example, the kinds of new jobs and incomes that come to Annapolis as a result of the plan, and the impact the plan has on resident' s incomes, property values and overall standing. The plan details 3

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C how the city plans to become more efficient and sustainable, which will also deliver economic benefits. Indeed, there are analyses that model these impacts and are useful to conduct as they would give an indication of future fiscal standing. However, a fiscal impact analysis specifically avoids considering the dynamic impact of the Plan on the economy. Instead, it seeks to determine whether the City is projected to accommodate t Ian' s assumed level of new growth at the level of service the government currently extends through its o erns, Atarapital infrastructure without raising taxes or other sources of revenue.

Therefore, the dollar value of the fiscal impact is less important than whether the impact is positive or negative, and what the magnitude of the impact is. The fiscal impact is not a prediction of the annual budget levels in FY2040 but rather, an indication of risks or opportunities presented by the deficit or surplus generated by new growth. 4

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ITEM NO. 11.

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METHODOLOGY
A variety of methodologies were used to project growth- related impacts to different sources of revenue and for the different departments within the City. In general, through meetings and consultations with city staff, components of the FY2O adopted budget were designated as / fixed' or `variable'; that is, determinations were made regarding which revenues and costs v
would be impacted by growth. Ultimately, only revenues and expenditures from the General Fund were analyzed as Enterprise Funds' are not impacted by growth, and Internal Service i'7
Funds2 are accounted for in the operating costs of departmental budgets in the General Fund.

Operating cost projections are based on the growth in either the residential population demand base or the service population demand base, which is the residential population plus 50 percent of jobs. Revenues other than real property tax and income tax revenue were projected similarly, based on an average revenue per chosen demand base. Real property tax and income tax revenue were calculated based on the development assumptions in the Comprehensive Plan. The Annapolis property tax rate is applied to the assumed assessed values of new development. Income tax revenue is based on the property values of new residential development and calculating a minimum income required to purchase or rent a given unit.

An estimate of growth- related capital costs and school costs is also provided, but these costs are not incorporated into the fiscal impact analysis itself. The city of Annapolis does not bear any schools costs, as schools are provided by Anne Arundel County. Moreover, as the city is built out, there will be limited new capital costs in terms of major infrastructure, which include roads classified as arterials or higher, and new sewer and water line ( not including connections). Sidewalks, road connections to entrances and other site related infrastructure I*114111" are not typically included in the fiscal impact analysis of a comprehensive plan, where the goal is to establish an order of magnitude for the fiscal impact, and the cost of smaller infrastructure can vary considerably.

The costs of smaller infrastructure, to the extent there are any, depend largely on assumptions about development types and potential sites, which is more information than established currently in the Comprehensive Planning process. It is certainly useful to conduct a fiscal impact analysis with more specific assumptions that are informed by proposed development The Enterprise Funds are used to account for those activities of the City that are financed and operated in a manner similar to private business enterprises where costs and expenses, including depreciation, are recovered principally through user charges. Individual operations that the City has designated as enterprise funds include Water, Sewer, Parking, Transportation, Watershed Restoration, and Refuse funds." 2 Internal Services Funds, including Health Insurance, Self-Insurance, Fleet Operations, and Fleet Replacement activities, provide service to the City government, and are paid for primarily through departmental budgets. As a result, increases in operating costs to departmental budgets will account for transfers from those departments to the Internal Service Funds.
5

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Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C types on a given site or in a given area, but it can only be done when there are proposed or finalized land use changes. In fact, fiscal impact analyses are often used to evaluate individual development projects. For the purposes of the current Comprehensive Plan, a fiscal analysis will be ultimately conducted for specific potential development sites to study the impact of potential zoning changes. Nonetheless, a rough estimate of capital costs is provided in this report based on the average spending in the Capital Improvement Plan for FY20 through FY25. As the estimate is less rigorously conceived than the estimates of revenues and operating costs, it is not included in the fiscal impact result.

As shown in the fiscal impact analysis presented in this report, 87.2 percent of the$ 80.8 million in City FY20 General Fund revenues are held variable, meaning that these revenues will generally increase in relation to the City' s population and employment growth through 2040.

Notably, projecting growth- related real property tax revenues accounts for over 64 percent of potential General Fund revenues based on FY20 levels.

Table 1: FY20 General Fund Revenues Held Variable
Source of FY20 Revenue FY20 Adopted
Revenue Held Variable Budget Variable
Taxes( a) 54,834,000 $ 54,983,800 99.7%
Licenses& Permits $ 3,256,300 $ 3,256,300 100. 0%
Fines& Forfeitures $ 435,000 $ 435,000 100.0%
Interest, Rent, Other $ 1, 549,000 0.0%
Intergovernmental( b) $ 6,343,000 $ 11, 565,000 54.8%
Charges for Service $ 5,626,500 $ 5,626,500 100. 0%
Other 3,423,500 0.0%
Total 70,494,800 $ 80,839, 100 87.2%
Notes:
a) Taxes include real and personal property taxes, and penalties and interest. b) Of intergovernmental sources of revenue, only the income tax is projected.

The fiscal impact analysis presented in this report estimates that 53. 4 percent of the approximately$ 83. 0 million in General Fund operating expenses in the FY20 adopted budget are variable, while the remaining expenditures were determined to be unaffected by new growth. Non-staff operating expenditures and staffing costs were analyzed separately.

Operating expenditure line items were held fixed or variable depending on if they were determined to be affected by growth.

Similarly, operating costs related to staff salaries, wages, and benefits were projected based on the need for new staff, which was based on the level of employed staff per department in FY20. Certain positions in each department, such as chiefs and directors, where held fixed 6

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C while lower level staff were held variable. The percentages of FY20 General Fund expenditures held variable are summarized in Table 2.

Table 2: FY20 General Fund Expenditures Held Variable
Variable Variable FY20 Adopted
Departm ent Expenditures Staff Costs Budget Variable
General Government( a) 1, 363, 650 $ 5, 359, 113 $ 30, 581, 430 22. 0% Police 2, 458, 830 $ 13, 336, 939 $ 19, 620, 830 80. 5% Fre 1, 380, 370 $ 11, 894, 367 $ 19, 286, 270 68. 8%
Emergency Management( b) $ 417, 520 0. 0%
FUblic Works 2, 386, 250 $ 3, 337,587 $ 7, 885, 250 72. 6% Parks 1, 597, 850 $ 1, 155, 655 $ 5, 176, 700 53. 2%
Total 9, 186, 950 $ 35, 083, 661 $ 82, 968, 000 53. 4%
Notes:
a) General government includes: City Council and the Office of the Mayor, Human Resources, Management Information Technology, Finance, Planning& Zoning, and the Office of Environmental Policy. b) Emergency management expenditures were determined to be fixed as they all growth- related needs over the next 20 years will come from non- local allocations.

Operating costs were projected linearly; for each variable line item and staffer within each department, projections of the increased costs generated by new growth were based on the rates of growth in either service population or residential population. The service population, which is defined as the residential population plus 50 percent of jobs, is projected to grow faster over the next 20 years than the growth in the residential population and is a useful proxy to measure the growth- related costs of services provided to residents and workers. For example, public works costs are likely to increase alongside the growth in the service population, as both workers and residents demand public works services. Parks costs, on the other hand, would not be impacted by an increase in workers, and are more appropriately projected by population growth.

A level of service was determined for the non-staff operating expenditures by dividing the amount budgeted for a given variable line item in FY20 by the size of the base year service or residential population. For example, based on the $320,050 appropriated for supplies3 in the Planning& Zoning Department, an average $ 3. 18 is spent per member of the service population ( 55,763 in 2020). The level of service is multiplied by the growth in the given demand base. Growth projections used in this fiscal impact analysis are discussed in the next section.

Similarly, a level of service for staffing is based on dividing the number of employed staff by the appropriate base year population. For example, based on the 14 ' Equipment Operator' positions in the Department of Public Works, there are 0.00025 of them per member of the service population in 2020. This is multiplied by the change in service population to 3 This budget refers to the line item for" Supplies and Other" within the Department budget for Planning& Zoning.

Expenditures within this line item include office supplies, training for staff and memberships. 7

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C determine how many new Equipment Operators are needed, which is then multiplied by the total salary and benefits received by each Equipment Operator to determine a cost. Based on an analysis of salaries, it was found that, on average, city staff across all departments receive benefits (i. e. health insurance) valued at 35 percent of their salary. This cost increase is incorporated into salary levels of staff when calculating the costs of growth- related staff needs.

Capital costs are also estimated, although not incorporated into the fiscal impact as the assumptions about growth- related capital needs are is less rigorously evaluated than the analysis of operating costs and revenues. While it is very unlikely that the city will require new, additional major capital infrastructure to service growth, there may be increased costs due to additional wear and tear on existing infrastructure. Using the average spending in the CIP between FY20 and FY25 per service population, we estimate how much additional spending in the CIP would be required by the growth in the service population by 2040. It is important to note that more detailed analysis of specific capital costs that are sensitive to development type and land use can be conducted once there are reliable assumptions that can be made.

There is no reason, however, to expect that more detailed fiscal impact analyses that are land use- and site-specific will lead to an increase in the estimate of capital costs provided in this report, as it is simply unknown what, if anything, the city would be responsible for in a given development project.

In terms of revenues, real property taxes are calculated directly based on the number of new residential units and nonresidential square footage contained within the comprehensive plan, and their respective market values, which are used as proxies for estimating assessed values.

Furthermore, income tax revenue is based on calculating the household incomes needed to purchase or rent the new residential units, and then applying Annapolis' share of Anne Arundel County' s income tax rate. All other costs and revenues, such fines and fees, are projected based on the existing average levels of revenues per service population today.

All calculations presented for costs, revenues and impacts are rounded to the nearest $ 1, 000. 8

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Docusign Envelope ID: 8463BA3F- D38D- 4CDC- AlD6- 2ABE915AOC1C

PROJECTION
Projections of the residential population, jobs, and households are based on growth rates developed by the Baltimore Metropolitan Council ( BMC). As shown in Table 3, the residential population of Annapolis is expected to grow by 4,347 between 2020 and 2040, while jobs are projected to grow by 82 in total. Therefore, the service population, which is defined as the residential population plus 50 percent of jobs, is anticipated to grow by 4,388. It is important to note that household growth is projected to increase at a lower rate than population growth, meaning that existing Annapolis households in 2020 will become larger. Using the average household sizes, new households can account for up to 1, 478 of the 4, 347 new residents, or only one- third of new growth. Therefore, the estimate of income tax revenues in this fiscal impact analysis is conservative as only the incomes of residents in new households are calculated. All projections used in this fiscal impact analysis are based directly on projections within the 2020 Comprehensive Plan.

Table 3: Summary of Demographic Projections
Base Overall Change % Change
Annapolis 2020 2025 2030 2035 2040 2020- 2040 2020- 2040 Population( a)( b) 40, 262 40, 765 40, 918 43, 852 44, 609 4,347 10. 8% Households( a)( c) 16, 426 16, 527 16, 868 16, 929 16, 989 563 3.4% Avg. Household Size 2. 45 2.47 2.43 2.59 2. 63 0. 17 7. 1% Jobs( d) 31, 001 31, 026 31, 041 31, 060 31, 083 82 0.3% Service Population( e) 55, 763 56, 278 56, 438 59, 382 60, 151 4,388 7.9% Notes:
a) Projections for population and households follow trends published in Round 9 of the BMC forecasts. b) Base year data reflects 2018 estimates from Esri, scaled by the BMC Round 9 annual growth rate from 2015- 2020( 0. 06%) c) Household projections account for 132 residential units currently in the construction pipeline as of April 1, 2020. Projections based on the BMC trend and Esri base year estimate include an additional 6. 65 units( 132/20) each year. d) Base year estimate and trends are based on BMC Round 9 estimates, with no adjustments. e) Service population is defined as the residential population plus 50% of jobs.

Source: Baltimore Metropolitan Council, Round 9; Department of Planning& Zoning; Esri; BAE, 2020.

OPERATING COSTS IMPACT
The impact of new growth on operating costs from 2020 to 2040 is based on expenditures in the General Fund. Expenditures were analyzed by department and summarized in categories including General Government, Police, Fire, Public Works, and Recreation and Parks.

Among General Government expenditures, budget items for Management Information Technology( MIT), Finance, and Planning and Zoning were held variable as the needs for these departments are likely to increase as the city grows, based on discussions with city staff.

Projected increases in expenditures in the General Government category were based on the projected growth in service population, as these departments are affected by both residential growth and the presence of jobs and businesses. Providing the same level of service over the 9

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C next 20 years to new growth, as represented by the variable non- staff operating expenditures in these departments, will generate approximately an additional $ 107, 000 in operating costs at plan buildout in 2040. Staffing is also only projected to increase in these departments.

Based on the growth in the service population, General Government will need to hire four or five new staffers to maintain the ratio of these staffers to the service population in 2020. The weighted average salary of these positions is $ 64,000, for a total cost of approximately 396,000, including accounting for an additional 35 percent in benefits.

Police operating expenditures are projected based on the growth in households, and no operating expenditures were held fixed. Household growth is chosen as the demand base because public safety costs can reasonably be expected to increase alongside development, as indicated by the Chief of Police. However, the growth- related impact on police costs realistically lies between the development growth and population growth. As a result, growthrelated impacts of public safety costs are adjusted in a sensitivity analysis of overall findings later in this report.

Staff needs were projected for all administrative positions, while only the Police Chief, Major, and Captain positions were held fixed in terms of uniformed officers. From 2020 to 2040, police operating expenditures will cost approximately $ 84,000. Administrative staff will need to increase by one staffer to maintain the existing level of service, while the number of uniformed officers will need to increase by four or five. In total, including 35 percent for benefits, staffing costs between 2020 and 2040 will be $ 457, 000.

Growth- related operating costs for the Fire Department by 2040 are slightly below the growthrelated operating costs for police. Based on the growth in the service population, Annapolis will need to spend $ 81,000 for operations and $ 408,000 in staff costs. This includes adding four or five firefighters below the rank of Fire Captain.

The FY20 Department of Public Works budget is subdivided into six categories including Administration, Engineering and Construction, Streets, Traffic Control and Maintenance, Snow, and Facilities. All operating expenditures were projected based on the increase in service population between 2020 and 2040 and maintaining the existing level of service. The projected cumulative operating expenditures over the next twenty years would cost approximately $ 188,000. Leadership and management positions within the various departments within Public Works were held fixed, while the rest were projected based on the growth in service population as well. Between 2020 and 2040, this analysis estimates that growth- related Public Works staff costs will be approximately$ 444,000, including benefits.

This represents hiring approximately five new staff.

Recreation and Parks costs round out the General Fund expenditures. Of the 11 subcategories within the Recreation and Parks budget, only costs for Arts in Public Places are held fixed. Recreation and Parks costs are projected based on the growth in the residential io

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C population as growth in nonresident workers will not generate an additional need. Operating expenditures between 2020 and 2040 are estimated to be $ 212, 000. Non- management level employees at the Pip Moyer Recreation Center are projected to increase, as well as custodial and administrative parks workers and harbormaster staff costs. In total, including 35 percent benefits, staff costs for Recreation and Parks will cost in total $ 125, 000 by 2040, representing one to two additional staff. Notably, there are several contractual workers identified in the Recreation and Parks budget, although these staff are accounted for in the projection of contractual services within the operating expenditures, not staff costs.

In total, the cumulative growth- related impact to the General Fund expenditures between 2020 and 2040 is approximately$ 2. 5 million, as shown in Table 4. This includes$ 672, 000 in new operating expenditures and $ 1. 8 million in staff costs. Total projected operating and staffing costs represent a 3. 0 percent increase over the FY20 adopted budget levels. The Police and Fire departments represent 59. 7 percent of the growth-related operating costs, followed by Public Works ( 16.5 percent), General Government ( 15 percent), and Recreation and Parks (8.8 percent).

Table 4: Growth-Related Operating Costs, 2020- 2040
2020 Adopted Operating Expenditure Staff Costs Total Impact, % Total Impact, % Increase Department Budget Impact, by 2040 Impact, by 2040 by 2040 by2040 since 2020 General Government( a) $ 30, 581, 000 $ 107, 000 $ 396, 000 $ 503, 000 20. 1% 1. 6% Police 19, 621, 000 $ 84, 000 $ 457, 000 $ 541, 000 21. 6% 2. 8% Fire 19, 286, 000 $ 81, 000 $ 408, 000 $ 489, 000 19. 5% 2. 5% Public Works 7, 885, 000 $ 188, 000 $ 444, 000 $ 632, 000 25. 3% 8. 0% Recreation and Parks $ 5, 217, 000 $ 212, 000 $ 125, 000 $ 337, 000 13. 5% 6. 5% Total 82, 590, 000 $ 672, 000 $ 1, 830, 000 $ 2, 502, 000 100. 0% 3. 0% Notes:
a) General Government includes: City Council and the Office of the Mayor, Human Resources, Management Information Technology, Finance, Planning& Zoning, and the Office of Environmental Policy.

Sources: City of Annapolis, FY 2020 Adopted Budget; BAE, 2020. 11

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1 D6- 2ABE915A0C1 C

REVENUE IMPACT
The impact of growth on Annapolis General Fund revenues will come primarily from real property taxes, which account for 64 percent of FY20 revenues. The other major source of revenue is intergovernmental transfers, which account for 14. 3 percent of FY20 revenues.

While some intergovernmental transfers, such as the utility tax or highway tax, are likely to increase over the next 20 years, these are State- based transfers for which analysis is beyond this report. However, income tax revenue is projected, which accounts for nearly 55 percent of intergovernmental transfers.

Real property tax revenue is calculated directly based on an assumption of the future development in Annapolis by 2040 and associated property values. Importantly, proposed land use changes and development types have not yet been finalized in the Comprehensive Plan at the time of the writing of this report, and the assumptions here are subject to change.

Iterations of the fiscal impact model can be performed as the planning process advances, of after it is complete.

Income tax is based on the incomes of the households that occupy the new projected development. As a result, income tax revenue projections in this fiscal impact analysis are potentially underestimated as new households do not account for all the population growth Annapolis is projected to experience between 2020 and 2040. The BMC Round 9 projections of population for Annapolis assume an increase in the household size of existing households, which will likely result in an increase in income tax revenue from additional residents in existing households. However, this analysis does not estimate this additional income tax revenue associated with additional residents in existing households due to a lack of information in the projections related to the age, employment, and income of these residents.

The income tax revenue calculations shown in this analysis therefore represent a somewhat conservative estimate of income tax revenues attributable to the projected growth. All other revenues to the General Fund are either held fixed or projected by either growth in the service population, residential population, or jobs.

Property Tax Revenue Impact of New Growth, 2020-2040
Property tax revenues are calculated directly based on a preliminary assumption of the development projections in the Annapolis Comprehensive Plan. The Annapolis property tax is applied to the estimated market value of the new development in 2040, which is calculated based on assumptions of rents, sale prices, and vacancy rates. The property tax revenue at buildout in 2040 is shown in order to compare the impact of growth- related operating costs.

However, the assessed property values assumed throughout the development period are the market values assumed, which are based on market conditions in FY19 and do not include 12

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C inflation. A sensitivity analysis accounting for potential recession- level effects of the Covid- 19 crisis on property values is also provided later in this report.

Assumptions for determining the market value of new residential development are shown in Table 5. There will be a total of 600 new homes built. The market value of the for- sale units is based on the market values for new construction from FY19, as reported in the market study for the Annapolis Comprehensive Plan. The market rate values for new construction are higher than the median sale price. The total market value of for-sale units, which is simply the number of units multiplied by the respective sale price by unit type, is $ 317. 6 million.

The market value of for-rent multifamily units is also based on the rents reported in the market study, and in addition, assumes a five percent vacancy rate and average annual expenses based on the National Apartment Association' s ' 2019 NM Survey of Operating Income & Expenses in Rental Apartment Communities.' Using a cap rate of 4. 75 percent, the estimated 13

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1 D6- 2ABE915A0C1 C market value of the for-rent multifamily properties is determined. The market value of the all for-rent units, including affordable units, is $ 22. 0 million.

Table 5: Assessed Value Assumption for New Residential Units, 2020- 2040 Total New Residential Units* 600
Market- Rate Residential
For Rent
Number of New Units 109
Average Monthly Rent( a) 1, 600
Vacancy Rate 5%
Average Annual Expense per Unit( b) 8,661
NOI( per unit) 9,579
For Sale
New Single Family Homes 69
Sale Rice( c) 700,000
New For-Sale Tow nhomes 322
Sale Rice 650, 000
New Condos 100
Sale Rice 600, 000
Summary
For- Rent Residential NOI 1, 044, 111
Residential Capitalization Rate 4. 75%
Estimated Market Value 21, 981, 000
For- Sale Total Value 317,599,000
Notes:
a) Based on the Q3 2019 Asking rents from the' Demographic and Economic Profile and Real Estate Market Analysis.' b) Based on the estimated operating costs for mid& hi- rise rental properties from the National Apartment Association' s' 2019 NAA Survey of Operating Income& Expenses in Rental Apartment Communities.' c) Based on new construction sale price from the' Demographic and Economic Profile and Real Estate Market Analysis.' Sources: City of Annapolis; National Apartment Association; BAE, 2020. 14

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C The estimated market value of new nonresidential development is based on assumptions of NNN rent ( per square foot) from the market study and a 5. 0 percent vacancy rate that are used to determine a net operating income ( N01) per square foot. A 6. 25 cap rate is applied to the NOI multiplied by the projected increase in nonresidential development. The only nonresidential development projected in the Comprehensive Plan is a net 20,000 square feet increase in the retail inventory and a net 20,000 square feet increase in the office inventory.

As shown in Table 6, the estimated market value of new retail development by 2040 is $ 8.5 million, and the estimated market value of new office development is $ 8. 2 million.

Table 6: Assessed Value Assumptions for New Nonresidential Units, 2020- 2040 Nonresidential
Retail
NNN Rent( per sq. ft. per year) 28. 00
Vacancy Rate 5%
NOI( per sq. ft.) 26. 60
Net New Retail( SF) 20,000
Office
NNN Rent( per sq. ft. per year) 27. 00
Vacancy Rate 5%
NOI( per sq. ft.) 25. 65
Net New Retail( SF) 20, 000
Summary
Retail NOI( a) 532, 000
Nonresidential Capitalization Rate 6. 25%
Estimated Market Value 8, 512,000
Office NOI( b) 513, 000
Nonresidential Capitalization Rate 6. 25%
Estimated Market Value 8, 208,000
In total, at plan buildout in 2040, the market value of new development, which represents the assessed value for real property tax revenue purposes, is approximately$ 356.3 million. 15

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C Applying the Annapolis real property tax rate of 0. 7380 per $ 100 of assessed value generates annual revenue at buildout of$ 2. 6 million. This is summarized in Table 7.

Table 7: Annual Real Property Tax Revenue at Plan Buildout, 2040 City of
Annapolis
Assessed Value of New Res. Development, 2020- 2040 339,580,000 Assessed Value of New Non- Res. Development, 2020-2040 $ 16,720,000 Assessed Value of Total New Development, 2020- 2040 $ 356,300,000 R-operty Tax( per$ 100 of assessed value) 0. 7380
Annual Property Tax Revenue at Plan Buildout 2,629,000
Income Tax Revenue Impact of New Growth, 2020-2040
This analysis uses the home sale price and rent assumptions shown in Table 5 above to estimate household incomes among new households in Annapolis and applies Annapolis' share of Anne Arundel County' s income tax rate, which is an effective tax rate of 0.7025 percent, to estimate income tax revenues from these households. Income assumptions for the new for-rent units are calculated by assuming a vacancy rate of 5.0 percent and a rent-toincome ratio of 25 percent, which would imply these renters are not cost- burdened. For the new for-sale units, the revenue calculations assume a 20 percent down payment on the median sale price, a fixed 30-year mortgage rate of 4. 50 percent, and a monthly mortgage payment to gross monthly income ratio of 28 percent. The effective Annapolis income rate is applied to the incomes calculated using this method and multiplied by the number of new units. Applying this method to new single- family units with an assumed sale price, for example, of$ 700, 000 would require a household income of$ 121, 604, which is above the 16

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C 2019 household median income in Annapolis ($ 80,010). Assumptions for growth- related income tax revenue are shown in Table 8.

Table 8: Growth- related Income Tax Revenue Calculation Assumptions Market- Rate Residential
For Rent
New For- Rent Wits 109
Average Monthly Rent( a) 1, 600
Vacancy Rate 5%
Annual Household Income( b) 76, 800
New Income Tax Revenue ( c) 38, 000
For Sale
New Single Family Homes 69
Sale Rice( d) 700, 000
Loan Amount( e) 560, 000
Mortgage Rate( f) 4. 50%
Loan Term( months) 360
Monthly Payment 2, 837
Annual Income( f) 121, 604
New Income Tax Revenue ( g) 40, 000
New Townhom es 322
Sale Rice( d) 650, 000
Loan Amount( e) 520, 000
Mortgage Rate( f) 4. 50%
Loan Term( months) 360
Monthly Payment 2, 635
Annual Income( f) 112, 918
New Income Tax Revenue 174, 000
New Condos 100
Sale Rice( d) 600, 000
Loan Amount( e) 480, 000
Mortgage Rate( f) 4. 50%
Loan Term( months) 360
Monthly Payment 2, 432
Annual Income( f) 104, 232
New Income Tax Revenue 50, 000
Notes:
a) Based on the Q3 2019 Asking rents from the' Demographic and Economic Profile and Real Estate Market Analysis.' b) Assumption of Rent- to-Income ratio: 25. 00%
c) The Anne Arundel County income tax rate in FY20: 2. 81% Annapolis' percentage of Anne Arundel County Income Tax: 17. 00% d) Based on median sale price from the' Demographic and Economic Profile and Real Estate Market Analysis.' e) Loan amount assumes 20% down payment.
f) Assumes Fixed- rate mortgage.
f) Assumption of monthly mortgage payment as percentage of gross monthly income: 28% gross monthly income multiplied by 12 for annual income) Source: BAE, 2020
17

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C As shown in Table 9, Combining the estimated new income tax revenue from new renteroccupied households ($ 38,000) and the new income tax revenue from new owner- occupied households ($ 264,000) generates a total new incomes tax revenue of$ 302, 000 between 2020 and 2040.

Table 9: Growth- related Income Tax Revenue, 2020- 2040 City of
Annapolis
Income Tax Revenue from For- Rent Wits $ 65, 000
Income Tax Revenue from For- Sale Wits $ 212, 000
New Income Tax Revenue 277, 000
Source: BAE, 2020
Overall Growth-related Impact to General Fund Revenues, 2020-2040 Other revenues in the General Fund were also accounted for in the fiscal impact analysis based on dividing FY20 revenues by a given population and multiplying by the growth in that population. Personal property tax revenue between 2020 and 2040 were projected in terms of jobs growth, as personal property is assessed on businesses. Licenses and Permits and Charges for Services revenue were projected by the growth in residential population, while fines and forfeiture revenues were projected by the growth in service population. All other revenues were held fixed. The impact of growth on other revenues between 2020 and 2040 is approximately $347,000.

Table 10 summarizes the growth- related impact to General Fund revenues. By 2040, new growth will generate an estimated $ 3.3 million in revenue. Real property tax revenue 18

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C generates 80. 2 percent of the total impact, which suggests that the fiscal impact relies heavily on the market value assumptions of new development.

Table 10: Growth- related Impact to General Fund Revenues, 2020- 2040 Source of 2020 Adopted Revenue Im pact, % Total Im pact, Revenue Budget( a) by 2040 by 2040
Real Property Tax( b) 51, 884,000 $ 2,629,000 80.2%
Personal Property Tax( c) $ 2,950,000 $ 8,000 0. 2%
Income Tax( d) 6,343,000 $ 302,000 9. 2%
License& Permits( e) 3,256,300 $ 112, 000 3. 4%
Fines& Forfeitures( f) 435,000 $ 34,000 1. 0%
Charges for Service( g) $ 5,626,500 $ 193, 000 5. 9%
Total 70,494,800 $ 3,278,000 100%
Notes:
a) Revenues shown are only for those revenue sources held variable, so total of FY20 adopted budget levels do not match FY20 General Fund revenues.
b) Property taxes are calculated based on the projections of new residential development for the Comprehensive Plan. The assumed projected' development program' in place currently is a placeholder. c) Projected based on base year personal property tax revenue per job. d) Revenue tax is based on the household revenues of new residential development. As a result, this is a low estimate as new residential development does not account for the entirety of the projected population growth by 2040. e) Projected based on base year licenses and permits revenue per resident. f) Projected based on base year fines and forfeitures revenue' service person.' g) Projected based on base year charges for service revenue per resident.

FISCAL IMPACT ANALYSIS OF NEW GROWTH
Combining the growth- related impacts to operating costs, capital costs, and revenues determines the overall fiscal impact by 2040. As shown in Figure 1, the fiscal impact of new growth will be $ 776,000 by 2040. If new growth generates this fiscal impact by 2040, the impact at plan buildout in 2040 would be a 0.94 percent increase to the FY20 adopted budget of$ 82. 6 million. While this represents a positive fiscal impact, the impact is marginally above 19

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C respective declines in home values to the real property tax revenue estimate of$ 2. 5 million by 2040.

This reflects the decline in residential sale prices only but will be applied to the overall market value of new development that includes new retail and office development.

Source: Zillow; BAE, 2020.

4.64 percent in order to generate a fiscally neutral result, which would be higher than the 22

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ITEM NO. 11.

Figure 2: Sensitivity Analysis
7, 000, 000
6, 000, 000
1o. aow°
5, 000, 000

7. 87%
CD112
t $4, 000, 000
yO

4. 64% 3, 278, 000
w• $ 3, 000, 000 2. 65% 3. 43% 2. 768. 887
O 2, 609, 353
2, 000, 000
1, 000, 000

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ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4 CDC- Al D6- 2ABE915A0C 1C S TOWN OF LOS GATOS MEETING DATE: 10/ 21/ 2025
Jpt.1t COUNCIL AGENDA REPORT ITEM NO: 7
DATE: October 16, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Authorize the Town Manager to Negotiate and Execute an Agreement with NHA Advisors, LLC( NHA) to deliver Fiscal Condition Analysis, Fiscal Impact Analysis, Asset Liability Management, and Wildfire Risk Mitigation Studies, including any optional services as directed by the Town Council, in the Amount Not to Exceed Amount of$ 250,500 and Authorize an Expenditure Budget Adjustment up to$250, 500 from the Available Unassigned fund Balance
RECOMMENDATION: Authorize the Town Manager to enter into an Agreement with NHA Advisors, LLC ( NHA) to deliver Fiscal Condition Analysis, Fiscal Impact Analysis, Asset Liability Management, and Wildfire Risk Mitigation Studies including any optional services as directed by the Town Council, in the not to exceed amount of$ 250,500; and authorize an Expenditure Budget Adjustment of$ 250, 500 from the available Unassigned fund Balance.

FISCAL IMPACT:

The requested budget adjustment in the amount of$ 250,500 will reduce the Town' s Unassigned Fund Balance. This amount reflects the full cost of all proposed services, including optional components. The final agreement amount may be lower, depending on the specific services selected by the Town Council.

STRATEGIC PRIORITY:

This initiative supports the Town' s strategic priority of ensuring prudent financial management to result in structurally balanced five-year forecasts and fully funded five-year Capital Improvement Plans, managing liabilities such as pension costs and leveraging the Town' s assets, efficiencies, partnerships, and revenue streams. The study is a material component in identifying the path to support this priority.

PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager and Town Attorney
110 E. Main Street Los Gatos, CA 95030• ( 408) 354- 6832 www. losgatosca. gov Page 696
ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C PAGE 2 OF 6
SUBJECT: Authorize the Town Manager to Negotiate and enter into Agreement with NHA DATE: October 14, 2025
This initiative supports the Town' s core goals of:

Fiscal Stability: Providing independent, data- driven forecasts and risk assessments to ensure sustainable financial planning.

Community Character: Evaluating fiscal impacts of growth to balance economic vitality with quality- of-life considerations.

Good Governance: Developing clear, auditable tools for decision- making and aligning long-term fiscal strategies with policy objectives.

BACKGROUND:

At its meeting on April 14, 2025, the Finance Commission discussed draft scopes of work for a Fiscal Impact Analysis and a Fiscal Condition Analysis with a Five- Year Projection. After reviewing the objectives and overlaps between the two scopes, the Commission recommended consolidating them into a single RFP process with three separate line items: ( 1) Fiscal Condition Analysis and Five- Year Forecast, ( 2) Long- Term Outlook to 2040 aligned with the General Plan and Housing Element, and ( 3) a standalone Asset Liability Management Study.

The Commission emphasized scenario planning, stakeholder engagement, transparency in methodology, and clear articulation of questions to be addressed regarding the Town' s shortand long- term fiscal condition and the fiscal impacts of projected development under the 2040 General Plan and Housing Element. Based on the Commission' s feedback, staff prepared a draft RFP ( Attachment 2), which was approved on August 11, 2025. The RFP was issued on August 20, 2025, and closed on September 22, 2025. Responses to questions were posted publicly Attachment 3).

DISCUSSION:

The Town received five proposals in response to the RFP. While the RFP did not require firms to address all three studies, it was encouraged where feasible. Of the five proposals submitted, two firms did not demonstrate experience in the State of California.

Three staff members independently reviewed and evaluated the proposals, ranking them based on quality. Upon comparison, the rankings were found to be consistent across all three reviewers. NHA ranked the highest with the reviewers. The highest- ranked firm submitted proposals for all three studies and also included an optional Fire Risk Assessment Study Attachment 1). If the Council wishes to include this additional study, staff will work with the firm to determine the most appropriate level of optional services for the Town.

NHA Advisors, LLC submitted a proposal to provide Study 1: Fiscal Condition Analysis and Study 2: Fiscal Impact Analysis for the Town of Los Gatos. Their proposal represents a collaborative effort among three experienced firms:

NHA Advisors, LLC— Lead advisor and project manager for Studies 1 and 2

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Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1 D6- 2ABE915A0C1 C PAGE 3 OF 6
SUBJECT: Authorize the Town Manager to Negotiate and enter into Agreement with NHA DATE: October 14, 2025
Raftelis Financial Consultants, Inc.— Subconsultant for Study 1 Willdan —Subconsultant for Study 2
NHA has previously worked with both Raftelis and Willdan on similar projects in California.

Their approach emphasizes collaboration, scenario- based modeling, and practical tools that Town staff can use independently.

NHA Advisors, LLC also submitted a separate proposal to provide Study 3: Asset Liability Management ( ALM) services as requested in the Town' s RFP. For this task, NHA is the sole service provider, independent of the team assembled for Studies 1 and 2. In addition, NHA included an unsolicited proposal for an optional Study 4, which would develop a long- term funding plan for wildfire risk mitigation in Los Gatos.

NHA brings extensive experience advising California public agencies on CaIPERS- related liabilities, debt management, and OPEB strategies. Their approach emphasizes integration with the fiscal condition model developed in Study 1, allowing for scenario planning that accounts for:

CaIPERS performance volatility
Infrastructure impacts from new development
Adequacy of cash reserves to withstand " Black Swan" events ( e. g., wildfires) The proposal highlights NHA' s ability to translate complex financial data into clear, actionable insights for decision- makers and the public.

NHA also reaffirmed acceptance of the Town' s Sample Consultant Services Agreement and designated Mark Northcross as the primary contact authorized to bind the firm.

Proposed Project Timeline by Month After Contract Execution:

Month Study 1: Fiscal Study 2: Fiscal Impact Study 3: Asset Liability Condition Analysis Analysis ( Willdan) Management ( NHA) Raftelis)
Month 1 Project Initiation Project Initiation Project Initiation Month 2 Data Collection and Inventory and Evaluate
Review Liabilities
Month 3 Assess Financial
Condition

Page 698 ends

ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1 D6- 2ABE915A0C1 C PAGE 4 OF 6
SUBJECT: Authorize the Town Manager to Negotiate and enter into Agreement with NHA DATE: October 14, 2025
Month Study 1: Fiscal Study 2: Fiscal Impact Study 3: Asset Liability Condition Analysis Analysis ( Willdan) Management ( NHA) Raftelis)
Month 4 Develop Forecasting Develop Fiscal Funding Needs and Risk Model Revenue and Cost Reduction Analysis
Inputs
Month 5 Complete 20- Year ALM Modeling
Fiscal Impact Analysis
Month 6 Final Reporting& Finalize Fiscal Impact Reserve Guidance Knowledge Transfer Model
Contract Cost Summary:

Raftelis proposes to conduct the Fiscal Condition Analysis ( Study 1) for a base cost of$ 105, 500, with optional services— such as gap closure strategies and Council decision support— bringing the total to $165, 000 if selected. Willdan submitted a fixed fee proposal of$ 18, 000 for the Fiscal Impact Analysis ( Study 2), which includes up to two meetings, with additional services billed hourly if needed. NHA Advisors proposes to lead the Asset Liability Management Study Study 3) on a time- and- materials basis, with a not- to- exceed budget of$ 50, 000, covering liability evaluation, risk analysis, modeling, and reserve guidance. NHA also offers an optional Wildfire Risk Mitigation Study (Study 4) for up to $45, 000, which includes GIS analysis and funding strategy development, with additional optional tasks potentially adding up to $25, 000.

In addition, NHA proposes to serve as Team Manager for Studies 1 and 2, coordinating across firms for a not-to-exceed amount of$ 17,500.

Study/ Task Firm Fee Type Estimated Notes
Cost
Study 1: Fiscal Raftelis Fixed Fee $ 105, 500 Includes forecasting Condition base) model, reporting, and
Analysis 165, 000 optional gap
with strategies & Council
options) support
Study 2: Fiscal Willdan Fixed Fee $ 18, 000 Includes 2 meetings; Impact Analysis additional services
billed hourly

Page 699 ends

ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1 D6- 2ABE915A0C1 C PAGE 5 OF 6
SUBJECT: Authorize the Town Manager to Negotiate and enter into Agreement with NHA DATE: October 14, 2025
Study/ Task Firm Fee Type Estimated Notes
Cost
Study 3: Asset NHA Time & 35, 055 — Includes modeling,
Liability Materials 49,875 reserve guidance, and
Management Blended Not- to- liability analysis
ALM) Rate: Exceed:
285/ hr) 50, 000
Optional Study NHA Time & Not- to- Includes GIS work;
4: Wildfire Risk Materials Exceed: optional tasks may
Mitigation 45, 000 add up to $ 25,000+
Team NHA Time & Not- to- Approx. 50 hours of
Management for Materials Exceed: coordination across
Studies 1 & 2 17, 500 firms
If all services— Studies 1, 2, and 3 with options, along with the optional wildfire risk mitigation study—are included, the total not-to- exceed amount for the agreement is $ 250, 500.

RECOMMENDATION:

Staff is requesting that the Town Council provide direction regarding which services to include in the agreement. If all services— Studies 1, 2, and 3, along with the optional wildfire risk mitigation study— are included, the total not-to- exceed amount would be $ 250, 500. If the Council chooses to include only selected services, the agreement will be tailored accordingly to reflect those areas.

Based on the Council' s direction regarding optional services, staff will prepare the draft agreement. To ensure timely initiation of work, staff recommends that the Town Council authorize the Town Manager to negotiate and execute an agreement with NHA Advisors for all three requested services, in an amount not to exceed $ 250, 500.

ALTERNATIVES
The Town Council may consider alternative approaches to the proposed scope of work, which would affect total cost and fiscal impact:

1. Proceed with All Studies ( Recommended Option) — Approve all studies including optional components for a not-to-exceed amount of$ 250,500. This option provides the most comprehensive fiscal analysis, aligning with long-term financial planning objectives.

Page 700 ends

ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1D6- 2ABE915A0C1C PAGE 6 OF 6
SUBJECT: Authorize the Town Manager to Negotiate and enter into Agreement with NHA DATE: October 14, 2025

2. Remove Optional Study Components — Excluding the optional elements (Wildfire Risk Mitigation Study and optional tasks within Study 1) would reduce total project costs to approximately$ 180,000 to $190,000, depending on final scope adjustments. This would lower the immediate budget impact by roughly$ 60,000 to $70,000 while maintaining delivery of the three core studies.

3. Select Individual Studies Only — The Council may choose to fund only one or two studies e. g., Fiscal Condition and Impact Analyses) at an estimated combined cost of$ 120, 000 to 130,000. This would provide partial insights but limit integration between financial forecasting and liability management.

Reducing the scope will proportionally reduce the Unassigned Fund Balance adjustment.

However, omitting optional studies may limit the Town' s ability to evaluate long- term wildfire risk and related fiscal exposures, which could affect future budget forecasting accuracy.

COORDINATION:

This item was developed with the coordination of the Town Manager' s Office, the Town Attorney' s Office, and the Community Development Department.

Attachments:

1. NHA Proposals

2. Request For Proposals: Fiscal Condition Analysis With Five- Year and Long- Term Forecast, Fiscal Impact Analysis, and Asset Liability Management Study

3. Date issued: questions and answers provided

Page 701 ends

ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4 CDC- Al D6- 2ABE915A0C 1C MEETING DATE: 10/ 21/ 2025

TOWN OF LOS GATOS
ITEM NO: 7

COUNCIL AGENDA REPORT

DESK ITEM
DATE: October 21, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Authorize the Town Manager to Negotiate and Execute an Agreement with NHA Advisors, LLC( NHA) to deliver Fiscal Condition Analysis, Fiscal Impact Analysis, Asset Liability Management, and Wildfire Risk Mitigation Studies, including any optional services as directed by the Town Council, in the Amount Not to Exceed Amount of$ 250,500 and Authorize an Expenditure Budget Adjustment up to$250, 500 from the Available Unassigned fund Balance
RECOMMENDATION: Authorize the Town Manager to enter into an Agreement with NHA Advisors, LLC ( NHA) to deliver Fiscal Condition Analysis, Fiscal Impact Analysis, Asset Liability Management, and Wildfire Risk Mitigation Studies including any optional services as directed by the Town Council, in the not to exceed amount of$ 250,500; and authorize an Expenditure Budget Adjustment of$ 250, 500 from the available Unassigned fund Balance.

REMARKS:

Staff clarifies that the contract cost summary of$ 250,500, as referenced in the staff report, does not include the optional Wildfire Risk Mitigation Study. This study was not part of the original Request for Proposal ( RFP) but was instead offered as an optional service by the prospective vendor.

The $250, 500 amount includes all optional services for Study 1, Study 2, and Study 3 as outlined in the proposal.

PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager and Town Attorney
110 E. Main Street Los Gatos, CA 95030• ( 408) 354- 6832 www. losgatosca. gov Page 702
ITEM NO. 11.

Docusign Envelope ID: 8463BA3F- D38D- 4CDC- A1 D6- 2ABE915A0C1 C PAGE 2 OF 2
SUBJECT: Authorize the Town Manager to Negotiate and enter into Agreement with NHA DATE: October 21, 2025
Study/ Task Firm Estimated Cost Notes
Study 1: Fiscal Condition 105, 500 ( base) Includes forecasting model, reporting, and Raftel is Analysis 165, 000 ( with options) optional gap strategies& Council support Includes 2 meetings; additional services
Study 2: Fiscal Impact Analysis Willdan $ 18, 000
billed hourly
Study 3: Asset Liability NHA $
35, 055—$ 49, 875 Includes modeling, reserve guidance, and Management( ALM) Not-to- Exceed:$ 50,000 liability analysis Optional Study 4: Wildfire Risk Includes GIS work; optional tasks may add NHA Not- to- Exceed:$ 45, 000
Mitigation up to$ 25, 000+
Team Management for Studies Approx. 50 hours of coordination across 1 & 2
NHA Not- to- Exceed:$ 17,500 firms
Total Estimated Cost: 250, 500
In addition, cognizant of the cost, the staff provides an alternative recommendation that includes only the base costs of Study 1, Study 2, along with Team Management for both studies, and Study 3, totaling not to exceed $ 191, 000.

Study/ Task Firm Estimated Cost Notes
Study 1: Fiscal Condition Analysis 105, 500 Includes forecasting model, and reporting Study - OPTIONAL A
Raftelis $
29, 750 Optional Gap Closure Strategies
Study- OPTIONAL B 29, 750 Decesion- Support for Town Council Includes 2 meetings; additional services
Study 2: Fiscal Impact Analysis 18,000
Willdan
billed hourly
Study 3: Asset Liability Management Includes modeling, reserve guidance, and ALM) 50,000 liability analysis, not to exceed amount
Optional Study 4: Wildfire Risk Includes GIS work; optional tasks may add Mitigation
NHA Not-to-Exceed:$ 45,000 up to$ 25,000+
Team Management for Studies 1& 2 NHA $ 17, 500 Approx 50 hours of coordination across firms, not to exceed amount
Total Estimated Cost: 191, 000
Additional services may be added during the course of the studies or after their completion, as needed.

Attachments previously distributed with the staff report:

1. NHA Proposals

2. Request For Proposals: Fiscal Condition Analysis With Five- Year and Long- Term Forecast, Fiscal Impact Analysis, and Asset Liability Management Study

3. Date issued: questions and answers provided

Page 703 ends

ITEM NO. 11.

AMENDMENT
This AMENDMENT TO AGREEMENT amends that certain agreement titled Fiscal Condition Analysis, Fiscal Impact Analysis, Asset Liability Management Studies dated 11/10/2025, made by and between the Town of Los Gatos, ("Town,") and NHA Advisors, LLC (“Contractor”), a Limited Liability Company and whose address is 4040 Civic Center Drive, Suite 200, San Rafael CA 94903.

A. Town and Contractor entered into an Agreement for Services on 11/10/2025 (“Agreement”).

AMENDMENT
A. Section 2.2 Term and Time of Performance: This contract will remain in effect until June 30, 2026.

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

ATTACHMENT 2

Page 704 ends

ITEM NO. 11.

Amendment to Agreement Page 2 of 2
NHA Advisors, LLC
TOWN OF LOS GATOS NHA Advisors LLC
**signature_90786**

SIGNATURE
Chris Constantin

FULL NAME
Town Manager
TITLE
**date_signed_90786**

DATE SIGNED
**signature_90787**

SIGNATURE
Mark Northcross

CONTRACTOR SIGNATORY'S FULL NAME
Principal

CONTRACTOR SIGNATORY'S TITLE
**date_signed_90787**

DATE SIGNED
Approved as to form:
**signature_90784**

SIGNATURE
Gabrielle Whelan

FULL NAME
Town Attorney
TITLE
**date_signed_90784**

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

Attachments:

A - NHA Executed Agreement

Page 705 ends

ITEM NO. 11.

PREPARED BY: Chris Constantin
Town Manager
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 04/07/2026
ITEM NO: 12
DATE: March 20, 2026
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Adopt Resolutions to Join the California Joint Powers Insurance Authority (CJPIA), Participate in Its Liability Protection Program, Delegate Claims Handling Authority, Authorize Administrative Implementation, and Appoint the Mayor as Voting Delegate and the Town Manager and Town Attorney as Alternates
RECOMMENDATION: Adopt the following actions to implement the Town’s transition from the Pooled Liability Assurance Network Joint Powers Authority to the California Joint Powers Insurance Authority (CJPIA), effective July 1, 2026:
a. Adopt a resolution approving execution of the Joint Powers Agreement creating the CJPIA.
b. Adopt a resolution authorizing and approving pooling of selfinsurance through the Liability Protection Program of the CJPIA effective, July 1, 2026.
c. Adopt a resolution delegating tort liability claims handling responsibilities to the California Joint Powers Insurance Authority pursuant to Government Code sections 910 et seq. d. Adopt a resolution authorizing the Town Manager, or the Town Manager’s designee, to execute and administer
activities and obligations related to the Town’s membership in and participation with the California Joint Powers
Insurance Authority.
e. Appoint the Mayor to serve as the Town’s Director to the CJPIA Board of Directors and appoint the Town Manager and Town Attorney as Alternate Directors.
f. Authorize completion and submission of the 2026 Annual Board of Directors Meeting Voting Delegate and Alternate Form and any related membership and program
participation documents.

Page 706 ends

ITEM NO. 12.

PAGE 2 OF 6
SUBJECT: California JPIA Membership and Liability Program Participation DATE: April 7, 2026
FISCAL IMPACT:

Approval of this item authorizes the transition of insurance coverage to CJPIA beginning in FY 2026-27, with an estimated cost of $1,416,500. By comparison, the FY 2025-26 adopted operating budget includes $1,675,965 for liability and property insurance under PlanJPA.

Transitioning to CJPIA will result in estimated savings of $259,465, primarily due to lower property insurance premiums and a reduction in self-insured retention.

Although future premiums may vary based on claims history and insurance authority negotiations, these changes are expected to result in ongoing annual savings of approximately $250,000, which will be incorporated into the development of the FY 2026-27 budget.

STRATEGIC PRIORITY:

This action supports prudent financial management because it implements a previously approved transition intended to improve coverage for key risk exposures, reduce volatility associated with retained liability risk, and reduce risk management costs. The December 2, 2025, report tied this evaluation to the Town’s strategic priority of prudent financial management.

BACKGROUND:

Since December 2017, the Town of Los Gatos has obtained key insurance and risk management services through the Pooled Liability Assurance Network Joint Powers Authority, also known as PLAN JPA. PLAN JPA is a public agency risk pool that provides member agencies with protection and services for major areas of municipal risk, including general liability, property, cyber, crime, and pollution coverage. In practical terms, PLAN JPA has helped the Town manage the financial risk of lawsuits, property losses, and other significant claims by pooling those risks with other public agencies and providing related claims administration and risk management support.

PLAN JPA was created when former Association of Bay Area Governments (ABAG) PLAN member agencies separated from ABAG and formed an independent joint powers authority to take over the prior program’s assets, liabilities, and obligations. Since that time, the Town has participated in PLAN JPA as part of its overall insurance and risk management program and has been pleased and satisfied with the service.

As part of its review of the Town’s insurance and risk management needs, staff conducted an internal evaluation of the Town’s existing PLAN JPA coverages, costs, and overall level of protection. That review included comparing the Town’s current program to alternatives available through two other agencies, including the California Joint Powers Insurance Authority (CJPIA). Based on that analysis, staff determined that CJPIA offered an opportunity for the Town

Page 707 ends

ITEM NO. 12.

PAGE 3 OF 6
SUBJECT: California JPIA Membership and Liability Program Participation DATE: April 7, 2026
to obtain stronger coverage protection in several key areas while also lowering overall costs, as shown in the table below.

Current Vendor- The PlanJPA CJPIA
Coverage FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 Estimate Liability Insurance $ 629,535 $ 727,963 $ 913,348 $ 1,103,502 $ 1,254,500 Property Insurance $ 145,790 $ 231,605 $ 242,373 $ 252,262 $ 100,000 Employment
Practices Liability
_ _ $ 103,581 $ 111,026 Included
Self-Insured
Retention Payments
$ 212,674 $ 124,525 $ (9,898) $ 200,000 $ 50,000
Cyber Coverage Included Included Included Included Included Pollution Coverage Included Included Included Included $7,500 Crime Coverage Included Included Included Included $ 4,500 Public Official Bond $ 9,111 $ 9,175 $ 9,175 $ 9,175 Included Total $ 997,110 $
1,093,268 $ 1,258,579 $ 1,675,965 $ 1,416,500
On December 2, 2025, the Town Council considered that analysis and found that moving from PLAN JPA to CJPIA was in the Town’s best interests. Council determined that the transition was expected to improve protection for important Town risk exposures and produce ongoing cost savings while maintaining prudent risk management safeguards. Council therefore authorized Town staff to terminate the Town’s membership in PLAN JPA and to move forward with joining CJPIA.

Following that direction, on December 5, 2025, the Town Attorney provided formal notice to PLAN JPA of the Town’s intent to terminate membership for general liability, property, cyber, crime, and pollution coverage. At the same time, the Town proceeded with the steps necessary to transition to CJPIA, based on the conclusion that CJPIA appeared to provide a more robust program and more competitive rates.

The December 2, 2025, Council action was the policy decision to make the change. The item before the Council tonight is the next implementation step. CJPIA requires several formal resolutions and related Council actions in order to finalize the Town’s membership, authorize participation in its liability protection program, delegate claims handling authority, authorize administrative actions for the risk management program, and establish the Town’s voting and governance representatives. If approved, these actions will be the official action joining and transferring to the CJPIA, the Town’s insurance and risk management coverages to CJPIA beginning July 1, 2026.

Page 708 ends

ITEM NO. 12.

PAGE 4 OF 6
SUBJECT: California JPIA Membership and Liability Program Participation DATE: April 7, 2026
DISCUSSION:

The Town’s current insurance and risk management program has been provided through PLAN JPA since 2017. As discussed in the Background section, staff recently reviewed the Town’s costs, coverages, and overall risk protection and compared those services to options available through the California Joint Powers Insurance Authority. That review found that CJPIA would provide stronger protection in several important areas, particularly liability coverage, while also reducing overall cost to the Town. Based on that analysis, the Town Council acted on December 2, 2025, to begin the transition from PLAN JPA to CJPIA.

The item before the Council now is the next step in that process. In order for the Town’s transition to take effect on July 1, 2026, CJPIA requires several formal actions by the Town Council. These actions are largely administrative and procedural, but they are necessary to complete the Town’s membership and authorize participation in CJPIA’s programs.

First, the Council is being asked to approve the Town’s membership in the CJPIA by adopting the resolution in Attachment 1. This action formally approves the Town’s participation in CJPIA and authorizes execution of the Joint Powers Agreement that governs the Authority and its member agencies (Attachment 6). Attachment 7 also provides CJPIA’s standards of governance, showing their compliance with best practices for pooled insurance providers.

Second, the Council is being asked to authorize the Town’s participation in CJPIA’s Liability Protection Program through the resolution in Attachment 2. This is one of the most important components of the transition because it places the Town into the liability program that will provide protection for claims and lawsuits beginning July 1, 2026. As described in the prior staff report (Attachment 9), this program is expected to provide higher liability protection while reducing the Town’s overall cost exposure.

Third, the Council is being asked to adopt the resolution in Attachment 3, delegating claims handling authority to CJPIA. This allows CJPIA to process tort claims on behalf of the Town under the Government Claims Act. In practical terms, this means the same entity providing the Town’s liability coverage will also handle the related claims administration, creating a more efficient and coordinated process.

Fourth, the Council is being asked to adopt the resolution in Attachment 4 authorizing the Town Manager, or designee, to take the administrative steps necessary to carry out the Town’s membership and participation in CJPIA and the Town’s risk management activities. This includes signing forms, notices, elections, certifications, and other related documents needed to implement and maintain the Town’s participation.

Finally, the Council is being asked to appoint the Town’s CJPIA voting delegate and alternates.

Because CJPIA is a joint powers authority governed by its member agencies, each member agency must designate representatives to act on its behalf in voting and governance matters.

This action ensures the Town is properly represented within the Authority once membership

Page 709 ends

ITEM NO. 12.

PAGE 5 OF 6
SUBJECT: California JPIA Membership and Liability Program Participation DATE: April 7, 2026
becomes effective. Commonly, participating members appoint the Mayor as the delegate and the Town Manager as an alternate. It is also recommended to add the Town Attorney as a second alternate.

Taken together, these actions will complete the formal steps necessary to move the Town’s insurance and risk management program from PLAN JPA to CJPIA. If approved, the transition will take effect on July 1, 2026, and the Town will begin receiving its liability coverage and related risk management services through CJPIA. While there is no resolution for other coverages, the Town will also be participating in similar other coverages it currently possesses, such as property, cyber, crime, and pollution coverage.

This transition is intended to provide the Town with stronger protection for significant risks, more stable long-term insurance arrangements, and lower overall cost, while preserving the public agency pooled risk model the Town has used for many years.

CONCLUSION:

The Town currently receives its insurance and risk management services through PLAN JPA.

After reviewing the Town’s costs, coverage levels, and overall risk protection, staff determined that moving to the CJPIA would provide stronger protection in key areas and lower overall cost.

In December 2025, the Town Council approved that transition and directed staff to take the steps needed to make the change.

The item before the Council tonight completes those steps. By adopting the attached resolutions and making the required appointments, the Council will finalize the Town’s membership in CJPIA and authorize the actions needed to begin the transition on July 1, 2026.

Approval of these actions will allow the Town to move its insurance and risk management program to CJPIA and continue those services through a public agency risk pool structure designed to provide coverage, claims administration, and related risk management support.

COORDINATION:

This item was coordinated with the Town Manager’s Office and the Town Attorney. Finance staff previously reviewed the financial information during the review of the December 2, 2025, Town Council agenda item.

ENVIRONMENTAL ASSESSMENT:

This action is exempt from the California Environmental Quality Act under CEQA Guidelines section 15061(b)(3), because it can be seen with certainty that approval of the resolutions and related administrative actions to implement the Town’s participation in CJPIA will not result in a direct or reasonably foreseeable indirect physical change in the environment. The December 2,

Page 710 ends

ITEM NO. 12.

PAGE 6 OF 6
SUBJECT: California JPIA Membership and Liability Program Participation DATE: April 7, 2026
2025, item addressed the same administrative transition in risk management and insurance arrangements.

Attachments:

1. Draft Resolution Approving Execution of the Joint Powers Agreement Creating the CJPIA

2. Draft Resolution Authorizing Pooling of Self Insurance Through the Liability Protection Program of the CJPIA

3. Draft Resolution Delegating Tort Liability Claims Handling Responsibilities to the CJPIA

4. Draft Resolution Authorizing the Town Manager, or Designee, to Execute and Administer Activities and Obligations Related to CJPIA Membership and Participation

5. California JPIA Bylaws

6. California JPIA Joint Powers Agreement

7. Association of Government Risk Pools (AGRiP) Governance Materials

8. 2026 Annual Board of Directors Meeting Voting Delegate and Alternate Form

9. December 2, 2025, Town Council Staff Report Only Terminating with Plan JPA and joining CJPIA

Page 711 ends

ITEM NO. 12.
1 of 2
Resolution 2026 - April 7, 2026
ATTACHMENT 1
RESOLUTION 2026-xx

A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS, COUNTY OF

SANTA CLARA, CALIFORNIA, APPROVING EXECUTION OF THE JOINT POWERS

AGREEMENT CREATING THE CALIFORNIA JOINT POWERS INSURANCE AUTHORITY WHEREAS, pursuant to the provisions of Sections 990, 990.4, 990.8 and 6500 of the California Government Code, the California Joint Powers Insurance Authority ("California JPIA") has been created by a Joint Powers Agreement; and
WHEREAS, Joint Protection Programs have been developed by the California JPIA pursuant to the provisions of said Agreement; and
WHEREAS, Article 22 of said Agreement provides for additional members to become parties to the Joint Powers Agreement creating the California JPIA and enter one or more Joint Protection Programs providing self-insurance and loss pooling; and WHEREAS, the self-insurance and loss pooling programs of the California JPIA, as well as its group insurance coverage programs, offer significant advantages to the Town of Los Gatos in terms of cost, protection, risk management and loss control advice and assistance, and entering such programs would be in the best interest of the Town of Los Gatos.

NOW, THEREFORE, BE IT RESOLVED that the Town Council of the Town of Los Gatos does hereby resolve, order and determine as follows:

Section 1. That the Mayor of the Town of Los Gatos is hereby authorized and directed to execute the Joint Powers Agreement on behalf of the Town of Los Gatos binding the Member to the terms and conditions of said Agreement. The Town of Los Gatos understands and agrees that, by executing the Agreement, it will be bound by the terms of the Joint Powers Agreement, specifically Article 21, “Responsibilities of Members,” including the obligation to make deposits and deposit adjustments for joint protection programs it joins.

Section 2. That the Town of Los Gatos hereby joins the California JPIA, for a period of not less than three (3) years.

Section 3. That the Town of Los Gatos acknowledges and agrees to the provisions of Article 24 of the Agreement, which provides:
(a) A Member that enters into this Agreement may not withdraw as a party to this Agreement and as a Member of the Authority for a three-year period commencing on the effective date of its membership.

Page 712 ends

ITEM NO. 12.
2 of 2
Resolution 2026 - April 7, 2026
ATTACHMENT 1
(b) A Member that enters into a joint protection program may not withdraw as a participant in that program for a three-year period commencing on the effective date of its participation in the joint protection program.
(c) After the initial three-year non-cancellable commitment to membership in the Authority or participation in a joint protection program, a Member may withdraw only at the end of any protection period, provided it has given the Authority a twelve-month written notice of its intent to withdraw from this Agreement and/or any joint protection programs in which it participates.

PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the _____
th of April 2026, by the following vote:

COUNCIL MEMBERS:

AYES:

NAYS:

ABSENT:

ABSTAIN:

SIGNED:
_______________________________
MAYOR

LOS GATOS, CALIFORNIA
ATTEST:
___________________________________

TOWN CLERK

LOS GATOS, CALIFORNIA

Page 713 ends

ITEM NO. 12.
1 of 2
Resolution 2026 - April 7, 2026
ATTACHMENT 2
RESOLUTION 2026-xx

A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS, COUNTY OF SANTA CLARA, CALIFORNIA, TO AUTHORIZE AND APPROVE POOLING OF SELFINSURANCE THROUGH THE LIABILITY PROTECTION PROGRAM OF THE CALIFORNIA

JOINT POWERS INSURANCE AUTHORITY
WHEREAS, pursuant to the provisions of Section 6500 et seq. and also Sections 990.4 and 990.8 of the California Government Code, the California Joint Powers Insurance Authority (“California JPIA”) was created in 1977; and
WHEREAS, the Town of Los Gatos has executed the Joint Powers Agreement to become a member of the California JPIA; and
WHEREAS, the California JPIA has established and administered a successful Liability Self-Insurance and Loss Pooling Program since April 1, 1978; and WHEREAS, there are significant financial and administrative advantages for the Town of Los Gatos to participate in the Primary Liability Program.

NOW, THEREFORE, BE IT RESOLVED that the Town Council of the Town of Los Gatos does hereby resolve, order and determine as follows:

Section 1. Liability coverage for the Town of Los Gatos through the Liability Program of the California JPIA is hereby authorized and directed effective July 1, 2026, pursuant to the terms of the Memorandum of Coverage in effect at the time of any occurrence covered by the Memorandum of Coverage.

Section 2. That an initial annual contribution of $1,254,500, or such pro-rata part thereof as the California JPIA might determine for coverage of less than a fiscal period, for the Liability Program is approved and the appropriate officers of the Town of Los Gatos are authorized to pay the same to the California JPIA.

Section 3. That the Town of Los Gatos will subsequently be required to make deposits and deposit adjustments as provided in the California JPIA Joint Powers Agreement.

Section 4. That the coverage provided is from the first dollar incurred per occurrence and there is no self-insured retention level. The cost allocation formula, including the self-insured retention level, is periodically reviewed by the California JPIA and may be changed or amended in subsequent Program years.

Section 5. That the Mayor shall sign, and the Town of Los Gatos’ Clerk shall certify to the passage and adoption of this Resolution, and thereupon the same shall take effect and be in

Page 714 ends

ITEM NO. 12.
2 of 2
Resolution 2026 - April 7, 2026
ATTACHMENT 2
force.

Section 6. That the Town of Los Gatos’ Clerk is directed to forward a certified copy of this Resolution to the California JPIA, 8081 Moody Street, La Palma, CA 90623.

PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the _____
th of April 2026, by the following vote:

COUNCIL MEMBERS:

AYES:

NAYS:

ABSENT:

ABSTAIN:

SIGNED:
_______________________________
MAYOR

LOS GATOS, CALIFORNIA
ATTEST:
___________________________________

TOWN CLERK

LOS GATOS, CALIFORNIA

Page 715 ends

ITEM NO. 12.
1 of 2
Resolution 2026 - April 7, 2026
ATTACHMENT 3
RESOLUTION 2026-xx

A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS

ESTABLISHING A POLICY WHICH DELEGATES TORT LIABILITY CLAIMS

HANDLING RESPONSIBILITIES TO THE CALIFORNIA JOINT POWERS

INSURANCE AUTHORITY AS AUTHORIZED BY GOVERNMENT CODE SECTIONS 910, ET SEQ.

WHEREAS, the Town of Los Gatos is a member of the California Joint Powers Insurance Authority (California JPIA), and pursuant to Government Code sections 990.4, et seq., and 6500 et seq., pools its self-insured liability claims and losses with other California JPIA members under a Memorandum of Coverage; and
WHEREAS, the Joint Powers Agreement creating the California JPIA authorizes it to exercise powers common to members and appropriate to defend and indemnify members from liability claims under the Memorandum of Coverage.

NOW, THEREFORE, BE IT RESOLVED that the Town Council of the Town of Los Gatos does hereby resolve, order and determine as follows:

Section 1. The Town of Los Gatos delegates to California JPIA authority to act on its behalf pursuant to Government Code sections 910, et seq. to accept, reject, return as insufficient, or return as untimely any claims against it, and to provide any notices authorized under those statutes on behalf of the Town of Los Gatos.

Section 2. This Resolution shall become effective immediately upon its adoption.

Section 3. The Town Clerk shall certify to the adoption of this Resolution.

PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the _____
th of April 2026, by the following vote:

COUNCIL MEMBERS:

AYES:

NAYS:

ABSENT:

ABSTAIN:

Page 716 ends

ITEM NO. 12.
2 of 2
Resolution 2026 - April 7, 2026
ATTACHMENT 3
SIGNED:
_______________________________
MAYOR

LOS GATOS, CALIFORNIA
ATTEST:
___________________________________

TOWN CLERK

LOS GATOS, CALIFORNIA

Page 717 ends

ITEM NO. 12.
1 of 2
Resolution 2026 - April 7, 2026
ATTACHMENT 4
RESOLUTION 2026-xx

A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS AUTHORIZING THE TOWN MANAGER, OR THE TOWN MANAGER’S DESIGNEE, TO EXECUTE AND ADMINISTER ACTIVITIES AND OBLIGATIONS RELATED TO THE TOWN’S MEMBERSHIP IN AND

PARTICIPATION WITH THE CALIFORNIA JOINT POWERS INSURANCE AUTHORITY WHEREAS, the Town of Los Gatos is a member of the California Joint Powers Insurance Authority (“CJPIA”) and participates in insurance, self-insurance, risk management, claims handling, and related programs through that membership; and WHEREAS, Town Code section 2.30.295 establishes the Town Manager’s authority and responsibility to administer Town operations and carry out duties assigned by the Town Council, and the Town Council desires to clarify the Town Manager’s authority with respect to CJPIA-related activities and obligations;
WHEREAS, the Town Council finds it desirable to designate the Town Manager, or the Town Manager’s designee, as the officer responsible for executing and administering administrative actions necessary to implement the Town’s CJPIA membership and participation.

NOW, THEREFORE, BE IT RESOLVED by the Town Council of the Town of Los Gatos as follows:

Section 1. Authority of Town Manager. The Town Manager, or the Town Manager’s designee, is hereby authorized to execute, administer, and take any and all actions necessary or convenient to carry out any activity, duty, or obligation of the Town arising from or related to the Town’s membership in and participation with the California Joint Powers Insurance Authority, including, without limitation, the execution and submission of forms, notices, certifications, elections, program documents, contributions, deposits, and other related administrative instruments.

Section 2. Delegation by Town Manager. The Town Manager may designate one or more Town officers or employees to exercise any authority granted under this Resolution, in whole or in part, and may limit, revoke, or modify any such designation at any time. Any such designation may be made in writing and shall specify the scope of the delegated authority.

Section 3. Scope of Authority. This Resolution is intended to provide administrative authority to implement the Town’s CJPIA membership and participation obligations and shall be construed to apply only to actions arising from or related to that membership and participation.

Section 4. Effective Date. This Resolution shall take effect immediately upon adoption.

PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the _____
th of April 2026, by the following vote:

Page 718 ends

ITEM NO. 12.
2 of 2
Resolution 2026 - April 7, 2026
ATTACHMENT 4
COUNCIL MEMBERS:

AYES:

NAYS:

ABSENT:

ABSTAIN:

SIGNED:
_______________________________
MAYOR

LOS GATOS, CALIFORNIA
ATTEST:
___________________________________

TOWN CLERK

LOS GATOS, CALIFORNIA

Page 719 ends

ITEM NO. 12.

Bylaws Page 1 of 14 Adopted July 16, 2008
BYLAWS

CALIFORNIA JOINT POWERS INSURANCE

AUTHORITY
AMENDED JULY 17, 2019
ATTACHMENT 5

Page 720 ends

ITEM NO. 12.
ii
BYLAWS

TABLE OF CONTENTS
ARTICLE I – OFFICES .............................................................................................................. 1 Section 1. Principal Executive Office._________________________________________________1 Section 2. Other Offices. ___________________________________________________________1 ARTICLE II - BOARD OF DIRECTORS ................................................................................. 1 Section 1. Composition and Selection. ________________________________________________1 Section 2. Vacancies.______________________________________________________________2 Section 3. Annual Meeting._________________________________________________________2 Section 4. Special Meetings. ________________________________________________________3 Section 5. Place of Meetings. _______________________________________________________3 Section 6. Quorum. _______________________________________________________________4 Section 7. Adjourned Meetings. _____________________________________________________4 Section 8. Voting. ________________________________________________________________4 Section 9. Inspectors of Election. ____________________________________________________5 ARTICLE III - EXECUTIVE COMMITTEE........................................................................... 6 Section 1. Number of Members. _____________________________________________________6 Section 2. Composition, Selection and Term of Office. ___________________________________6 Section 3. Vacancies.______________________________________________________________6 Section 4. Resignation. ____________________________________________________________7 Section 5. Removal of Executive Committee or its Individual Members by Board of Directors. ___8 Section 6. Regular Meetings.________________________________________________________8 Section 7. Special Meetings. ________________________________________________________8 Section 8. Actions at Meetings.______________________________________________________9 Section 9. Adjourned Meetings. _____________________________________________________9 ARTICLE IV – CLAIMS COMMITTEE................................................................................ 10 Section 1. Composition.___________________________________________________________10 Section 2. Meetings. _____________________________________________________________10 ARTICLE V - ADVISORY COMMITTEES........................................................................... 10 Section 1. Managers Committee.____________________________________________________11 Section 2. Finance Officers Committee. ______________________________________________11

Page 721 ends

ITEM NO. 12.
iii
Section 3. Underwriting Committee._________________________________________________12 Section 4. Other Committees_______________________________________________________12 Section 5. Meetings. _____________________________________________________________12 ARTICLE VI - OFFICERS AND EMPLOYEES.................................................................... 12 Section 1. Officers. ______________________________________________________________12 Section 2. Election and Term of Office. ______________________________________________12 Section 3. Other Officers and Employees. ____________________________________________13 Section 4. Vacancies._____________________________________________________________13 Section 5. Removal and Resignation. ________________________________________________13 Section 6. President. _____________________________________________________________14 Section 7. Vice President. _________________________________________________________14 Section 8. Secretary. _____________________________________________________________14 Section 9. Treasurer. _____________________________________________________________15 Section 10. Chief Executive Officer __________________________________________________15 ARTICLE VII - MISCELLANEOUS....................................................................................... 15 Section 1. Rules and Regulations of Joint Protection Programs. ___________________________15 Section 2. Annual Report. _________________________________________________________15 Section 3. Defense of Agents of the Authority._________________________________________15 Section 4. Inspection of Authority Records. ___________________________________________16 Section 5. Checks and Drafts. ______________________________________________________16 Section 6. Register of Demands. ____________________________________________________16 Section 7. Execution of Contracts. __________________________________________________17 Section 8. Rules of Procedure for Meetings.___________________________________________17 ARTICLE VIII - AMENDMENTS TO BYLAWS.................................................................. 18 Section 1. Power of Board of Directors. ______________________________________________18 Section 2. Power of Executive Committee.____________________________________________18

Page 722 ends

ITEM NO. 12.

Bylaws Page 1 of 18 Amended July 17, 2019
BYLAWS

FOR THE REGULATION, EXCEPT AS OTHERWISE PROVIDED BY

STATUTE, OR THE AGREEMENT CREATING THE AUTHORITY, OF THE

CALIFORNIA JOINT POWERS INSURANCE AUTHORITY
ARTICLE I – OFFICES
Section 1. Principal Executive Office.

The principal executive office for the transaction of the business of the Authority is hereby fixed and located at 8081 Moody Street, La Palma, California 90623. The Executive Committee of the Authority shall have the authority to change the location of the principal executive office from time to time. Any such change shall be noted on the Bylaws by the Secretary, opposite this section, or this section may be amended to state the new location.

Section 2. Other Offices.

Other business offices may at any time be established by the Executive Committee at any place or places where the Authority is qualified to do business.

ARTICLE II - BOARD OF DIRECTORS
Section 1. Composition and Selection.

The Board of Directors shall be composed of one Director from each Member of the Authority, who shall be a member of and selected by the legislative body of that Member, as provided for in the Agreement creating the Authority. Each legislative body shall also appoint at least one alternate, who shall be an officer or employee of that Member. The alternate may attend meetings and vote in the absence of the Director. One person may be duly appointed by more than one Member as the Director representing those Members. "Absence," as the term is used in this section, includes "vacancy" as defined in Section 2 of this Article II. “Director” as the term is used in these Bylaws includes an “alternate” serving in the absence of the Director.

Page 723 ends

ITEM NO. 12.

Bylaws Page 2 of 18 Amended July 17, 2019
If a Member's membership in the Authority is terminated for whatever reason and by whatever method, that Member shall no longer have a representative on the Board of Directors, Executive Committee, or any other Committee of the Authority.

Section 2. Vacancies.

A vacancy or vacancies on the Board of Directors shall be deemed to exist in case of death, resignation, expiration of term, removal by the Member that made the appointment, or when the Director ceases to be a member of the legislative body of the appointing Member. Vacancies in the positions of Director or alternate or alternates shall be filled in the manner provided for regular appointment of such persons in the Agreement creating the Authority and the Bylaws.

Section 3. Annual Meeting.
(a) Time Held and Business to be Transacted.

The annual meeting of the Board of Directors shall be held in July of each year or at such other time as may be designated by the Executive Committee. At such meeting the President and Vice President of the Authority and other members of the Executive Committee shall be elected as provided in Article III, reports of the affairs of the Authority shall be considered, and any other business may be transacted that is within the powers of the Board of Directors.
(b) Notice.

Written notice of each annual meeting shall be given to each Member of the Authority by mail, email, or other means of written communication, in the manner provided by the Ralph M. Brown Act, California Government Code Section 54950, et seq. Such notice shall specify:
(1) the place, the date, and the hour of such meeting;
(2) those matters that are intended to be presented for action or review by the Board of Directors;
(3) if officers and members of the Executive Committee are to be elected, the names of nominees intended at the time of the notice to be presented for election;

Page 724 ends

ITEM NO. 12.

Bylaws Page 3 of 18 Amended July 17, 2019
(4) the general nature of any proposal to be presented for action with respect to approval of (i) a new Member, (ii) a contract or other transaction of the Authority with an interested Member, (iii) amendment of the Agreement creating the Authority, (iv) the cancellation of a Member's participation in a joint protection program, (v) voluntary termination of the Agreement creating the Authority, or (vi) a distribution of program assets upon program dissolution; and (5) such other matters, if any, as may be expressly required by statute or by the Agreement creating the Authority.

Section 4. Special Meetings.

Special meetings of the Board of Directors, for the purpose of taking any action permitted by statute and the Agreement creating the Authority, may be called at any time by the President, or by the Vice President in the absence or disability of the President, or by the Executive Committee of the Authority or by not less than ten (10) Members. Upon request in writing that a special meeting of the Board of Directors be called for any proper purpose, directed to the President, Vice President, or Secretary of the Authority, by any person or persons entitled to call a special meeting of the Board of Directors, the officer receiving such request forthwith shall cause notice to be given to the Members that a meeting will be held at a time requested by the person or persons calling the meeting, not less than fifteen (15) nor more than sixty (60) days after receipt of the request. Notice of any special meeting shall be given in compliance with the Ralph M. Brown Act, California Government Code Section 54950, et seq. Such notice shall specify the place, date and hour of such meeting, and, if applicable, the names of nominees for officers or members of the Executive Committee intended at the time of the notice to be presented for election and the nature of the business to be transacted. No business other than that specified in the notice of the special meeting may be transacted at that meeting.

Section 5. Place of Meetings.

All annual or other meetings of the Board of Directors shall be held at a place within the State of California designated by the Executive Committee by resolution.

Page 725 ends

ITEM NO. 12.

Bylaws Page 4 of 18 Amended July 17, 2019
Section 6. Quorum.

At any meeting, the presence in person or by approved teleconference by the Director or alternate of a majority of the Members shall constitute a quorum for the transaction of business.

Section 7. Adjourned Meetings.
(a) Adjournment.

Any meeting of the Board of Directors may be adjourned from time to time by the vote of a majority of the Directors present.
(b) Notice.

When any meeting of the Board of Directors is adjourned for forty-five (45) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting.

Except as specifically provided herein, or by the Ralph M. Brown Act, it shall not be necessary to give any notice of the time and place of the adjourned meeting or of the business to be transacted thereat, other than by announcement of the time and place thereof at the meeting at which such adjournment is taken.

Section 8. Voting.

Unless a record date for voting purposes is fixed by the Executive Committee, Members that are Members on the day of the meeting of the Board of Directors shall be entitled to vote at such meeting. Such vote may be by voice vote or ballot; provided, however, that all elections for officers or members of the Executive Committee must be by ballot upon demand made by a Director at any election and before the voting begins. If a quorum is present, the affirmative vote of the majority of the Members represented at the meeting shall be the act of the Board, unless the vote of a greater number is required by the Agreement creating the Authority or by statute. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of Directors, provided that any action taken is approved by a number of Directors at least equal to a majority (or greater number if required) of the number required for a quorum for such meeting. Every Member shall have one vote to be exercised by its Director. If one person has been duly appointed by more than one Member as the Director representing those Members, said person shall have the right to cast votes equal to the number of Members for which he or she has been appointed as Director.

Page 726 ends

ITEM NO. 12.

Bylaws Page 5 of 18 Amended July 17, 2019
Ballots shall have imprinted on them, the name of the Member on whose behalf a ballot is cast.

Ballots shall be open to inspection and public disclosure. A Director has the right to change his or her vote up to the time the vote is finally announced and thereafter only with permission of the Board of Directors prior to adjournment. No Director may change his or her vote, nor may anyone challenge the vote of any Director after the results have been announced, except by the consent of the Board of Directors, and then only prior to adjournment of the meeting at which the vote was cast. Written proxies or powers of attorney casting the vote for any Director, directing any Director to vote in a particular fashion, or acting in the place and stead of any Director, are not acceptable. The vote of each Director or his or her alternate shall not be challenged on the basis that said Director or alternate voted contrary to the express will of the legislative body of the Member for which he or she acts.

Section 9. Inspectors of Election.
(a) Appointment.

In advance of any meeting of the Board of Directors, the Executive Committee may appoint any persons, other than nominees for office, as inspectors of election to act at such meeting or any adjournment thereof. If inspectors of election are not so appointed, the President, or Vice President in his or her absence, may, and on the request of any Director or alternate, shall make such appointment at the meeting. The number of inspectors shall be either one (1) or three (3), at least one of whom shall be a member of the Board of Directors. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may, and on the request of any Director, shall be filled by appointment by the Executive Committee in advance of the meeting, or at the meeting by the President, or the Vice President in his or her absence. (b) Duties.

The duties of such inspectors shall include: Determining the current number of Members, the Members represented at the meeting, and the existence of a quorum; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes

Page 727 ends

ITEM NO. 12.

Bylaws Page 6 of 18 Amended July 17, 2019
or consents; determining when the polls shall close; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all Members. (c) Procedure.

The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. The decision, act or certificate of a majority of the inspectors shall be effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

ARTICLE III - EXECUTIVE COMMITTEE
Section 1. Number of Members.

The authorized number of members of the Executive Committee shall be nine (9), until and unless changed by amendment of this Section, duly adopted by the vote or written consent of a majority of the Board of Directors, and subject to the limitations in the Agreement creating the Authority.

Section 2. Composition, Selection and Term of Office.

The Executive Committee shall consist of the President, Vice President and seven other members elected by the Board of Directors from the members of the Board.

The terms of office of the Executive Committee members shall be for a term of two years or until he or she resigns or is removed or otherwise disqualified to serve. Members of the Executive Committee shall hold office until their successors are elected.

The President, or in his or her absence, the Vice President, shall serve as Chairperson of the Executive Committee.

Section 3. Vacancies.
(a) Creation of Vacancies.

Page 728 ends

ITEM NO. 12.

Bylaws Page 7 of 18 Amended July 17, 2019
A vacancy or vacancies in the Executive Committee shall be deemed to exist in case of the death, resignation, expiration of term, termination of membership on the Board of Directors, removal of any Executive Committee member by the Board of Directors, declaration of unsound mind by order of court, conviction of a felony, increase in the authorized number of members by amendment of the Agreement creating the Authority, or if the Board of Directors fail, at any annual or special meeting of the Board at which any members of the Executive Committee are elected, to elect the full authorized number of Executive Committee members to be voted for at that meeting. A vacancy in the Executive Committee may further be created by removal of any member by the Executive Committee when such member has been absent from two or more regular meetings of the Executive Committee without advance excuse approved by the Executive Committee during any one year (from July 1 to June 30), and the Executive Committee determines, after reviewing the circumstances of said absences, that such member should be removed.
(b) Vacancies Filled by Executive Committee.

Vacancies in the Executive Committee, except for a vacancy created by the removal of an Executive Committee member, may be filled by appointment by a majority of the remaining members of the Executive Committee, though less than a quorum, or by a sole remaining member of the Executive Committee, and each member so appointed shall hold office until the expiration of the term of the vacated seat. (c) Vacancies Filled by Board of Directors.

The Board of Directors may elect a member of the Executive Committee at any time to fill any vacancy or vacancies or seat filled on an interim basis by the Executive Committee. A vacancy in the Executive Committee created by the removal of a member by the Board of Directors may be filled only by the vote of a majority of the Directors present at a duly held meeting of the Board of Directors.

Section 4. Resignation.

Any Executive Committee member may resign effective upon written notice to the President, the Vice President, the Secretary or the Board of Directors of the Authority, unless the notice

Page 729 ends

ITEM NO. 12.

Bylaws Page 8 of 18 Amended July 17, 2019
specifies a later time for the effectiveness of such resignation. A vacancy created by such resignation shall be filled pursuant to Article III, Section 3.

Section 5. Removal of Executive Committee or its Individual Members by Board of Directors.

The entire Executive Committee or any of its individual members may be removed from office by a two-thirds vote of the Directors present at a duly held meeting of the Board of Directors.

Section 6. Regular Meetings.
(a) Regular Meetings.

The Executive Committee shall hold a regular monthly meeting. In the event a meeting date falls on a holiday or conflicts with another activity of the Authority or its Members, the President and Chief Executive Officer may confer, and the President will reschedule the monthly meeting to a more convenient date, giving notice to all Members. (b) Call and Notice.

No further call or notice of regular meetings need be given, except as is required to comply with the Ralph M. Brown Act, California Government Code Section 54950 et seq.

Section 7. Special Meetings.
(a) Call.

Special meetings of the Executive Committee for any purpose or purposes may be called at any time by the President, the Vice President, the Secretary, any two members of the Executive Committee, or the Chief Executive Officer.
(b) Notice.

Notice of the time and place of special meetings shall be given in writing to the members of the Executive Committee, delivered personally, by mail, email, or other approved method of delivery to each member at least 24 hours before the time of such meeting.

Page 730 ends

ITEM NO. 12.

Bylaws Page 9 of 18 Amended July 17, 2019
Such notice shall specify the business to be transacted at the meeting and no business other than that specified in the notice shall be transacted at that meeting. Said notice shall be given in compliance with the Ralph M. Brown Act, California Government Code Section 54950 et seq.

Section 8. Actions at Meetings.

The President, or in his or her absence, the Vice President shall serve as the Chairperson of the Executive Committee. The presence of a majority of the authorized number of Executive Committee members at a meeting constitutes a quorum for the transaction of business, except as hereinafter provided. Members of the Executive Committee may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another; such participation in a meeting constitutes presence in person at such meeting. Every act or decision done or made by a majority of the Executive Committee members present at a meeting duly held at which a quorum is present shall be regarded as the act of the Executive Committee, unless a greater number is required by law, by the Agreement creating the Authority, or by these Bylaws. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of members, provided that any action taken is approved by a number of members at least equal to a majority (or greater number if required) of the number required for a quorum for such meeting.

Section 9. Adjourned Meetings.
(a) Adjournment.

A quorum of the members of the Executive Committee may adjourn any Executive Committee meeting to a stated day, hour and place; provided, however, that in the absence of a quorum, a majority of the Executive Committee members present at any meeting may adjourn from time to time to a time not later than the time fixed for the next regular meeting of the Executive Committee.
(b) Notice of Adjournment.

Page 731 ends

ITEM NO. 12.

Bylaws Page 10 of 18 Amended July 17, 2019
If a meeting is adjourned for more than 24 hours, at least 24-hours written notice of such adjournment to another time or place shall be given prior to the time of the adjourned meeting to the Executive Committee members who were not present at the time of adjournment. Otherwise, notice of the time and place of holding an adjourned meeting need not be given if the time and place are fixed at the time of adjournment, except that the provisions of the Ralph M. Brown Act, California Government Code Sections 54950 et seq., shall be complied with.

ARTICLE IV – CLAIMS COMMITTEE
Section 1. Composition.

The Claims Committee shall be composed of each member of the Executive Committee, the Managers Committee Chair, and the Finance Officers Committee Chair.

Section 2. Meetings.

The President shall appoint an Executive Committee member to serve as the Chair of the Claims Committee. The Chair, or in his or her absence the President, shall preside over the meetings.

The presence of a majority of the authorized number of Claims Committee members at a meeting constitutes a quorum for the transaction of business, except as hereinafter provided. Members of the Claims Committee may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another; such participation in a meeting constitutes presence in person at such meeting.

Every act or decision done or made by a majority of the Claims Committee members present at a meeting duly held at which a quorum is present shall be regarded as the act of the Claims Committee, unless a greater number is required by law, by the Agreement creating the Authority, or by these Bylaws. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of members, provided that any action taken is approved by a number of members at least equal to a majority of the number required for a quorum for such meeting.

ARTICLE V - ADVISORY COMMITTEES

Page 732 ends

ITEM NO. 12.

Bylaws Page 11 of 18 Amended July 17, 2019
Section 1. Managers Committee.

Pursuant to the Agreement creating the Authority, the Managers Committee shall be composed of one representative from each Member, who shall be the City Manager, City Administrator or the Chief Executive Officer of that Member. An alternate may be designated in writing to serve in place of and may vote for that representative in his or her absence. At any meeting, the presence in person or by approved teleconference of at least seven Managers or alternates shall constitute a quorum for the transaction of business. In the absence of a quorum, a majority of the Committee members present at any meeting may adjourn from time to time to a time not later than the time fixed for the next regular meeting of the Committee.

Section 2. Finance Officers Committee.

Pursuant to the Agreement creating the Authority, the Finance Officers Committee shall be composed of one representative from each Member, who shall be the Finance Director or Chief Finance Officer of that Member. An alternate may be designated in writing to serve in place of and may vote for that representative in his or her absence. At any meeting, the presence in person or by approved teleconference of at least seven Finance Officers or alternates shall constitute a quorum for the transaction of business. In the absence of a quorum, a majority of the Committee members present at any meeting may adjourn from time to time to a time not later than the time fixed for the next regular meeting of the Committee.

Section 3. Risk Managers Committee.

Pursuant to the Agreement creating the Authority, the Risk Managers Committee shall be composed of one representative from each Member, who shall be the Risk Manager or risk officer of that Member. An alternate may be designated in writing to serve in place of and may vote for that representative in his or her absence. At any meeting, the presence in person or by approved teleconference of at least seven Risk Managers or alternates shall constitute a quorum for the transaction of business. In the absence of a quorum, a majority of the Committee members present at any meeting may adjourn from time to time to a time not later than the time fixed for the next regular meeting of the Committee.

Page 733 ends

ITEM NO. 12.

Bylaws Page 12 of 18 Amended July 17, 2019
Section 4. Underwriting Committee.

Pursuant to the Agreement creating the Authority, the Underwriting Committee shall be composed of the Managers Committee Chair and Vice Chair, the Finance Officers Committee Chair and Vice Chair, and the Chief Executive Officer of the Authority. Three representatives shall constitute a quorum. In the absence of a quorum, a majority of the Committee members present at any meeting may adjourn.

Section 5. Other Committees
Other committees may be created by the Executive Committee for the purpose of providing specialized advice to the Executive Committee on the subject matter brought before it. The committee’s purpose, composition, quorum requirements, and meeting schedule may be defined by the Executive Committee or delegated by the Executive Committee to the advisory committee itself.

Section 6. Meetings.

Such Committees shall meet from time to time and shall elect their respective Chairpersons, Vice Chairpersons and other officers as deemed necessary by them. All meetings shall be noticed in compliance with the Ralph M. Brown Act, California Government Code Section 54950, et seq.

ARTICLE VI - OFFICERS AND EMPLOYEES
Section 1. Officers.

The officers of the Authority shall be a President, a Vice President, a Secretary, and a Treasurer.

The Executive Committee may, in addition, provide for other officers as it deems necessary for the performance of the business of the Authority.

Section 2. Election and Term of Office.

The President and Vice President of the Authority shall be elected by the Board of Directors at its annual meeting, and each shall hold office for a term of two years or until he or she resigns or is removed or otherwise disqualified to serve, and until his or her successor is elected.

Page 734 ends

ITEM NO. 12.

Bylaws Page 13 of 18 Amended July 17, 2019
Section 3. Other Officers and Employees.

The Executive Committee shall appoint, or may empower the President to appoint, subject to ratification by the Executive Committee, all officers other than the President and Vice President.

Except as may otherwise be provided in the Agreement creating the Authority or the Bylaws, such officers shall hold office until replaced by action of the Executive Committee. The Executive Committee shall also appoint a Chief Executive Officer and Authority Attorney who shall serve at the pleasure of the Executive Committee or for such term as the Executive Committee may provide by agreement. All officers and employees shall have such authority and perform such duties as are provided in the Agreement creating the Authority, or the Bylaws or as the Executive Committee may from time to time determine. The Executive Committee may provide for the payment of compensation to officers or employees for their services to the Authority.

Section 4. Vacancies.

A vacancy in any office because of death, resignation, removal, disqualification, expiration of term, or any other cause shall be filled in the manner prescribed in the Agreement creating the Authority and the Bylaws for regular appointments to such office.

Section 5. Removal and Resignation.
(a) Removal.

The President, Vice President or any Executive Committee member may be removed, without cause, by the Board of Directors, at any regular or special meeting thereof. An officer chosen by the Executive Committee may be removed, without cause, by the Executive Committee or by any officer upon whom such power of removal may be conferred by the Executive Committee, (subject, in each case, to the rights, if any, of an officer under any contract of employment).
(b) Resignation.

Any officer may resign at any time by giving written notice to the Executive Committee or to the President, or to the Secretary of the Authority, without prejudice, however, to the rights, if any, of the Authority under any contract to which such officer is a party.

Page 735 ends

ITEM NO. 12.

Bylaws Page 14 of 18 Amended July 17, 2019
Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 6. President.

The President shall preside at all meetings of the Board of Directors and the Executive Committee. He or she shall be a member of all of the Executive Committee standing committees and shall have the powers and duties as may be prescribed by the Board of Directors, the Agreement creating the Authority, or the Bylaws.

Section 7. Vice President.

In the absence or disability of the President, the Vice President shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice President shall have such other powers and perform such other duties as from time to time may be prescribed by the Board of Directors or the Bylaws.

Section 8. Secretary.

The Secretary shall record or cause to be recorded, and shall keep or cause to be kept, at the principal executive office or such other place as the Executive Committee may order, a permanent record of minutes of actions taken at all meetings of the Board of Directors and Executive Committee, whether regular or special, (and, if special, how authorized), the notice thereof given, the names of those present at the meetings, and the proceedings thereof.

The Secretary shall keep, or cause to be kept, at the principal executive office of the Authority a list of all designated Directors and alternates of each Member.

The Secretary shall give, or cause to be given, notice of all the meetings of the Board of Directors and of the Executive Committee required by the Bylaws or by law to be given, and shall have such other powers and perform such other duties as may be prescribed by the Executive Committee, the Agreement creating the Authority, or by the Bylaws.

Page 736 ends

ITEM NO. 12.

Bylaws Page 15 of 18 Amended July 17, 2019
Section 9. Treasurer.

The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct financial records of the Authority, including accounts of its assets, liabilities, receipts, and disbursements, and shall have such other duties as are provided for in the Agreement creating the Authority.

Section 10. Chief Executive Officer
The Chief Executive Officer shall be authorized and responsible for the overall management and administration of the Authority and its joint protection programs and shall select and appoint all employees. The Chief Executive Officer shall have such other and related duties as may be prescribed by the Executive Committee or the Bylaws.

ARTICLE VII – MISCELLANEOUS
Section 1. Rules and Regulations of Joint Protection Programs.

As soon as practicable after development of the details of a joint protection program of the Authority, the specific rules and regulations for the implementation of the program shall be adopted by the Executive Committee, which shall cause them to be set forth in written form and a copy thereof distributed to each Member. Such rules and regulations shall be included in any procedure manual prepared by the Authority for the Members.

Section 2. Annual Report.

The Executive Committee of the Authority shall cause an annual report to be sent to the Members not later than 270 days after the close of each fiscal year. Such report shall contain a statement of net position as of the end of such fiscal year and a statement of revenues, expenses, and changes in net position for such fiscal year, and shall be accompanied by the annual audit report thereon and such other information as may be required by law.

Section 3. Defense and Indemnification of Agents of the Authority. (a) For the purpose of this Article, "agent" means any person who is or was an officer, board member, employee, or other agent of the Authority.

Page 737 ends

ITEM NO. 12.

Bylaws Page 16 of 18 Amended July 17, 2019
(b) The Authority shall provide for the defense and indemnity of any civil action or proceeding brought against any such agent of the Authority in his or her official or individual capacity or both, on account of an act or omission within the scope of his or her agency as an agent of the Authority, and to the extent of such defense as is provided for in California Government Code Section 995 et seq.

Section 4. Inspection of Authority Records.

The accounting, books and records, the list of Members' designated Directors and alternates, and minutes of proceedings of the Board of Directors and the Executive Committee and all other committees of the Authority shall be open to the inspection of any Member at any reasonable time. Such inspection by a Member may be made in person or by agent or attorney, and the right of inspection includes the right to copy and make extracts.

Section 5. Checks and Drafts.

All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Authority, shall be signed or endorsed by the President and Treasurer or by such person or persons and in such manner as, from time to time, shall be determined by the Executive Committee.

Section 6. Register of Demands.

A register of all demands shall be submitted to the Executive Committee for payment approval and shall have attached thereto the affidavit or declaration of the Chief Executive Officer certifying as to the accuracy of the demands and the availability of funds for payment thereof.

The Executive Committee shall not hear, consider, allow or approve any bill or demand against the Authority unless the same is itemized giving names, dates, and particular services tendered, and any other pertinent details as the case may be. Demands for salaries and wages of officers and employees of the Authority may, but need not be, presented to the Executive Committee prior to payment but shall appear on the next register of demands for approval.

After approval of the register of demands by the Executive Committee, the public officer performing the function of Treasurer shall sign the warrant authorizing payment of the demands so approved. Signatures on warrants may be by facsimile.

Page 738 ends

ITEM NO. 12.

Bylaws Page 17 of 18 Amended July 17, 2019
Section 7. Execution of Contracts.

The Executive Committee may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Authority, and such authorization may be general or confined to specific instances. Unless so authorized by the Executive Committee, no officer, agent or employee shall have any power or authority to bind the Authority by any contract or engagement or to pledge its credit or to render it liable for any purpose or to any amount. The Chief Executive Officer is authorized to enter into any contract or execute any instrument in the name of, and on behalf of, the Authority for services and programs approved by the Executive Committee or Board of Directors, subject to limitations (including budget limitations) set by the Executive Committee or the Board of Directors.

Section 8. Rules of Procedure for Meetings.

All meetings of the Board of Directors, Executive Committee, and any other Committees of the Authority, shall be conducted in accordance with Robert's Rules of Order, except where such are in conflict with California law, the Agreement creating the Authority, or the Bylaws, whereupon the latter three shall govern over said Rules of Order.

Page 739 ends

ITEM NO. 12.

Bylaws Page 18 of 18 Amended July 17, 2019

ARTICLE VIII - AMENDMENTS TO BYLAWS
Section 1. Power of Board of Directors.

New Bylaws may be adopted, or these Bylaws may be amended or repealed by the affirmative vote of a majority of the quorum at a meeting of the Board of Directors, except as otherwise provided by the Agreement creating the Authority.

Section 2. Power of Executive Committee.

Subject to the right of the Board of Directors as provided in Section 1 of this Article VIII to adopt or amend Bylaws, Bylaws other than a bylaw or amendment thereof changing the authorized number of members of the Executive Committee may be adopted or amended by the Executive Committee. Any amendment by the Executive Committee shall be on the agenda of the next meeting of the Board of Directors for ratification. An affirmative vote by a majority of the quorum shall constitute ratification of the amendment.

Page 740 ends

ITEM NO. 12.
i

Page 1 of 18 ends

Joint Powers Agreement
California Joint Powers Insurance Authority
Amended July 17, 2019

JOINT POWERS AGREEMENT

CALIFORNIA JOINT POWERS INSURANCE

AUTHORITY
AMENDED JULY 17, 2019
ATTACHMENT 6

Page 741 ends

ITEM NO. 12.
i

TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS..................................................................................................................................... 2 ARTICLE 2 - PURPOSES.......................................................................................................................................... 3 ARTICLE 3 - PARTIES TO AGREEMENT............................................................................................................ 4 ARTICLE 4 - TERM OF AGREEMENT ................................................................................................................. 4 ARTICLE 5 - CREATION OF AUTHORITY ......................................................................................................... 4 ARTICLE 6 - POWERS OF AUTHORITY.............................................................................................................. 4 ARTICLE 7 - BOARD OF DIRECTORS ................................................................................................................. 5 ARTICLE 8 - POWERS OF THE BOARD OF DIRECTORS............................................................................... 5 ARTICLE 9 - MEETINGS OF THE BOARD OF DIRECTORS........................................................................... 6 ARTICLE 10 - EXECUTIVE COMMITTEE........................................................................................................... 6 ARTICLE 11 - POWERS OF THE EXECUTIVE COMMITTEE ........................................................................ 6 ARTICLE 12 - MEETINGS OF THE EXECUTIVE COMMITTEE.................................................................... 7 ARTICLE 13 - CLAIMS COMMITTEE .................................................................................................................. 8 ARTICLE 14 - OFFICERS OF THE AUTHORITY ............................................................................................... 8 ARTICLE 15 - ADVISORY COMMITTEES........................................................................................................... 9 ARTICLE 16 - COVERAGE...................................................................................................................................... 9 ARTICLE 17 - DEVELOPMENT OF THE JOINT PROTECTION PROGRAMS ............................................ 9 ARTICLE 18 - ACCOUNTS AND RECORDS....................................................................................................... 10 ARTICLE 19 - RESPONSIBILITY FOR MONIES............................................................................................... 11 ARTICLE 20 - RESPONSIBILITIES OF THE AUTHORITY............................................................................ 11 ARTICLE 21 - RESPONSIBILITIES OF MEMBERS ......................................................................................... 12 ARTICLE 22 - NEW MEMBERS............................................................................................................................ 13 ARTICLE 23 - PROGRAM PARTICIPATION..................................................................................................... 14 ARTICLE 24 - WITHDRAWAL.............................................................................................................................. 15 ARTICLE 25 - EFFECT OF WITHDRAWAL ...................................................................................................... 15 ARTICLE 26 - CANCELLATION OF PROGRAM PARTICIPATION ............................................................ 16 ARTICLE 27 - CANCELLATION OF MEMBERSHIP ....................................................................................... 16 ARTICLE 28 - CANCELLATION FOR NON-PAYMENT.................................................................................. 16 ARTICLE 29 - ATTORNEY FEES AND COSTS OF COLLECTION ............................................................... 17 ARTICLE 30 - TERMINATION AND DISTRIBUTION ..................................................................................... 17 ARTICLE 31 - PROVISION FOR BYLAWS......................................................................................................... 18 ARTICLE 32 - NOTICES......................................................................................................................................... 18 ARTICLE 33 – PROVISION FOR MAILED BALLOTS..................................................................................... 18 ARTICLE 34 - AMENDMENT................................................................................................................................ 19 ARTICLE 35 - PROHIBITION AGAINST ASSIGNMENT................................................................................. 19 ARTICLE 36 - AGREEMENT COMPLETE......................................................................................................... 19

Page 742 ends

ITEM NO. 12.

Joint Powers Agreement Page 1 of 19 Amended July 17, 2019

JOINT POWERS AGREEMENT

CREATING THE CALIFORNIA

JOINT POWERS INSURANCE AUTHORITY

THIS AGREEMENT is made and entered into by and among the public entities organized and existing under the Constitution or laws of the State of California, hereinafter collectively referred to as “Members” and individually as “Member,” that are parties signatory to this Agreement. Said Members are sometimes referred to herein as “parties.” RECITALS:

WHEREAS, California Government Code Section 6500 et seq. provides that two or more public agencies may by agreement jointly exercise any power common to the contracting parties; and
WHEREAS, California Government Code Section 990.4 provides that a local public entity may self-insure, purchase insurance through an authorized carrier, or purchase insurance through a surplus line broker, or any combination of these; and WHEREAS, California Government Code Section 990.8 provides that two or more local public entities may, by a joint powers agreement, provide insurance for any purpose by any one or more of the methods specified in Government Code Section 990.4; and WHEREAS, each of the parties to this Agreement desires to join together with the other parties for the purpose of pooling their self-insured losses and jointly purchasing excess insurance and administrative services in connection with one or more joint protection programs for said parties; and
WHEREAS, it appears economically feasible and practical for the parties to this Agreement to do so;
NOW, THEREFORE, for and in consideration of all of the mutual benefits, covenants and agreements contained herein, the parties hereto agree as follows:

Page 743 ends

ITEM NO. 12.

Joint Powers Agreement Page 2 of 19 Proposed July 17, 2019 ARTICLE 1 - DEFINITIONS
The following definitions shall apply to the provisions of this Agreement:
(a) “Advisory Committee” shall mean the Managers Committee, Finance Officers Committee, Risk Managers Committee and any other committee created by the Board of Directors or Executive Committee for the purpose of providing specialized advice to the Board of Directors or Executive Committee on the subject matter brought before it. (b) “Alternate” shall mean that person or persons selected by the legislative body of each Member to represent the Member at the Board of Directors meeting in the absence of the Director, pursuant to Article 7 of this Agreement.
(c) “Authority” shall mean the California Joint Powers Insurance Authority created by this Agreement.
(d) “Board of Directors” or “Board” shall mean the governing body of the Authority. (e) “Chief Executive Officer” shall mean that employee of the Authority who is appointed by the Executive Committee, and is granted authority and responsibility for the management and administration of the Authority and its joint protection programs. (f) “Claims” shall mean demands made against the Authority, a Member, or Members arising out of occurrences that are within an Authority joint protection program as developed by the Executive Committee.
(g) “Contribution” shall mean an amount determined by the Executive Committee that is to be paid by the Member as its established share of funding required to cover the financial obligations of each joint protection program in which the member participates. (h) “Director” shall mean that person selected by and from the legislative body of each Member to represent the Member on the Board of Directors pursuant to Article 7 of this Agreement.
(i) “Executive Committee” shall mean the Executive Committee of the Board of Directors of the Authority.
(j) “Finance Officers Committee” shall mean the committee of the Authority composed of the Finance Directors or chief finance officers of the Members by whatever title locally designated.
(k) “Fiscal Year” shall mean that period of twelve months that is established as the fiscal year of the Authority.

Page 744 ends

ITEM NO. 12.

Joint Powers Agreement Page 3 of 19 Proposed July 17, 2019 (l) “Insurance” shall mean and include pooled self-insurance through a funded program and/or any commercial insurance, excess insurance, or reinsurance contract purchased on behalf of the Authority to protect the funds of the Authority against catastrophes or an unusual frequency of losses during a specific protection period. (m) “Managers Committee” shall mean the committee of the Authority composed of the City Managers, City Administrators, or chief executive officers of the Members by whatever title locally designated.
(n) “Risk Managers Committee” shall mean the committee of the Authority composed of the Risk Managers or risk officers of the Members by whatever title locally designated.
(o) “Secretary” shall mean the person selected by the Executive Committee from among its members to serve as Secretary of the Authority. (p) “Treasurer” shall mean the person selected by the Executive Committee to serve as Treasurer of the Authority.

ARTICLE 2 - PURPOSES
This agreement is entered into by the Members pursuant to the provisions of California Government Code Sections 990, 990.4, 990.8, and 6500 et seq. in order to provide more comprehensive and economical protection from financial loss, to reduce the amount and frequency of their losses, and to decrease the cost incurred in the handling and litigation of claims. This purpose shall be accomplished through the exercise of the powers of the Members jointly in the creation of a separate entity, the California Joint Powers Insurance Authority (the Authority), to administer joint protection programs wherein Members will pool their losses and claims, jointly purchase insurance and administrative and other services, including claims adjusting, data processing, risk management consulting, loss prevention, training, legal, and related services.

It is also the purpose of this Agreement to provide, to the extent permitted by law, for the inclusion at a subsequent date of such additional public entities organized and existing under the Constitution or laws of the State of California as may desire to become parties to this Agreement.

Page 745 ends

ITEM NO. 12.

Joint Powers Agreement Page 4 of 19 Proposed July 17, 2019 ARTICLE 3 - PARTIES TO AGREEMENT
Each party to this Agreement certifies that it intends to and does contract with all other parties who are signatories of this Agreement and, in addition, with such other parties as may later be added as parties to and signatories of this Agreement pursuant to Article 22. Each party to this Agreement also certifies that the deletion of any party from this Agreement, pursuant to Articles 24, 26, 27, or 28 shall not affect this Agreement nor such party's intent to contract as described above with the other parties to the Agreement then remaining.

ARTICLE 4 - TERM OF AGREEMENT
This Agreement became effective on June 29, 1977, and shall continue until and unless terminated as hereinafter provided.

ARTICLE 5 - CREATION OF AUTHORITY
Pursuant to Section 6500 et seq. of the California Government Code, there is hereby created a public entity separate and apart from the parties hereto, to be known as the California Joint Powers Insurance Authority. Pursuant to Government Code Section 6508.1, the debts, liabilities and obligations of the Authority shall not constitute debts, liabilities or obligations of any party to this Agreement; except with respect to public retirement system liabilities, which shall be governed by Sections 6508.1 and 6508.2.

ARTICLE 6 - POWERS OF AUTHORITY
(a) The Authority shall have the powers common to its Members and is hereby authorized to do all acts necessary for the exercise of said common powers, including, but not limited to, any or all of the following:

1. To make and enter into contracts;

2. To incur debts, liabilities or obligations;

3. To acquire, hold or dispose of property, contributions and donations of property, funds, services and other forms of assistance from persons, firms, corporations and governmental entities;

4. To sue and be sued in its own name; and

5. To exercise all powers necessary and proper to carry out the terms and provisions of this Agreement, or otherwise authorized by law.

Page 746 ends

ITEM NO. 12.

Joint Powers Agreement Page 5 of 19 Proposed July 17, 2019 (b) Said powers shall be exercised pursuant to the terms hereof and in the manner provided by law and are subject to the restrictions upon the manner of exercising the powers of the City of Lakewood.

ARTICLE 7 - BOARD OF DIRECTORS
(a) The Authority shall be governed by the Board of Directors that is hereby established and that shall be composed of one representative Director from each Member, who shall be selected from the legislative body of that Member by the process chosen by the Member. (b) Each legislative body, in addition to appointing its Director of the Board, shall appoint at least one alternate who shall be an officer or employee of the Member. The alternate shall have the authority to attend, participate in, and vote at any meeting of the Board when the regular Director for whom he or she is an alternate is absent from said meeting.

ARTICLE 8 - POWERS OF THE BOARD OF DIRECTORS
The Board of Directors of the Authority shall have the following powers and functions:
(a) The Board shall elect from its members pursuant to Article 10 of this Agreement an Executive Committee, to which it may give authority to make and implement any decisions, including those involving the administration of the Authority, except those decisions that would require an amendment of this Agreement, under Article 34 herein. (a) The Board shall adopt the operating budget of the Authority. (b) The Board may review all acts of the Executive Committee, including development of the memoranda of coverage, and shall have the power to modify and/or override any decision or action of the Executive Committee upon a majority vote of a quorum of the Board of Directors.
(c) The Board shall receive and review periodic accountings of all funds under Articles 18 and 19 of this Agreement.
(d) The Board shall have the power to conduct on behalf of the Authority all business of the Authority, including that assigned to the Executive Committee, that the Authority may conduct under the provisions hereof and pursuant to law. (e) The Board shall have such other powers and functions as are provided for in this Agreement.

Page 747 ends

ITEM NO. 12.

Joint Powers Agreement Page 6 of 19 Proposed July 17, 2019 (f) The Board shall not have the power to overturn the decisions of the Claims Committee in regard to the settlement of claims.

ARTICLE 9 - MEETINGS OF THE BOARD OF DIRECTORS
(a) Meetings. The Board shall provide for its regular, adjourned regular, and special meetings; provided, however, that it shall hold at least one regular meeting annually at a time and place determined by the Executive Committee.
(b) Minutes. The Secretary of the Authority shall cause minutes of regular, adjourned regular, and special meetings to be kept and shall, as soon as possible after each meeting, cause a copy of the minutes to be forwarded to each member of the Board. (c) Quorum. A majority of the Directors or Alternates of the Board shall constitute a quorum for the transaction of business, except that less than a quorum may adjourn from time to time. A vote of the majority of those Directors or Alternates present at a meeting shall be sufficient to constitute action by the Board.
(d) Compliance with the Brown Act. All meetings of the Board, including, without limitation, regular, adjourned regular, and special meetings, shall be called, noticed, held, and conducted in accordance with the provisions of the Ralph M. Brown Act, California Government Code Section 54950 et seq.

ARTICLE 10 - EXECUTIVE COMMITTEE
There shall be an Executive Committee of the Board of Directors that shall consist of nine (9) members. Two of the members of the Executive Committee shall be the President and Vice President of the Board of Directors. The other members of the Executive Committee shall be elected by the Board of Directors at the Annual Meeting for the terms provided in the Bylaws.

The President of the Authority, or the Vice President in his or her absence, shall serve as the Chairperson of the Executive Committee.

ARTICLE 11 - POWERS OF THE EXECUTIVE COMMITTEE
The Executive Committee of the Board of Directors shall have the following powers:
(a) The Executive Committee shall determine and select joint protection programs for the Authority including adoption of language of the Memoranda of Coverage and any limitations or endorsements to such Memoranda.

Page 748 ends

ITEM NO. 12.

Joint Powers Agreement Page 7 of 19 Proposed July 17, 2019 (b) The Executive Committee shall determine and select all insurance necessary to carry out the joint protection programs of the Authority. (c) The Executive Committee shall have the authority to approve membership in the Authority and Member participation in one or more joint protection programs in accordance with Articles 22 and 23.
(d) The Executive Committee shall have the authority to cancel Member participation in one or more joint protection programs in accordance with Articles 26 and 28. (e) The Executive Committee shall develop the operating budget of the Authority. (f) The Executive Committee shall have authority to contract for or develop various services for the Authority, including, but not limited to, claims adjusting, loss control, and risk management consulting services.
(g) The Executive Committee shall receive and act upon reports of the Advisory Committees and the Chief Executive Officer.
(h) The Executive Committee shall appoint the Treasurer and Chief Executive Officer of the Authority.
(i) The Executive Committee shall have the power to hire such persons as the Executive Committee deems necessary for the administration of the Authority. (j) The Executive Committee shall have the general supervisory and policy control over the day-to-day decisions and administrative activities of the Chief Executive Officer of the Authority.
(k) The Executive Committee shall have such other powers and functions as are provided for in this Agreement or as delegated by the Board of Directors, including the power to create committees it deems necessary.

ARTICLE 12 - MEETINGS OF THE EXECUTIVE COMMITTEE
The meetings of the Executive Committee shall be held and conducted in the same manner as the meetings of the Board of Directors, provided for in Article 9 of this Agreement.

In addition, the Committee shall make periodic reports to the Board of Directors, advising the Board of its decisions and activities concerning the implementation of the joint protection programs of the Authority.

Page 749 ends

ITEM NO. 12.

Joint Powers Agreement Page 8 of 19 Proposed July 17, 2019 ARTICLE 13 - CLAIMS COMMITTEE
The Executive Committee members, together with the Chairs of the Managers Committee and the Finance Officers Committee, shall sit as the Claims Committee of the Authority. The Claims Committee shall have authority to make all determinations regarding defense, indemnity, and settlement of claims under the Memoranda of Coverage. Decisions of the Claims Committee regarding settlement of claims shall be final and not subject to further review.

Decisions regarding coverage for defense or indemnity of claims shall be final, but subject to the Member’s appeal rights as detailed in the applicable Memorandum of Coverage.

ARTICLE 14 - OFFICERS OF THE AUTHORITY
(a) President and Vice President. The Board shall elect a President and Vice President of the Authority, each to hold office for a two-year term, except as hereinafter provided, and until a successor is elected. The election of the President and Vice President shall be on alternate years. In the event the President so elected ceases to be a member of the Board, or for other reasons is unable to serve, the Vice President shall assume the position of President and serve the remainder of the prior President’s unexpired term. In the event the Vice President so elected ceases to be a member of the Board, or for other reasons is unable to serve, the Executive Committee shall select from among its membership a new Vice President who shall serve the remainder of the unexpired term.
(b) Chief Executive Officer. The Chief Executive Officer shall be authorized and responsible for the overall management and administration of the Authority and its joint protection programs and shall select and appoint all employees. (c) Secretary. The Secretary shall be responsible for all minutes, notices and records of the Authority and shall perform such other duties as may be assigned by the Executive Committee.
(d) Treasurer. The duties of the Treasurer are set forth in Articles 18 and 19 of this Agreement.
(e) Attorney. The Executive Committee shall select an attorney for the Authority.

The attorney shall serve at the pleasure of the Executive Committee. (f) The Executive Committee shall have the power to appoint such other officers as may be necessary in order to carry out the purposes of this Agreement.

Page 750 ends

ITEM NO. 12.

Joint Powers Agreement Page 9 of 19 Proposed July 17, 2019 ARTICLE 15 - ADVISORY COMMITTEES
The Board of Directors or Executive Committee may establish Advisory Committees as deemed necessary. Such Committees shall meet from time to time as deemed necessary by them, and shall make recommendations to the Executive Committee based upon their expertise.

ARTICLE 16 - COVERAGE
(a) The coverage provided for Members through the Authority’s joint protection programs may include protection for Personal Injury, Errors and Omissions, Contractual and Comprehensive Liability, Workers’ Compensation and such other areas of coverage as the Executive Committee may determine. Such coverage may be through insurance as defined in Article 1.
(b) The Authority shall maintain limits of coverage for Members determined by the Executive Committee to be adequate. The Executive Committee may arrange for a group policy to be issued for Members interested in obtaining additional coverage above the limits of coverage at an additional cost to those participating Members. (c) The Executive Committee shall arrange for the purchase of insurance it deems necessary to protect the funds of the Authority against catastrophes. The Executive Committee shall have the authority to discontinue purchase of this insurance, if at a future time the Executive Committee determines that it is no longer needed to protect the Authority's funds.

ARTICLE 17 - DEVELOPMENT OF THE JOINT PROTECTION PROGRAMS (a) The joint protection programs provided by the Authority shall extend to agencies or authorities as determined in the Memorandum of Coverage of each program. (b) The cost allocation formula for each joint protection program shall be adopted by the Executive Committee.
(c) The contribution for each Member’s participation in a joint protection program shall be determined by the Executive Committee.
(d) The cost allocation formula adopted by the Executive Committee for each joint protection program may provide for retrospective adjustments, and each Member shall pay any additional contribution required by such retrospective adjustment.

Page 751 ends

ITEM NO. 12.

Joint Powers Agreement Page 10 of 19 Proposed July 17, 2019 (e) The Executive Committee may provide for payment of a portion of such contributions to be made over a period of time on terms set by the Executive Committee. (f) The Executive Committee may expand the Authority's offerings of joint protection programs to make available for Members’ protection in addition to that which is provided for in this Agreement.
(g) Contributions held by the Authority for each joint protection program shall be accounted for separately, so that only Members participating in the program will share in pooled losses and expenses of that program. This separate accounting shall not prohibit the Authority from commingling contributions for purposes of investment, nor from paying losses or expenses when due from all available funds. As deemed appropriate, the Executive Committee may provide for inter-program transfers in the forms of loans, letters of credit, or other financial arrangements that stipulate that the lending program will be made whole by the borrowing program through the timely repayment of principal and compensation for the value of lost investment earnings during the financing period.

ARTICLE 18 - ACCOUNTS AND RECORDS
(a) Budget. The Authority shall adopt an operating budget, pursuant to Article 11(e) of this Agreement.
(b) Funds and Accounts. The Treasurer of the Authority shall establish and maintain such funds and accounts as may be required by good accounting practice or by the Executive Committee. Books and records of the Authority in the hands of the Treasurer shall be open to any inspection at all reasonable times by representatives of a Member. (c) Treasurer's Report. The Treasurer, within 270 days after the close of each fiscal year, shall give a complete written report of all financial activities for such fiscal year to the Board and to each Member.
(d) Annual Audit. The Executive Committee shall provide for a certified, annual audit of the accounts and records of the Authority. The audit shall conform to generally accepted auditing standards. When such an audit of the accounts and records is made by a Certified Public Accountant, a report thereof shall be filed as a public record with each of the Members.

Such report shall be filed within nine months of the end of the year under examination.

Page 752 ends

ITEM NO. 12.

Joint Powers Agreement Page 11 of 19 Proposed July 17, 2019 (e) Costs. Any costs of the audit, including contracts with, or employment of, Certified Public Accountants, in making an audit pursuant to this Article, shall be borne by the Authority and shall be considered included within the term “administrative costs.” ARTICLE 19 - RESPONSIBILITY FOR MONIES
(a) The Treasurer of the Authority shall have the custody of and disburse the Authority's funds. He or she shall have the authority to delegate the signatory function of Treasurer to such persons as are authorized by the Executive Committee. (b) A bond or other insurance protection providing coverage for embezzlement or other criminal acts in an amount determined by the Executive Committee to be adequate shall be required of all officers and personnel authorized to disburse funds of the Authority. The cost of such bond or insurance protection shall be paid for by the Authority. (c) The Treasurer of the Authority shall perform the duties described in California Government Code Sections 6505.5 and 6505.6 pertaining to the receipt, safekeeping, payment, and reporting of Authority funds.

ARTICLE 20 - RESPONSIBILITIES OF THE AUTHORITY
The Authority shall perform the following functions in discharging its responsibilities under this Agreement:
(a) Provide loss protection as necessary, through various means including but not limited to insurance or other financial risk transfer, by negotiation or bid and purchase. (b) Assist Members in obtaining coverage for risks not included within the joint protection programs of the Authority.
(c) Assist each Member’s assigned risk manager with the implementation of that function within the Member.
(d) Provide loss prevention and safety and consulting services to Members as required, which may include programs for grants or loans to Members for loss prevention or safety purposes.
(e) Provide claims adjusting and subrogation services for claims covered by the Authority's joint protection programs.

Page 753 ends

ITEM NO. 12.

Joint Powers Agreement Page 12 of 19 Proposed July 17, 2019 (f) Provide loss control and analysis by the use of statistical analysis, data processing, and record and file keeping services, in order to identify high exposure operations and to evaluate proper levels of self-retention and deductibles. (g) Provide contract review when requested by Members to determine sufficiency of indemnity and insurance provisions.
(h) Conduct risk management evaluations of each Member to encourage implementation of best risk management practices.
(i) The Authority shall have standing and shall pursue recovery in its own name or in the name of a Member for losses covered by a joint protection program. Such recovery may be through subrogation, cross complaint, or salvage, as appropriate. (j) The Authority shall have such other responsibilities as deemed necessary by the Board of Directors or Executive Committee in order to carry out the purposes of this Agreement.

ARTICLE 21 - RESPONSIBILITIES OF MEMBERS
Members shall have the following responsibilities:
(a) The legislative body of each Member shall appoint a representative and at least one alternate representative to the Board of Directors, pursuant to Article 7 of this Agreement. (b) Each Member shall appoint an employee to be responsible for the risk management function of that Member, and to serve as a liaison between the Member and the Authority as to risk management.
(c) Each Member shall maintain an active safety officer and/or committee, and shall consider all recommendations of the Authority concerning unsafe practices or exposures. (d) Each Member shall pay its contribution and any retrospective adjustment promptly to the Authority when due. After withdrawal or termination, each Member shall pay promptly to the Authority its share of any additional contribution, when and if required of it by the Executive Committee under Articles 24, 25, 26, 27, and 28 of this Agreement. (e) Each Member shall report all claims to the Authority in accordance with the policies and procedures governing the joint protection program to which the claim applies. (f) Each Member shall provide the Authority with such other information or assistance as may be necessary for the Authority to carry out the joint protection programs under this Agreement.

Page 754 ends

ITEM NO. 12.

Joint Powers Agreement Page 13 of 19 Proposed July 17, 2019 (g) Each Member shall cooperate with and assist the Authority in the pursuit of recoveries for losses covered by a joint protection program, including assigning its right to recover subrogated amounts, and if necessary, executing a written agreement to effect such assignment.
(h) Each Member shall in any and all ways cooperate with and assist the Authority, and any insurer of a joint protection program, in all matters relating to this Agreement and covered losses, and will comply with all bylaws, rules and regulations adopted by the Board of Directors and Executive Committee.
(i) Each Member shall actively participate in the Authority’s Risk Management Evaluation and Loss Control Action Plan (LossCAP) programs.

ARTICLE 22 - NEW MEMBERS
The Authority shall allow entry of new Members approved by the Executive Committee. (a) Executive Committee approval for new Members shall be according to the following procedure:

1. Investigation of each potential member by Authority staff and preparation of a report;

2. Review of the report by the Underwriting Committee, which shall then be forwarded to all Directors for review and comment;

3. Review by the Directors and submittal of comments to the Chief Executive Officer during the comment period; and

4. Approval by a two-thirds vote of the Executive Committee. (b) Membership is effective immediately upon approval by the Executive Committee and execution of this Agreement by the new Member to join the Authority. (c) A Member entering under this Article may be required to pay its share of organization expenses as determined by the Executive Committee including those necessary to analyze its loss data and determine its contributions.
(d) Should the Board of Directors rescind the membership approval made by the Executive Committee pursuant to Article 8(b), the Member shall be given at least ninety days advance notice of the effective date of termination of Membership, and the Member shall be

Page 755 ends

ITEM NO. 12.

Joint Powers Agreement Page 14 of 19 Proposed July 17, 2019 treated as if it had withdrawn on the effective date, and shall have the same responsibilities as if the Member had voluntarily withdrawn on the effective date. (e) New Members, accepted into membership after July 1, 2016, shall have provisional membership status throughout the initial five years of membership. During the provisional membership period:

1. The Authority reserves the right to retrospectively adjust the cost of coverage for provisional Members based on actual claims development, in the event that it varies materially from claims data provided to the Authority at the time of the initial underwriting; and

2. The Authority reserves the right to terminate membership of any provisional Member at the end of a protection period, with or without cause, by a two-thirds vote of the Executive Committee, provided the Executive Committee gives the provisional Member at least ninety days advance notice of the effective date of the termination of membership.

3. A provisional Member subject to termination under Paragraph 2, above, may appeal said termination to a panel of five chief executives randomly selected from the other Members.
(f) If a provisional Member does not complete five successive years of membership in good standing, due to withdrawal or termination, that provisional Member is not eligible to receive in any refunds, dividends, or equity distributions that may occur during the provisional membership period or at any time thereafter.

ARTICLE 23 - PROGRAM PARTICIPATION
The Authority shall allow for the participation of Members in the joint protection programs as approved by the Executive Committee.
(a) Executive Committee approval for new Members shall be according to the following procedure:

1. Investigation of a potential participant by Authority staff and preparation of a report;

2. Consideration of the report by the Underwriting Committee with a recommendation to the Executive Committee; and

Page 756 ends

ITEM NO. 12.

Joint Powers Agreement Page 15 of 19 Proposed July 17, 2019

3. Approval by a two-thirds vote of the Executive Committee, (b) Program participation is effective immediately upon approval by the Executive Committee and execution of appropriate resolutions and/or other documents by the new participant allowing participation in the joint protection program. (c) A Member entering into a joint protection program may be required to pay its share of program development expenses as determined by the Executive Committee including those necessary to analyze its loss data and determine its contributions. (d) Should the Board of Directors rescind the program participation approval made by the Executive Committee pursuant to Article 8(b), the Member shall be given at least ninety days advance notice of the effective date of termination of program participation, and the Member shall be treated as if it had withdrawn on the effective date, and shall have the same responsibilities as if the Member had voluntarily withdrawn on the effective date.

ARTICLE 24 - WITHDRAWAL
(a) A Member that enters into this Agreement may not withdraw as a party to this Agreement and as a Member of the Authority for a three-year period commencing on the effective date of its membership.
(b) A Member that enters into a joint protection program may not withdraw as a participant in that program for a three-year period commencing on the effective date of its participation in the joint protection program.
(c) After the initial three-year non-cancellable commitment to membership in the Authority or participation in a joint protection program, a Member may withdraw only at the end of any protection period, provided it has given the Authority a twelve-month written notice of its intent to withdraw from this Agreement and/or any joint protection programs in which it participates.

ARTICLE 25 - EFFECT OF WITHDRAWAL
(a) The withdrawal of any Member from this Agreement shall not terminate the Agreement, and no Member by withdrawing shall be entitled to payment or return of any deposits, contributions, consideration or property paid, or donated by the Member to the Authority, or to any distribution of assets.

Page 757 ends

ITEM NO. 12.

Joint Powers Agreement Page 16 of 19 Proposed July 17, 2019 (b) The withdrawal of any Member from participation in a joint protection program shall not terminate the Member’s responsibility to contribute its share of contributions or funds to the program until all claims, or other unpaid liabilities, covering the period the Member was signatory hereto have been finally resolved and a determination of the final amount of payments due from the Member or credits to the Member for the period of its participation has been made by the Executive Committee. In connection with this determination, the Executive Committee may exercise similar powers to those provided for in the Article 30(c) of this Agreement.

ARTICLE 26 - CANCELLATION OF PROGRAM PARTICIPATION
The Executive Committee shall have the right to cancel any Member’s participation in one or more joint protection programs upon the recommendation of the Chief Executive Officer and in accordance with the Healthy Members Practices and Procedures protocol. Any Member so cancelled shall on the effective date of the cancellation be treated the same and shall have the same responsibilities as if the Member had voluntarily withdrawn from the joint protection program.

ARTICLE 27 - CANCELLATION OF MEMBERSHIP
The Board of Directors shall have the right to cancel the membership of any Member based upon a three-fourths vote of the entire Board of Directors. Any Member so cancelled shall on the effective date of the cancellation be treated the same as if the Member had voluntarily withdrawn from membership, and said Member shall have the same responsibilities.

Cancellation, as specified above, shall be within the sole discretion of the Board of Directors and may occur with or without cause, and the Board's discretion shall not be subject to any further review or appeal.

ARTICLE 28 - CANCELLATION FOR NON-PAYMENT
In the absence of a payment plan as authorized in Article 17(e), any Member’s participation in a joint protection program may be cancelled automatically in the event of a failure of the Member to pay any contribution as required in this Agreement. Should any contribution remain unpaid more than thirty (30) days after receipt of notice by the Member, the Authority will send a notice advising the Member that it is in default under the terms of this Agreement, and that the Member’s participation will be cancelled within thirty (30) additional

Page 758 ends

ITEM NO. 12.

Joint Powers Agreement Page 17 of 19 Proposed July 17, 2019 days unless full payment is received. Failure to make full payment as required in the notice of default shall be considered a withdrawal by the Member from the program effective on the date of cancellation specified in the notice of default; and no coverage shall apply to any claims submitted subsequent to the effective date of cancellation that arise from occurrences taking place during the current protection period. A Member cancelled for non-payment shall remain liable for a prorated share of the current year’s contribution and for all retrospective adjustment contributions through the date of cancellation and attributable to prior years of coverage in which it participated.

ARTICLE 29 - ATTORNEY FEES AND COSTS OF COLLECTION
Should any Member or former Member fail to pay any contribution or retrospective adjustment contribution when due, the Member shall also be liable to the Authority for attorney fees and costs incurred by the Authority in pursuing collection of such sums.

ARTICLE 30 - TERMINATION AND DISTRIBUTION
(a) This Agreement may be terminated by the written consent of three-fourths of the Members; provided, however, that this Agreement and the Authority shall continue to exist for the purpose of disposing of all claims, distribution of assets and all other functions necessary to wind up the affairs of the Authority.
(b) Upon termination of this Agreement, all assets of the Authority shall be distributed only among the parties that have been Members of a joint protection program, including any of those parties that previously withdrew pursuant to Article 24 of this Agreement, in accordance with and proportionate to their cash (including contributions) payments and property (at market value when received) contributions made reduced by their share of losses and expenses paid during the term of this Agreement. The Executive Committee shall determine such distribution within six months after the last pending claim or loss covered by this Agreement has been finally disposed of.
(c) The Executive Committee is vested with all powers of the Authority for the purpose of winding up and dissolving the business affairs of the Authority. These powers shall include the power to require Members, including those that were Members at the time a claim arose or at the time a loss was incurred, to pay their share of any additional amount of

Page 759 ends

ITEM NO. 12.

Joint Powers Agreement Page 18 of 19 Proposed July 17, 2019 contribution deemed necessary by the Executive Committee for final disposition of all claims and losses covered by this Agreement. A Member’s share of such additional contributions shall be determined on the same basis as that provided for annual contributions in Article 17 of this Agreement, and shall be treated as if it were the next year's annual contribution for that Member. (d) In the absence of an Executive Committee, the Secretary shall exercise all powers and authority under this Article. The decision of the Executive Committee or Secretary under this Article shall be final.
(e) A provisional Member that does not complete five years of membership pursuant to Article 22 shall not be entitled to any distribution of assets upon termination of this Agreement.

ARTICLE 31 - PROVISION FOR BYLAWS
The Board shall cause to be developed Authority Bylaws. Each Member shall receive a copy of any Bylaws developed under this Article.

ARTICLE 32 - NOTICES
Notices to Members hereunder shall be sufficient if delivered to the administrative office of the respective Member. Delivery may be by U.S. Mail, email, or other form of notice acceptable under the Ralph M. Brown Act.

ARTICLE 33 – PROVISION FOR MAILED BALLOTS
Unless specifically prohibited elsewhere within this Agreement or the Bylaws, all actions contemplated by the Board of Directors may be voted on by the Members by mailed ballot as defined in the Bylaws. This shall not include the election of officers or members of the Executive Committee. Actions taken by mailed ballot shall require the same percentage of votes cast by the entire Membership as the percentage that would be required of a quorum voting on an item at a Board of Directors meeting.

Page 760 ends

ITEM NO. 12.

Joint Powers Agreement Page 19 of 19 Proposed July 17, 2019 ARTICLE 34 - AMENDMENT
With the exception of Article 27, this agreement may be amended by two-thirds vote of the Directors present at a duly held Board of Directors meeting, or by a two-thirds vote of the Membership for an amendment placed before the Membership by mailed ballot. Amendment to Article 27 shall require a three-fourths vote of the entire Board of Directors at a duly held Board of Directors meeting, or by a three-fourths vote of the Membership for an amendment placed before the Membership by mailed ballot.

ARTICLE 35 - PROHIBITION AGAINST ASSIGNMENT
With the exception of Article 21 (g), no Member may assign any right, claim or interest it may have under this Agreement, and no creditor, assignee or third party beneficiary of any Member shall have any right, claim or title to any part, share, interest, fund, contribution, or asset of the Authority.

ARTICLE 36 - AGREEMENT COMPLETE
The foregoing constitutes the full and complete Agreement of the parties. There are no oral understandings or agreements not set forth in writing herein.

IN WITNESS WHEREOF, the parties hereto have first executed this Agreement by authorized officials thereof on the date indicated below.

Date:

MEMBER:

By:

Page 761 ends

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ITEM NO. 12.
2026 ANNUAL BOARD OF DIRECTORS MEETING

VOTING DELEGATE/ALTERNATE FORM
On an annual basis, the California JPIA asks members to update their information in order that we may better serve you. If you have had a reorganization, please forward us your Notice of Reorganization with your current governing body and your list of Appointments for the California JPIA Director and Alternate(s), along with this form. In accordance with the Authority’s Bylaws, your governing body must designate one voting delegate and at least one alternate. You may designate additional alternates. The voting delegate must be a member of the governing body. Alternate(s) may be from the governing body or from staff.

Please note: In order to vote at the Annual Board of Directors Meeting, voting delegates and alternates must be designated by your governing body. Please attach either your appointment list or minute action as proof of designation. As an alternative, your agency may sign this form, affirming that the designation reflects the action taken by the governing body.

1. VOTING DELEGATE - PRIMARY
Name:

Title:

2. VOTING DELEGATE - ALTERNATE 3. VOTING DELEGATE - ALTERNATE Name: Name:

Title: Title:

If you have more than two alternates, please attach a separate sheet.

PLEASE ATTACH APPOINTMENT LIST DESIGNATING VOTING DELEGATE AND ALTERNATES.

OR
ATTEST: I affirm that the information provided reflects action by the governing body to designate the voting delegate and alternate(s).

Name: Title: ______________________________
Email: ___ Phone: ________________________
Signature: Date: ______________________________
Please complete and return to:

By Mail: By Email:

California JPIA E-mail: [email protected]
ATTN: Veronica Ruiz
8081 Moody Street
La Palma, CA 90623
If you have questions or need assistance with the Board of Directors Certification or updating your governing body information, please contact Agency Clerk Veronica Ruiz at (562) 467-8736 or [email protected]. 8081 Moody Street, La Palma, CA 90623 | www.cjpia.org | (562) 467-8700 AGENCY:

ATTACHMENT 8
Town of Los Gatos

Page 775 ends

ITEM NO. 12.

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: 12/02/2025
ITEM NO: 19
DATE: December 2, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Resolution Terminating Membership in the Pooled Liability Assurance Network Joint Powers Authority and Authorizing Membership in the California Joint Powers Insurance Authority to Obtain Risk Management and Insurance Coverages
RECOMMENDATION: Adopt a resolution authorizing the Town Manager and Town Attorney to issue written notice of termination of the Town’s membership in the Pooled Liability Assurance Network Joint Powers Authority (PLAN JPA) at the end of the fiscal year and to execute all necessary agreements to join the California Joint Powers Insurance Authority (CJPIA) and obtain risk management and insurance coverages.

FISCAL IMPACT:

Town staff estimates ongoing budget annual savings of up to approximately $250,000. While experience and claim history can change rates over time, the table below summarizes the four-year history of PlanJPA premiums and the current quotes from CJPIA.

Page 776 ends

ITEM NO. 12.

PAGE 2 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
Future rates are estimates, as current-year claims history and insurance authority negotiations can affect premiums. However, the reduction of the self-insured retention for the CJPIA liability program from the current $50,000 will allow the Town to reduce the self-insured retention budget. The CJPIA estimate includes $50,000 to account for property-based retentions, while the PlanJPA budget of $200,000 annually reflects retentions for both liability and property programs.

STRATEGIC PRIORITY:

Evaluating alternative risk-management services and insurance pooling arrangements aligns with the Town’s strategic priority of ensuring prudent financial management.

Improving coverage, reducing volatility, and stabilizing long-term costs support this goal.

BACKGROUND:

The Town of Los Gatos has participated in the Pooled Liability Assurance Network Joint Powers Authority (PlanJPA) since December 2017. PlanJPA was created when former Association of Bay Area Governments (ABAG) PLAN member agencies elected to separate from ABAG and form an independent joint powers authority dedicated to municipal risk pooling. On December 5, 2017, the Town Council approved participation in PlanJPA and authorized execution of a Joint Powers Agreement, enabling the transfer of assets and liabilities from the ABAG PLAN Corporation to the new authority.

PlanJPA’s governing documents confirm that the new JPA was formed to assume all assets, liabilities, and obligations of the former ABAG PLAN, and to administer pooled liability and property programs for member agencies. Under Article XIX of the PLAN JPA Joint Powers Agreement, withdrawal requires at least six months’ written notice and must occur at the end of a fiscal year.

PlanJPA provides pooled liability coverage, which includes general liability, bodily injury, property damage, personal injury, public officials’ errors and omissions, and employee benefit plan administration liability. PlanJPA also provides property coverage through participation in the Alliant Property Insurance Program (APIP), which offers a shared per-occurrence property limit for scheduled locations and associated sublimits for supplemental coverages. Property deductibles include a member-level per-occurrence deductible for most property and vehicle losses, with additional program-level deductibles applicable to certain types of losses. PlanJPA’s property program also includes boiler and machinery, cyber, crime, and pollution liability coverage, each administered through APIP.

As part of efforts to seek opportunities for broader coverage at a reduced cost, Town staff initiated an evaluation of alternative pooled insurance arrangements. Staff obtained

Page 777 ends

ITEM NO. 12.

PAGE 3 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
coverage information and quotations from the Bay Cities Joint Powers Insurance Authority (BCJPIA) and the California Joint Powers Insurance Authority (CJPIA), both of which provide pooled liability and property coverage for public agencies in California.

CJPIA appears to provide a more robust program and more competitive rates.

Using the detailed coverage documents provided by CJPIA, staff compared coverage structures, program design, and available member services to the Town’s current program under PlanJPA. Based on that review, Town staff recommend moving to the California Joint Powers Insurance Authority for general liability, property, cyber, crime, and pollution coverage.

Both insurance authorities offer similar types of coverage with nuanced differences.

However, for the Town’s highest-risk categories of police and general liability, the CJPIA program provides higher coverage limits and the opportunity to eliminate the existing $50,000 self-insured retention. The change is estimated to result in approximately $100,000 in annual savings, and allows the Town to discontinue budgeting $200,000 each year to cover potential self-insured retention payments under the current $50,000 per-occurrence structure. When retaining $50,000 for property retention, Town staff estimates a budgetary savings of approximately $250,000.

On November 6, 2025, the CJPIA Underwriting Committee considered the Town’s application and unanimously approved a positive membership recommendation for their Executive Board. On November 19, 2025, the Executive Board unanimously approved the Town’s membership application to the CJPIA for July 1, 2026.

DISCUSSION:

Insurance joint powers authorities are public-sector cooperatives. They allow cities, towns, and special districts to band together to manage risk, stabilize long-term insurance costs, and secure broad coverage that would be prohibitively expensive on an individual basis. A JPA spreads the financial impact of severe claims across all members, but it also builds a professional infrastructure for claims handling, litigation management, loss control, and training. In practice, participating agencies protect themselves against liability, employment claims, property loss, cyber incidents, and other exposures that a municipal organization inevitably encounters. The JPA structure gives each member the collective strength of the group while retaining local control through a governing board made up of the member agencies themselves.

The Town of Los Gatos’s current provider, the Pooled Liability Assurance Network Joint Powers Authority, is built around that cooperative model. PlanJPA was formed in 2017 when the former ABAG PLAN members separated from the Association of Bay Area Governments and created an independent JPA to assume all existing assets, liabilities, and obligations. Its current membership of 28 agencies is concentrated in Bay Area

Page 778 ends

ITEM NO. 12.

PAGE 4 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
cities and towns, including Los Gatos, Saratoga, Campbell, Cupertino, and other communities as far north as Fairfield and south as Morgan Hill. The organization provides pooled liability and property coverage, supported by pooled retained limits and excess insurance. Its programs cover general liability, public officials’ errors and omissions, auto liability, employment-related exposures, and property coverages ranging from buildings and contents to contractor’s equipment, business interruption, and boiler and machinery losses. PLAN also purchases or coordinates cyber, pollution, and crime policies for its members. The structure is collaborative and regionally focused, its board is comprised of one representative per member agency, and its services include claims management, training, and risk control.

The California Joint Powers Insurance Authority (CJPIA) is a larger and longer established statewide pooling organization. Its liability program is structured as a self-insured pool backed by significant reinsurance capacity. The liability program shows a primary limit of 30 million dollars for each member in a pooled structure that includes defense, indemnity, excess liability, public officials’ errors and omissions, employment practices liability, automobile liability, and employee benefits administration liability. Excess coverage increases limits up to $50 million.

CJPIA’s property program provides all-risk coverage that addresses buildings, contents, business interruption, boiler and machinery, and multiple extensions and sublimits for items such as newly acquired property, course-of-construction projects, and scheduled or unscheduled infrastructure. CJPIA supplements this with dedicated cyber liability insurance, offering firstparty incident response, liability protection, business interruption, cyber extortion, and e-crime coverages with defined limits and retentions. Under Article 24(a) of the CJPIA Joint Powers Agreement (Attachment 2), new members commit to a mandatory three-year initial term during which withdrawal is not permitted. After the initial three-year period, Article 24(c) requires members to provide twelve months’ written notice prior to withdrawing at the end of a protection period.

CJPIA, in addition to the insurance coverage, provides a proactive and focused risk management program. This program includes regular risk management reviews by a dedicated senior risk manager, in which the CJPIA completed the initial review in preparation for the Town’s membership. Additionally, the CJPIA provides other cost-saving benefits, such as a subscription to the police Lexipol policy manual (Los Gatos currently pays about $13,000 for this service), ongoing wellness services for police, an on-call attorney for quick responses on key employment-related matters, on-call emergency public information officer services for critical incidents, and robust training and best practices templates.

The CJPIA includes over 125 cities and public entities throughout California and is large enough to support broad coverage offerings, specialized training programs, claims oversight, and a deep catalogue of risk-management resources. Current membership includes the Midpeninsula Regional Open Space District (MROSD) in San Mateo County to

Page 779 ends

ITEM NO. 12.

PAGE 5 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
the north and members as far as the Mexican border in both San Diego and Imperial counties. While 79% of its members are cities, Pacific Grove and Seaside are the furthest north, so Los Gatos would become its northernmost town, abutting their current member MROSD.

The CJPIA Bylaws require each member agency to appoint a Director and an Alternate Director to the CJPIA Board of Directors (Attachment 3). Meetings, notices, and procedures of the Authority are governed by the CJPIA Bylaws, which incorporate Brown Act requirements as described in Article II and Article III of the Bylaws.

Insurance Review Due Diligence
Staff conducted a comparison of the Town’s current insurance and risk management programs under PlanJPA and the programs available through CJPIA. The review focused on the structure of each pool, the scope of available coverage, deductible and retention levels, and how liability, property, cyber, crime, and pollution coverages are delivered and administered. Additionally, the comparison included the cost and budget associated with the plans.

Under PlanJPA, liability coverage is structured around a pooled primary layer sitting above a Town-level retention, with additional excess protection purchased above that layer. PlanJPA’s property insurance is placed through the Alliant Property Insurance Program (APIP), with a shared program limit and standard member deductibles applied to most losses, along with higher internal pool deductibles for certain categories of risk.

Ancillary coverages such as cyber liability, crime, pollution liability, and boiler and machinery are also accessed through the APIP structure.

CJPIA administers its own pooled liability program with integrated cyber and employee liability coverage, together with an all-risk property program that incorporates APIP-style sublimits for business interruption and related coverages. The CJPIA property program is structured so that internal deductibles are managed authority-wide rather than by applying a Town-specific self-insured retention. CJPIA also provides separate crime, and pollution programs with defined member-level deductibles and authority-level self-insured retentions, which the Town intends to acquire.

Both the PlanJPA and CJPIA operate as member-driven joint powers agencies with formal governance structures, shared decision-making, and defined amendment and subrogation practices within their Memoranda of Coverage. While both organizations provide comprehensive pooled coverage solutions, they differ somewhat in their liability limits, treatment of member deductibles and retentions, and in how property, cyber, and pollution programs are structured. The following sections set out a line-by-line comparison of the two programs. Overall, both programs adequately cover and address

Page 780 ends

ITEM NO. 12.

PAGE 6 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
risk exposures for the Town of Los Gatos.

General Description of Insurance Programs
Both authorities provide similar lines of insurance programs covering general liabilities and property coverages. Some coverages have optional additions and vary in self-insured retentions and coverage limits, but both sets of programs are similar. Some coverages are included in one insurance program, while those coverages may be reflected separately in the other programs. Holistically, the following provides a reasonable description of the insurance and coverage programs, which include:

Liability Insurance
Liability insurance protects the agency against claims alleging bodily injury, property damage, personal injury, civil rights violations, automobile liability, employment practices liability (included separately in other plans called ERMA), or errors and omissions by public officials. It provides legal defense and indemnity when the agency becomes legally responsible for damages resulting from its operations, employees, or decision-making.

Property Insurance
Property insurance covers physical assets owned or used by the agency, including buildings, facilities, equipment, vehicles, contents, and other scheduled or unscheduled property. Coverage typically includes losses caused by fire, theft, vandalism, weather events, mechanical breakdown, and other accidental direct physical damage. It may also include business interruption, debris removal, and extra expenses needed to continue operations after a loss.

ERMA (Employee Risk Management Authority)
ERMA provides employment-practices liability coverage, including defense and indemnity for claims such as wrongful termination, discrimination, harassment, retaliation, failure to hire or promote, and violations of state and federal employment laws. The program also offers training, loss-control resources, and claims management support to reduce the frequency and severity of workplace-related litigation.

Self-Insured Retentions (SIRs)
A self-insured retention is the portion of a loss that the agency pays directly before pooling or excess coverage applies. It functions like a deductible but is handled differently in public-sector pooling, where the member agency manages and funds the

Page 781 ends

ITEM NO. 12.

PAGE 7 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
initial layer of liability up to the SIR amount, after which the JPA’s pooled coverage or excess insurance responds.

Cyber Coverage
Cyber coverage protects the agency against costs and liabilities arising from data breaches, network intrusions, ransomware, business interruption caused by system failures, e-crime losses, and digital extortion. It typically includes incident response services, forensics, notification and credit-monitoring expenses, regulatory defense, restoration of corrupted data, and liability for unauthorized access or disclosure of personal information.

Pollution Coverage
Pollution coverage provides protection for sudden and accidental releases of pollutants, contamination of soil or water, disinfection events, sewer backup, mold or legionella occurrences, and third-party claims arising from environmental damage. It may also include remediation expenses, emergency response costs, business interruption related to pollution incidents, and coverage for potable-water or wastewater systems.

Crime Coverage
Crime coverage protects the agency against financial losses resulting from dishonest or fraudulent acts. This can include employee theft, forgery or alteration of documents, theft of money or securities inside or outside agency premises, computer fraud, fundstransfer fraud, counterfeit currency, credit-card forgery, and social-engineering or impersonation schemes.

Public Official Bond
A public official bond guarantees the honest and faithful performance of duty by designated officials, which often includes finance officers, treasurers, or others who handle public funds. If an official fails to perform required duties or commits a dishonest act that causes financial loss, the bond provides reimbursement to the agency up to the bond’s stated amount.

Risk Exposure Considerations
The Town’s risk exposures arise from the full span of municipal operations, including police and public safety activities, street and infrastructure maintenance, land-use decisions, parks and recreation programs, employment practices, public-official governance, large and aging physical assets, cyber systems, and environmental

Page 782 ends

ITEM NO. 12.

PAGE 8 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
management responsibilities.

Both PlanJPA and CJPIA are structured to absorb these exposures through pooled and excess liability, property, and ancillary coverages, but they do so at different scales and with different coverage designs. Evaluating some of these differences helps illustrate how each authority mitigates the Town’s exposure to financial loss.

PlanJPA
PlanJPA is a regional pool composed of 28 Bay Area cities and towns, including Los Gatos. Its risk-sharing structure is built around various self-insured retentions, which is $50,000 for Los Gatos’s liability program and shared excess insurance for liability and property claims. PlanJPA provides coverage for general liability, bodily injury, property damage, personal injury, public officials’ errors and omissions, auto liability, and property losses, including buildings, contents, equipment, business interruption, and boiler and machinery failures. These exposures are addressed through a pooled coverage layer above a member’s retention limit, followed by excess insurance purchased by the insurance pool.

Because the pool is regionally concentrated, member agencies often face correlated exposures such as earthquake, flood, and regional litigation trends. While the property program provides extensive sublimits, including flood and earthquake when purchased (Los Gatos does not participate), the overall all-risk limit is shared and subject to impacts to more than one agency when the exposure impacts others. The pool’s liability protection depends on the collective financial strength of its members, its pooled reserves, and the structure of its excess insurance.

The benefits of PlanJPA’s structure include closer governance relationships with other cities in the Bay Area. The limitations include a smaller pool size, lower aggregate purchasing power, and the potential for large losses within the region to affect the program more sharply. Further, the lower excess coverage of $30 million could result in Town exposure should a claim result in a liability greater than the coverage level.

These would be high risk, low frequency events, but with public safety and infrastructure liabilities, they are a possibility.

CJPIA Risk Exposure Profile
CJPIA, with over 125 member agencies statewide, addresses municipal risk on a larger scale. Its liability program Memorandum of Coverage provides $30 million of primary pooled protection per member, backed by excess insurance purchased by the Authority, increasing coverage to $50 million. The broader membership base distributes high-severity risks across many agencies, reducing volatility for any single member. The statewide pool also smooths regional risk

Page 783 ends

ITEM NO. 12.

PAGE 9 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
concentrations; for example, earthquake, major litigation, or catastrophic employment matters affecting one region are absorbed across a wider financial base.

CJPIA’s property program offers comprehensive all-risk coverage, business-interruption protections, coverage for newly acquired property, course-of-construction projects, scheduled and unscheduled infrastructure, boiler and machinery, and automatic extensions that address the evolving nature of a municipal property portfolio. CJPIA supplements this with a dedicated cyber program providing first-party breach response, data restoration, extortion, and liability protections.

The scale of CJPIA allows for greater diversification of losses, the ability to purchase broader excess and reinsurance layers, and access to specialized risk-management services. The tradeoff is that governance occurs within a larger, more complex organization, and some programs, such as the property program, carry higher administrative or participation costs. However, the coverage depth and financial protections are designed to absorb high-severity municipal exposures more fully, and the overall cost of the programs provides the Town with some financial relief.

Comparative Assessment of Town Risk Exposures
The following section provides a detailed comparison of the Town’s current coverage through PLAN JPA and the coverage available through the CJPIA. Because insurance pooling programs differ significantly in structure, limits, deductibles, and the way risk is shared among members, understanding these differences is beneficial for determining which program delivers the strongest financial protection and most predictable cost exposure for the Town. The narrative that follows summarizes each program’s coverage in key areas and then identifies where the CJPIA program provides added value.

Liability Coverage

PLAN JPA
PLAN JPA provides liability coverage that includes general liability, auto liability, bodily injury, property damage, personal injury, and public officials’ errors and omissions.

Under this structure, the Town must pay its own self-insured retention, which is typically about $50,000 per occurrence before the pooled layer begins to respond. Once the retention is satisfied, the combination of pooled and excess layers provides roughly $30 million in total per occurrence liability protection.

CJPIA
CJPIA provides broad liability coverage that includes bodily injury, property damage,

Page 784 ends

ITEM NO. 12.

PAGE 10 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
auto liability, public officials’ liability, employment practices liability (this is a separate additional cost with PlanJPA), and media liability. Unlike PLAN JPA, the CJPIA program provides true first-dollar coverage, so the Town does not pay a self-insured retention before the program responds. CJPIA provides a total liability tower of $50 million per occurrence through primary and excess layers.

Differences and Value Added
CJPIA provides two structural advantages for the Town. First, it removes the need to fund a self-insured retention at the start of each significant claim, which reduces budget volatility. Second, it provides a higher per occurrence limit of $50 million rather than the $30 million available through PLAN JPA. Together, these differences offer significantly stronger protection for high-risk municipal liability exposures, such as police liability.

Property Coverage

PLAN JPA
PLAN JPA participates in the Alliant Property Insurance Program (APIP), which offers a shared $1 billion limit across all participating agencies, including private sector participants in the APIP pool. Under this program, the Town is responsible for a property deductible usually between $5,000 and $15,000, depending on the asset. The program also applies an internal pooled deductible of $500,000 before upper layers are attached.

The coverage includes buildings, contents, vehicles, technology equipment, fine arts, and business interruption.

CJPIA
The CJPIA property program has a shared $750 million per occurrence all risk limit. The Town pays a consistent $25,000 deductible for most covered losses. While similar in coverage to PlanJPA, the deductible is a little higher, but the overall coverage covers the Town’s property, and the CJPIA program does not impose internal pooled deductibles for different items lost, similar to those in PlanJPA APIP. Optional earthquake and flood coverage is available with shared limits of $225 million for each peril.

Differences and Value Added
The CJPIA program now provides a high capacity property limit that is well matched to the scale of the Town’s exposures while avoiding the internal pooled deductible structure in APIP. CJPIA’s single predictable deductible enhances financial clarity and simplifies budgeting. Although APIP provides a higher theoretical limit, CJPIA’s

Page 785 ends

ITEM NO. 12.

PAGE 11 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
structure more closely aligns with real-world risk for Los Gatos and provides clearer and more stable financial protection. It should be noted that the Town cannot join the liability program of one authority and the property of another. As liability is a base requirement, liability coverage tends to drive decision-making when picking coverages.

Cyber Coverage

PLAN JPA
The PLAN JPA cyber program provides a $2 million primary limit and an additional $3 million excess limit for a total potential limit of $5 million. Member deductibles range from $50,000 to $250,000, depending on the member’s total insured values. Coverage includes breach response services, business interruption, extortion response, data restoration, media liability, and payment card liabilities.

CJPIA
CJPIA provides a $2 million aggregate limit per member within a $10 million shared pool for cyber incidents. The Town’s deductible is a consistent $100,000 for each claim, and CJPIA pays a $500,000 internal retention, which is not charged to members. The program covers first party response costs, including forensics, notification, identity monitoring, business interruption, system restoration, and extortion response, along with liability exposures such as regulatory penalties and payment card assessments.

Differences and Value Added
While PLAN JPA provides a higher theoretical combined limit, CJPIA provides more predictable financial exposure by offering a fixed deductible and absorbing the internal retention. This creates a more stable budgeting environment for cyber events, which are typically high urgency and resource intensive.

Crime Coverage

PLAN JPA
PLAN JPA provides crime coverage with a $2 million limit for most categories, including employee theft, forgery, theft of money or securities, computer fraud, and restoration expenses. The deductible for crime losses is $25,000. The coverage includes dedicated protection for social engineering and impersonation fraud.

CJPIA

Page 786 ends

ITEM NO. 12.

PAGE 12 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
CJPIA offers crime coverage with a range of limit options from $1 million to $5 million, allowing members to select the level that fits their needs. Deductibles range from $5,000 to $100,000, depending on the selected limit. The program covers employee dishonesty, forgery, theft of money and securities, computer fraud, and related financial fraud events.

Differences and Value Added
Both programs provide comprehensive crime protection. CJPIA’s primary advantage is the ability to tailor limits to the Town’s operations, which can improve efficiency and alignment with actual exposure. Although PLAN JPA includes certain preset sublimits for social engineering events, the difference is not a decisive factor in overall program selection.

Pollution Liability

PLAN JPA
PLAN JPA provides pollution coverage through the APIP program with a $2 million per incident limit and a $2 million per member aggregate. The overall program aggregate is $25 million. Deductibles usually fall between $250,000 and $500,000, depending on the type of environmental loss. Covered exposures include remediation of contaminated property, bodily injury, off-site migration, mold, sewer backup, wildfire, and contractor pollution.

CJPIA
CJPIA provides a $5 million per incident limit and a $5 million per member aggregate with a $20 million program aggregate. The program uses a standard $250,000 deductible except for older underground storage tanks. Coverage includes remediation of contaminated property, emergency response actions, bodily injury, environmental migration, image restoration costs, and protections for newly acquired properties subject to reporting conditions.

Differences and Value Added
CJPIA’s substantially higher per incident limit provides stronger protection for the types of large environmental losses that create the greatest financial risk for municipalities.

Since pollution exposures are typically dominated by the severity of individual events rather than aggregate limits, CJPIA’s structure offers meaningfully greater value for the Town.

Page 787 ends

ITEM NO. 12.

PAGE 13 OF 13
SUBJECT: CJPIA Insurance
DATE: December 2, 2025
ENVIRONMENTAL ASSESSMENT:

This action is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15061(b)(3), the “common sense exemption,” because it can be seen with certainty that the approval of a resolution to withdraw from PLAN JPA and to join CJPIA will not result in a direct or reasonably foreseeable indirect physical change in the environment. The action constitutes an administrative and organizational change in insurance and risk management providers and therefore does not constitute a “project” under CEQA or has no potential for causing a significant environmental impact.

CONCLUSION:

It is prudent to periodically review insurance coverage and costs. Based on Town staff review, the Town can see savings while increasing coverage on key areas of liability, such as public safety and infrastructure use, and recommends moving forward with CJPIA.

Attachments:

1. Resolution

2. CJPIA Joint Powers Authority Agreement

3. CJPIA Bylaws

Page 788 ends

ITEM NO. 12.

PREPARED BY: Katy Nomura
Assistant Town Manager
Reviewed by: Town Manager, Town Attorney, and Administrative Services Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 04/07/2026
ITEM NO: 13
DATE: April 7, 2026
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Authorize the Town Manager to Negotiate and Execute and Art Transfer Agreement with the Los Gatos Museum Association (NUMU) to Transfer a Sculpture and Plaque
RECOMMENDATION: Authorize the Town Manager to negotiate and execute an Art Transfer Agreement with the Los Gatos Museum Association (NUMU) in substantially the form presented to transfer a sculpture and plaque.

FISCAL IMPACT:

There is no fiscal impact related to this specific item. The terms of the agreement require that NUMU be responsible for all costs associated with this transfer.

STRATEGIC PRIORITY:

This item is not directly related to a strategic priority. However, the potential sale of the 4 Tait property, which spurred interest in these items, is related to the strategic priority of prudent financial management.

DISCUSSION:

On January 21, 2025, the Town Council approved a resolution declaring the town-owned property at 4 Tait Avenue as exempt surplus land pursuant to the Surplus Land Act.

In January 2026, NUMU requested that they be allowed to take possession of a metal sculpture with locks hanging from it and a plaque affixed to a rock dedicating the native plant garden to the Mathews. NUMU expressed that these were items commissioned by them during the time they leased the 4 Tait property.

Page 789 ends

ITEM NO. 13.

PAGE 2 OF 2
SUBJECT: NUMU Art Transfer Agreement
DATE: April 7, 2026
If the sculpture and plaque are not transferred to NUMU, they would remain with the property, including if the property is sold to a new owner. The Town did not contemplate future uses for these items, and therefore, staff recommends that the items be transferred to NUMU, with removal at their sole expense. If, for any reason, the Town believes that this transfer would impact the potential sale of the property, the transfer will be canceled.

CONCLUSION:

Authorize the Town Manager to negotiate and execute an Art Transfer Agreement with the Los Gatos Museum Association (NUMU) in substantially the form presented to transfer a sculpture and plaque.

ENVIRONMENTAL ASSESSMENT:

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

Attachments:

1. Draft Agreement

Page 790 ends

ITEM NO. 13.

ATTACHMENT 1

ART TRANSFER AGREEMENT
This Agreement is made and entered into on this ___ day of April 2026, by and between the Town of Los Gatos, a municipal corporation, hereinafter referred to as “Town” and Los Gatos Museum Association, a California Nonprofit Corporation, hereinafter referred to as “NUMU.”

RECITALS
WHEREAS, the Town wishes to sell property at 4 Tait;
WHEREAS, it is understood by both the Town and NUMU that NUMU desires to take possession of two items at the property owned by the Town located at 4 Tait Avenue, Los Gatos, CA 95030;
WHEREAS, the first item is a metal sculpture with locks hanging from it (“Sculpture”), pictured in Exhibit A. The second item is a plaque, including the rock it is affixed to, that reads as follows: “This Museum Garden of Native Plants is dedicated to Stephanie and Mike Mathews for their leadership and support” (“Plaque”), pictured in Exhibit B; NOW, THEREFORE, the parties agree as follows:

1. The Town and NUMU agree that NUMU may take possession of the Sculpture and the Plaque, with NUMU assuming full responsibility for the removal and transport of the Sculpture and Plaque, including compliance with the California Art Preservation Act (“CAPA”), which is codified in California Civil Code Section 987.

2. NUMU must ensure that the removal of these items does not damage the property in any way, and NUMU agrees to restore the site to its original condition after removal of the Sculpture and Plaque.

3. The Town and NUMU agree that the consideration to the Town will be NUMU’s expense and responsibility of removing and transporting the Sculpture and Plaque, and that the consideration to NUMU will be the Sculpture and the Plaque.

4. NUMU agrees to remove the items no later than April ___, 2026.

5. NUMU agrees to, and shall indemnify, defend, keep and hold the Town and the Town’s officials, agents, and employees harmless from any and all costs, liabilities, damages, or expenses, including costs of removal, transport, injury or death resulting from removal/transport, or damage to the Sculpture or Plaque, including any claims brought pursuant to CAPA.

6. It is the intent of this agreement that the Town and its officials, agents, and employees have no financial liability or impact whatsoever resulting from the removal and transport of the Sculpture and Plaque and that NUMU shall be fully and solely responsible therefore.

Page 791 ends

ITEM NO. 13.

ATTACHMENT 1

7. If, for any reason, the transfer of the Sculpture and Plaque affects or delays the Town’s sale of 4 Tait, the Town, in its sole discretion, may terminate this agreement and cancel the transfer prior to removal.

8. In consideration of the above, Town agrees to transfer the Sculpture and Plaque to NUMU and NUMU hereby accepts transfer to NUMU of all rights, title, and interest in the Sculpture and Plaque so long as the Sculpture and Plaque are removed prior to April ___, 2026.

IN WITNESS WHEREOF, TOWN and NUMU have executed this Agreement.

TOWN OF LOS GATOS:
_______________________________
Chris Constantin, Town Manager
SIGNATORY:
_______________________________
Kimberly Snyder, Executive Director
Approved as to Form:
_______________________________
Gabrielle Whelan, Town Attorney

Page 792 ends

ITEM NO. 13.

PREPARED BY: Ed Karas
Accountant / Finance Analyst
Reviewed by: Town Manager, Town Attorney, and Administrative Services Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 04/07/2026
ITEM NO: 14
DATE: April 7, 2026
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Adopt a Resolution Approving the Comprehensive Fee Schedule for Fiscal Year 2026-27 to Continue and Amend Certain Department Fees, Rates, and Charges for Fiscal Year 2026-27; and Adopt a Resolution Approving the Administrative Fine and Penalty Schedule for Fiscal Year 2026-27 to Continue and Amend Certain Department Fines for Fiscal Year 2026-27 RECOMMENDATION: Adopt a resolution approving the Comprehensive Fee Schedule for FY 2026-27 to continue certain Department fees, rates, and charges, and amend certain fees, rates, and charges for FY 2026-27; and Adopt a resolution approving the Administrative Fine and Penalty Schedule for FY 2026-27 to continue certain department fines and amend certain fines for FY 2026-27.

FISCAL IMPACT:

The Town’s financial policies require that fees be maintained to provide for the recovery of costs associated with Town services. If approved, staff will incorporate the adopted changes into the FY 2026–27 Operating & Capital Budget. Based on the 2.2% CPI adjustment and proposed new fees, staff estimates net annual revenue of $168,000, allocated approximately as follows: Administrative Services $4,500; Community Development $87,000; Parks & Public Works $70,000; Police $6,500. Volumes are projected using prior‑year activity with conservative assumptions.

STRATEGIC PRIORITY:

This item supports the strategic priorities to ensure prudent financial management and develop structure to ensure accountability of how funding resources move forward.

BACKGROUND:

Page 793 ends

ITEM NO. 14.

PAGE 2 OF 6
SUBJECT: Fee Schedule for Fiscal Year 2026-27
DATE: April 7, 2026
The Town’s financial policies require that certain fees, rates, and charges for services be maintained to allow for cost recovery based on the actual cost of providing Town services. “Fee” activities are services and functions provided by the Town to individuals who receive some direct material benefit above and beyond services offered to residents at general taxpayer expense. Staff periodically review the cost of providing such services and recommends appropriate fee adjustments when supported by actual cost data.

The Town’s most recent comprehensive cost allocation and selected recommendations from the user fee study were incorporated into the FY 2019-20 Fee Schedule. A new user fee study is expected to be completed in Fiscal Year 2026-27.

DISCUSSION:

A. COMPREHENSIVE FEE SCHEDULE:

The Comprehensive Fee Schedule allows for an annual adjustment of fees by the average increase in the Consumer Price Index (CPI) for the previous calendar year. For FY 2026-27, staff is proposing that fees be adjusted by 2.2% CPI (2025 average of San Francisco-Oakland-San Jose CPI-U 2-month and 12-month percent changes, all items index, not seasonally adjusted).

In addition to the proposed CPI changes, the proposed FY 2026-27 Comprehensive Fee Schedule accounts for modifications to fees, as explained below:

Administrative Services

1. Expedited Processing Fee (New Fee - $113.73 per day) – Staff recommends an Expedited Processing Fee when required documentation is submitted post deadline. Event coordinators who do not provide their insurance and other required documents at least one week in advance of the event create additional work hours for event staff. The late documents often require staff to come in on their days off or work overtime to process documents. Moving forward, when this occurs, the event coordinators will be charged a fee to cover the staff costs of processing the late paperwork.

2. No Parking Sign Admin Fee (New Fee - $56.87) – In prior years, volunteers assisted with preparing the no parking signs for approved events. Out of necessity, this task has shifted to staff, and thus, additional coordination time is necessary to prepare and provide no parking signs for events. Staff is proposing an administrative fee to offset the cost of staff time to determine the number and locations of signs needed for an event, then write out the individual signs. The fee is equivalent to a half hour of the fully burdened hourly rate for the event specialist to complete this task.

3. Entertainment Zone Signicades (A-frame) (New Fee - $5.00 per Signicade, per day) – For the newly adopted entertainment zone. Event staff will purchase signicades for the perimeter of the entertainment zone. These will be available for organizers to rent in the quantity necessary for the size of the activated zones, should they choose not to use

Page 794 ends

ITEM NO. 14.

PAGE 3 OF 6
SUBJECT: Fee Schedule for Fiscal Year 2026-27
DATE: April 7, 2026
their own signage that meets the Town’s requirements. The fee was determined by considering the purchase of twenty custom signicades with the necessary language included on the signs, with an anticipated life span of two years per signicade.

4. Facilities Maintenance Fee (New Fee - $155.00) – This fee has been added as an option to charge events a maintenance fee, if/when the event utilizes additional Town facilities for their event, that were not originally approved within the scope of the conditional letter of approval. The use of the facility requires Town staff to engage in support either during or after the event to mitigate the impacts of the event on the Town facility. This fee was determined by actual costs charged for janitorial fees.

Development Services

1. Supplemental Fee for Minor Residential Development applications that require Planning Commission Approval (New Fee - $3,884.00). New fee line item for Minor Residential Applications that do not include Parks and Public Works review and associated fee.

2. SB 684 Small Lot Subdivision and Housing Development and related Engineering Development Review Service Fee (New Fee - $1,643.00). New line item for new legislation that created a new application type. This fee is based on the current SB 9 fee, as this process mirrors that process. Further, development engineering fees are based on an analysis of actual time spent by staff to do a typical review or process using their fully loaded hourly rates.

3. Outside Legal Counsel Review (New Fee - Fully allocated hourly rate of legal review Initial $5,000.00 deposit) – These deposits will be taken to offset Town Attorney expenditures for legal review of complex planning applications to recover the cost of outside legal counsel review. There is a new deposit fee line item, and any remaining deposit will be refunded to the applicant; amounts exceeding the deposit amount will be paid by the applicant.

4. Annual Utility Blanket Permit (New Fee - As determined by the Town Engineer based on anticipated number of installations and hours of staff time) – As determined by the Town Engineer based on anticipated number of installations and hours of staff time.

This blanket permit is for minor utility maintenance type work that would require an encroachment permit due to work being done in a Town right-of-way or easement but is minor in nature not requiring plan review or inspection oversight. Examples would be PG&E’s installation of a new support cross brace on a pole where no sidewalk or pavement work was needed.

5. Certificate of Correction (New Fee - $1,500 initial surveyor deposit plus 25% admin fee)– Moving to its own fee, as the certificate of correction fee was repeated for both map types. The deposit was determined based on the average of surveyor costs associated with the COC and staff time associated with managing consultant survey

Page 795 ends

ITEM NO. 14.

PAGE 4 OF 6
SUBJECT: Fee Schedule for Fiscal Year 2026-27
DATE: April 7, 2026

6. License Agreement Application (Town Manager) (New Fee - $3,119.00) - Fee to review a license agreement for private facilities in public right-of-way. This fee was determined based on an evaluation of the fully loaded staff time needed to evaluate and process a license agreement.

7. License Agreement Application (Town Council) (New Fee - $4,135.00) - Fee to review a license agreement for private facilities in the public right-of-way. This fee was determined based on an evaluation of the fully loaded staff time needed to evaluate and process a license agreement and prepare appropriate materials for Town Council.

8. License Agreement Recording and Issuance (New Fee - $1,925.00) – Fee to record and issue a license agreement for private facilities in the public right of way. This fee was determined based on an evaluation of the fully loaded staff time needed to develop and process a license agreement once approved by either the Town Manager or Town Council.

Police Services

1. Initial Residential Alarm Registration Fee and Renewal Residential Alarm Registration Fee (New Fees - Initial Registration Fee $95.00 Renewal Registration Fee - $50.00) – The proposed changes aim to improve alarm system management by requiring alarm registration. The update includes new fees for residential alarm registrations, while remaining mindful of the fees associated with specific renewal costs. The initial fee covers the administrative work required to establish the permit, including dispatch setup, address and system verification, community outreach and integration, and finance and contract processing. The renewal fee supports ongoing administrative efforts such as financial reconciliation, outreach coordination and scheduling, and dispatch-related tasks including address confirmation, phone line monitoring, and documentation. These adjustments are intended to promote more effective emergency response, greater compliance and to help reduce unnecessary police responses.

Parks and Public Works Services

1. Adopt a Bench (New Fee - Initial Fee - $9,865, and Renewal Fee - $5,911.00) – Initial 10 Year Term (Inclusive of Bench Cost) and Renewal Terms. Fees account for staff related maintenance, graffiti, bench installation and procurement. The initial fee includes the cost of the bench. The renewal fee does not. Support policy adopted by the Town Council on February 3, 2026, and sets a fee for a program that has never had one. This fee is calculated based on the estimated installation, maintenance, and fully loaded labor cost for a park bench for a period of 10 years.

2. Electric Vehicle Charging Fee Hourly Charge - 1- 4 hours (Increase Fee - $1.70).

This fee is based on actual associated cost.

Page 796 ends

ITEM NO. 14.

PAGE 5 OF 6
SUBJECT: Fee Schedule for Fiscal Year 2026-27
DATE: April 7, 2026
Attachment 2 contains the proposed FY 2026-27 Comprehensive Fee Schedule reflecting all Town fees (including proposed changes). An itemized list of recommended FY 2026-27 fee adjustments, reclassifications, and deletions, are reflected in Attachment 3.

B. ADMINISTRATIVE FINE PENALTY SCHEDULE:

The Administrative Fine and Penalty Schedule sets forth the administrative penalty amounts for code violations. Attachment 5, contains the proposed FY 2026-27 Administrative Fine and Penalty Schedule reflecting all Town fines (including proposed changes). An itemized list of recommended FY 2026-27 fine adjustments, reclassifications, and deletions are reflected in Attachment 6 and explained below:

Los Gatos California Fire Code

1. Section 2703.13 Requirements for HPM gases – Section 2703.13 remains in our Administrative Fine and Penalty schedule; this action removes a duplicative listing of the fine section.

In addition, the proposed FY 2026-27 Comprehensive Fine Schedule accounts for modifications to fines, as explained below:

1. Fireworks (First Offense - $500.00, Second Offense - $1,000.00, and Third Offense - $1,500.00) – The justification to raise the fine for the unlawful use of fireworks is to serve as motivation not to use illegal fireworks. The existing fine is insufficient to deter the behavior.

2. False Alarms (False Alarm and No Permit - 2 Times Annual Permit Fee, and Over two (2) false alarms occur on the premises within a six-month period within a calendar year $175.00)– The primary proposed changes to the false alarm ordinance are to:
 Require residential alarm users to register their alarm system with the Town,
 Provide that when the Police Department responds to a false alarm at a location without an alarm permit, the property owner shall pay a penalty of two times the annual permit fee,
 Provide that residential properties with more than five false alarms within a calendar year will be placed on “no response status”.

Page 797 ends

ITEM NO. 14.

PAGE 6 OF 6
SUBJECT: Fee Schedule for Fiscal Year 2026-27
DATE: April 7, 2026
Police Services.

The revised schedule imposes new penalties for false alarms at unpermitted properties and two or more false alarms within a 6-month period.

Miscellaneous
Town Code violations that are subject to the Town’s standard penalties of $100 for the first violation, $200 for the second violation, and $500 for subsequent violations have been removed from the schedule, because the purpose of the schedule is to list penalties that are different from those standard amounts.

CONCLUSION:

It is recommended that the Town Council approve the Comprehensive Fee Schedule effective July 1, 2026, and the Administrative Fine and Penalty Schedule, effective July 1, 2026, and adopt the related resolutions.

COORDINATION:

The preparation of the Fee and Fine Schedules was coordinated with all applicable Town Departments and Offices.

ENVIRONMENTAL ASSESSMENT:

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

Attachments:

1. Resolution approving Comprehensive Fee Schedule FY 2026-27

2. Proposed FY 2026-27 Comprehensive Fee Schedule (Redlined)

3. Proposed FY 2026-27 Fee Adjustment, Reclassification, Deletions and Additions Report

4. Resolution approving Administrative Fine and Penalty Schedule FY 2025-26

5. Proposed FY 2026-27 Administrative Fine and Penalty Schedule (Redlined)

6. Proposed FY 2026-27 Administrative Fine and Penalty Adjustments, Reclassifications, Deletions and Additions Report

Page 798 ends

Los Gatos City CouncilApril 7, 2026

Los Gatos City Council
April 7, 2026