Milpitas City Council
December 6, 2022

Beginning with fiscal year 2020, the City began to report the liability of this plan seperately.

No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB 75. 109
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City of Milpitas
Required Supplementary Information

SCHEDULE OF CONTRIBUTIONS
Dependent Fund (OPEB) Plan
Last 10 fiscal years*
Fiscal Year Ended June 30, 2020 2021 2022
Explicit Explicit Explicit
Actuarially required contribution N/A (a) N/A (a) N/A (a) Contributions in relation to the
actuarially required contributions $1,028,064 $0 $1,012,052 Contribution deficiency (excess) N/A (a) N/A (a) N/A (a) Covered-employee payroll $52,202,907 $59,134,552 $59,298,425 Contributions as a percentage of
covered-employee payroll N/A (a) N/A (a) N/A (a)
*No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB 75. (a) Due to the nature of the Plan, actuarially required contribution is not available.

See Note 12D for contribution requirements.
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City of Milpitas
Required Supplementary Information
Measurement Period 2013-14 2014-15 2015-16 2016-17
Total Pension Liability
Service Cost $2,652,510 $2,664,628 $2,666,665 $3,008,973 Interest 13,600,615 14,114,152 14,689,192 15,078,047
Differences between expected and actual experience (982,598) (18,301) (1,238,427) Changes in assumptions (3,463,459) 12,475,424
Changes in benefits
Benefit payments, including refunds of employee contributions (8,381,334) (8,930,516) (9,558,779) (10,236,837) Net change in total pension liability 7,871,791 3,402,207 7,778,777 19,087,180 Total pension liability - beginning 184,205,937 192,077,728 195,479,935 203,258,712 Total pension liability - ending (a) $192,077,728 $195,479,935 $203,258,712 $222,345,892 Plan fiduciary net position
Contributions - employer $3,356,909 $4,076,975 $4,519,744 $5,048,143 Contributions - employee 1,439,932 1,326,989 1,333,019 1,266,956 Net investment income 22,034,637 3,281,429 775,183 16,109,364 Administrative expense (164,523) (89,109) (211,414)
Benefit payments, including refunds of employee contributions (8,381,334) (8,930,516) (9,558,779) (10,236,837) Other Miscellaneous Income/Expense
Net Plan to Plan Resource Movement (370) (370)
Net change in plan fiduciary net position 18,450,144 (409,646) (3,020,312) 11,975,842 Plan fiduciary net position - beginning 128,172,005 146,622,149 146,212,503 143,192,191 Plan fiduciary net position - ending (b) $146,622,149 $146,212,503 $143,192,191 $155,168,033 Net pension liability - ending (a)-(b) $45,455,579 $49,267,432 $60,066,521 $67,177,859 Plan fiduciary net position as a percentage of the total pension liability 76.33% 74.80% 70.45% 69.79%
Covered payroll $15,682,538 $16,009,660 $16,161,589 $16,418,123 Net pension liability as percentage of covered payroll 289.85% 307.74% 371.66% 409.17% * Fiscal year 2015 was the first year of implementation.

Changes in assumptions. In 2017, the accounting discount rate reduced from 7.65% to 7.15%. In 2016, 2018, 2019, 2020 and 2021, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). In 2014, amounts were based on the 7.5% discount rate.

Benefit changes. The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS Miscellaneous Plan - Agent Multiple-Employer Defined Pension Plan Last 10 Years*
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Item # C9.

City of Milpitas
Required Supplementary Information

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS Miscellaneous Plan - Agent Multiple-Employer Defined Pension Plan Last 10 Years*
Measurement Period 2017-18 2018-19 2019-20 2020-21
Total Pension Liability
Service Cost $3,042,853 $3,361,140 $3,777,335 $4,262,309 Interest 15,647,110 16,517,342 17,295,222 18,046,275
Differences between expected and actual experience 1,831,444 4,569,776 2,592,349 1,466,976 Changes in assumptions (1,404,854)
Changes in benefits
Benefit payments, including refunds of employee contributions (10,906,398) (11,589,225) (12,009,750) (12,545,846) Net change in total pension liability 12,859,033 8,210,155 11,655,156 11,229,714 Total pension liability - beginning 222,345,892 230,556,047 243,415,080 255,070,236 Total pension liability - ending (a) $230,556,047 $243,415,080 $255,070,236 $266,299,950 Plan fiduciary net position
Contributions - employer $5,762,448 $6,864,376 $7,965,270 $8,925,250 Contributions - employee 1,473,732 1,569,027 1,772,996 1,998,174 Net investment income 13,123,448 10,774,536 8,527,794 40,453,566 Administrative expense (241,795) (116,977) (241,663) (177,248) Benefit payments, including refunds of employee contributions (10,906,398) (11,589,225) (12,009,750) (12,545,846) Other Miscellaneous Income/Expense (459,172) 381
Net Plan to Plan Resource Movement (381)
Net change in plan fiduciary net position 7,502,118 8,751,882 6,014,647 38,653,896 Plan fiduciary net position - beginning 155,168,033 163,919,915 171,422,033 177,436,680 Plan fiduciary net position - ending (b) $163,919,915 $171,422,033 $177,436,680 $216,090,576 Net pension liability - ending (a)-(b) $66,636,132 $71,993,047 $77,633,556 $50,209,374 Plan fiduciary net position as a percentage of the total pension liability 71.10% 70.42% 69.56% 81.15%
Covered payroll $18,846,066 $22,079,190 $19,463,309 $25,754,131 Net pension liability as percentage of covered payroll 353.58% 326.07% 398.87% 194.96% * Fiscal year 2015 was the first year of implementation. 113
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Item # C9.

City of Milpitas
Required Supplementary Information
Fiscal Year Ended June 30 2015 2016 2017 2018
Actuarially determined contribution $3,252,668 $4,236,931 $5,082,638 $6,243,904 Contributions in relation to the actuarially
determined contributions 3,252,668 4,236,931 5,082,638 6,243,904 Contribution deficiency (excess) $0 $0 $0 $0
Covered payroll $16,009,660 $16,161,589 $16,418,123 $18,846,066 Contributions as a percentage of covered
payroll 20.32% 26.22% 30.96% 33.13%
Notes to Schedule
Valuation date: 6/30/2012 6/30/2013 6/30/2014 6/30/2015 Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age
Amortization method Level percentage of payroll
Remaining amortization period 15 Years as of the Valuation Date Asset valuation method Market Value of Assets
Inflation 2.75% for 2015 to 2019, 2.625% for 2020, and 2.50% for 2021 and 2022 Salary increases
Investment rate of return
Retirement age
Mortality
* Fiscal year 2015 was the 1st year of implementation.

The probabilities of Retirement are based on the
CalPERS Experience Study.

The probabilities of mortality are based on the CalPERS Experience Study. Pre-retirement and Post-retirement
mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society
of Actuaries for 2015 to 2018. For 2019, 2020, 2021,
and 2022 pre-retirement and post-retirement mortality
rates include 15 years of projected mortality
improvement using 90% of Scale MP-2016 published by
the Society of Actuaries.

SCHEDULE OF CONTRIBUTIONS
Miscellaneous Plan - Agent Multiple-Employer Defined Pension Plan Last 10 Years*
Varies by Entry Age and Service

7.50% for 2015 to 2018, 7.375% for 2019, 7.25% for
2020, and 7.00% for 2021 and 2022, net of pension plan
investment expense, including inflation.
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2019 2020 2021 2022
$6,863,508 $8,337,504 $8,916,157 $9,799,723
6,863,508 8,337,504 8,916,157 9,799,723
$0 $0 $0 $0
$22,079,190 $19,463,309 $21,793,252 $25,754,131

31.09% 42.84% 40.91% 38.05%
6/30/2016 6/30/2017 6/30/2018 6/30/2019
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City of Milpitas
Required Supplementary Information
Measurement Period 2013-14 2014-15 2015-16 2016-17
Total Pension Liability
Service Cost $4,932,970 $4,808,751 $5,094,318 $5,934,642 Interest 19,838,662 20,535,893 21,663,378 22,434,283
Differences between expected and actual experience (2,363,470) 3,274,330 (690,685) Changes in assumptions (5,052,089) 18,725,315
Changes in benefits
Benefit payments, including refunds of employee contributions (13,076,629) (13,656,196) (14,390,575) (14,864,837) Net change in total pension liability 4,272,889 11,695,003 15,641,451 31,538,718 Total pension liability - beginning 268,587,329 280,282,332 284,555,221 300,196,672 Total pension liability - ending (a) $280,282,332 $284,555,221 $300,196,672 $331,735,390 Plan fiduciary net position
Contributions - employer $5,856,270 $6,604,951 $7,230,399 $7,887,539 Contributions - employee 1,839,234 1,887,408 2,064,277 2,233,341 Net investment income 30,157,647 4,420,615 1,031,136 22,090,936 Administrative expense (224,227) (121,445) (288,028)
Net Plan to Plan Resource Movement
Other Miscellaneous Income/Expense
Benefit payments, including refunds of employee contributions (13,076,629) (13,656,196) (14,390,575) (14,864,837) Net change in plan fiduciary net position 24,776,522 (967,449) (4,186,208) 17,058,951 Plan fiduciary net position - beginning 175,461,012 200,237,534 199,270,085 195,083,877 Plan fiduciary net position - ending (b) $200,237,534 $199,270,085 $195,083,877 $212,142,828 Net pension liability - ending (a)-(b) $80,044,798 $85,285,136 $105,112,795 $119,592,562 Plan fiduciary net position as a percentage of the total pension liability 71.44% 70.03% 64.99% 63.95%
Covered payroll $18,310,535 $18,810,920 $20,170,400 $21,078,669 Net pension liability as percentage of covered payroll 437.15% 453.38% 521.12% 567.36% Notes to Schedule:
* Fiscal year 2015 was the 1st year of implementation.

Changes in assumptions. In 2017, the accounting discount rate reduced from 7.65% to 7.15%. In 2016, 2018, 2019, 2020 and 2021, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). In 2014, amounts were based on the 7.5% discount rate.

Benefit changes. The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS Safety Plan - Agent Multiple-Employer Defined Pension Plan Last 10 Years*
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2017-18 2018-19 2019-20 2021-22
$5,975,378 $6,211,449 $6,711,730 $7,266,789
23,331,989 24,560,414 25,568,359 26,671,979
4,563,968 626,935 981,131 2,106,663
(986,630)
(16,083,729) (17,533,455) (18,278,539) (20,179,552)
12,863,943 17,802,376 14,982,681 15,865,879
331,735,390 344,599,333 362,401,709 377,384,390
$344,599,333 $362,401,709 $377,384,390 $393,250,269
$8,866,550 $10,288,856 $12,104,306 $13,294,083
2,240,962 2,441,763 2,748,961 2,834,054
17,931,642 14,733,700 11,689,024 55,066,837
(330,577) (159,951) (329,757) (241,588)
(521)
(627,771) 521
(16,083,729) (17,533,455) (18,278,539) (20,179,552)
11,996,556 9,771,434 7,933,995 50,773,834
212,142,828 224,139,384 233,910,818 241,844,813
$224,139,384 $233,910,818 $241,844,813 $292,618,647
$120,459,949 $128,490,891 $135,539,577 $100,631,622

65.04% 64.54% 64.08% 74.41%
$21,698,152 $23,314,576 $21,136,130 $26,167,767
555.16% 551.12% 641.27% 384.56%
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City of Milpitas
Required Supplementary Information
Fiscal Year Ended June 30 2015 2016 2017 2018
Actuarially determined contribution $5,904,019 $7,346,983 $8,741,506 $9,247,165 Contributions in relation to the actuarially
determined contributions 5,904,019 7,346,983 8,741,506 9,247,165 Contribution deficiency (excess) $0 $0 $0 $0
Covered payroll $18,810,920 $20,170,400 $21,078,669 $21,698,152 Contributions as a percentage of covered
payroll 31.39% 36.42% 41.47% 42.62%
Notes to Schedule
Valuation date: 6/30/2012 6/30/2013 6/30/2014 6/30/2015 Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age
Amortization method Level percentage of payroll
Remaining amortization period 15 Years as of the Valuation Date Asset valuation method Market Value of Assets
Inflation 2.75% for 2015 to 2019, 2.625% for 2020, and 2.50% for 2021 and 2022 Salary increases
Investment rate of return
Retirement age
Mortality
* Fiscal year 2015 was the 1st year of implementation.

Safety Plan - Agent Multiple-Employer Defined Pension Plan Last 10 Years*

SCHEDULE OF CONTRIBUTIONS
Varies by Entry Age and Service

7.50% for 2015 to 2018, 7.375% for 2019, 7.25% for 2020, and 7.00% for 2021 and 2022, net of pension plan
investment expense, including inflation.

The probabilities of Retirement are based on the CalPERS Experience Study
The probabilities of mortality are based on the CalPERS Experience Study. Pre-retirement and Post-retirement
mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of
Actuaries for 2015 to 2018. For 2019, 2020, 2021 and 2022, pre-retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.
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2019 2020 2021 2022
$10,289,680 $11,739,849 $12,866,635 $14,258,505
10,289,680 11,739,849 12,866,635 14,258,505
$0 $0 $0 $0
$23,314,576 $21,136,130 $23,212,673 $26,167,767

44.13% 55.54% 55.43% 54.49%
6/30/2016 6/30/2017 6/30/2018 6/30/2018
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NON-MAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS:

GAS TAX FUND
Established to account for the City’s share of state gasoline taxes which are restricted for use on construction and maintenance of the street system in Milpitas.

HOUSING AND COMMUNITY DEVELOPMENT FUND
Established to account for community development block grants and expenditures.

LAW ENFORCEMENT SERVICES FUND
Established to account for the proceeds from Federal and State asset seizures. This fund also accounts for the Supplemental Law Enforcement Services grant, Local Law Enforcement Block grant, Justice Assistance grant and expenditures. These funds must be used only for specified law enforcement purposes.

SOLID WASTE REDUCTION AND SERVICES FUND
Established to account for landfill tipping fees allocated by Santa Clara County. The County allocates a fee of $1 per ton to each City to be used in relation to the State of California Waste Reduction Act. Revenue is used for the implementation of waste reduction programs to meet the State required landfill deposits percentage reduction. The fund also accounts for special charges built into garbage rates specifically for community promotions and household hazardous waste activities.

LIGHTING AND LANDSCAPE MAINTENANCE DISTRICT FUND
Established to account for assessments collected within the district. Revenue is used for servicing and maintaining the public landscaping and additional lighting for the district.

COMMUNITY FACILITIES DISTRICT FUND
Established to account for assessments collected within the district. Revenue is used for providing City services for the district.

HETCH-HETCHY GROUND LEASE FUND
Established to account for the lease payment to the City and County of San Francisco for the permitted use of the Hetch-Hetchy land.

COMMUNITY PLANNING FUND
Established to account for fees collected to fund the General Plan update, zoning ordinance update and other long range planning documents.

COMMUNITY BENEFITS FUND
Established to account for fees collected from developers to fund Public Benefits for the Community.

AFFORDABLE HOUSING FUND
Established to account for fees collected from developers to fund Affordable Housing activities.

AFFORDABLE HOUSING UNRESTRICTED FUND
Established to account for Affordable Housing unrestricted activities funded by General Fund Surplus.

CAPITAL PROJECTS FUNDS:

PUBLIC ART FUND
Established to account for the acquisition and installation of public art. Financing provided by a percentage of eligible project expenditures within the City’s Annual Capital Improvement Program.

PARK IMPROVEMENT FUND
Established to account for the construction and maintenance of City parks. A special park improvement fee is imposed on developments to provide financing.

STORM DRAIN DEVELOPMENT FUND
Established to account for the construction and maintenance of storm drain projects. A special storm drain fee is imposed on developments to provide financing.
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CITY OF MILPITAS

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS
JUNE 30, 2022

SPECIAL REVENUE FUNDS
Lighting and
Housing and Law Solid Waste Landscape Community
Community Enforcement Reduction and Maintenance Facilities Gas Tax Development Services Services District District ASSETS
Cash and investments available for operations $3,978,669 $593,531 $753,657 $1,219,102 $194,509 $2,156,709 Receivables:

Due from other governments 437,655 347,656 7,574 21,069 14,296 Interest 8,370 39 2,520 401 5,013
Loans receivable 3,225,910
Prepaids, materials, supplies and deposits 2,179 2,416 1,789 12,763 Total Assets $4,424,694 $4,169,276 $761,270 $1,245,107 $196,699 $2,188,781

LIABILITIES
Accounts payable $351,971 $8,266 $15,856 $1,888
Accrued payroll 210 18,153 4,349 $36,461
Unearned revenue 638,426 146,072
Refundable deposits 18,843
Total Liabilities 351,971 646,902 198,924 6,237 36,461
Fund Balances:

Nonspendable 2,179 2,416 1,789 12,763
Restricted $4,424,694 3,815,126 114,368 1,043,767 188,673 2,139,557 Assigned
Total Fund Balances 4,424,694 3,817,305 114,368 1,046,183 190,462 2,152,320 Total Liabilities and Fund Balances $4,424,694 $4,169,276 $761,270 $1,245,107 $196,699 $2,188,781

FUND BALANCE
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SPECIAL REVENUE FUNDS
Total
Hetch-Hetchy Affordable Storm Nonmajor
Ground Community Community Affordable Housing Public Park Drain Governmental Lease Planning Benefits Housing Unrestricted Art Improvement Development Funds $1,483,137 $309,763 $364,546 $5,076,140 $2,539,483 $1,063,970 $8,457,494 $6,044,392 $34,235,102 188 62,823 771,333 1,662,594
3,229 1,403 10,586 4,691 2,317 18,416 11,232 68,217
3,225,910
2,632 2,818 24,597
$1,486,366 $313,986 $364,546 $5,152,367 $2,544,174 $1,066,287 $9,247,243 $6,055,624 $39,216,420 $210 $21,394 $887,482 $35,872 $1,322,939
8,380 22,722 12,152 53 102,480
784,498
18,843
8,590 44,116 899,634 35,925 2,228,760
2,632 2,818 24,597
$1,486,366 302,764 $364,546 5,105,433 $2,544,174 8,347,609 6,019,699 35,896,776 $1,066,287 1,066,287
1,486,366 305,396 364,546 5,108,251 2,544,174 1,066,287 8,347,609 6,019,699 36,987,660 $1,486,366 $313,986 $364,546 $5,152,367 $2,544,174 $1,066,287 $9,247,243 $6,055,624 $39,216,420

CAPITAL PROJECTS FUNDS
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Lighting and
Housing & Law Solid Waste Landscape Community
Community Enforcement Reduction and Maintenance Facilities Gas Tax Development Services Services District District REVENUES:

Other taxes $445,034 $4,128,065
Use of money and property $61,900 $9,039 $6,863 $10,826 1,080 18,554 Intergovernmental 3,346,867 1,232,162 287,067 158,131
Charges for services 7,346
Developer contributions
Other
Total Revenues 3,408,767 1,241,201 293,930 176,303 446,114 4,146,619 EXPENDITURES:

Current:

General Government 1,241,003 8,454
Building, Safety and Housing
Public Works 556,149 208,816 1,393,134
Engineering 86,301
Planning
Police 288,914
Capital outlay
Total Expenditures 1,241,003 288,914 556,149 295,117 1,401,588

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 3,408,767 198 5,016 (379,846) 150,997 2,745,031

OTHER FINANCING SOURCES (USES)
Transfers in 98 40,590
Transfers (out) (2,276,735) (60,000) (138,558) (4,000) (2,610,000) Total Other Financing Sources (Uses) (2,276,637) (60,000) (138,558) 36,590 (2,610,000) NET CHANGE IN FUND BALANCES 1,132,130 198 (54,984) (518,404) 187,587 135,031 Fund balances at beginning of year 3,292,564 3,817,107 169,352 1,564,587 2,875 2,017,289 FUND BALANCES AT END OF YEAR $4,424,694 $3,817,305 $114,368 $1,046,183 $190,462 $2,152,320

CITY OF MILPITAS

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENTS OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2022

SPECIAL REVENUE FUNDS
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Total
Hetch-Hetchy Affordable Storm Nonmajor
Ground Community Community Affordable Housing Public Park Drain Governmental Lease Planning Benefits Housing Unrestricted Art Improvement Development Funds $4,573,099
($51,851) $3,682 $3,227 $44,831 $19,448 ($37,355) ($287,469) ($178,214) (375,439) 62,823 806,795 5,893,845
265,191 123,001 395,538
1,083,650 1,505,434 550,092 3,139,176
176,164 176,164
(51,851) 268,873 3,227 1,314,305 19,448 138,809 2,024,760 371,878 13,802,383 37,014 8,891 106,068 1,401,430
841,486 841,486
2,158,099
86,301
289,371 289,371
288,914
6,024,411 887,517 6,911,928
37,014 289,371 8,891 947,554 6,024,411 887,517 11,977,529 (88,865) (20,498) (5,664) 366,751 19,448 138,809 (3,999,651) (515,639) 1,824,854 295,254 75,000 1,030,761 1,441,703
(550,000) (326,000) (359,516) (6,324,809)
(550,000) 295,254 (326,000) (284,516) 1,030,761 (4,883,106) (88,865) (570,498) (5,664) 366,751 314,702 (187,191) (4,284,167) 515,122 (3,058,252) 1,575,231 875,894 370,210 4,741,500 2,229,472 1,253,478 12,631,776 5,504,577 40,045,912 $1,486,366 $305,396 $364,546 $5,108,251 $2,544,174 $1,066,287 $8,347,609 $6,019,699 $36,987,660

SPECIAL REVENUE FUNDS CAPITAL PROJECTS FUNDS
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CITY OF MILPITAS

BUDGETED NON-MAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)
FOR THE YEAR ENDED JUNE 30, 2022

HOUSING AND COMMUNITY

GAS TAX DEVELOPMENT
Variance Variance
Actual Amounts Positive Actual Amounts Positive
Budget Budgetary Basis (Negative) Budget Budgetary Basis (Negative)

REVENUES
Other taxes
Use of money and property $61,900 $61,900 $9,039 $9,039 Intergovernmental 3,346,867 3,346,867 1,232,162 1,232,162 Charges for services
Developer contributions
Total Revenues 3,408,767 3,408,767 1,241,201 1,241,201

EXPENDITURES
Current:

General Government:

City Manager
City Attorney
Finance $15,000 15,000
Non-departmental 1,224,162 1,226,003 (1,841)
Building, Safety and Housing
Public Works
Engineering
Planning
Police
Fire
Total Expenditures 1,239,162 1,241,003 (1,841)

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 3,408,767 3,408,767 (1,239,162) 198 1,239,360

OTHER FINANCING SOURCES (USES)
Transfers in 98 98
Transfers (out) (2,276,735) (2,276,735)
Total Other Financing Sources (Uses) (2,276,637) (2,276,637) NET CHANGE IN FUND BALANCES 1,132,130 $1,132,130 ($1,239,162) 198 $1,239,360 ADJUSTMENT TO BUDGETARY BASIS:

Expenditures capitalized for GAAP purposes
Capital Outlay
Encumbrance adjustments
Fund balances at beginning of year 3,292,564 3,817,107
Fund balances at end of year $4,424,694 $3,817,305
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SOLID WASTE REDUCTION
Variance Variance Variance
Actual Amounts Positive Actual Amounts Positive Actual Amounts Positive Budget Budgetary Basis (Negative) Budget Budgetary Basis (Negative) Budget Budgetary Basis (Negative) $445,034 $445,034
$6,863 $6,863 $10,826 $10,826 1,080 1,080
287,067 287,067 158,131 158,131
7,346 7,346
293,930 293,930 176,303 176,303 446,114 446,114
$988,542 658,966 329,576 $329,499 208,816 120,683
8,382 8,382 109,573 88,480 21,093
$777,897 370,801 407,096
38,887 (38,887)
777,897 409,688 368,209 996,924 658,966 337,958 439,072 297,296 141,776 (777,897) (115,758) 662,139 (996,924) (482,663) 514,261 (439,072) 148,818 587,890 40,590 40,590
(60,000) (60,000) (138,558) (138,558) (4,000) (4,000)
(60,000) (60,000) (138,558) (138,558) 36,590 36,590
($777,897) (175,758) $602,139 ($996,924) (621,221) $375,703 ($439,072) 185,408 $624,480 120,774 102,817 2,179
169,352 1,564,587 2,875
$114,368 $1,046,183 $190,462
(Continued)

LAW ENFORCEMENT SERVICES MAINTENANCE DISTRICT AND SERVICES

LIGHTING AND LANDSCAPING
127
230
Item # C9.

CITY OF MILPITAS

BUDGETED NON-MAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)
FOR THE YEAR ENDED JUNE 30, 2022
Variance Variance
Actual Amounts Positive Actual Amounts Positive
Budget Budgetary Basis (Negative) Budget Budgetary Basis (Negative)

REVENUES
Other taxes $4,128,065 $4,128,065
Use of money and property 18,554 18,554 ($51,851) ($51,851) Intergovernmental
Charges for services
Developer contributions
Total Revenues 4,146,619 4,146,619 (51,851) (51,851)

EXPENDITURES
Current:

General Government:

City Manager
City Attorney
Finance
Non-departmental $8,454 8,454 $37,500 37,014 486
Building, Safety and Housing
Public Works 1,496,433 1,473,134 23,299
Engineering
Planning
Police
Total Expenditures 1,504,887 1,481,588 23,299 37,500 37,014 486

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (1,504,887) 2,665,031 4,169,918 (37,500) (88,865) (51,365)

OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (out) (2,610,000) (2,610,000)
Total Other Financing Sources (Uses) (2,610,000) (2,610,000) NET CHANGE IN FUND BALANCES ($1,504,887) 55,031 $1,559,918 ($37,500) (88,865) ($51,365) ADJUSTMENT TO BUDGETARY BASIS:

Expenditures capitalized for GAAP purposes
Capital Outlay
Encumbrance adjustments 80,000
Fund balances at beginning of year 2,017,289 1,575,231
Fund balances at end of year $2,152,320 $1,486,366

COMMUNITY FACILITIES DISTRICT HETCH-HETCHY GROUND LEASE 128
231
Item # C9.

Variance Variance Variance
Actual Amounts Positive Actual Amounts Positive Actual Amounts Positive Budget Budgetary Basis (Negative) Budget Budgetary Basis (Negative) Budget Budgetary Basis (Negative) $3,682 $3,682 $3,227 $3,227 $44,831 $44,831
62,823 62,823
265,191 265,191 123,001 123,001
1,083,650 1,083,650
268,873 268,873 3,227 3,227 1,314,305 1,314,305
$15,000 8,891 6,109 $34,506 33,838 668
23,211 14,627 8,584
65,030 57,603 7,427
1,171,589 841,486 330,103
$289,813 289,371 442
289,813 289,371 442 15,000 8,891 6,109 1,294,336 947,554 346,782 (289,813) (20,498) 269,315 (15,000) (5,664) 9,336 (1,294,336) 366,751 1,661,087 (550,000) (550,000)
(550,000) (550,000)
($289,813) (570,498) ($280,685) ($15,000) (5,664) $9,336 ($1,294,336) 366,751 $1,661,087 875,894 370,210 4,741,500
$305,396 $364,546 $5,108,251
(Continued)

COMMUNITY PLANNING COMMUNITY BENEFITS AFFORDABLE HOUSING 129
232
Item # C9.

AFFORDABLE
Variance Variance
Actual Amounts Positive Actual Amounts Positive
Budget Budgetary Basis (Negative) Budget Budgetary Basis (Negative)

REVENUES
Other taxes
Use of money and property $19,448 $19,448 ($37,355) ($37,355) Intergovernmental
Charges for services
Developer contributions 176,164 176,164
Total Revenues 19,448 19,448 138,809 138,809

EXPENDITURES
Current:

General Government:

City Manager
City Attorney
Finance
Non-departmental
Building, Safety and Housing
Public Works
Engineering
Planning
Police
Total Expenditures

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 19,448 19,448 138,809 138,809

OTHER FINANCING SOURCES (USES)
Transfers in 295,254 295,254
Transfers (out) (326,000) (326,000)
Total Other Financing Sources (Uses) 295,254 295,254 (326,000) (326,000) NET CHANGE IN FUND BALANCES 314,702 $314,702 (187,191) ($187,191) ADJUSTMENT TO BUDGETARY BASIS:

Expenditures capitalized for GAAP purposes
Capital Outlay
Encumbrance adjustments
Fund balances at beginning of year 2,229,472 1,253,478
Fund balances at end of year $2,544,174 $1,066,287
FOR THE YEAR ENDED JUNE 30, 2022

CITY OF MILPITAS

BUDGETED NON-MAJOR FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)

HOUSING UNRESTRICTED PUBLIC ART
130
233
Item # C9.

TOTALS
Variance
Actual Amounts Positive
Budget Budgetary Basis (Negative)
$4,573,099 $4,573,099
90,244 90,244
5,024,227 5,024,227
272,537 272,537
1,259,814 1,259,814
11,219,921 11,219,921
$49,506 33,838 15,668
23,211 14,627 8,584
15,000 15,000
1,335,146 1,329,074 6,072
1,171,589 841,486 330,103
2,814,474 2,340,916 473,558
117,955 88,480 29,475
289,813 289,371 442
777,897 370,801 407,096
6,594,591 5,323,593 1,270,998
(6,594,591) 5,896,328 12,490,919
335,942 335,942
(5,965,293) (5,965,293)
(5,629,351) (5,629,351)
($6,594,591) 266,977 $6,861,568
305,770
21,909,559
$22,482,306
131
234
Item # C9.
235
Item # C9.

INTERNAL SERVICE FUNDS
Internal Service Funds report any activity that provides goods or services to other funds, departments, or agencies of the primary government and its components units, or to other governments, on a cost reimbursement basis. These funds include the following:

EQUIPMENT MANAGEMENT INTERNAL SERVICE FUND
The Equipment Management Internal Service Fund is used to finance and account for the replacement of equipment used by City departments and the maintenance of computer systems on a cost reimbursement basis.

PENSION SECTION 115 INTERNAL SERVICE FUND
The Pension Section 115 Internal Service Fund is used to accumulate funds which may be used to fund either the annual actuarially determined pension contribution amounts, pay down unfunded pension liabilities with CalPERS, or reduce the length of pension cost amortization schedules with CalPERS. 236
Item # C9.
237
Item # C9.

CITY OF MILPITAS

INTERNAL SERVICE FUNDS

COMBINING STATEMENTS OF NET POSITION
JUNE 30, 2022
Equipment Pension
Management Section 115 Totals
ASSETS
Current Assets
Cash and investments $12,799,403 $30,537,346 $43,336,749 Interest receivable 25,895 25,895
Total current assets 12,825,537 30,537,346 43,362,883
Noncurrent Assets
Materials, supplies and deposits 600,659 600,659
Capital assets (net of accumulated depreciation) 9,341,366 9,341,366 Total noncurrent assets 9,942,025 9,942,025
Total Assets 22,767,562 30,537,346 53,304,908

LIABILITIES
Current Liabilities
Accounts payable 83,539 83,539
Interest payable
Refundable deposit 196 196
Accrued payroll 50,725 50,725
Accrued vacation 112,221 112,221
Sick leave payable 15,458 15,458
Noncurrent Liabilities
Accrued vacation 19,782 19,782
Sick leave payable
Total Liabilities 281,921 281,921

NET POSITION
Invested in capital assets 9,341,366 9,341,366
Restricted for pension expenses 30,537,346 30,537,346
Unrestricted 13,144,275 13,144,275
Total Net Position $22,485,641 $30,537,346 $53,022,987
133
238
Item # C9.

Equipment Pension
Management Section 115 Totals

OPERATING REVENUES
Charges for services $3,734,444 $3,734,444
Other 1,696 ($5,672,403) (5,670,707)
Total Operating Revenues 3,736,140 (5,672,403) (1,936,263)

OPERATING EXPENSES
Personal services 1,431,811 1,431,811
Services and supplies 1,088,229 1,088,229
Depreciation and amortization 1,190,932 1,190,932
Maintenance and repairs 760,039 760,039
Total Operating Expenses 4,471,011 4,471,011
Operating Income (Loss) (734,871) (5,672,403) (6,407,274)

NONOPERATING REVENUES (EXPENSES)
Gain on sale of capital assets 80,616 80,616
Interest income(loss) (413,345) 822,738 409,393
Total Nonoperating Revenues (Expenses) (332,729) 822,738 490,009 Income (Loss) Before Contributions and Transfers (1,067,600) (4,849,665) (5,917,265) Contributions 1,205,018 1,205,018
Transfer in 890,508 890,508
Transfer out (211,131) (211,131)
Change in net position 816,795 (4,849,665) (4,032,870)
Net position-beginning 21,668,846 35,387,011 57,055,857 Net position-ending $22,485,641 $30,537,346 $53,022,987

CITY OF MILPITAS

INTERNAL SERVICE FUNDS

COMBINING STATEMENTS OF REVENUES, EXPENSES AND

CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2022
134
239
Item # C9.

Equipment Pension
Management Section 115 Totals

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $3,735,901 ($5,672,403) ($1,936,502) Payments to suppliers (2,423,487) (2,423,487)
Payments to employees (1,490,216) (1,490,216)
Net cash provided by operating activities (177,802) (5,672,403) (5,850,205)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Transfers in 890,508 890,508
Transfers out (211,131) (211,131)
Cash Flows from Noncapital Financing Activities 679,377 679,377

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition of capital assets 257,008 257,008
Proceeds from sale of capital assets 93,272 93,272
Cash Flows from Capital and Related
Financing Activities 350,280 350,280

CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends (412,705) 822,738 410,033
Cash Flows from Investing Activities (412,705) 822,738 410,033 Net increase (decrease) in cash and cash equivalents 439,150 (4,849,665) (4,410,515) Cash and investments at beginning of period 12,360,253 35,387,011 47,747,264 Cash and investments at end of period $12,799,403 $30,537,346 $43,336,749 NONCASH TRANSACTIONS:

Contributions and transfers of capital assets, net $1,205,018 $1,205,018 Retirement of capital assets, net (12,656) (12,656)
Reconciliation of operating income (loss) to net cash provided by operating activities:

Operating income (loss) (734,871) ($5,672,403) (6,407,274) Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation 1,190,932 1,190,932
Change in assets and liabilities:

Receivables, net (239) (239)
Materials, supplies and deposits (481,042) (481,042)
Accounts and other payables (152,582) (152,582)
Net cash provided by operating activities ($177,802) ($5,672,403) ($5,850,205)

CITY OF MILPITAS

INTERNAL SERVICE FUNDS

COMBINING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2022
135
240
Item # C9.
241
Item # C9.

STATISTICAL SECTION
This part of the City’s Annual Comprehensive Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. In contrast to the financial section, the statistical section information is not subject to independent audit.

Financial Trends
These schedules contain trend information to help the reader understand how the City’s financial performance and wellbeing have changed over time:

Net Position – Schedule 1
Changes in Net Position – Schedule 2
Fund Balances, Governmental Funds – Schedule 3
Changes in Fund Balance, Governmental Funds – Schedule 4 Revenue Capacity
These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax:

Assessed Value and Actual Value of Taxable Property – Schedule 5 Direct and Overlapping Property Taxes Rates – Schedule 6 Principal Property Taxpayers – Schedule 7
Property Tax Levies and Collections – Schedule 8
Taxable Sales by Category – Schedule 9
Direct and Overlapping Sales Tax Rates – Schedule 10
Principal Sales Tax Payers – Schedule 11
Debt Capacity
These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future:

Ratios of Outstanding Debt by Type – Schedule 12
Bonded Debt Pledged Revenue Coverage, Redevelopment Agency Tax Allocation Bonds – Schedule 13 Computation of Direct and Overlapping Debt – Schedule 14 Legal Debt Margin Information – Schedule 15
Installment Payment Coverage, Sewer Certificates of Participation and Waste Water Revenue Refunding Bonds – Schedule 16
Installment Payment Coverage, Water Revenue Bonds – Schedule 17 Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place:

Bimonthly Sewer Rates by Customer Class – Schedule 18
Bimonthly Water Rates by Customer Class – Schedule 19
Demographic and Economic Statistics – Schedule 20
Principal Employers – Schedule 21
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs:

Authorized Full-Time Equivalent Employees by Function/Program – Schedule 22 Operating Indicators by Function/Program – Schedule 23
Capital Asset Statistics by Function/Program – Schedule 24 Sources
Unless otherwise noted, the information in these schedules is derived from the Annual Comprehensive Financial Reports for the relevant year.
242
Item # C9.
243
Item # C9.

Schedule 1

CITY OF MILPITAS

NET POSITION

LAST TEN FISCAL YEARS
(Accrual basis of accounting)
(Dollars in Thousands)
Fiscal Year Ended June 30,
2013 (a) 2014 2015 (b) 2016 2017
Governmental activities
Net investment in capital assets and capacity rights $217,002 $291,704 $291,500 $298,321 $312,138 Restricted 88,147 90,758 103,829 100,327 108,630
Unrestricted 64,876 51,315 (84,598) (44,368) (30,091)
Total governmental activities net position $370,025 $433,777 $310,731 $354,280 $390,677 Business-type activities
Net investment in capital assets and capacity rights $106,489 $107,816 $113,232 $118,588 $122,937 Restricted 32,889 37,254 40,867 35,130 40,311
Unrestricted 19,799 20,880 11,586 15,261 20,254
Total business-type activities net position $159,177 $165,950 $165,685 $168,979 $183,502 Primary government
Net investment in capital assets and capacity rights $323,491 $399,520 $404,732 $416,909 $435,075 Restricted 121,036 128,012 144,696 135,457 148,941
Unrestricted 84,675 72,195 (73,012) (29,107) (9,837)
Total primary government net position $529,202 $599,727 $476,416 $523,259 $574,179 Fiscal Year Ended June 30
2018 (c) 2019 2020 2021 2022
Governmental activities
Net investment in capital assets and capacity rights $323,239 $326,564 $344,471 $358,445 $365,009 Restricted 109,726 145,983 158,716 189,030 176,451
Unrestricted (63,405) (65,799) (93,911) (142,708) (118,570) Total governmental activities net position $369,560 $406,748 $409,276 $404,767 $422,890 Business-type activities
Net investment in capital assets and capacity rights $130,736 $135,048 $99,331 $125,206 $127,204 Restricted 43,834 59,191 63,084 72,629 75,083
Unrestricted 15,784 8,930 47,967 18,483 21,208
Total business-type activities net position $190,354 $203,169 $210,382 $216,318 $223,495 Primary government
Net investment in capital assets and capacity rights $453,975 $461,612 $443,802 $483,651 $492,213 Restricted 153,560 205,174 221,800 261,659 251,534
Unrestricted (47,621) (56,869) (45,944) (124,225) (97,362) Total primary government net position $559,914 $609,917 $619,658 $621,085 $646,385 (a) The City implemented the provisions of GASB Statement 63 in fiscal year 2013, which replaced the term “net assets” with the term “net position” (b) The City implemented the provisions of GASB Statement 68 in fiscal year 2015 that required the restatement of net position.

Amounts prior to 2015 have not been restated.
(c) The City implemented the provisions of GASB Statement 75 in fiscal year 2018 that required the restatement of net position. Amounts prior to 2018 have not been restated.
(200,000)
(100,000)
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2013
(a)
2014 2015
(b)
2016 2017 2018
(c)
2019 2020 2021 2022
($ 000)
Net investment in capital assets and capacity rights
Restricted
Unrestricted
137
244
Item # C9.

Schedule 2
2013 (a) 2014 2015 2016
Expenses
Governmental activities
General Government $15,329 $21,074 $18,118 $18,614
Building and Safety 2,293 2,684 2,617 2,513
Building, Housing and Safety
Recreation and Community Services
Public Works 17,700 (b) 18,664 17,509 12,761
Engineering 5,790 (d)
Planning and Neighborhood Services 2,553 2,119 2,372 2,649 (d) Planning
Parks and Recreation 3,107 (b) 3,012 3,098 4,090
Police 21,702 23,373 24,699 24,556
Fire 15,810 15,159 16,301 16,400
Interest on Long Term Debt 227 240 67 56
Total governmental activities expenses 78,721 86,325 84,781 87,429 Business-type activities
Water Utility 17,195 17,369 18,344 19,743
Recycled Water Utility (c) (c) (c) (c)
Sewer Utility 9,418 11,008 10,426 10,872
Total business-type activities expenses 26,613 28,377 28,770 30,615 Total primary government expenses $105,334 $114,702 $113,551 $118,044 Program Revenues
Governmental activities:

Charges for services:

General Government $1,700 $1,819 $1,063 $2,065
Building and Safety 4,554 6,445 5,128 5,963
Building, Housing and Safety
Recreation and Community Services
Public Works 2,668 2,472 2,644 (d)
Engineering 2,863 (d)
Planning and Neighborhood Services 301 432 700 747
Planning
Parks and Recreation 1,987 1,958 2,060 1,981
Police 1,051 1,091 1,151 1,138
Fire 1,508 2,120 1,885 2,440
Operating grants and contributions 7,487 6,195 6,201 7,320 Capital grants and contributions 8,286 15,483 14,711 35,195 Total government activities program revenues 29,542 38,015 35,543 59,712 Business-type activities
Charges for services:

Water Utility 19,801 21,354 21,136 18,709
Recycled Water Utility (c) (c) (c) (c)
Sewer Utility 12,632 12,753 14,453 15,964
Operating grants and contributions 111 57 127 63
Capital grants and contributions 1,975 1,402 710 1,103
Total business-type activities program revenue 34,519 35,566 36,426 35,839 Total primary government program revenues $64,061 $73,581 $71,969 $95,551 Net (Expense)/Revenue
Governmental activities ($49,179) ($48,310) ($49,238) ($27,717) Business-type activities 7,906 7,189 7,656 5,224
Total primary government net expense ($41,273) ($41,121) ($41,582) ($22,493) (a) The City implemented the provisions of GASB Statement 63 in fiscal year 2013, which replaced the term “net assets” with the term “net position.”
(b) The parks division is part of the Public Works department beginning in fiscal year 2013. (c) Beginning in fiscal year 2013, the Recycled Water Utility is part of the Water Utility. (d) Public Works and Engineering are separate departments beginning in fiscal year 2016. (e) Neighborhood Services is a component of Building, Housing and Safety, and Planning is a separate department beginning in fiscal year 2019. (f) Under the terms of a settlement agreement with the County Auditor - Controller, Successor Agency to the Milpitas Redevelopment Agency and other parties, the City and Economic Development Corporation transferred cash and certain capital assets to the Successor Agency and received certain capital assets from the Successor Agency.

LAST TEN FISCAL YEARS
(accrual basis of accounting)
(Dollars in Thousands)
Fiscal Year Ended June 30,

CITY OF MILPITAS

CHANGES IN NET POSITION
138
245
Item # C9.

Schedule 2
2017 2018 2019 2020 2021 2022
$21,174 $19,111 $25,281 $24,050 $25,247 $25,213
3,389 4,148 (e) (e) (e) (e)
(e) 5,449 7,418 6,705 4,943
5,890 7,020 7,095 5,174 6,114
16,266 15,903 20,053 20,342 20,219 22,063
6,249 (d) 5,712 (d) 6,459 (d) 7,314 (d) 6,826 (d) 5,047 (d) 3,103 (d) 3,586 (d) (e) (e) (e) (e)
1,851 2,741 2,489 1,851
4,949
30,270 33,840 35,868 43,505 38,919 29,468
20,499 24,194 26,535 31,472 31,859 29,040
48 17 37 785 838
105,947 112,384 128,533 143,974 138,223 124,577
20,666 23,742 25,232 28,750 28,959 26,898
(c) (c) (c) (c) (c) (c)
9,969 12,715 12,231 15,240 15,982 15,622
30,635 36,457 37,463 43,990 44,941 42,520
$136,582 $148,841 $165,996 $187,964 $183,164 $167,097
$1,970 $2,088 $2,347 $1,809 $1,710 $1,931
7,814 10,093 (e) (e) (e) (e)
9,718 6,621 8,629 8,815
2,559 2,655 1,145 762 2,360
(d) (d) (d) (d) (d) (d)
2,720 (d) 2,465 (d) 2,379 (d) 2,132 (d) 1,792 (d) 1,096 (d) 292 418 (e) (e) (e) (e)
226 452 408 474
2,301
1,184 1,089 1,130 1,087 1,055 1,421
3,224 3,326 2,172 2,402 2,553 2,582
7,880 6,521 8,277 10,643 14,986 15,335
32,256 34,003 47,194 33,423 18,997 19,924
59,641 62,562 76,098 59,714 50,892 53,938
26,318 29,667 29,355 32,792 34,658 34,374
(c) (c) (c) (c) (c) (c)
16,803 17,139 17,830 19,566 20,152 21,593
89 124 114 171 125 306
4,937 2,507 2,755 601 1,434 1,026
48,147 49,437 50,054 53,130 56,369 57,299
$107,788 $111,999 $126,152 $112,844 $107,261 $111,237
($46,306) ($49,822) ($52,435) ($84,260) ($87,331) ($70,639) 17,512 12,980 12,591 9,140 11,428 14,779
($28,794) ($36,842) ($39,844) ($75,120) ($75,903) ($55,860) (Continued)
139
246
Item # C9.

Schedule 2
2013 (a) 2014 2015 2016

LAST TEN FISCAL YEARS
(accrual basis of accounting)
(Dollars in Thousands)
Fiscal Year Ended June 30,

CITY OF MILPITAS

CHANGES IN NET POSITION
General Revenues and Other Changes in Net Position
Governmental activities
Taxes:

Property taxes $20,469 $27,607 $24,927 $27,068
Sales and use taxes 20,196 19,014 18,779 23,924
Hotel/Motel taxes 7,933 9,336 10,917 11,757
Other taxes 516 672 664 822
Franchise fees 3,270 3,453 3,659 3,841
Motor vehicle in lieu 37 31 29 29
Investment earnings 260 844 379 913
Gain on sale of capital assets/property 46
Miscellaneous 103 200 333 287
Transfers 3,045 3,402 1,627 2,625
Extraordinary item
Special Item 49,799
Total government activities 55,875 64,559 61,314 71,266 Business-type activities
Investment earnings 94 690 383 695
Transfers (3,045) (3,402) (1,627) (2,625)
Total business-type activities (2,951) (2,712) (1,244) (1,930) Total primary government $52,924 $61,847 $60,070 $69,336 Change in net position
Governmental activities $6,696 $16,249 $12,076 $43,549
Business-type activities 4,955 4,477 6,412 3,294
Total primary government $11,651 $20,726 $18,488 $46,843 (a) The City implemented the provisions of GASB Statement 63 in fiscal year 2013, which replaced the term “net assets” with the term “net position.”
(b) The parks division is part of the Public Works department beginning in fiscal year 2013. (c) Beginning in fiscal year 2013, the Recycled Water Utility is part of the Water Utility. (d) Public Works and Engineering are separate departments beginning in fiscal year 2016. (e) Neighborhood Services is a component of Building, Housing and Safety, and Planning is a separate department beginning in fiscal year 2019. (f) Under the terms of a settlement agreement with the County Auditor - Controller, Successor Agency to the Milpitas Redevelopment Agency and other parties, the City and Economic Development Corporation transferred cash and certain capital assets to the Successor Agency and received certain capital assets from the Successor Agency. 140
247
Item # C9.

Schedule 2
2017 2018 2019 2020 2021 2022
$30,262 $31,893 $33,811 $37,684 $40,979 $42,646
25,392 26,991 27,983 24,173 24,170 33,210
11,858 12,122 14,503 11,377 4,213 8,013
803 814 808 836 791 1,070
3,871 4,678 5,127 5,173 5,036 5,188
34 39 36 60 57 87
118 301 4,474 2,808 965 (7,560)
7,324 4 43 28 198
118 186 390 446 503 1,554
2,923 2,511 2,489 4,187 6,079 4,357
(12,432) (f)
82,703 67,103 89,625 86,787 82,821 88,763
(65) 171 2,712 2,261 588 (3,246)
(2,923) (2,511) (2,489) (4,187) (6,079) (4,357)
(2,988) (2,340) 223 (1,926) (5,491) (7,603)
$79,715 $64,763 $89,848 $84,861 $77,330 $81,160
$36,397 $17,281 $37,190 $2,527 ($4,510) $18,124
14,524 10,640 12,814 7,214 5,937 7,176
$50,921 $27,921 $50,004 $9,741 $1,427 $25,300
141
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Schedule 3

CITY OF MILPITAS

FUND BALANCES, GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
(Dollars in Thousands)
Fiscal Year Ended June 30,
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
General Fund
Nonspendable $468 $23,279 $23,265 $23,387 $20,209 $10,043 $10,234 $10,189 $4,783 $4,866 Restricted
Committed 5,433 5,433 5,433 8,440 19,026 33,643 43,852 44,082 13,266 15,766 Assigned 10,434 6,658 7,013 9,052 8,067 8,629 5,916 6,118 6,543 6,114 Unassigned 16,444 13,521 13,864 13,410 25,440 40,496 40,655 34,387 38,128 40,038 Total General Fund $32,779 $48,891 $49,575 $54,289 $72,742 $92,811 $100,657 $94,776 $62,720 $66,784 (a) All Other Governmental Funds
Nonspendable $11 $32 $11 $13 $15 $2,229 $85 $20 $28 $27 Restricted 89,821 62,661 92,347 99,701 109,416 110,418 143,232 155,359 150,544 147,231 Assigned 14,244 11,808 20,806 29,956 29,635 24,284 28,532 29,768 39,508 22,250 Unassigned (12,955) (6,610) (5,932)
Total all other governmental funds $91,121 $67,891 $107,232 $129,670 $139,066 $136,931 $171,849 $185,147 $190,080 $169,508 (a) (a) The change in total fund balance for the General Fund and other governmental funds is explained in Management's Discussion and Analysis.
0 50,000
100,000
150,000
200,000
250,000
300,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
($ 000)
Nonspendable Restricted Committed
Assigned Unassigned
143
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Item # C9.

Schedule 4
2013 2014 2015 2016 2017
Revenues
Property taxes $20,466 $27,608 $24,927 $27,068 $30,261
Sales taxes 20,908 19,766 19,572 24,719 26,214
Hotel/Motel taxes
Franchise fees
Other taxes 13,343 14,992 17,505 18,737 19,349
Licenses and fines 5,875 8,193 6,971 8,051 10,497
Use of money and property 1,538 2,964 2,032 3,037 2,180 Intergovernmental 5,842 5,216 5,482 6,104 4,696
Charges for services 5,550 5,735 6,449 7,196 7,238
Developer contributions 7,987 13,975 11,614 29,410 25,637 Other 715 1,144 205 113 310
Total Revenues 82,224 99,593 94,757 124,435 126,382
Expenditures
Current:

General Government 11,871 13,204 12,814 13,771 17,089
Building and Safety 2,278 2,658 2,706 2,885 3,148
Building, Housing and Safety
Recreation and Community Services 3,383 3,876
Human Resources and Recreation 3,087 3,124 3,329 (c) (c) Parks and Recreation (a) (a) (a) (a) (a)
Public Works 9,124 8,535 9,199 6,020 6,839
Engineering 3,257 3,527
Planning and Neighborhood Services 2,030 2,202 2,570 2,805 2,978 Planning
Police 20,978 22,165 24,193 26,124 27,247
Fire 15,420 14,587 15,605 17,470 18,456
Capital outlay 7,510 10,035 14,376 24,811 26,151
Debt service:

Principal 4,209 3,828 6,000
Interest and fees 668 223 61 54 48
Total Expenditures 77,175 80,561 90,853 100,580 109,359 Excess (deficiency) of revenues over
(under) expenditures 5,049 19,032 3,904 23,855 17,023
Other Financing Sources (Uses)
Proceeds from debt issuance
Payments to refunded debt escrow agent 46
Proceeds/gain from sale of properties 6 4 160 7,324
Loss from sale/conveyance of property (512)
Transfers in 13,780 7,499 25,558 23,001 18,405
Transfers (out) (10,735) (4,098) (19,305) (19,864) (14,903) Total other financing sources (uses) 2,579 3,407 6,257 3,297 10,826 Extraordinary Items
Assets transferred to Housing Successor
Assets transferred to/liabilities assumed
by Successor Agency/Housing Successor
Special Item
Assets transferred to/from Successor Agency and County (27,261) (b) Net Change in fund balances $7,628 $22,439 $10,161 $27,152 $27,849 Debt service as a percentage of
noncapital expenditures 18.5% 5.5% 7.4% 0.1% 0.1%
(a) Beginning in fiscal year 2013, parks maintenance division is part of the public works department and the recreation division is part of human resources department.

However starting in fiscal year 2016, the recreation was separated out from Human Resources as an individual department (b) Under the terms of a settlement agreement with the County Auditor - Controller, Successor Agency to the Milpitas Redevelopment Agency and other parties, the City and Economic Development Corporation transferred cash and certain capital assets to the Successor Agency and received certain capital assets from the Successor Agency. (c) Human Resources is a component of General Government and Recreation is a separate department beginning in fiscal year 2016. (d) Neighborhood Services is a component of Building, Housing and Safety, and Planning is a separate department beginning in fiscal year 2019. (e) Transient occupancy taxes and Franchise fees were reported separately from Other taxes beginning in fiscal year 2020.

Fiscal Year Ended June 30,

CITY OF MILPITAS

CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
(Dollars in Thousands)
144
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Schedule 4
2018 2019 2020 2021 2022
$31,893 $33,811 $37,799 $41,093 $42,759
27,854 28,890 25,058 25,114 34,364
11,377 (e) 4,213 (e) 8,012 (e)
5,173 (e) 5,036 (e) 5,188 (e)
20,429 23,386 4,632 (e) 4,889 (e) 5,940 (e)
12,758 11,757 9,039 10,993 11,287
2,719 8,452 8,092 1,505 (5,980)
6,228 6,019 9,089 12,576 15,403
6,981 6,969 5,228 4,816 6,114
29,065 41,153 24,684 15,880 9,331
568 926 983 642 621
138,495 161,363 141,154 126,757 133,039
15,397 21,352 19,146 22,902 24,657
3,633 (d) (d) (d)
5,038 5,784 6,088 5,853
4,497 5,144 5,227 3,662 5,041
(c) (c) (c) (c)
(a) (a) (a) (a)
6,983 8,151 9,588 10,671 10,850
3,103 3,201 3,559 3,846 3,474
3,153 (d) (d) (d)
1,648 2,116 2,293 2,142
27,880 30,389 34,301 34,803 35,023
21,034 23,225 26,416 28,200 29,483
27,243 23,435 32,106 33,648 33,828
199 728 275
69 104 155 449 737
112,992 121,886 139,126 146,562 151,363
25,503 39,477 2,028 (19,805) (18,324)
952 21,919
1 3 118
(12,437) (152)
19,505 37,936 27,164 21,486 16,902
(14,637) (35,449) (21,777) (50,724) (13,225)
(7,569) 3,288 5,387 (7,316) 3,795
$17,934 $42,765 $7,415 ($27,121) ($14,529)

0.1% 0.3% 0.7% 0.3% 0.7%
Fiscal Year Ended June 30,
145
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Schedule 5

CITY OF MILPITAS

ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY

LAST TEN FISCAL YEARS
(Dollars in Thousands)
Real Property Less: Total Taxable
Fiscal Residential Commercial Industrial Tax-Exempt Assessed Total Direct Year Property Property Property Other (c) Unsecured Property (c) Value (a) Tax Rate (b) 2012-13 $6,291,949 $1,348,591 $2,507,227 $355,453 $1,706,657 ($309,165) $11,900,712 1% 2013-14 6,793,845 1,388,236 2,622,328 540,230 1,764,760 (296,041) 12,813,358 1% 2014-15 7,728,283 1,427,474 2,628,858 654,879 1,887,428 (266,136) 14,060,786 1% 2015-16 8,629,667 1,445,665 2,788,984 649,712 1,844,591 (299,860) 15,058,759 1% 2016-17 9,386,926 1,493,922 3,248,012 675,017 1,529,223 (314,291) 16,018,809 1% 2017-18 10,143,815 1,581,140 3,563,327 782,718 1,710,357 (315,999) 17,465,358 1% 2018-19 10,997,080 1,619,668 3,504,633 790,143 1,761,094 (328,719) 18,343,899 1% 2019-20 12,311,913 1,684,889 3,752,681 665,325 1,917,745 (333,527) 19,999,026 1% 2020-21 13,398,580 1,792,792 4,048,447 534,924 1,890,212 (186,858) 21,478,097 1% 2021-22 14,045,849 1,861,634 4,231,585 463,153 1,922,357 (178,163) 22,346,415 1% Source: Hdl Coren & Cone, Santa Clara County Assessor Combined Tax Rolls Notes:
(a) The State Constitution requires property to be assessed at one hundred percent of the most recent purchase price, plus an increment of no more than two percent annually, plus any local over-rides. These values are considered to be full market values. (b) California cities do not set their own direct tax rate. The state constitution establishes the rate at 1% and allocates a portion of that amount, by an annual calculation, to all the taxing entities within a tax rate area. (c) Corrections were made for Fiscal Years 2013-14 through 2018-19 to correct the amounts for Other and Tax-Exempt Property. Total assessed value was unchanged.
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
$22,000,000
$24,000,000
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 146
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Schedule 6

CITY OF MILPITAS

DIRECT AND OVERLAPPING PROPERTY TAX RATES

LAST TEN FISCAL YEARS
(Rate per $100 of assessed value)
City Direct Rates Overlapping Rates (a)
County of
Fiscal Basic Total Santa School Special
Year Rate (b) Direct Clara (c) Districts Districts
2012-13 1.00 1.00 0.0463 0.1140 0.0069
2013-14 1.00 1.00 0.0437 0.0961 0.0070
2014-15 1.00 1.00 0.0503 0.0750 0.0065
2015-16 1.00 1.00 0.0503 0.0817 0.0057
2016-17 1.00 1.00 0.0498 0.0734 0.0086
2017-18 1.00 1.00 0.0621 0.0880 0.0062
2018-19 1.00 1.00 0.0589 0.0850 0.0042
2019-20 1.00 1.00 0.0581 0.1245 0.0410
2020-21 1.00 1.00 0.0412 0.1255 0.0037
2021-22 1.00 1.00 0.0412 0.1210 0.0051
Source: County of Santa Clara, Tax Rates & Information
Notes:
(a) Overlapping rates are those of local and county governments that apply to property owners within the City of Milpitas. Not all overlapping rates apply to all Milpitas property owners. These are voter approved levies in addition to the 1% State levy.
(b) The City's basic property tax rate can only be increased by a 2/3 vote of the City's residents. (c) The overlapping rates for the County of Santa Clara were corrected in prior years to include amounts that were previously omitted by mistake.
147
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Schedule 7

CITY OF MILPITAS

PRINCIPAL PROPERTY TAX PAYERS
FISCAL YEARS 2021-22 and 2012-13
2021-2022 2012-2013
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
Cisco Systems Inc. $867,898,866 1 3.88% $920,982,774 1 7.74% KLA Tencor Corporation 465,867,697 2 2.08% 218,574,011 3 1.84% Milpitas Mills LP 344,278,329 3 1.54% 327,223,683 2 2.75% Headway Technologies Inc 308,496,406 4 1.38% 97,763,124 7 0.82% Sandbox Expansion LLC 244,429,905 5 1.09% 90,412,630 8 0.76% McCarthy Center Holding LLC 199,182,830 6 0.89%
Trader Joes Company 192,903,762 7 0.86%
Western Digital Technologies Inc 190,545,438 8 0.85%
Amalfi Milpitas LLC 172,689,312 9 0.77%
Lago Vista Milpitas LLC 172,078,619 10 0.77% 0.00%
Linear Technology Corporation 127,580,218 4 1.07%
BRE Milpitas LLC 118,766,415 5 1.00%
California Diversified LLC 114,342,000 6 0.96%
EQR Fresca 2009 LP 80,692,794 9 0.68%
Silicon Valley California I LLC 77,414,549 10 0.65%
Subtotal $3,158,371,164 14.13% $2,173,752,198 18.27%
Fiscal Year 2021-2022 Total Net Assessed Valuation $22,346,415,000 Fiscal Year 2012-2013 Total Net Assessed Valuation $11,900,712,000 Source: Hdl, Coren & Cone, Santa Clara County Assessor 2021/22 Combined Tax Rolls 148
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Item # C9.

Schedule 8

CITY OF MILPITAS

PROPERTY TAX LEVIES AND COLLECTIONS

LAST TEN FISCAL YEARS
(Dollars in thousands)
Percent Delinquent Total
Fiscal Taxes Current of Levy Tax Taxes Percent
Year Levied (a) Collections (a) Collected Collections Collected (a) of Levy 2012-13 (b) $20,469 $20,469 100.00% $0 $20,469 100.00%
2013-14 27,608 27,608 100.00% 0 27,608 100.00%
2014-15 24,927 24,927 100.00% 0 24,927 100.00%
2015-16 27,068 27,068 100.00% 0 27,068 100.00%
2016-17 30,262 30,262 100.00% 0 30,262 100.00%
2017-18 31,893 31,893 100.00% 0 31,893 100.00%
2018-19 33,811 33,811 100.00% 0 33,811 100.00%
2019-20 37,684 37,684 100.00% 0 37,684 100.00%
2020-21 41,093 41,093 100.00% 0 41,093 100.00%
2021-22 42,759 42,759 100.00% 0 42,759 100.00%
(a) The City elected to participate in the "Teeter" plan offered by the County whereby cities receive 100% of the taxes levied in exchange for foregoing any interest and penalties collected on delinquent taxes.
(b) The Redevelopment Agency was dissolved effective January 31, 2012 and collections of property tax increment ceased as of that date. Subsequent to that date, a Successor Agency collects property taxes of the former Redevelopment Agency.

Source: City of Milpitas Annual Comprehensive Financial Report 149
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Item # C9.

Schedule 9

CITY OF MILPITAS

TAXABLE SALES BY CATEGORY

LAST TEN CALENDAR YEARS
(Dollars in Thousands)
Adjusted for Economic Data (a)

CALENDAR YEARS
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Apparel Stores $ 291,556$ 282,727 300,238$ 321,992$ 324,754$ 314,471$ 325,501$ 328,250$ 135,581$ $ 234,479 General Merchandise 92,912 93,209 85,048 86,475 92,857 90,725 86,646 83,341 64,448 70,905 Food Stores 28,345 27,962 30,876 32,076 32,093 32,541 31,105 31,622 33,127 35,255 Eating and Drinking Places 215,651 230,422 240,297 261,608 277,250 292,114 300,096 312,895 178,556 266,523 Building Materials 53,043 58,260 90,386 134,128 219,504 217,800 245,999 273,634 246,796 261,114 Auto Dealers and Supplies 173,357 167,073 177,278 186,944 195,658 218,917 208,223 201,342 176,739 204,398 Service Stations 109,768 110,453 115,955 98,980 93,186 97,579 107,423 110,236 70,733 108,408 Other Retail Stores 303,230 241,299 197,343 211,182 198,233 191,574 194,569 192,038 123,966 158,319 All Other Outlets 757,674 686,659 764,395 959,364 1,014,866 1,291,651 1,138,049 1,201,892 1,181,873 1,193,162 Total $2,016,707 $1,906,893 $2,001,816 $2,292,749 $2,448,401 $2,747,372 $2,637,611 $2,735,250 $2,211,819 $2,532,563 Source: State Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office, The HdL Companies Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories presented are intended to provide alternative information regarding the sources to the City's revenue. (a) Adjusted for Economic Data - reflects adjustments for prior periods taxable sales in the appropriate quarters. $-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
($ 000)
Apparel Stores General Merchandise Food Stores Eating and Drinking Places Building Materials Auto Dealers and Supplies Service Stations Other Retail Stores All Other Outlets 150
257
Item # C9.

Schedule 10 CITY OF MILPITAS

DIRECT AND OVERLAPPING SALES TAX RATES

LAST TEN FISCAL YEARS
City
Fiscal Direct Santa Clara State of
Year Rate County (d) California
2012-13 1.00 1.50 (a) 6.25 (b)
2013-14 1.00 1.50 6.25
2014-15 1.00 1.50 6.25
2015-16 1.00 1.50 6.25
2016-17 1.00 2.00 6.00 (c)
2017-18 1.00 2.00 6.00
2018-19 1.00 2.00 6.00
2019-20 1.00 2.00 6.00
2020-21 1.25 2.00 6.00
2021-22 1.25 2.13 6.00
Source: California State Board of Equalization
(a) April 1, 2013 the County increased the rate 0.25%
(c) On April 1, 2017, the County increased the rate 0.50% and on January 1, 2017 the State decreased the rate 0.25%.
(d) Corrections were made to the County and State rates in all years. 0.25% that is part of the County Transportation Fund was being counted as State rate by mistake.

Note: The City's sales tax rate may be changed only with approval of the State Legislature. (b) On both July 1, 2012 and April 1, 2013 the State increased the State Rate 0.125% 151
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Item # C9.

Schedule 11

CITY OF MILPITAS

PRINCIPAL SALES TAX PAYERS
FISCAL YEARS 2021-22 and 2012-13

IN ALPHABETICAL ORDER
Fiscal Year 2021-2022 Fiscal Year 2012-2013
Autumn Information Systems Best Buy
Best Buy Burlington
Cisco Systems Chevron
Coach Chevron
Consolidated Electrical Distributors Cisco Systems
Envision Honda of Milpitas Coach
Envision Toyota of Milpitas Dave & Busters
Eplus Technology Flextronics
Flextronics Gap Outlet
Floor & Decor Headway Technologies
Headway Technologies Home Depot
Home Depot Jacklin Shell
Hoya Optics KLA Tencor
Independent Electric Supply Kohls
Jacklin Shell Leotek Electronics
KLA Tencor Marshalls
Marshalls Mazak Corporation
Milpitas Materials Company Milpitas Materials Company
Piercey Honda Nike Factory Store
Piercey Toyota One Workplace
Teledyne Lecroy Piercey Toyota
Veeco Process Equipment Inc Pivot Interiors
Vm Services Inc Shell
Walmart Supercenter South Bay Honda
Western Digital Technologies Walmart Supercenter
Source: HDL Coren & Cone
152
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Item # C9.

Schedule 12
Business-type Activities
Lease Certificates Total Percentage
Fiscal Revenue Purchase Capital of Revenue Primary of Personal Per Year Bonds Agreement Lease Participation Bonds (d) Government Income (a) Capita (a) 2012-13 $0 $9,828 $360 $7,315 $0 $17,503 0.82% $258
2013-14 0 6,000 274 6,910 0 13,184 0.59% 188
2014-15 0 0 186 6,490 0 6,676 0.29% 96
2015-16 0 0 94 6,055 0 6,149 0.26% 81
2016-17 0 0 0 5,605 0 5,605 0.22% 74
2017-18 0 0 0 0 5,363 5,363 0.20% 71
2018-19 0 0 728 0 4,812 5,540 0.19% (b) 73
2019-20 0 0 0 0 59,448 59,448 1.76% 763
2020-21 21,919 0 0 0 57,882 79,801 2.11% 1,056
2021-22 21,470 0 0 0 56,246 77,716 2.08% 961
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. (a) See Schedule 20 for personal income and population data. (b) The Redevelopment Agency was dissolved as of January 31, 2012 and its debt was assumed by a Successor Agency. (c) Data for fiscal year 2018-19 not available until May of 2020. (d) Balance of Revenue Bonds includes unamortized Bond Premium Governmental Activities
(Dollars in thousands, except per capita)

CITY OF MILPITAS

RATIOS OF OUTSTANDING DEBT BY TYPE

LAST TEN FISCAL YEARS
153
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Item # C9.

Schedule 13

CITY OF MILPITAS

BONDED DEBT PLEDGED REVENUE COVERAGE

REDEVELOPMENT AGENCY TAX ALLOCATION BONDS

LAST TEN FISCAL YEARS
Fiscal Net
Year Redevelopment Tax Debt Service Requirements
Ended Agency Property Less Housing Increment
June 30 Tax Increments (a) Reserve Fund Revenue Principal Interest Total Coverage 2013 $33,401,413 (d) $0 (b) $33,401,413 $5,595,000 (c) $7,973,533 (c) $13,568,533 2.46 2014 40,418,284 (d) 0 (b) 40,418,284 5,825,000 (d) 7,713,234 (d) 13,538,234 2.99 2015 44,843,881 (d) 0 (b) 44,843,881 6,120,000 (d) 7,414,608 (d) 13,534,608 3.31 2016 48,810,216 (d) 0 (b) 48,810,216 7,375,000 (d) 5,567,028 (d) 12,942,028 3.77 2017 51,563,292 (d) 0 (b) 51,563,292 6,045,000 (d) 5,682,175 (d) 11,727,175 4.40 2018 66,266,187 (d) 0 (b) 66,266,187 6,225,000 (d) 5,467,000 (d) 11,692,000 5.67 2019 71,988,412 (d) 0 (b) 71,988,412 6,475,000 (d) 5,213,000 (d) 11,688,000 6.16 2020 83,139,471 0 (b) 83,139,471 6,735,000 (d) 4,915,125 (d) 11,650,125 7.14 2021 84,805,793 0 (b) 84,805,793 7,070,000 (d) 4,570,000 (d) 11,640,000 7.29 2022 91,606,749 0 (b) 91,606,749 7,425,000 (d) 4,207,625 (d) 11,632,625 7.87 (a) Tax increments are net of pass-through payments and administrative fees withheld by the County prior to distribution to the Agency. (b) The Redevelopment Agency was dissolved as of January 31, 2012 and its debt was assumed by a Successor Agency.

The Successor Agency collects Property Taxes, with no distinction between housing and non-housing revenues, which are used for the repayment of the former Redevelopment Agency's Bonds. (c) Includes debt service paid by the Redevelopment Agency prior to the dissolution and by the Successor Agency after the dissolution. (d) Tax increment reported in this table after the dissolution date is the amount calculated by the County Auditor-Controller as available for payment of enforceable obligations. Under the provisions of the laws dissolving the Redevelopment Agency, the Successor Agency only receives the funds necessary to fulfill its approved obligations.

Debt service reported was paid by the Successor Agency. $0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000
$75,000
$80,000
$85,000
$90,000
$95,000
$100,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
($000)
Series1 Series4
154
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Item # C9.

Schedule 14

CITY OF MILPITAS

COMPUTATION OF DIRECT AND OVERLAPPING DEBT

PERCENTAGE AMOUNT

APPLICABLE APPLICABLE

TO CITY OF TO CITY OF
JURISDICTION MILPITAS (1) MILPITAS
2021-22 Assessed Valuation, Direct and Overlapping Debt $22,346,414,172 OVERLAPPING TAX AND ASSESSMENT DEBT:

Santa Clara County $43,843,055
San Jose- Evergreen Community College District 103,598,543 Milpitas Unified School District 285,549,509
East Side Union High School District 7,188,870
Berryessa Union School District 6,004,597
Santa Clara Valley Water District Benefits Assessment District 1,866,776 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 448,051,350

DIRECT AND OVERLAPPING GENERAL FUND DEBT
Santa Clara County General Fund Obligations $46,938,621 Santa Clara County Pension Obligation Bonds 13,012,703
Santa Clara County Board of Education Certificates of Participation 70,561 San Jose-Evergreen Community College District OPEB Bonds 5,893,765 Milpitas Unified School District General Fund Obligations 10,172,783 East Side Union High School District OPEB Bonds 204,019 Berryessa Union School District General Fund Obligations 150,468 City of Milpitas General Fund Obligations 100% 18,170,000 Santa Clara County Vector District Certifications of Participations 58,349 TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT 94,671,269 Less: Santa Clara County supported obligations 700,914
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $93,970,355 OVERLAPPING TAX INCREMENT DEBT (Successor Agency) 100% $80,440,000 TOTAL DIRECT DEBT $18,170,000
TOTAL GROSS OVERLAPPING DEBT $604,992,619
TOTAL NET OVERLAPPING DEBT $604,291,705
GROSS COMBINED TOTAL DEBT $623,162,619 (2)
NET COMBINED TOTAL DEBT $622,461,705
(1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value.

Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations.

Ratios to 2021-22 Assessed Valuation:

Total Overlapping Tax and Assessment Debt 2.01%
Ratios to Assessed Valuation:

Direct Debt % 0.08%
Total Gross Debt % 2.79%
Source: Avenu Insights & Analytics, California Municipal Statistics, Inc.

JUNE 30, 2022
155
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Item # C9.

Schedule 15

CITY OF MILPITAS

LEGAL DEBT MARGIN INFORMATION

LAST TEN FISCAL YEARS
(Dollars in Thousands)
Legal Debt Margin Calculation for Fiscal Year 2021-22
Assessed value (net) - June 30, 2022 $22,346,414
Debt limit: 3.75% of assessed value (a) $837,991
Debt applicable to limit
Total Bonded Debt
Less: Tax Allocation Bonds
not subject to limit
Amount of Debt subject to limit 0
Legal debt margin $837,991
Total Net Debt
Applicable to the
Limit as a
Fiscal Debt Total Net Debt Legal percentage of
Year Limit Applicable to Limit Debt Margin Debt Limit
2012-13 $446,277 $0 $446,277 0.0%
2013-14 480,501 0 480,501 0.0%
2014-15 527,280 0 527,280 0.0%
2015-16 564,703 0 564,703 0.0%
2016-17 600,705 0 600,705 0.0%
2017-18 654,951 0 654,951 0.0%
2018-19 687,896 0 687,896 0.0%
2019-20 749,963 0 749,963 0.0%
2020-21 805,429 0 805,429 0.0%
2021-22 837,991 0 837,991 0.0%
(a) California Government Code, Section 43605 sets the debt limit at 15%. The Code section was enacted prior to the change in being assessed value to full market value when it was previously 25% of market value. Thus, the limit shown as 3.75% is one-fourth the limit to account for the adjustment of showing assessed valuation at full cash value.

Source: City of Milpitas Finance Department
Santa Clara County Tax Assessor's Office
156
263
Item # C9.

Schedule 16

CITY OF MILPITAS

INSTALLMENT PAYMENT COVERAGE

SEWER CERTIFICATES OF PARTICIPATION AND

LAST TEN FISCAL YEARS
Less: Net Installment Payments
Fiscal Gross Operating Available
Year Revenues (1) Expenses (2) Revenue Principal Interest Total Coverage 2012-13 $12,785,567 $6,356,621 $6,428,946 $395,000 $292,966 $687,966 9.34 2013-14 13,235,908 7,834,220 5,401,688 405,000 278,965 683,965 7.90 2014-15 14,664,759 7,263,553 7,401,206 420,000 264,528 684,528 10.81 2015-16 16,408,718 7,687,848 8,720,870 435,000 249,348 684,348 12.74 2016-17 16,803,344 6,657,757 10,145,587 450,000 233,193 683,193 14.85 2017-18 17,245,001 9,031,729 8,213,272 470,000 216,055 686,055 11.97 2018-19 19,163,495 8,427,888 10,735,607 480,000 170,273 650,273 16.51 2019-20 20,664,951 10,235,463 10,429,488 460,000 808,477 1,268,477 8.22 2020-21 20,499,033 11,425,234 9,073,799 920,000 1,498,525 2,418,525 3.75 2021-22 21,592,843 9,373,484 12,219,359 980,000 1,455,875 2,435,875 5.02 NOTE: The Certificates of Participation were issued on November 28, 2006 and called on January 5, 2018.

The 2017 Wastewater Revenue Refunding Bonds were issued on December 4, 2017.

The 2019 Wastewater Revenue Bonds were issued on October 22, 2019. (1) Gross Revenues include sewer service charges, other operating revenues, and interest income.

Gross Revenues exclude connection fees and capital contributions. (2) Operating Expenses include sewer treatment services, personnel services, services and supplies, and repairs and maintenance expenses.

Operating Expenses exclude depreciation and amortization expenses.

WASTEWATER REVENUE REFUNDING BONDS
157
264
Item # C9.

Schedule 17

CITY OF MILPITAS

INSTALLMENT PAYMENT COVERAGE

LAST TEN FISCAL YEARS
Less: Net Installment Payments
Fiscal Gross Operating Available
Year Revenues (1) Expenses (2) Revenue Principal Interest Total Coverage 2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20 $33,954,254 $26,919,455 $7,034,799 $155,000 $419,018 $574,018 12.26 2020-21 35,023,092 27,314,613 7,708,479 290,000 755,650 1,045,650 7.37 2021-22 32,732,692 24,593,074 8,139,618 300,000 744,050 1,044,050 7.80 NOTE: The Water Revenue Bonds were issued on October 24, 2019. (1) Gross Revenues include water service charges, other operating revenues, and interest income.

Gross Revenues exclude connection fees and capital contributions. (2) Operating Expenses include wholesale water purchases, personnel services, services and supplies, and repairs and maintenance expenses.

Operating Expenses exclude depreciation and amortization expenses.

WATER REVENUE FUNDS
158
265
Item # C9.

Schedule 18

CITY OF MILPITAS

BIMONTHLY SEWER RATES BY CUSTOMER CLASS

LAST TEN FISCAL YEARS
Single Family Multi-Family Mobile Home
Fiscal Per Dwelling Per Dwelling Parks Per Flat Quantity Year Unit Unit Dwelling Unit Rate Charges (a)
2012-13 75.92 51.06 33.36 13.72 2.38 - 6.99
2013-14 75.92 51.06 33.36 13.72 2.38 - 6.99
2014-15 86.93 52.22 38.20 14.68 2.73 - 8.00
2015-16 90.27 69.32 56.97 14.97 3.94 - 8.34
2016-17 90.27 69.32 56.97 14.97 3.94 - 8.34
2017-18 90.27 69.32 56.97 14.97 3.94 - 8.34
2018-19 102.52 78.73 64.70 24.30 4.21 - 9.63
2019-20 111.07 85.30 70.08 25.78 4.54 - 10.65
2020-21 118.34 90.88 74.66 26.55 4-91 - 11.48
2021-22 124.14 95.34 78.28 27.35 5.31-12.09
Source: City of Milpitas, Ordinance 208.53
(a) For each one hundred cubic feet of water used. Charge varies depending on the business or type of business.

Residential Commercial
159
266
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Schedule 19

CITY OF MILPITAS

BIMONTHLY WATER RATES BY CUSTOMER CLASS

LAST TEN FISCAL YEARS
Potable
Commercial
Industrial
Fiscal Potable Capital 5/8 inch Institutional 5/8 to 10 inch Year Residential Surcharge Meter Charge Construction Meter Charge 2012-13 2.02 - 4.50* 26.29 4.62 26.29 - 641.40
2013-14 2.30 - 4.86* 26.82 4.94 26.82 - 654.23
2014-15 2.62 - 5.29* 27.36 5.29 27.36 - 667.31
2015-16 4.75 18.00 4.75 18.00 - 900.00
2016-17 5.13 1.30 19.44 5.13 19.44 - 972.00
2017-18 5.13 1.30 19.44 5.13 19.44 - 972.00
2018-19** 5.13 - 5.31 1.30 - 1.08 19.44 - 27.01 5.13 - 5.31 19.44 - 1,350.33 2019-20 5.63 1.08 28.63 5.63 26.83 - 1,431.35
2020-21 6.32 1.08 32.17 6.32 32.17-1608.26
2021-22 6.70 1.08 34.10 6.70 34.10-1704.76
Source: City of Milpitas, Ordinance 120.48
*Residential rates were a range based on consumption amounts for the period. There were 4 levels with the lowest rate being for use under 10 hc, and the highest rate for use over 30 hcf in the period.. **Rate effective Service Period April 1, 2019 to June 30, 2019 implemented on bill dated June 17, 2019. July 2018 rate listed first, and April rate listed second.

Single Family Residential Commercial
160
267
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Schedule 20

CITY OF MILPITAS

DEMOGRAPHIC AND ECONOMIC STATISTICS

LAST TEN CALENDAR YEARS
(Personal Income in Thousands)
Population Per Capita
Calendar Density Total Personal Personal School Unemployment Land Area Year Population (Sq. Mile) Income Income Enrollment Rate (%) (Sq. Mile) 2012 67,894 4,970 $2,143,889 $31,577 10,033 6.70% 13.66 2013 70,092 5,131 2,234,603 31,881 10,156 5.50% 13.66
2014 69,903 5,117 2,287,366 32,722 10,281 4.90% 13.66
2015 75,521 5,529 2,374,221 31,437 10,291 3.90% 13.66
2016 75,410 5,520 2,528,663 33,532 10,260 3.50% 13.66
2017 75,410 5,520 2,721,275 36,086 10,318 3.60% 13.66
2018 76,231 5,581 2,966,362 38,912 10,172 2.80% 13.66
2019 77,961 5,707 3,373,340 43,269 10,308 2.70% 13.66
2020 75,663 5,539 3,787,034 50,051 10,413 7.50% 13.66
2021 80,839 5,918 3,744,971 46,326 10,072 5.30% 13.66
Sources: HdL, Coren & Cone
City of Milpitas Annual Budget
161
268
Item # C9.

Schedule 21

CITY OF MILPITAS

PRINCIPAL EMPLOYERS
FISCAL YEAR 2021-22 and 2012-2013
2021-22 2012-13
Percentage Percentage
Number of of Total City Number of of Total City
Employer Employees Rank Employment Employees Rank Employment Cisco Systems, Inc. 3,347 1 8.224% 2,741 1 3.36%
KLA-Tencor Corporation 2,611 2 6.415% 2,099 2 2.57%
Western Digital Tech (SanDisk Corporation) 1,773 3 4.356% 1,485 3 1.82% Analog Devices (Linear Technology Corporation) 1,283 4 3.152% 284 8 0.35% Flextronics International (aka Vista Point Technologies) 1,449 5 3.560% Milpitas Unified School District 819 6 2.012% 825 4 1.01% Headway Technologies Inc. (2 Locations) 890 7 2.187% 394 5 0.48% Walmart Supercenter 446 8 1.096% 268 10 0.33%
City of Milpitas 389 9 0.956%
Nanometrics, Inc. 281 10 0.690%
Spectra Laboratories 358 6 0.44%
Vista Healthcare Corporation 320 7 0.39%
JDS Uniphase Corporation 277 9 0.34%
Subtotal 13,288 32.6486% 9,051 11.0857%
Total Labor Force 40,700 81,646
Source: California Municipal Statistics, Inc.
162
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Schedule 22

CITY OF MILPITAS

AUTHORIZED FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION/PROGRAM

LAST TEN FISCAL YEARS
Fiscal Year Ended June 30,
2013 2014 2015 2016 2017 2018 2019 (e) 2020 2021 2022
Function
General Government 68.5 65.5 63.0 64.8 64.8 69.0 60.0 64.0 67.5 66.5 Building, Housing and Safe 28.0 23.0 23.0 24.0 24.0 25.0 33.0 (c) 33.0 (c) 33.0 33.0 Public Works 91.0 94.5 97.0 73.0 (b) 73.0 84.0 44.0 48.0 47.5 47.6 Engineering 26.0 (b) 26.0 17.0 22.0 25.0 24.0 24.0
Planning 16.5 18.5 18.5 17.0 17.0 17.0 9.0 (c) 10.0 (c) 10.0 9.0 Recreation 25.5 (a) 25.5 25.5 18.0 18.0 17.5 18.0 20.75 20.75 20.75 Parks and Recreation
Police:

Sworn Police 91.5 92.0 92.0 92.0 93.0 93.0 90.0 93.0 93.0 93.0 Civilians 29.5 30.0 30.0 30.0 29.0 29.0 29.0 33.0 33.0 33.0 Fire:

Firefighters and Safety
Officers 70.0 70.0 68.0 66.0 66.0 68.0 71.0 73.0 79.0 78.0 Civilians 10.0 10.0 12.0 11.0 11.0 12.0 3.0 4.0 4.0 4.0 Utilities (d) 24.0 27.5 27.5 29.5 29.5 34.5 27.5 27.5 27.5 28.4 Total 454.5 456.5 456.5 451.3 451.3 466.0 406.5 431.3 439.3 437.3 (a) Beginning in fiscal year 2013, parks maintenance division is now under public works department and recreation division is part of human resources department, but it is reported separately here. (b) Beginning in fiscal year 2016, Public Works and Engineering are separate departments. (c) Neighborhood Services is a component of Building, Housing and Safety, and Planning is a separate department beginning in fiscal year 2019. (d) Utilities is comprised of employees from Public Works and Finance. (e) In Fiscal Year 2019, the City removed unfunded authorized positions.

Source: City of Milpitas, final budget
0 100
200
300
400
500
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
FTE's
General Government Building Public Works Engineering and Planning Planning and Neighborhood Services Recreation Parks and Recreation Police Fire Utilities
163
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Schedule 23
2013 2014 2015 2016 2017
Function/Program
Building Safety & Housing
Building permits issued 3,400 4,300 4,300 4,200 4,090
Plan review performed 1,100 1,500 1,400 1,500 1,610
Code Customer Service Requests /
Violations abated 725 725 755 755 800
Public Works
Street miles maintained 139 139 139 139 139
Customer Service Requests 3,500 2,880 2,800 2,794 2,800 Development projects reviewed 200 205 190 178 158
Planning
Applications to Planning Commission 106 159 236 92 92
Recreation
Sports Center members 1,600 1,450 1,504 1,600 1,325
Senior nutrition meals served 22,090 20,656 21,231 20,158 18,678 Police
Avg response time to emergency calls (minutes) 2:32 2:33 2:32 2:40 2:44 Number of anti-terrorist patrol checks 1,996 2,550 2,300 2,400 2,200 Crime prevention presentations 201 200 200 125 70
Number of vehicle citations issued 4,120 3,516 3,600 5,900 5,720 Fire
Emergency calls for service 4,356 4,356 4,950 5,000 5,000 Public education events 45 45 80 100 112
Permits Inspections 4,510 4,510 4,666 7,600 7,322
Plan Review 807 807 983 1,200 1,550
Utility
Clean sewer lines (feet) 329,313 640,255 500,000 500,000 500,000 Repair, replace or set water meters 149 298 279 189 152 Average daily consumption (thousands of gallons) 9,340 9,300 9,300 7,800 5,800 Source: City of Milpitas, final budget
Footnote: Statistic for DARE presentations: schools/students is removed from this schedule in 2022 due to no activity since 201

CITY OF MILPITAS

OPERATING INDICATORS BY FUNCTION/PROGRAM

LAST TEN FISCAL YEARS
Fiscal Year Ended June 30,
164
271
Item # C9.

Schedule 23
2018 2019 2020 2021 2022
4,200 4,300 4,000 3,000 3,000
1,700 1,600 4,800 4,900 4,900
714 784 600 600 600
298 298 298 303 303
3,000 2,384 4,468 3,353 4,652
160 225 134 48 24
100 419 37 31 60
1,450 1,575 1,877 506 1,024
17,206 18,322 20,145 39,783 28,699
2:57 2:41 2:36 2:40 2:50
2,200 1,949 1,479 958 490
56 104 110 105 47
5,900 5,895 6,000 6,300 4,230
5,200 5,640 5,600 5,390 6,164
200 223 134 0 2,082
7,577 7,824 7,772 2,949 1,652
1,700 1,600 1,575 1,884 1,401
491,244 528,051 432,022 636,681 331,232
115 147 219 113 25
6,590 8,394 8,410 7,440 6,895
3 Fiscal Year Ended June 30,
165
272
Item # C9.

Schedule 24
2013 2014 2015 2016
Function/Program
Public Works
Miles of streets 287 287 298 298
Street lights 4,500 4,500 4,577 4,577
Square feet of buildings
maintained (in thousands) 376 376 376 376
City vehicles 242 252 260 264
Signs 8,534 5,500 5,700 5,700
Signal lights 72 72 70 71
City Parks 33 34 34 33
Acres of Parkland 179 180 180 180
Playgrounds 24 25 34 34
Parks and recreation
Community centers 1111
Senior centers 1111
Sports centers 1111
Satellite centers 0000
Swimming pools 3333
Tennis courts 20 20 21 21
Football field 1111
Baseball/softball fields 8899
Soccer fields 9 9 12 13
Basketball courts 8879
Volleyball courts / Horse Shoe Pits /
Bocce Ball / Cricket Field / Par Course 4 9 7 10
Handball courts 5555
Skate Park
Joint use:

Russell Bobbysocks Fields 0000
Soccer fields 0000
Open Space - Number of School Sites 0000
Police
Police stations 2222
Police patrol vehicles 27 29 28 34
Fire
Fire stations 4444
Fire Apparatus 22 19 19 13
Fire hydrants 1,840 1,847 2,033 2,033
Utility
Miles of water mains 213 214 213 203
Water Tank Storage
capacity (million of gallons) 16 16 16 16
Miles of sanitary sewers 179 179 179 173
Miles of storm drain 110 110 110 99
Miles of recycled water main 4 4 23 23
Source: City of Milpitas, final budget
Fiscal Year Ended June 30,

CITY OF MILPITAS

CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM

LAST TEN FISCAL YEARS
166
273
Item # C9.

Schedule 24
2017 2018 2019 2020 2021 2022
298 298 298 298 303 303
4,581 5,119 5,141 4,418 4,494 4,494
376 322 473 473 473 455
264 269 271 258 268 256
6,000 10,000 10,000 6,000 6,000 6,000
72 72 74 78 83 83
32 32 32 36 36 36
195 195 195 154 154 154
33 30 33 33 33 33
111111
111111
111111
221211
333333
21 21 21 21 21 21
111111
7 7 9 9 9 11
13 13 8 8 8 8
10 10 10 10 10 10
13 12 10 10 10 10
666666
1 333330
228220
0 0 0 0 0 13
222222
29 29 29 29 30 30
444444
11 11 12 13 13 13
2,039 2,039 2,039 2,308 2,308 2,308
203 206 206 206 206 206
16 16 16 16 16 16
173 175 173 173 173 173
99 105 99 99 99 99
21 23 26 26 26 24
Fiscal Year Ended June 30,
167
274
Item # C9.
275
Item # C9.

OTHER AUDIT REPORT
276
Item # C9.
277
Item # C9.

INDEPENDENT AUDITOR’S REPORT ON

INTERNAL CONTROL OVER FINANCIAL REPORTING

AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE

WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Members of the City Council
City of Milpitas, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the basic financial statements of the City of Milpitas, California, as of and for the year ended June 30, 2021, and have issued our report thereon dated November 7, 2021. Our report includes a reference to other auditors who audited the financial statements of Terrace Gardens, Inc., as described in our report on the City’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or on compliance and other matters that are reported on separately by those auditors.

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

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

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weakness may exist that have not been identified. 169
278
Item # C9.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.

We have also issued a separate Memorandum on Internal Control dated November 7, 2022 which is an integrate part of our audit and should be read in conjunction with this report.

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

Pleasant Hill, California
November 7, 2022
170
279
Item # C9.

CITY OF MILPITAS

BICYCLE/PEDESTRIAN PROJECTS

FINANCIAL STATEMENTS

FOR THE YEARS ENDED
JUNE 30, 2021 AND 2022
280
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281
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Bicycle/Pedestrian Projects
Financial Statement
For the Years Ended June 30, 2021 and 2022
Table of Contents
Page
Independent Auditor’s Report ........................................................................................................................... 1 Fund Financial Statements:

Balance Sheets ......................................................................................................................................... 5 Statement of Revenues, Expenditures and Changes in Fund Balances ................................................... 6 Notes to Financial Statements .................................................................................................................. 7 Independent Auditor’s Report on Internal Control Over Financial Reporting, on Compliance with the Transportation Development Act and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .......................... 9 282
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Item # C9.

INDEPENDENT AUDITOR’S REPORT
To the Honorable Members of the City Council
City of Milpitas, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the Bicycle/ Pedestrian Projects (Projects) of the City of Milpitas, California, as of and for the years ended June 30, 2022 and 2021, and the related notes to the financial statements, as listed in the Table of Contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Projects as of June 30, 2022 and 2021, and the respective changes in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America.

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

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

Emphasis of a Matter
As discussed in Note 1, the financial statements present only the Projects and do not purport to, and do not present fairly the financial position of the City as of June 30, 2022 and 2021, the changes in its financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter. 1 284
Item # C9.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the judgment made by a reasonable user based on the financial statements.

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

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
2 285
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Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 10, 2022, on our consideration of the Project’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Project’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Project’s internal control over financial reporting and compliance.

Pleasant Hill, California
November 10, 2022
3 286
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CITY OF MILPITAS

BICYCLE/PEDESTRIAN PROJECTS

BALANCE SHEETS
JUNE 30, 2021 AND 2022
2022 2021
ASSETS
Receivable from MTC $155,316 $211,883
Total Assets $155,316 $211,883

LIABILITIES
Due to the City $155,316 $211,883
Total Liabilities 155,316 211,883

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue 155,316 211,883
Total Deferred Inflows of Resources 155,316 211,883

FUND BALANCE
Fund Balance (155,316) (211,883)
Total Fund Balance (155,316) (211,883)
Total Liabilities, Deferred Inflows, and Fund
Balance ($155,316) ($211,883)
See accompanying notes to financial statements
5 288
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CITY OF MILPITAS

BICYCLE/PEDESTRIAN PROJECTS

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE YEARS ENDED JUNE 30, 2021 AND 2022
2022 2021

REVENUES
TDA Article 3.0 (Note 2) $211,883
Total Revenues $211,883

EXPENDITURES
ADA Curb Ramp Transition Program (22001050) $155,316
ADA Curb Ramp Transition Program (19001050) $127,587
ADA Curb Ramp Transition Program (20001031) 84,296
Total Expenditures 155,316 211,883
Net change in fund balance 56,567 (211,883)
Fund balance at beginning of year (211,883)
Fund balance at end of year ($155,316) ($211,883)
See accompanying notes to financial statements
6 289
Item # C9.

CITY OF MILPITAS

BICYCLE/PEDESTRIAN PROJECTS

NOTES TO FINANCIAL STATEMENTS
For the Year Ended June 30, 2022
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The has developed the Bicycle/Pedestrian Projects (Projects) under the Transportation Development Act (TDA), Article 3.0 for the construction of pedestrian pathways and wheelchair ramps and bicycle master plan studies. The Projects are funded by TDA grants.

The TDA Fund is distributed through the Metropolitan Transportation Commission (MTC) which is the agency responsible for allocation of funds to eligible claimants within the greater San Francisco Bay Area.

The following is a summary of significant accounting policies applicable to the Projects which conform to generally accepted accounting principles as applicable to governments.

A. Fund Accounting
The Projects are accounted for as part of the General Government Capital Projects Fund of the City.

This fund is a set of self-balancing accounts which comprise its assets, deferred inflows/outflows of resources, liabilities, fund balance, revenues and expenditures.

B. Basis of Accounting
Basis of accounting refers to when revenues and expenditures are recognized. The Projects are accounted for in a governmental fund type and the modified accrual basis of accounting is used.

Under the modified accrual basis, revenues are recognized when they become measurable and available as net current assets. The Projects considers all revenues reported in the governmental funds to be available if the revenues are collected within forty-five days after year-end. Expenditures are recognized when they are incurred.

C. Deferred Inflows and Deferred Outflows of Resources
In addition to assets, the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expenditure) until then.

In addition to liabilities, the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. 7 290
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BICYCLE/PEDESTRIAN PROJECTS

NOTES TO FINANCIAL STATEMENTS
For the Year Ended June 30, 2022
NOTE 2 – TDA ARTICLE 3.0 REVENUE
For the year ended June 30, 2021 and 2022, the City had allocation instructions from the Metropolitan Transportation Commission for the following projects:

Instruction Grant Expended in Expended in Revenue in Revenue in Number Project Name Award June 30, 2021 June 30, 2022 June 30, 2021 Fiscal Year 2022 20001031
pg
2020 $84,296 $84,296 $84,296
22001050
pg
2022 155,316 $155,316
19001050
pg
2019 127,587 127,587 127,587
$367,199 $211,883 $155,316 $211,883
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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING, ON COMPLIANCE WITH THE TRANSPORTATION

DEVELOPMENT ACT AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Members of the City Council
City of Milpitas, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the basic financial statements of the Bicycle/ pedestrian Projects (Projects) of the City of Milpitas, California, as of and for the year ended June 30, 2022, and have issued our report thereon dated November 10, 2022. Our report included an emphasis of a matter paragraph disclosing the implementation of new accounting principles.

Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Project’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Project’s internal control.

Accordingly, we do not express an opinion on the effectiveness of the Project’s internal control.

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

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. 9 292
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Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Projects’ financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. Our procedures included the applicable audit procedures contained in §6666 and §6667 of Title 21 of California Code of Regulations and tests of compliance with the applicable provisions of the Transportation Development Act and the allocation instructions and resolutions of the Metropolitan Transportation Commission. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

We have also issued a separate Memorandum on Internal Control dated November 10, 2022, which is an integral part of our audit and should be read in conjunction with this report.

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

Accordingly, this communication is not suitable for any other purpose.

Pleasant Hill, California
November 10, 2022
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FOR THE YEAR ENDED
JUNE 30, 2022
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Table of Contents
Page
Memorandum on Internal Control ................................................................................................... 1 Schedule of Significant Deficiency. ................................................................................................... 3 Schedule of Other Matters .................................................................................................................. 5 Status of Prior Year Other Matters ................................................................................................... 17 296
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MEMORANDUM ON INTERNAL CONTROL
To the City Council of
the City of Milpitas, California
We have audited the basic financial statements of the City of Milpitas for the year ended June 30, 2022, and have issued our report thereon dated November 7, 2022. Our opinions on the basic financial statements and this report, insofar as they relate to Terrace Gardens, Inc, are based solely on the report of other auditors. In planning and performing our audit of the City, in accordance with auditing standards generally accepted in the United States of America, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore material weaknesses or significant deficiencies may exist that were not identified. In addition, because of inherent limitations in internal control, including the possibility of management override of controls, misstatements due to error or fraud may occur and not be detected by such controls. However, as discussed below, we identified certain deficiency in internal control that we consider to be a significant deficiency.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. We did not identify any deficiencies in internal control that we consider to be material weaknesses.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control included on the Schedule of Significant Deficiency to be a significant deficiency.

Included in the Schedule of Other Matters are recommendations not meeting the above definitions that we believe are opportunities for strengthening internal controls and operating efficiency.

Government Auditing Standards require the auditor to perform limited procedures on the City's response to the findings identified in our audit and described in the accompanying Schedule of Significant Deficiency and Schedule of Other Matters and Status of Prior Year Other Matters. The City's response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.
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This communication is intended solely for the information and use of management, City Council, others within the organization, and agencies and pass-through entities requiring compliance with Government Auditing Standards, and is not intended to be and should not be used by anyone other than these specified parties.

Pleasant Hill, California
November 7, 2022
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SCHEDULE OF SIGNIFICANT DEFICIENCY
2022-01 Timeliness of Year-End Close
Criteria: Effective organizations develops plans to ensure that adequate resources are available to analyze the City’s general ledger to ensure that all accounts are accurate and timely for the reporting year.

These resources need to be in place throughout the fiscal year to ensure proper accounting processes and procedures and allow time for the analysis of account balances and activities.

Condition: During the audit, City staff proposed numerous journal entries, which caused the audit team to reprocess and reanalyze the trial balance. City staff had difficulty completing closing entries prior to providing the trial balance for audit in various areas, which affected the year-end closing process and many of the City’s funds.

Cause: The tight labor market directly impacted the City’s recruitment causing multiple vacancies in the finance department. Furthermore, the City’s legacy financial system is inflexible which causes staff to perform time-consuming procedures that delay year-end close.

Potential Effect: The above condition delayed the completion of the year-end closing process, which increases the risk that errors or misstatements may go undetected by staff and corrections may not be made in a timely manner.

Recommendation: The City should analyze staff resources to determine what plans can or should be made to ensure that the financial data is processed properly and timely. In addition, the City must develop procedures to ensure that accounts are analyzed throughout the fiscal year and after the year-end close to ensure that additional closing entries are not required prior to providing the general ledger for audit.

Management Response: The City continues to actively recruit and has been successful in filling several key positions. Also, the City launched a project to assess the finance procedures and systems to identify strengths, challenges, and opportunities.
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2022-02 Missing Dates of Preparation and Review for Bank Reconciliations Criteria: Bank reconciliations should be completed as soon as reasonably possible after each month-end, usually within 30 days, and subsequently reviewed for accuracy.

Condition: Per review of February 28, 2022, General Checking bank reconciliation, there was no documentation of when it was reviewed. In addition, per review of the August 31, 2021, and October 31, 2021, Worker’s Compensation bank reconciliations, there was no documentation of the dates when they were prepared and reviewed.

Cause: The General checking bank reconciliation for February 2022 was reviewed however the date was erroneously omitted. The Worker’s Compensation bank reconciliation was transitioned to the City’s worker’s compensation administrator and in doing so, the process was not thoroughly defined with documentation of preparer, reviewer, and dates.

Potential Effect: Bank reconciliation is an essential element of the City’s internal control structure. In order to be an effective control, bank reconciliations should be completed as soon as reasonably possible after each month-end, usually within 30 days, and subsequently reviewed for accuracy. Errors and unreconciled differences should be investigated and corrected immediately, so as to prevent additional errors, unauthorized transactions and decrease in efficiency.

Recommendation: The City should document the date when each bank reconciliation was prepared and reviewed in a timely manner.

Management Response: City will improve its General checking bank reconciliation and workers’ compensation bank reconciliation procedures to ensure the revised forms reflect the preparer, reviewer and dates. A project management tool will ensure the reconciliations are performed and reviewed in a timely manner, and can be monitored accordingly.
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NEW GASB PRONOUNCEMENTS OR PRONOUNCEMENTS NOT YET EFFECTIVE The following comment represents new pronouncements taking affect in the next few years. We cite them here to keep you informed of developments:

EFFECTIVE FISCAL YEARS 2022, 2023 and 2024:

GASB 99 – Omnibus 2022
The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. The practice issues addressed by this Statement are as follows:
 Classification and reporting of derivative instruments within the scope of Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, that do not meet the definition of either an investment derivative instrument or a hedging derivative instrument  Clarification of provisions in Statement No. 87, Leases, as amended, related to the determination of the lease term, classification of a lease as a short term lease, recognition and measurement of a lease liability and a lease asset, and identification of lease incentives  Clarification of provisions in Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, related to (a) the determination of the public-private and public-public partnership (PPP) term and (b) recognition and measurement of installment payments and the transfer of the underlying PPP asset
 Clarification of provisions in Statement No. 96, Subscription-Based Information Technology Arrangements, related to the subscription-based information technology arrangement (SBITA) term, classification of a SBITA as a short term SBITA, and recognition and measurement of a subscription liability
 Extension of the period during which the London Interbank Offered Rate (LIBOR) is considered an appropriate benchmark interest rate for the qualitative evaluation of the effectiveness of an interest rate swap that hedges the interest rate risk of taxable debt  Accounting for the distribution of benefits as part of the Supplemental Nutrition Assistance Program (SNAP)
 Disclosures related to nonmonetary transactions
 Pledges of future revenues when resources are not received by the pledging government  Clarification of provisions in Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, as amended, related to the focus of the government-wide financial statements
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GASB 99 – Omnibus 2022 (Continued)
 Terminology updates related to certain provisions of Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position  Terminology used in Statement 53 to refer to resource flows statements.

The Requirements of this Statement are Effective as Follows:

The requirements in paragraphs 26–32 related to extension of the use of LIBOR, accounting for SNAP distributions, disclosures of nonmonetary transactions, pledges of future revenues by pledging governments, clarification of certain provisions in Statement 34, as amended, and terminology updates related to Statement 53 and Statement 63 are effective upon issuance.

The requirements in paragraphs 11–25 related to leases, PPPs, and SBITAs are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter.

The requirements in paragraphs 4–10 related to financial guarantees and the classification and reporting of derivative instruments within the scope of Statement 53 are effective for fiscal years beginning after June 15, 2023, and all reporting periods thereafter.

Earlier application is encouraged and is permitted by individual topic.

How the Changes in This Statement Will Improve Financial Reporting The requirements of this Statement will enhance comparability in the application of accounting and financial reporting requirements and will improve the consistency of authoritative literature. Consistent authoritative literature enables governments and other stakeholders to more easily locate and apply the correct accounting and financial reporting provisions, which improves the consistency with which such provisions are applied. The comparability of financial statements also will improve as a result of this Statement. Better consistency and comparability improve the usefulness of information for users of state and local government financial statements.
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EFFECTIVE FISCAL YEAR 2022/23:

GASB 91 – Conduit Debt Obligations
The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures.

A conduit debt obligation is defined as a debt instrument having all of the following characteristics:
 There are at least three parties involved:
(1) an issuer
(2) a third-party obligor, and
(3) a debt holder or a debt trustee.
 The issuer and the third-party obligor are not within the same financial reporting entity.  The debt obligation is not a parity bond of the issuer, nor is it cross-collateralized with other debt of the issuer.
 The third-party obligor or its agent, not the issuer, ultimately receives the proceeds from the debt issuance.
 The third-party obligor, not the issuer, is primarily obligated for the payment of all amounts associated with the debt obligation (debt service payments).

All conduit debt obligations involve the issuer making a limited commitment. Some issuers extend additional commitments or voluntary commitments to support debt service in the event the third party is, or will be, unable to do so.

An issuer should not recognize a conduit debt obligation as a liability. However, an issuer should recognize a liability associated with an additional commitment or a voluntary commitment to support debt service if certain recognition criteria are met. As long as a conduit debt obligation is outstanding, an issuer that has made an additional commitment should evaluate at least annually whether those criteria are met. An issuer that has made only a limited commitment should evaluate whether those criteria are met when an event occurs that causes the issuer to reevaluate its willingness or ability to support the obligor’s debt service through a voluntary commitment.
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GASB 91 – Conduit Debt Obligations (Continued)
This Statement also addresses arrangements—often characterized as leases—that are associated with conduit debt obligations. In those arrangements, capital assets are constructed or acquired with the proceeds of a conduit debt obligation and used by third-party obligors in the course of their activities.

Payments from third-party obligors are intended to cover and coincide with debt service payments.

During those arrangements, issuers retain the titles to the capital assets. Those titles may or may not pass to the obligors at the end of the arrangements.

Issuers should not report those arrangements as leases, nor should they recognize a liability for the related conduit debt obligations or a receivable for the payments related to those arrangements. In addition, the following provisions apply:
 If the title passes to the third-party obligor at the end of the arrangement, an issuer should not recognize a capital asset.
 If the title does not pass to the third-party obligor and the third party has exclusive use of the entire capital asset during the arrangement, the issuer should not recognize a capital asset until the arrangement ends.
 If the title does not pass to the third-party obligor and the third party has exclusive use of only portions of the capital asset during the arrangement, the issuer, at the inception of the arrangement, should recognize the entire capital asset and a deferred inflow of resources. The deferred inflow of resources should be reduced, and an inflow recognized, in a systematic and rational manner over the term of the arrangement.

This Statement requires issuers to disclose general information about their conduit debt obligations, organized by type of commitment, including the aggregate outstanding principal amount of the issuers’ conduit debt obligations and a description of each type of commitment. Issuers that recognize liabilities related to supporting the debt service of conduit debt obligations also should disclose information about the amount recognized and how the liabilities changed during the reporting period.

How the Changes in this Statement will Improve Financial Reporting The requirements of this Statement will improve financial reporting by eliminating the existing option for issuers to report conduit debt obligations as their own liabilities, thereby ending significant diversity in practice. The clarified definition will resolve stakeholders’ uncertainty as to whether a given financing is, in fact, a conduit debt obligation. Requiring issuers to recognize liabilities associated with additional commitments extended by issuers and to recognize assets and deferred inflows of resources related to certain arrangements associated with conduit debt obligations also will eliminate diversity, thereby improving comparability in reporting by issuers. Revised disclosure requirements will provide financial statement users with better information regarding the commitments issuers extend and the likelihood that they will fulfill those commitments. That information will inform users of the potential impact of such commitments on the financial resources of issuers and help users assess issuers’ roles in conduit debt obligations.
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GASB 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). As used in this Statement, a PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction. Some PPPs meet the definition of a service concession arrangement (SCA), which the Board defines in this Statement as a PPP in which (1) the operator collects and is compensated by fees from third parties; (2) the transferor determines or has the ability to modify or approve which services the operator is required to provide, to whom the operator is required to provide the services, and the prices or rates that can be charged for the services; and (3) the transferor is entitled to significant residual interest in the service utility of the underlying PPP asset at the end of the arrangement.

This Statement also provides guidance for accounting and financial reporting for availability payment arrangements (APAs). As defined in this Statement, an APA is an arrangement in which a government compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an underlying nonfinancial asset for a period of time in an exchange or exchange-like transaction.

PPPs – This Statement requires that PPPs that meet the definition of a lease apply the guidance in Statement No. 87, Leases, as amended, if existing assets of the transferor that are not required to be improved by the operator as part of the PPP arrangement are the only underlying PPP assets and the PPP does not meet the definition of an SCA. This Statement provides accounting and financial reporting requirements for all other PPPs: those that either (1) meet the definition of an SCA or (2) are not within the scope of Statement 87, as amended (as clarified by this Statement). The PPP term is defined as the period during which an operator has a noncancelable right to use an underlying PPP asset, plus, if applicable, certain periods if it is reasonably certain, based on all relevant factors, that the transferor or the operator either will exercise an option to extend the PPP or will not exercise an option to terminate the PPP.

A transferor generally should recognize an underlying PPP asset as an asset in financial statements prepared using the economic resources measurement focus. However, in the case of an underlying PPP asset that is not owned by the transferor or is not the underlying asset of an SCA, a transferor should recognize a receivable measured based on the operator’s estimated carrying value of the underlying PPP asset as of the expected date of the transfer in ownership. In addition, a transferor should recognize a receivable for installment payments, if any, to be received from the operator in relation to the PPP.

Measurement of a receivable for installment payments should be at the present value of the payments expected to be received during the PPP term. A transferor also should recognize a deferred inflow of resources for the consideration received or to be received by the transferor as part of the PPP. Revenue should be recognized by a transferor in a systematic and rational manner over the PPP term.

This Statement requires a transferor to recognize a receivable for installment payments and a deferred inflow of resources to account for a PPP in financial statements prepared using the current financial resources measurement focus. Governmental fund revenue would be recognized in a systematic and rational manner over the PPP term.
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GASB 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements (Continued)
This Statement also provides specific guidance in financial statements prepared using the economic resources measurement focus for a government that is an operator in a PPP that either (1) meets the definition of an SCA or (2) is not within the scope of Statement 87, as amended (as clarified in this Statement). An operator should report an intangible right-to-use asset related to an underlying PPP asset that either is owned by the transferor or is the underlying asset of an SCA. Measurement of the right-touse asset should be the amount of consideration to be provided to the transferor, plus any payments made to the transferor at or before the commencement of the PPP term, and certain direct costs. For an underlying PPP asset that is not owned by the transferor and is not the underlying asset of an SCA, an operator should recognize a liability measured based on the estimated carrying value of the underlying PPP asset as of the expected date of the transfer in ownership. In addition, an operator should recognize a liability for installment payments, if any, to be made to the transferor in relation to the PPP. Measurement of a liability for installment payments should be at the present value of the payments expected to be made during the PPP term. An operator also should recognize a deferred outflow of resources for the consideration provided or to be provided to the transferor as part of the PPP. Expense should be recognized by an operator in a systematic and rational manner over the PPP term.

This Statement also requires a government to account for PPP and non-PPP components of a PPP as separate contracts. If a PPP involves multiple underlying assets, a transferor and an operator in certain cases should account for each underlying PPP asset as a separate PPP. To allocate the contract price to different components, a transferor and an operator should use contract prices for individual components as long as they do not appear to be unreasonable based on professional judgment or use professional judgment to determine their best estimate if there are no stated prices or if stated prices appear to be unreasonable. If determining the best estimate is not practicable, multiple components in a PPP should be accounted for as a single PPP.

This Statement also requires an amendment to a PPP to be considered a PPP modification, unless the operator’s right to use the underlying PPP asset decreases, in which case it should be considered a partial or full PPP termination. A PPP termination should be accounted for by a transferor by reducing, as applicable, any receivable for installment payments or any receivable related to the transfer of ownership of the underlying PPP asset and by reducing the related deferred inflow of resources. An operator should account for a termination by reducing the carrying value of the right-to-use asset and, as applicable, any liability for installment payments or liability to transfer ownership of the underlying PPP asset. A PPP modification that does not qualify as a separate PPP should be accounted for by remeasuring PPP assets and liabilities.

APAs – An APA that is related to designing, constructing, and financing a nonfinancial asset in which ownership of the asset transfers by the end of the contract should be accounted for by a government as a financed purchase of the underlying nonfinancial asset. This Statement requires a government that engaged in an APA that contains multiple components to recognize each component as a separate arrangement. An APA that is related to operating or maintaining a nonfinancial asset should be reported by a government as an outflow of resources in the period to which payments relate. 11 308
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GASB 96 – Subscription-Based Information Technology Arrangements This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended.

A SBITA is defined as a contract that conveys control of the right to use another party’s (a SBITA vendor’s) information technology (IT) software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction.

The subscription term includes the period during which a government has a noncancelable right to use the underlying IT assets. The subscription term also includes periods covered by an option to extend (if it is reasonably certain that the government or SBITA vendor will exercise that option) or to terminate (if it is reasonably certain that the government or SBITA vendor will not exercise that option).

Under this Statement, a government generally should recognize a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability. A government should recognize the subscription liability at the commencement of the subscription term, —which is when the subscription asset is placed into service. The subscription liability should be initially measured at the present value of subscription payments expected to be made during the subscription term. Future subscription payments should be discounted using the interest rate the SBITA vendor charges the government, which may be implicit, or the government’s incremental borrowing rate if the interest rate is not readily determinable. A government should recognize amortization of the discount on the subscription liability as an outflow of resources (for example, interest expense) in subsequent financial reporting periods.

The subscription asset should be initially measured as the sum of (1) the initial subscription liability amount, (2) payments made to the SBITA vendor before commencement of the subscription term, and (3) capitalizable implementation costs, less any incentives received from the SBITA vendor at or before the commencement of the subscription term. A government should recognize amortization of the subscription asset as an outflow of resources over the subscription term.

Activities associated with a SBITA, other than making subscription payments, should be grouped into the following three stages, and their costs should be accounted for accordingly:
 Preliminary Project Stage, including activities such as evaluating alternatives, determining needed technology, and selecting a SBITA vendor. Outlays in this stage should be expensed as incurred.  Initial Implementation Stage, including all ancillary charges necessary to place the subscription asset into service. Outlays in this stage generally should be capitalized as an addition to the subscription asset.
 Operation and Additional Implementation Stage, including activities such as subsequent implementation activities, maintenance, and other activities for a government’s ongoing operations related to a SBITA. Outlays in this stage should be expensed as incurred unless they meet specific capitalization criteria.
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GASB 96 – Subscription-Based Information Technology Arrangements (Continued) In classifying certain outlays into the appropriate stage, the nature of the activity should be the determining factor. Training costs should be expensed as incurred, regardless of the stage in which they are incurred.

If a SBITA contract contains multiple components, a government should account for each component as a separate SBITA or nonsubscription component and allocate the contract price to the different components. If it is not practicable to determine a best estimate for price allocation for some or all components in the contract, a government should account for those components as a single SBITA.

This Statement provides an exception for short-term SBITAs. Short-term SBITAs have a maximum possible term under the SBITA contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Subscription payments for short-term SBITAs should be recognized as outflows of resources.

This Statement requires a government to disclose descriptive information about its SBITAs other than short-term SBITAs, such as the amount of the subscription asset, accumulated amortization, other payments not included in the measurement of a subscription liability, principal and interest requirements for the subscription liability, and other essential information.

How the Changes in this Statement will Improve Financial Reporting The requirements of this Statement will improve financial reporting by establishing a definition for SBITAs and providing uniform guidance for accounting and financial reporting for transactions that meet that definition. That definition and uniform guidance will result in greater consistency in practice.

Establishing the capitalization criteria for implementation costs also will reduce diversity and improve comparability in financial reporting by governments. This Statement also will enhance the relevance and reliability of a government’s financial statements by requiring a government to report a subscription asset and subscription liability for a SBITA and to disclose essential information about the arrangement. The disclosures will allow users to understand the scale and important aspects of a government’s SBITA activities and evaluate a government’s obligations and assets resulting from SBITAs. 13 310
Item # C9.

CITY OF MILPITAS

MEMORANDUM ON INTERNAL CONTROL

SCHEDULE OF OTHER MATTERS
EFFECTIVE FISCAL YEAR 2023/24:

GASB 100 – Accounting for Changes and Error Corrections The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability.

This Statement defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes. As part of those descriptions, for (1) certain changes in accounting principles and (2) certain changes in accounting estimates that result from a change in measurement methodology, a new principle or methodology should be justified on the basis that it is preferable to the principle or methodology used before the change. That preferability should be based on the qualitative characteristics of financial reporting—understandability, reliability, relevance, timeliness, consistency, and comparability. This Statement also addresses corrections of errors in previously issued financial statements.

This Statement prescribes the accounting and financial reporting for (1) each type of accounting change and (2) error corrections. This Statement requires that (a) changes in accounting principles and error corrections be reported retroactively by restating prior periods, (b) changes to or within the financial reporting entity be reported by adjusting beginning balances of the current period, and (c) changes in accounting estimates be reported prospectively by recognizing the change in the current period. The requirements of this Statement for changes in accounting principles apply to the implementation of a new pronouncement in absence of specific transition provisions in the new pronouncement. This Statement also requires that the aggregate amount of adjustments to and restatements of beginning net position, fund balance, or fund net position, as applicable, be displayed by reporting unit in the financial statements.

This Statement requires disclosure in notes to financial statements of descriptive information about accounting changes and error corrections, such as their nature. In addition, information about the quantitative effects on beginning balances of each accounting change and error correction should be disclosed by reporting unit in a tabular format to reconcile beginning balances as previously reported to beginning balances as restated.

Furthermore, this Statement addresses how information that is affected by a change in accounting principle or error correction should be presented in required supplementary information (RSI) and supplementary information (SI). For periods that are earlier than those included in the basic financial statements, information presented in RSI or SI should be restated for error corrections, if practicable, but not for changes in accounting principles.
14 311
Item # C9.

CITY OF MILPITAS

MEMORANDUM ON INTERNAL CONTROL

SCHEDULE OF OTHER MATTERS
EFFECTIVE FISCAL YEAR 2024/25:

GASB 101 – Compensated Absences
The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures.

Recognition And Measurement
This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already rendered when an employee has performed the services required to earn the leave. Leave that accumulates is carried forward from the reporting period in which it is earned to a future reporting period during which it may be used for time off or otherwise paid or settled. In estimating the leave that is more likely than not to be used or otherwise paid or settled, a government should consider relevant factors such as employment policies related to compensated absences and historical information about the use or payment of compensated absences. However, leave that is more likely than not to be settled through conversion to defined benefit postemployment benefits should not be included in a liability for compensated absences.

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

This Statement also establishes guidance for measuring a liability for leave that has not been used, generally using an employee’s pay rate as of the date of the financial statements. A liability for leave that has been used but not yet paid or settled should be measured at the amount of the cash payment or noncash settlement to be made. Certain salary-related payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities.

With respect to financial statements prepared using the current financial resources measurement focus, this Statement requires that expenditures be recognized for the amount that normally would be liquidated with expendable available financial resources.

Notes To Financial Statements
This Statement amends the existing requirement to disclose the gross increases and decreases in a liability for compensated absences to allow governments to disclose only the net change in the liability (as long as they identify it as a net change). In addition, governments are no longer required to disclose which governmental funds typically have been used to liquidate the liability for compensated absences. 15 312
Item # C9.

CITY OF MILPITAS

MEMORANDUM ON INTERNAL CONTROL

SCHEDULE OF OTHER MATTERS
GASB 101 – Compensated Absences (Continued)
How the Changes in this Statement Will Improve Financial Reporting The unified recognition and measurement model in this Statement will result in a liability for compensated absences that more appropriately reflects when a government incurs an obligation. In addition, the model can be applied consistently to any type of compensated absence and will eliminate potential comparability issues between governments that offer different types of leave.

The model also will result in a more robust estimate of the amount of compensated absences that a government will pay or settle, which will enhance the relevance and reliability of information about the liability for compensated absences.
16 313
Item # C9.

CITY OF MILPITAS

MEMORANDUM ON INTERNAL CONTROL

STATUS OF PRIOR YEAR

OTHER MATTERS
2016-05 Information Systems Best Practices
We conducted an Information Systems Review with our audit which encompassed the City’s financial information system and the network environment that houses it. We expanded our work in previous years beyond simply looking at financial information systems as a result of greater risks of unauthorized access caused by overall industry growth of web-based commerce and internet based financial systems. Internal controls that are present in the overall network environment have become more important and relevant to understanding the internal controls over the financial system. We believe Information System controls must be continuously improved and enhanced to stay ahead of the ever increasing sophistication of hackers and criminals.

Currently, there are no Information Systems standards to which local governments are required to conform. Indeed, there are a wide variety of informal guidelines and suggested controls from many different organizations which local governments can use to implement appropriate controls to ensure adequate security over information technology. A voluntary risk-based Cybersecurity Framework has been developed by the National Institute of Standards and Technology (NIST) per Presidential Executive Order 13636 (12 FEB 2013). The Framework for Improving Critical Infrastructure Cybersecurity version 1.0 (12 FEB 2014) offers a number of appropriate standards. Our Information Systems auditors have reviewed the voluntary framework and concluded that the risk management framework developed by NIST for the Federal Information Security Management Act (FISMA) is the most appropriate for local governments1
. The NIST risk management framework represents the minimum security requirements for federal government agencies and recommends these controls for private industry and state and local governments.

While the results of our work did not indicate material weaknesses, we noted a few areas which could be improved. A summary of these recommendations which we believe are “best practices” are as follows:

Business Continuity Planning with Regards to Information Technology The City does not have a formal written information technology business continuity policy. As organizations rely more and more on information technology and electronic data storage for an increasingly wider scope of processes, it becomes more and more important to develop a plan to make those resources available during and after some form of disaster. A formal disaster recovery business continuity policy serves to show management’s intent and due diligence for the continuity of operations.

A disaster recovery policy or contingency plan should address what to do in case of a disaster and how to prepare for a disaster that cripples or closes the computer center such as a fire, flood, natural or manmade disaster. The City should consider developing and implementing an IT contingency plan which would include procedures for periodic information backup and offsite storage, along with an alternative processing site that would allow the City to continue to operate in the event of a disaster.2 1 "State, local, and tribal governments, as well as private sector organizations are encouraged to consider using these guidelines, as appropriate." NIST SP 800-37 Rev 1 pg. 11 2 For more information see “Contingency Planning Guide for Information Technology Systems” NIST SP 800-34. 17 314
Item # C9.

CITY OF MILPITAS

MEMORANDUM ON INTERNAL CONTROL

STATUS OF PRIOR YEAR

OTHER MATTERS
2016-05 Information Systems Best Practices (Continued)
Current Status:

Business Continuity Planning with Regards to Information Technology –The City implemented its Business Continuity Plan in December 2018. Since then, the City has implemented a few major changes to its infrastructure, such as implementing Hyperconverged Infrastructure, cloud backup strategies, and moving communications and Office applications to Office 365.

As a part of the City-wide Continuity of Operation review effort, the IT department has been collaborating with the EOC management staff and various departments to update the Business Continuity Plan, which has been completed in June 2022. 18 315
Item # C9.

CITY OF MILPITAS

REQUIRED COMMUNICATIONS

FOR THE YEAR ENDED
JUNE 30, 2022
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Item # C9.

CITY OF MILPITAS

REQUIRED COMMUNICATIONS
For the Year Ended June 30, 2022
Table of Contents
Page
Required Communications .............................................................................................................................. 1 Significant Audit Matters ......................................................................................................................... 1 Qualitative Aspects of Accounting Practices ................................................................................... 1 Difficulties Encountered in Performing the Audit ........................................................................... 4 Corrected and Uncorrected Misstatements ...................................................................................... 4 Disagreements with Management .................................................................................................... 5 Management Representations ............................................................................................................ 5 Management Consultations with Other Independent Accountants ................................................. 5 Other Audit Findings or Issues .......................................................................................................... 5 Other Matters ............................................................................................................................................ 5 318
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Item # C9.

REQUIRED COMMUNICATIONS
To the City Council of
the City of Milpitas, California
We have audited the basic financial statements of Milpitas for the year ended June 30, 2022. We did not audit the financial statements of Terrace Gardens, Inc. as of and for the year ended December 31, 2021, which represent 1.04%, 1.56%, and 1.21% of the assets, net position and revenues, respectively, of the primary government. These component unit financial statements were audited by other auditors, whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for this entity, is based solely on the report of the other auditors.

Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter dated April 29, 2022.

Significant Audit Matters
Qualitative Aspects of Accounting Practices
Accounting Policies - Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted, and the application of existing policies was not changed during the year, except as follows:

GASB 87 – Leases
The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities.

A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this definition should be accounted for under the leases guidance, unless specifically excluded in this Statement.

The pronouncement became effective, and as disclosed in Note 10 to the financial statements required a prior period restatement for the cumulative effect on the financial statements. 1 320
Item # C9.

GASB 90 – Majority Equity Interests (an amendment of GASB Statements No. 14 and No. 61) The primary objectives of this Statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. It defines a majority equity interest and specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government’s holding of the equity interest meets the definition of an investment. A majority equity interest that meets the definition of an investment should be measured using the equity method, unless it is held by a special-purpose government engaged only in fiduciary activities, a fiduciary fund, or an endowment (including permanent and term endowments) or permanent fund. Those governments and funds should measure the majority equity interest at fair value.

For all other holdings of a majority equity interest in a legally separate organization, a government should report the legally separate organization as a component unit, and the government or fund that holds the equity interest should report an asset related to the majority equity interest using the equity method. This Statement establishes that ownership of a majority equity interest in a legally separate organization results in the government being financially accountable for the legally separate organization and, therefore, the government should report that organization as a component unit.

This Statement also requires that a component unit in which a government has a 100 percent equity interest account for its assets, deferred outflows of resources, liabilities, and deferred inflows of resources at acquisition value at the date the government acquired a 100 percent equity interest in the component unit. Transactions presented in flows statements of the component unit in that circumstance should include only transactions that occurred subsequent to the acquisition.

The pronouncement became effective, but did not have a material effect on the financial statements.

GASB 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans—An Amendment of GASB Statements No. 14 and No. 84, and a Supersession of GASB Statement No. 32
The primary objectives of this Statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans.

The pronouncement became effective, but did not have a material effect on the financial statements.
2 321
Item # C9.

GASB 99 – Omnibus 2022
The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. The Statement contains provisions that are to be implemented in phases over three fiscal years. The practice issues addressed by this Statement that are effective in fiscal year 2022 are as follows:
 Extension of the period during which the London Interbank Offered Rate (LIBOR) is considered an appropriate benchmark interest rate for the qualitative evaluation of the effectiveness of an interest rate swap that hedges the interest rate risk of taxable debt  Accounting for the distribution of benefits as part of the Supplemental Nutrition Assistance Program (SNAP)
 Disclosures related to nonmonetary transactions
 Pledges of future revenues when resources are not received by the pledging government  Clarification of provisions in Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, as amended, related to the focus of the government-wide financial statements  Terminology updates related to certain provisions of Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position
 Terminology used in Statement 53 to refer to resource flows statements.

The requirements in paragraphs 26-32 of the pronouncement became effective, but did not have a material effect on the financial statements.

The following pronouncements became effective, but did not have a material effect on the financial statements:

GASB 89 – Accounting for Interest Cost Incurred before the End of a Construction Period GASB 92 – Omnibus 2020
GASB 93 – Replacement of Interbank Offered Rates
Unusual Transactions, Controversial or Emerging Areas - We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting Estimates - Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:

Estimated Fair Value of Investments: As of June 30, 2022, the City held approximately $378.1 million of cash and investments as measured by fair value as disclosed in Note 3 to the financial statements. Fair value is essentially market pricing in effect as of June 30, 2022. These fair values are not required to be adjusted for changes in general market conditions occurring subsequent to June 30, 2022.

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Item # C9.

Estimate of Depreciation: Management’s estimate of the depreciation is based on useful lives determined by management. These lives have been determined by management based on the expected useful life of assets as disclosed in Note 8 to the financial statements. We evaluated the key factors and assumptions used to develop the depreciation estimate in determining that it is reasonable in relation to the basic financial statements taken as a whole.

Estimate of Compensated Absences: Accrued compensated absences which are comprised of accrued vacation and sick leave is estimated using accumulated unpaid leave hours and hourly pay rates in effect at the end of the fiscal year as disclosed in Note 13F to the financial statements.

We evaluated the key factors and assumptions used to develop the accrued compensated absences in determining that it is reasonable in relation to the basic financial statements taken as a whole.

Estimated Claims Liabilities: Management’s estimate of the claims liabilities payable is disclosed in Note 14 to the financial statements and is based on estimates determined by the City’s risk pool and third party claims administrator, which are based on the claims experience of the City. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the basic financial statements taken as a whole.

Estimated Net Pension Liabilities and Pension-Related Deferred Outflows and Inflows of Resources: Management’s estimate of the net pension liabilities and deferred outflows/inflows of resources are disclosed in Note 12C to the financial statements and are based on accounting valuations determined by the California Public Employees Retirement System, which are based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the basic financial statements taken as a whole.

Estimated Net OPEB Asset: Management’s estimate of the net OPEB asset is disclosed in Note 13C to the financial statements and is based on actuarial study determined by a consultant, which is based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the basic financial statements taken as a whole.

Estimated Net OPEB Liability and Pension-Related Deferred Outflows and Inflows of Resources:

Management’s estimate of the net OPEB liability is disclosed in Note 13D to the financial statements and is based on actuarial study determined by a consultant, which is based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the basic financial statements taken as a whole.

Disclosures - The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole. 4 323
Item # C9.

Professional standards require us to accumulate all known and likely uncorrected misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We have no such misstatements to report to the City Council.

Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations
We have requested certain representations from management that are included in a management representation letter dated November 7, 2022.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Matters
We applied certain limited procedures to the required supplementary information that accompanies and supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the required supplementary information and do not express an opinion or provide any assurance on the required supplementary information.

We were engaged to report on the supplementary information that accompanies the financial statements, but is not required supplementary information. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. 5 324
Item # C9.

We were not engaged to report on the Introductory and Statistical Sections which accompany the financial statements, but are not required supplementary information. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.
******
This information is intended solely for the use of City Council and management and is not intended to be, and should not be, used by anyone other than these specified parties.

Pleasant Hill, California
November 7, 2022
6 325
Item # C9.

INDEPENDENT ACCOUNTANT’S REPORT ON

APPLYING AGREED UPON PROCEDURES FOR
COMPLIANCE WITH THE PROPOSITION 111
2021-2022 APPROPRIATIONS LIMIT INCREMENT
Honorable Mayor and Members of the City Council
City of Milpitas, California
We have performed the procedures enumerated below on the Appropriations Limit Worksheet (Worksheet) of the City of Milpitas, California, for the year ended June 30, 2022. The City’s management is responsible for the Worksheet.

The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of these procedures, which were suggested by the League of California Cities and presented in their Article XIIIB Appropriations Limitation Uniform Guidelines, were performed solely to assist you in meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and associated findings were as follows:

A. We obtained the Worksheet and determined that the 2021-2022 Appropriations Limit of $119,175,291 and annual adjustment factors were adopted by Resolution of the City Council. We also determined that the population and inflation options were selected by a recorded vote of the City Council.

B. We recomputed the 2021-2022 Appropriations Limit by multiplying the 2020-2021 Prior Year Appropriations Limit by the Total Growth Factor. We recomputed the Total Growth Factor by multiplying the population option by the inflation option.

C. For the Worksheet, we agreed the Per Capita Income Factor, City Population Factor and County Population Factor to California State Department of Finance Worksheets.

We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Worksheet.

Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

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Item # C9.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of management and the City Council and is not intended to be and should not be used by anyone other than those specified parties; however, this restriction is not intended to limit the distribution of this report, which is a matter of public record.

Pleasant Hill, California
November 7, 2022
327
Item # C9.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Authorize the City Manager to Execute a Master Encroachment Agreement for Bandwidth IG, LLC, a Delaware Limited Liability Company for Installation of Network Facilities Within Public Right-of-Way (Staff Contact: Steve Erickson, Engineering Director / City Engineer, 408-586-3301; and Roberto Alonzo, Principal Civil Engineer, 408-586-3316)
Category: Consent Calendar-Community Development
Meeting Date: 12/6/2022
Recommendation: Authorize the City Manager to execute a master encroachment agreement for Bandwidth IG, LLC, a Delaware Limited Liability Company for installation of network facilities within public right-of-way and find a CEQA exemption.

BACKGROUND:

Bandwidth IG, LLC, a Delaware limited liability company is requesting permission to install and operate private underground fiber optic lines within City public right-of-way for its communication network to serve the business community with a focus on connecting data centers and targeted metro business districts. The initial fiber deployment will consist of a high strand count backbone focused on data centers and end user buildings.

The initial fiber optic backbone alignment through the City of Milpitas is anticipated to be along Milpitas Boulevard.

ANALYSIS:

Telecommunications providers are authorized to provide Telecommunications Services in the state of California pursuant to a Certificate of Public Convenience and Necessity (CPCN) issued by the Public Utilities Commission of the State of California and, as a telephone corporation, may use public roads and highways pursuant to Public Utilities Code section 7901. A Master Encroachment Agreement (Attached) is recommended to allow for the installation, maintenance, perpetual use, and outlines the terms and conditions for the use of the public right-of-way.

POLICY ALTERNATIVE(S):

Alternative 1: Not approve the proposed Master Encroachment Agreement with Bandwidth IG for installation of fiber optic telecommunications equipment with the City’s public right of way.

Pros: None
Cons: Not approving the Master Encroachment Agreement may delay installation of the telecommunications equipment and delay business within Milpitas from enhanced communications connectivity.

Reason for Not Recommending: State law has authorized the use of the public right of way for installation of telecommunications equipment. The proposed Master Encroachment Permit Agreement allows for the installation, maintenance, perpetual use, and outlines the terms and conditions for the use of the public rightof-way.

FISCAL IMPACT:

Bandwidth IG will pay City review costs for plan review and construction inspection for installation of their fiber optic communications equipment within City right of way.

California Environmental Quality Act (CEQA): 328
Item # C10.

The item is exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15183 (Projects Consistent with a General Plan) and 15061(b)(3) (Common Sense Exemption).

RECOMMENDATION:

Authorize the City Manager to Execute a Master Encroachment Agreement for Bandwidth IG, LLC, a Delaware Limited Liability Company for Installation of Network Facilities Within Public Right-of-Way.

Attachment(s):

Master Encroachment Permit Agreement
329
Item # C10.
1 Recording Requested By
City of Milpitas
When. Recorded it To:

City of Milpitas
Engineering Director
455 E. Calaveras Blvd.

Milpitas, CA 95035
For the Benefit of
City of Milpitas
Recorded Free
Gov. Code Sec. 27383
(Space above this line for Recorder's Use)

MASTER ENCROACHMENT AGREEMENT

BETWEEN THE CITY OF MILPITAS

AND BANDWIDTH IG, LLC

RELATED TO THE INSTALLATION OF NETWORK FACILITIES

WITHIN PUBLIC RIGHT-OF-WAY
This Agreement ("Agreement") dated as of ____________ __, 2022 ("Effective Date") is entered into by and between the CITY OF MILPITAS, a California municipal corporation (herein termed "CITY") and Bandwidth IG, LLC, a Delaware limited liability company (herein termed "ENCROACHER"). CITY and ENCROACHER are sometimes individually referred to herein as a “Party” and collectively as the “Parties.”

RECITALS
WHEREAS, ENCROACHER is authorized to provide Telecommunications Services (as defined herein) in the state of California pursuant to a Certificate of Public Convenience and Necessity (CPCN) issued by the Public Utilities Commission of the State of California and, as a telephone corporation, may use public roads and highways pursuant to Public Utilities Code Section 7901; and,
WHEREAS, CITY owns, operates and maintains the Public Right-of-Way (as defined herein) within CITY; and,
WHEREAS, ENCROACHER desires to construct Network Facilities (as defined herein) within the Public Right-of-Way within CITY to provide Telecommunications Services; and 330
Item # C10.
2 WHEREAS, CITY has the authority to regulate the terms and conditions for the use of Public Right-of-Way for the construction, installation, and maintenance of Network Facilities by ENCROACHER.

NOW, THEREFORE, in consideration of the recitals and the mutual promises contained herein, CITY AND ENCROACHER agree as follows:

SECTION 1

DEFINITIONS

1.1 Network Facilities or Facilities - Means any and all cables, lines, poles, conduits, access manholes, handholes, pedestals, boxes, and other similar equipment and devices owned or leased by ENCROACHER. The term does not include antennas, cell towers, or other wireless facilities. No portion of Network Facilities shall, without the CITY’s prior authorization, be: (1) used by ENCROACHER as all or any portion of a cable television system or community antenna television system; (2) used by ENCROACHER to provide Video Services; or (3) used by ENCROACHER for any purposes other than the provision of Telecommunications Services.

1.2 Public Right-of-Way or Public Rights-of-Way - Means the full width of the right-of-way of any City street, as defined in the California Vehicle Code used by the general public. "Public Right-of-Way" also includes any dedicated public utility easement in which CITY now or hereafter holds any property interest which, consistent with the purposes for which it was dedicated, may be used for the purpose of installing and maintaining Network Facilities. The term does not include any area designated or delineated as a proposed public street on any tentative subdivision or parcel map approved by CITY which has not yet become a public street.

1.3 Telecommunications Services - Means services that ENCROACHER is authorized to offer and or provide pursuant to any applicable law or CPCN, including its existing CPCN (U-7336-C) which authorizes ENCROACHER to provide facilities-based competitive local exchange service and interexchange services. Telecommunications services also includes offering internet access, data transport, private line, and facilities leasing to affiliates and third parties, which may also be offered through an indefeasible right of use to the extent permitted by applicable law.

1.4 Video Services — Means services provided pursuant to any applicable California Video Franchise Certificate issued by the California Public Utilities Commission pursuant to the Digital Infrastructure and Video Competition Act (Public Utilities Code, Section 5800 and following, and California Public Utilities Commission decisions pertaining to video services.

SECTION 2

SCOPE OF USE OF PUBLIC RIGHT-OF-WAY

2.1 Nothing in the Agreement shall be construed as granting or creating any franchise rights.

2.2 CITY hereby grants an encroachment right to ENCROACHER, subject to reservations, covenants, and conditions herein contained, to construct, install, maintain and operate, and remove Network Facilities within Public Right-of-Way that are located within 331
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3 the corporate limits of the CITY to provide Telecommunications Services, subject to obtaining all required permits and approvals. ENCROACHER may install replacement poles (subject to the approval of the pole owner and CITY).

2.3 ENCROACHER shall not commence installation of Network Facilities until ENCROACHER has first obtained a permit to do so in accordance with this Agreement and applicable law. Before ENCROACHER applies for any new permits after the Effective Date of this Agreement, ENCROACHER must submit: (i) a comprehensive master plan ("Master Plan") showing at a minimum the location and specific details (i.e., underground depth, above-ground height, etc.) of all Network Facilities presently installed within the City's limits; (ii) a Master Plan showing a high-level design of all Network Facilities presently intended to be installed over the five-year period from the Effective Date; and (iii) the Bond (as defined in Section 8). The Master Plan shall be submitted in conformance with the requirements of the City’s Engineering Plans and Maps and Procedures, and the Master Plan shall be completed by a California Licensed Civil Engineer. ENCROACHER shall provide an updated Master Plan annually, showing, to the extent applicable, any change to the Master Plan submitted in the prior year.

ENCROACHER does not warrant the continuing accuracy of the Master Plan or any updates to the Master Plan as it relates to anticipated projects, and ENCROACHER may, in its sole discretion, deviate at any time from the Master Plan as it relates to anticipated projects, subject, however, to ENCROACHER providing notice to the City Engineer and updating the Master Plan and, obtaining all appropriate and necessary Encroachment Permits and other licenses, permits, authorizations, and approvals required under this Agreement

2.4 ENCROACHER shall not install or erect any facilities or apparatus in or on other public property or places, or within any privately owned area within CITY which has not yet become a public street but is designated or delineated as a proposed public street on any tentative subdivision or parcel map approved by CITY, except those installed or erected upon public utility facilities now existing, without obtaining the prior written approval of the City Engineer.

2.5 ENCROACHER is not authorized to place any facilities other than Network Facilities in the Public Right-of-Way, without first obtaining written authorizations and required permits (including any necessary franchises) from the CITY, except that the foregoing does not apply to facilities where state law preempts any requirement for local authorization.

2.6 ENCROACHER shall comply with any lawful provision that the CITY may adopt in the future requiring it to obtain a franchise or other authorization and may be required to do so as a condition of the continued effectiveness of this Agreement. The City Engineer shall, subject to applicable laws, be solely responsible for determining what written authorizations and or permits are required. ENCROACHER agrees that once a written authorization and/or permit is determined to be required, ENCROACHER shall first apply for same before challenging the requirement.

2.7 This Agreement does not authorize use of any property other than the City Public Rights of Way. Any use of any other CITY-owned or CITY-controlled property, including but not limited to poles and conduits, shall require a separate agreement.

2.8 No use of any Public Right-of-Way or other interest or property under this 332
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4 Agreement shall create or vest in ENCROACHER any ownership or other interest in the Public Right-of-Way, streets or any other property or interest of the CITY. This Agreement is not a grant by the CITY of any property interest but is made subject and subordinate to the prior and continuing right of CITY and its assigns to use all the Public Right-of-Way in the performance of its governmental duties and police powers including but not limited to, public use as a street and for the purpose of laying, installing, maintaining, repairing, protecting, replacing, and removing sanitary sewers, water mains, storm drains, gas mains, poles, overhead and underground electrics, and telephone lines electroliers, cable television, and other utility and municipal uses together with appurtenances thereof and with right of ingress and egress, along, over, across, and in said Public Right-of-Way.

ENCROACHER shall have a duty to remove, relocate, and rearrange its facilities within a time frame set forth by CITY (subject to force majeure and events beyond the control of ENCROACHER), and at its own expense (except as otherwise set forth in this Agreement), in order to accommodate such uses, as further provided in this Agreement and applicable law.

Further, ENCROACHER shall not cause any unreasonable delay or interference with CITY’s access to the Public Right-of-Way. ENCROACHER shall not interfere with the operations of CITY in the Public Right-of-Way, whether or not such interference is considered material.

2.9 The grant of rights in this Agreement is made subject to all easements, restrictions, conditions, covenants, encumbrances, and claims of title which may affect the Public Right-of-Way, and it is understood that ENCROACHER, at its own costs and expense, shall obtain such permission as may be necessary consistent with any other existing rights. No reference herein to a "Public Right-of-Way" shall be deemed to be representation or guarantee by CITY that its interest or other rights to control the use of such property is sufficient to permit its use for such purposes, and ENCROACHER shall be deemed to gain only those rights to use the property as the CITY may have the undisputed right and power to give, and which do not interfere with CITY's needs for uses within the Public Right-of-Way. In the event of any conflict, the use of the subject Public Right-ofWay by ENCROACHER is secondary to the rights and needs of the CITY.

2.10 This Agreement shall be for the non-exclusive use of the Public Right-ofWay. By executing this Agreement, CITY does not agree to restrict the use of the Public Rights-of-Way in all or any part of the CITY by any person in the same business, a related business, or a competing business as ENCROACHER.

2.11 If the CITY is not prohibited from charging for use of the Public Right-ofWay by ENCROACHER by state or federal statute, it may do so, and the payment of any lawful compensation established by the CITY shall be a condition of the continued effectiveness of this Agreement.

SECTION 3

CONSTRUCTION AND MAINTENANCE STANDARDS

3.1 The construction, operation or repair and maintenance of Network Facilities shall be in accordance with all applicable Federal, State, and local laws, including, without limitation, zoning laws, construction codes, and CITY's latest standard specifications and details, as the same may exist now, or be hereafter issued, amended or revised, and any supplements thereto or revisions of this Agreement, and any Franchise or other authorization now or in the future. Nothing in this Agreement prevents the CITY from establishing additional or stricter conditions (even with respect to the matters specified in those sections) and requiring ENCROACHER to comply with the same. In the event of a 333
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5 conflict among codes and standards, the most stringent code or standard, as determined in the sole judgment of the City Engineer consistent with applicable law, shall apply.

3.2 ENCROACHER shall at all times employ reasonable care, within the meaning of applicable law, and shall install, maintain, and use commonly accepted methods and devices for preventing failures and accidents that are likely to cause damage, injury, or nuisance to the public.

3.3 This Agreement does not guarantee receipt of a particular permit or approval.

CITY reserves the right, and ENCROACHER hereby acknowledges, that CITY may reject without liability the design drawings for any proposed construction and/or require any changes thereto if CITY determines, in its sole and absolute discretion, that such action is necessary to ensure CITY can adequately inspect, clean, maintain, repair, and replace CITY’s existing property and structures and/or install additional structures within the Public Right-ofWay.

3.4 ENCROACHER shall construct, operate, and maintain its Network Facilities so as not to endanger or interfere with improvements CITY shall deem appropriate to make, consistent with applicable law, or to interfere in any manner with the Public Rightof-Way or legal rights of any property owner or to unnecessarily hinder or obstruct pedestrian or vehicular traffic. ENCROACHER shall place facilities in strict conformance with the plans and drawings approved in writing by CITY, consistent with applicable law, and shall not place facilities, equipment, or fixtures where they will interfere with any existing gas, electric, telephone, telecommunications, water, sewer, or other utility facilities or obstruct or hinder in any manner such existing use of any Public Right-of-Way. Any and all Public Rights-of-Way, public property or private property that is disturbed or damaged by ENCROACHER during the construction, repair, replacement, relocation, operation, maintenance, or construction of a Network Facility shall be promptly repaired by ENCROACHER, in accordance with the latest CITY standards and to the satisfaction of the City Engineer, to a condition equal to or better than that which existed prior to the damage.

3.5 All construction shall be open and subject to inspection by CITY, and ENCROACHER shall give notice and allow CITY to inspect any underground improvements or installations prior to backfilling.

3.6 If Public Right-of-Way to be used by ENCROACHER has preexisting installation(s) placed in the said Public Right-of-Way, ENCROACHER shall assume the responsibility to verify the location of the preexisting installation by means as directed by City or other preexisting utility owner and notify, consistent with applicable law, CITY and any third-party owner of ENCROACHER's proposed installation. The cost of any work required of such third-party owner or CITY to provide adequate space or required clearance to accommodate ENCROACHER's installation shall, consistent with applicable law, be borne solely by ENCROACHER. Except as required by applicable law, CITY is under no obligation to move its existing utilities out of the way to accommodate or make room for ENCROACHER's Network Facilities.

3.7 Within ten business (10) days after its receipt of a written request from CITY, ENCROACHER shall, at its sole cost and expense, expose its subsurface Network Facility to a depth of one foot (1') below the bottom of such facility by means as directed by CITY. If ENCROACHER fails to perform, CITY may proceed on ENCROACHER's 334
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6 account and ENCROACHER shall promptly reimburse CITY for the cost of same, plus a 15 percent administrative overhead charge, and CITY is hereby held harmless and indemnified by ENCROACHER for any loss and or damages resulting from the CITY's performance of the required work.

3.8 Any contractor or subcontractor used for the construction, installation, operation, maintenance, or repair of the Network Facility equipment shall be properly licensed under the laws of the State and all applicable local ordinances, and each contractor or subcontractor shall have the same obligations with respect to its work as ENCROACHER would have under this Agreement and applicable law as if the work were performed by ENCROACHER. ENCROACHER shall be responsible for the performance of the work of contractors and subcontractors consistent with the requirements of this Agreement and applicable law, including all acts or omissions of contractors or subcontractor, and ENCROACHER shall implement a quality control program to monitor that the work is properly performed. This section is not meant to alter tort liability of ENCROACHER to third parties.

3.9 ENCROACHER agrees to keep said Network Facilities in good and safe condition and free from any nuisance.

3.10 ENCROACHER shall identify the Network Facilities installed in each Public Right-of-Way by means of an identification method mutually agreed upon by the Parties, or as directed by the City Engineer if the Parties cannot mutually agree on an identification method. Such identification shall be detectable from ground level without opening the street.

To prevent conflicts between ENCROACHER's Network Facilities and public facilities in the same location, ENCROACHER shall participate in the USA North 811 Program and notify Underground Service Alert of the location of the facilities for the benefit of future construction projects which may need to be aware of the presence of the Network Facilities within the Public Right-of-Way. Failure of ENCROACHER to comply with this Section shall not create any claim or right against the CITY, and as set forth herein below, ENCROACHER shall indemnify and hold harmless, and defend CITY from any and all costs for failure to comply with this Section.

SECTION 4

SERVICE CHANGES

4.1 ENCROACHER hereby represents and warrants that: 1) it has any and all authorizations and approvals from state and federal regulatory agencies including the California Public Utilities Commission and the Federal Communications Commission as are necessary for the activities and Network Facilities contemplated by the Agreement, and is in compliance in all material respects with its obligations under such authorizations; 2) the type of service offered through the Network Facilities in the Public Right of Way consists solely of Telecommunications Services; 3) it does not offer Video Services; 4) Network Facilities will be installed only within the Public Rights-of-Way (underground within conduit or aerial on poles); and 5) it will not construct or install any new cell towers, poles or antennas.

4.2 The terms of this Agreement are based on the type of equipment comprising the Network Facilities, and the types of Telecommunications Services which ENCROACHER provides via the Network Facilities installed in the Public Right-of335 Item # C10.
7 Way. ENCROACHER. acknowledges that any change in service or change in the law may increase the CITY's regulatory authority over such services, product, and ENCROACHER's use of Public Right-of-Way, and may require modification of this Agreement, and require ENCROACHER to obtain additional authorizations consistent with the requirements of an existing or hereinafter-enacted CITY ordinance regulating such services.

4.3 If ENCROACHER is authorized by the California Public Utilities Commission to provide additional and/or alternative services, including but not limited to Video Services, and intends to offer such services to customers within the corporate limits of CITY, ENCROACHER shall notify CITY in writing, as soon as practicable, comply with CITY's local ordinances, and pay to CITY any applicable franchise or other fees.

SECTION 5
TAXES

5.1 ENCROACHER agrees that it will be solely responsible for the payment of any and all lawful taxes, fees, and assessments relating to its use and maintenance of the Network Facilities including but not limited to all taxes, fees, and assessments listed in ENCROACHER's CPCN issued by the California Public Utilities Commission.

5.2 ENCROACHER shall provide such records to CITY as CITY may require to confirm compliance with this requirement as it pertains to CITY’s taxes, fees, and assessments. The cost of any auditor to conduct such audit shall be borne by ENCROACHER if that audit discloses an underpayment of more than five percent (5%) of the amount remitted. Audits shall not be conducted more than once every two (2) years, and ENCROACHER or CITY shall pay or rebate such amounts discovered by the auditor within sixty (60) days of receipt of the audit report.

5.3 Pursuant to Section 107.6 of the California Revenue and Taxation Code, the CITY hereby advises, and ENCROACHER recognizes and understands, that should ENCROACHER's use of Public Rights-of-Way create a possessory interest subject to property taxation, ENCROACHER may be subject to the payment of property taxes levied on such interest.

SECTION 6

REMOVAL AND RELOCATION

6.1 In the event of an emergency, or where Network Facilities create or are contributing to an imminent danger to health, safety, or property, CITY may remove any or all parts of those Network Facilities without prior notice; however, CITY shall make reasonable efforts to provide prior notice and, where prior notice is not given, shall notify ENCROACHER of such work as soon as practicable.

6.2 ENCROACHER shall upon sixty (60) days written notice from the CITY, relocate its facilities at its sole cost and expense to accommodate projects or needs of CITY, or other government agencies or where relocation is necessary to protect and preserve the public health safety or welfare.

6.3 In the event all or any portion of said Public Right-of-Way occupied by said 336
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8 Network Facilities shall be needed by CITY for governmental purposes (for example, if and when made necessary by any lawful change of grade, alignment or width of any street, including the construction, maintenance, or operation of any underground subway or viaduct by CITY and/or the construction, maintenance, or operation of any other CITY underground or aboveground facilities), or in the event the existence of said Network Facilities shall be considered detrimental to governmental activities, including but not limited to interference with CITY construction projects, or is in conflict vertically and/or horizontally with any proposed CITY installation, ENCROACHER shall, upon sixty (60) days advance written direction of CITY's City Engineer, remove and relocate said Network Facilities to such other location or locations on said Public Right-of-Way as may be designated by CITY, without cost or expense to CITY. Said removal or relocation shall be completed within sixty (60) days of notification by CITY, except for force majeure events or events beyond the control of ENCROACHER.

6.4 ENCROACHER shall, by a time specified by CITY (subject to force majeure events or events beyond the control of ENCROACHER), protect, support, temporarily disconnect, relocate, or remove any of its property when required by CITY or any other governmental entity by reason of traffic conditions; public safety; Public Rights-of-Way construction; Public Rights-of-Way maintenance or repair (including resurfacing or widening); change of Public Rights-of-Way grade; construction, installation, or repair of sewers, drains, water pipes, power lines, signal lines, tracks, or any other type of government-owned communication system, public work, or improvement, or any government-owned utility; Public Rights-of-Way vacation; or for any other purpose where the work involved would be aided by the removal or relocation of the Network Facility.

6.5 In those areas and portions of the CITY where the transmission or distribution facilities of either all wireline public utility telephone corporations or those of the utility providing electric service (in locations where no wireline public utility telephone corporation has aerial facilities), are underground or hereafter must be placed underground, then ENCROACHER shall likewise construct, operate, and maintain all of its Network Facilities underground, except for Facilities which by their nature are placed above ground (e.g., pedestals, pole risers). For the purposes of this subsection, "underground" shall include a partial underground system. The CITY shall not in any manner be responsible for any costs incurred by ENCROACHER in placing ENCROACHER's facilities underground. ENCROACHER may install new poles (subject to the approval of the pole owner and CITY) if another wireline telephone corporation would be permitted to install new poles at the same location.

6.6 If any portions of the Network Facilities covered under this Agreement other than redundant facilities or facilities for emergency use are no longer used or useful by ENCROACHER, or are abandoned for a period in excess of one (1) year, ENCROACHER shall notify CITY and shall either promptly vacate and remove the facilities at its own expense or, at the discretion of the City Engineer, may abandon some or all of the facilities in place and transfer ownership of those facilities to CITY. Notwithstanding the foregoing, this section shall not apply to Network Facilities installed to meet future demand or needs for capacity.

6.7 When removal or relocation is required under this Agreement. ENCROACHER shall, after the removal or relocation of the Network Facilities, at its own cost, repair and return the Public Right-of-Way in which the facilities were located to a safe and satisfactory 337
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9 condition comparable to or better to the condition of the Public Right-of-Way prior to the start of such removal or relocation work in accordance with the construction-related conditions and specifications as established by CITY consistent with applicable law. Before proceeding with removal or relocation work, ENCROACHER shall obtain an encroachment permit from the CITY prior to proceeding with any work. Should ENCROACHER remove the Network Facilities from the Public Right-of-Way, ENCROACHER shall, within ten (10) days after such removal, give notice thereof to CITY specifying the right-of-way affected and the location thereof as well as the date of removal.

6.8 In the event said Network Facilities are not removed or relocated within the timelines specified in any CITY notification, subject to force majeure events or events beyond the control of ENCROACHER, CITY may cause the same to be done at the sole expense of ENCROACHER.

SECTION 7

CONSTRUCTION PERMIT AND FEES

7.1 ENCROACHER shall obtain an encroachment permit (and such other permits as may be required) for all work and each job within the Public Right-of-Way.

ENCROACHER shall furnish detailed plans of the work and other such information as required by the City Engineer of CITY and shall pay all processing, field marking, engineering, and inspection fees prior to issuance of permit in accordance with the rates in effect at the time of payment.

7.2 Any encroachment permit shall set forth the description of the Network Facilities to be installed and the Public Right-of-Way in which such facilities are to be located. CITY may establish construction-related conditions and specifications in addition to those in this Agreement, and these shall also be set forth in the encroachment permit.

Following construction, ENCROACHER shall provide as-builts of the facilities and shall further notify Underground Service Alert (USA) of the location of the facilities.

7.3 In addition to any other remedies available in this Agreement or in applicable law, the failure to comply with the terms and conditions of this Agreement may, at CITY's sole discretion consistent with applicable law, result in withholding issuance of any new encroachment permits and/or other enforcement actions pursuant to Milpitas Municipal Code.

SECTION 8

PERFORMANCE BOND

8.1 Prior to the issuance of an encroachment permit and undertaking any of the work, installation, improvements, construction, repair, relocation, removal, or maintenance authorized by permits issued for Facilities under this Agreement, ENCROACHER shall cause to be furnished a bond executed by a corporate surety or financial institution authorized to do business in the State of California in the amount of 100% of the estimated total cost of the work to guarantee performance of ENCROACHER's obligations under this Agreement. The bond shall be conditioned so that ENCROACHER shall observe all the covenants, terms, and conditions and faithfully perform all of the obligations of this Agreement including removal and replacement of defective work or materials discovered in CITY's streets or property under any 338
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10 designated permits, normal wear and tear excepted as reasonably determined by the City.

This bond is to guarantee that the work is of good quality and free from any defective or faulty materials or workmanship and will remain in full force and effect for a period of one (1) year after inspection and acceptance of ENCROACHERS completed work.

ENCROACHER may meet the obligations of this subsection with one or more bonds acceptable to the CITY. In the event that a bond issued pursuant to this subsection is canceled by the surety, after proper notice and pursuant to the terms of said bond, ENCROACHER shall, prior to the expiration of said bond, procure a replacement bond which complies with the terms of this subsection.

8.2 So long as the bond is in place, it may be utilized by the CITY as provided herein for reimbursement to the CITY by reason of ENCROACHER's failure to pay the CITY for actual costs and expenses incurred by the CITY with respect to damages as a result of ENCROACHERS work and failure to complete repairs as may be directed by City under this Agreement. CITY shall provide notice to ENCROACHER of its intention to draw on the Bond at least fifteen (15) days prior to drawing against the bond during which time ENCROACHER shall have the opportunity to cure any failure to pay any amounts due.

8.3 In the event ENCROACHER has been declared by the CITY to be in default of a material provision of this Agreement relating to removal and if ENCROACHER fails, within 30 days of mailing of the CITY's default notice, to perform any of the conditions of this Agreement with respect to removal, or fails to begin to perform any such condition that may take more than thirty (30) days to complete, CITY may thereafter obtain from the bond, after proper claim is made to the surety, an amount sufficient to compensate the CITY for its damages. Upon such withdrawal from the bond, the CITY shall notify ENCROACHER in writing, by First Class Mail, postage prepaid, of the amount withdrawn and the date thereof.

8.4 Thirty (30) days after the CITY's mailing of notice of the bond forfeiture or withdrawal authorized herein, ENCROACHER shall deposit such further bond, or other security, as the CITY may require, which is sufficient to meet the requirements of this Agreement.

8.5 The rights reserved to the CITY with respect to any bond are in addition to all other rights of the CITY whether reserved by this Agreement or authorized by law, and no action, proceeding, or exercise of a right with respect to any bond shall constitute an election or waiver of any rights or other remedies the CITY may have.

SECTION 9

DAMAGE TO FACILITIES IN PUBLIC RIGHT-OF-WAY

9.1 ENCROACHER shall be responsible for any damage to CITY street pavements, existing utilities, curbs, gutters, sidewalks, and all other public or private facilities due to its construction, operation, installation, maintenance, repair, or removal of its Network Facilities in Public Right-of-Way or due to neglect of Network Facilities, and shall repair, replace and restore in kind the said damaged public and private facilities at its sole expense.

ENCROACHER shall complete all necessary repairs within thirty (30) days of notification by City Engineer.
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11 9.2 Any premature deterioration of surface and subsurface improvements, such as trench failures, pavement, base, or concrete failure over the facility or trench or adjacent area, or reduction in the life of the street or Public Right-of-Way as determined by City Engineer, normal wear and tear excepted as may be determined by City Engineer, which results from ENCROACHER's acts or omissions shall be the responsibility of ENCROACHER. ENCROACHER shall complete all necessary repairs within thirty (30) days of notification by City Engineer. If ENCROACHER fails to make repairs within thirty (30) days of notice, CITY may have repairs made with the cost being billed to ENCROACHER. If the repair cannot fully reverse the deterioration or loss of life, the CITY may require ENCROACHER to pay for the damage suffered as a result.

SECTION 10

PARTICIPATION WITH OTHER UTILITIES

10.1 ENCROACHER agrees to cooperate, to the extent commercially reasonable, in the planning, locating, and constructing of its Network Facilities in utility joint trenches or common duct banks with other similar utilities providers and to participate in cost-sharing for the joint trench and ducts, when two or more telecommunications service providers are proposing Network Facilities in the same Public Right-of-Way or when an underground project is being planned by CITY.

10.2 The requirements of this section shall not apply when ENCROACHER's excavation work is due to an emergency or other maintenance or repair event that requires urgent action, however, prior to starting emergency work, ENCROACHER shall contact the City Engineer during normal business hours to notify of said emergency work. If after normal business hours, ENCROACHER shall contact the City’s Police Dispatch
SECTION 11

MAPS, RECORDS AND FIELD LOCATIONS

11.1 ENCROACHER shall maintain accurate maps and improvement plans of said Network Facilities located within the City of Milpitas. ENCROACHER shall, upon demand of the City Engineer, deliver to the Engineering Department free of charge within thirty (30) days after such demand, such maps and plans as may be required to show in detail the exact location, size, depth, and description of all Network Facilities installed within said Public Right-of-Way. ENCROACHER shall also submit the plan to CITY in digital electronic format as specified by CITY.

11.2 ENCROACHER shall be a member of USA, the regional notification center for subsurface installations, and shall field mark, at ENCROACHER’S sole expense, the locations of its underground Network Facilities upon notification in accordance with the requirements of Section 4216 of the State of California Government Code, as it now reads or may herein after be amended.

11.3 ENCROACHER shall provide books and records for copying and inspection by CITY, and ENCROACHER's facilities shall be subject to such inspection by the CITY, as the CITY finds appropriate to request in the exercise of its rights under this Agreement and its jurisdiction over ENCROACHER.
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12 SECTION 12

HOLD HARMLESS AND INDEMNIFICATION

12.1 ENCROACHER, jointly and severally, for itself, its successors, agents, and ENCROACHER's employees, agrees to indemnify, defend (with reasonable notice to ENCROACHER and with counsel reasonably acceptable to CITY) and hold harmless CITY, its officers, employees, and agents and any successors to CITY's interest from and against any and all claims, demands, losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings and orders, judgments, remedial actions of any kind, and all costs and cleanup actions of any kind, all costs and expenses incurred in connections therewith, including, without limitation, reasonable attorney's fees and costs of defense (collectively, the "Losses") arising directly or indirectly out of ENCROACHER's and its employees’, contractors’, or agents’ activities or Network Facilities described in this Agreement and/or the installation, construction, operation, maintenance, removal, and/or repair of the improvement and facilities thereto.

ENCROACHER shall indemnify CITY for all of CITY’s costs, reasonable attorneys’ fees, and damages which CITY incurs in enforcing the indemnification provisions set forth herein. However, ENCROACHER shall not indemnify the CITY, its officers, employees, and agents and any successors to CITY's interest for Losses arising directly or indirectly, from the CITY's gross negligence or willful misconduct. CITY shall not be responsible for any damages, losses, or liability of any kind occurring by reason of anything done or omitted to be done by CITY, except for acts which constitute the CITY's gross negligence or willful misconduct, or by any third party, including, without limitation, damages, losses or liability arising from the issuance by the CITY of a permit or approval to any third party or any interruption in service.

12.2 ENCROACHER, for itself and its successors and assigns, hereby waives all claims and causes of action, whether now existing or hereafter arising, against CITY or its officers, agents or employees, for damages, physical or otherwise, to any of the facilities covered by this Agreement from any cause whatsoever excluding those arising as a result of the CITY's gross negligence or willful misconduct. Under no circumstances shall either Party be liable or responsible to the other Party for special, incidental, indirect, punitive, or consequential damages, whether foreseeable or not, including, without limitation, economic loss or lost profits, in connection with this Agreement or the Party’s performance or nonperformance of its obligations under this Agreement, regardless of the form of action, whether under contract, warranty, tort, or otherwise, all claims for which are hereby specifically waived.

SECTION 13

INSURANCE

13.1 Types; Amounts. ENCROACHER shall procure and maintain, and shall require its contractors to procure and maintain, during construction of any Public Improvement pursuant to this Agreement, insurance of the types and in the amounts described below ("Required Insurance"). The insurance requirements set forth herein in no way limit the indemnity covenants contained in this Agreement. If any of the Required Insurance contains a general aggregate limit, such insurance shall apply separately to this Agreement or be no less than two times the specified occurrence limit.

13.1.1 General Liability. ENCROACHER and its contractors shall procure and maintain occurrence version general liability insurance, or equivalent 341
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13 form, with a combined single limit of not less than $1,000.000 per occurrence for bodily injury, personal injury, and property damage, and $2,000,000 general aggregate including premises-operations, products and completed operations, independent contractor, contractual liability, personal injury, and advertising injury.

13.1.2 Commercial Automobile Liability. ENCROACHER and its contractors shall procure and maintain commercial automobile liability insurance, or equivalent form, with a combined single limit of not less than $1,000,000 per occurrence. Such insurance shall include coverage for the ownership, operation, maintenance, use, loading, or unloading of any vehicle owned, leased, hired, or borrowed by the insured or for which the insured is responsible.

13.1.3 Workers' Compensation. ENCROACHER and its contractors shall procure and maintain workers' compensation insurance with limits as required by the Labor Code of the State of California and employers' liability insurance with limits of not less than $1,000,000 for each accident; $1,000,000 disease for each employee; $1,000,000 diseasepolicy limit, at all times during which insured retains employees.

13.1.4 Professional Liability. For any consultant or other professional who will engineer or design the Public Improvements, liability insurance for errors and omissions with limits not less than $1,000,000 per occurrence, shall be procured and maintained for a period of five (5) years following completion of the Public Improvements. Such insurance shall be endorsed to include contractual liability.

13.1.5 Completed Operations. CITY, its elected officials, officers, employees, agents, and volunteers shall be added as an additional insured for completed operations utilizing ISO form CG 20 37, or its equivalent.

13.1.6. Contractors’ Pollution Legal Liability. ENCROACHER must maintain Contractors’ Pollution Legal Liability insurance with limits of $1,000,000 per occurrence or claim, and $2,000,000 policy aggregate. If any coverage required is written on a claims-made coverage form:
(1) The retroactive date must be shown, and this date must be before the execution date of the contract or the beginning of contract work.
(2) Insurance must be maintained, and evidence of insurance must be provided for at least five years after completion of contract work. (3) If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective, or start of work date, the ENCROACHER must purchase extended reporting period coverage for a
minimum of five (5) years after completion of contract work. 342
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14 (4) A copy of the claims reporting requirements must be submitted to the CITY for review.

13.2 Deductibles. Any deductibles or self-insured retentions must be declared to and approved by CITY. At the option of CITY, either: (a) the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City, its elected officials, officers, employees, agents, and volunteers; or (b) ENCROACHER and its contractors shall provide a financial guarantee satisfactory to CITY guaranteeing payment of losses and related investigation costs, claims, and administrative and defense expenses.

13.3 Additional Insured; Separation of Insureds. The Required Insurance shall name CITY, its elected officials, officers, employees, agents, and volunteers as additional insureds with respect to work performed by or on behalf of ENCROACHER or its contractors, including materials, parts, or equipment furnished in connection therewith. The Required Insurance shall contain standard separation of insureds provisions, and shall contain no special limitations on the scope of its protection to CITY, its elected officials, officers, employees, agents, and volunteers.

13.4 Primary Insurance; Waiver of Subrogation. The Required Insurance shall be primary with respect to any insurance or self-insurance programs covering CITY, its elected officials, officers, employees, agents, and volunteers. All policies for the Required Insurance shall provide that the insurance company waives all right of recovery by way of subrogation against CITY in connection with any damage or harm covered by such policy.

13.5 Certificates; Verification. ENCROACHER and its contractors shall furnish CITY with original certificates of insurance and endorsements effecting coverage for the Required Insurance annually. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements must be received and approved by CITY before work pursuant to this Agreement can begin. CITY reserves the right to require complete, certified copies of all required insurance policies, at any time.

13.6 Term; Cancellation Notice. ENCROACHER shall maintain the Required Insurance for the term of this Agreement and shall replace any certificate, policy, or endorsement which will expire prior to that date. ENCROACHER shall ensure any contractors who perform work for ENCROACHER in the Public Rights-of-Way also maintain the Required Insurance. ENCROACHER shall provide CITY thirty (30) days prior written notice of the suspension, expiration, cancellation, or reduction below the minimums set forth in this Section 13 for all applicable policies. Such notice shall be sent directly to CITY at 455 East Calaveras Blvd, Milpitas, CA 95035, Attn: City Manager.

13.7 Insurer Rating. Unless approved in writing by CITY, all Required Insurance shall be placed with insurers licensed to do business in the State of California and with a current A.M. Best rating of at least A:VII or better.

SECTION 14

ASSIGNMENT

14.1 ENCROACHER shall not assign, sublet, or transfer any interest in this 343
Item # C10.
15 Agreement nor the performance of any ENCROACHER’s obligations hereunder, without the prior written consent of CITY, which shall not be unreasonably withheld, and any attempt by ENCROACHER to so assign this Agreement or any rights, duties or obligations arising hereunder shall be void and of no effect. The transfer of the rights and obligations of ENCROACHER to a parent, successor, subsidiary, or other affiliate (defined for the purposes of this section being any person or entity that, directly or indirectly, controls, is wholly controlled or owned by, or is under common control with ENCROACHER) of ENCROACHER, shall not be deemed an assignment for the purposes of this section; provided that ENCROACHER provides written notice of the transfer to CITY within thirty (30) days of such transfer. For the purposes of this section, the leasing or granting in the ordinary course of business of indefeasible rights of use or similar rights in dark fiber, fiber optic capacity, conduit, and other network elements shall not require the express consent of the CITY, so long as ENCROACHER remains solely responsible for locating, placing, installing, maintaining, relocating, and removing the Facilities.

SECTION 15

TERM AND TERMINATION

15.1 This Agreement shall terminate ten (10) years from the Effective Date unless renewed in writing prior to said termination date, except that this Agreement may be terminated sooner under the following circumstances and consistent with applicable law. a. This Agreement may be terminated by CITY upon approval of the City Engineer and at least thirty (30) days written notice to ENCROACHER if CITY reasonably determines that the provisions herein interfere with the use or disposal of said Public Right-of-Way or any part thereof by CITY. Where only a portion of
ENCROACHER's Network Facilities interferes with the use or disposal of said Public Right-of-Way, CITY shall allow
ENCROACHER to relocate the said portion in accordance with this Agreement.
b. This Agreement may be terminated by CITY for failure, neglect, or refusal by ENCROACHER to fully and promptly comply with any and all of the conditions of this Agreement, or for nonuse in accordance with Section 6.6 herein, upon thirty (30) days written notice, unless ENCROACHER confirms with thirty (30) days of receipt of the notice that the cited condition has ceased, been corrected or, subject to CITY's agreement is diligently being pursued by ENCROACHER, which agreement shall not be unreasonably withheld.
c. This Agreement may be terminated by CITY if ENCROACHER’s Certificate of Public Convenience and Necessity terminates, is revoked, or is abandoned, upon ten (10) days written notice, unless ENCROACHER confirms within ten (10) days of receipt of the notice that the cited condition has ceased, been corrected or, subject to CITY's agreement is diligently being pursued by ENCROACHER, which agreement shall not be unreasonably withheld.
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16 d. ENCROACHER may, in its sole discretion, provide thirty (30) days’ written notice to CITY that ENCROACHER elects to discontinue occupation of CITY Public Rights-of-Way and terminate the Agreement, subject to compliance with removal/abandonment requirements and other obligations that survive the termination of Agreement.

15.2 Upon termination of the Agreement, and upon written request by CITY, ENCROACHER, at its own cost and expense, agrees to remove, or at CITY's discretion, abandon in place some or all of its Network Facilities from the Public Right-of-Way and restore the Public Right-of-Way as set forth in the Removal and Relocation provisions of this Agreement. Should ENCROACHER in such event fail, neglect, or refuse to make such removals or restoration with one hundred eight (180) days of CITY's written request, at the sole option of CITY, such removal and restoration may be performed by CITY at the expense of ENCROACHER, which actual expense, including administrative and legal costs ENCROACHER agrees to pay CITY upon demand. If CITY allows ENCROACHER to abandon its Network Facilities in place, title to those Network Facilities shall pass to CITY and ENCROACHER shall, upon demand, promptly execute and deliver to CITY all documentation necessary to effectuate such transfer of ownership of the Network Facilities. Upon such transfer of ownership after abandonment and acceptance by CITY, ENCROACHER shall have no further obligations or liabilities under this Permit, with the exception of the repair obligations delineated in Section 9 above.

SECTION 16

HAZARDOUS MATERIALS USE

16.1 ENCROACHER covenants that it will not handle or transport Hazardous Materials on Network Facilities or the Public Right-of-Way. As used in this Agreement, the term “Hazardous Materials” means: (a) any substance, products, waste, or other material of any nature whatsoever which is or becomes listed, regulated, or addressed pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 United States Code Section 9601 et seq.; the Resources Conservation and Recovery Act, 42 United States Code Section 6901 et seq.; the Hazardous Materials Transportation Conservation and Recovery Act, 42 United States Code Section 1801 et seq.; the Clean Water Act, 33 United States Code Section 1251 et seq.; the Toxic Substances Control Act, 15 United States Code Section 2601 et seq.; the California Hazardous Waste Control Act, Health and Safety Code Section 25100 et seq.; the Hazardous Substance Account Act, Health and Safety Code Section 25330 et seq.; the California Safe Drinking Water and Toxic Enforcement Act, Health and Safety Code Section 25249.5 et seq.; California Health and Safety Code Section 25280 et seq. (Underground Storage of Hazardous Substances); the California Hazardous Waste Management Act, Health and Safety Code Section 25170.1 et seq.; California Health and Safety Code Section 25501 et seq. (Hazardous Materials Release Response Plans and Inventory); or the California Porter-Cologne Water Quality Control Act, Water Code Section 13000 et seq., all as amended (the above cited California state statutes are hereinafter collectively referred to as “the State Toxic Substances Law”); or any other federal, state, or local statute, law, ordinance, resolution, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning any Hazardous Substance, now or at any time hereinafter in effect; (b) any substance, product, waste or other material of any nature whatsoever which may give rise to liability under any of the above statutes or under any statutory or common law theory based on 345
Item # C10.
17 negligence, trespass, intentional tort, nuisance or strict liability or under any reported decisions of a state or federal court; (c) petroleum or crude oil, other than petroleum and petroleum products which are contained within regularly operated motor vehicles; and (d) asbestos. In the event a Network Facility is now or in the future used in the handling or transporting of Hazardous Materials, ENCROACHER agrees fully to comply with all applicable federal, state, and local laws, rules, regulations, orders, decisions, and ordinances (hereinafter referred to as “Hazardous Materials Standards”) concerning Hazardous Materials. Encroacher further agrees that at CITY’s request it will furnish CITY with proof, satisfactory to CITY that ENCROACHER is in such compliance.

16.2 Notwithstanding anything else contained in this Agreement and to the extent permitted by law, in case of a breach of the obligations contained in this Section, ENCROACHER agrees to assume liability for and to save and hold harmless CITY from and against any and all injuries to any person, including wrongful death, and damage to property, including without limitation, property of CITY and ENCROACHER, and all related expenses, including without limitation reasonable attorneys’ fees, investigators’ fees, litigation expenses, and mitigation costs resulting in whole or in part from ENCROACHER’s failure to comply with any Hazardous Materials Standards issued by any governmental authority concerning Hazardous Materials. ENCROACHER, at its cost, shall assume the defense of all claims, in accordance with Section 12 hereof.

ENCROACHER agrees to reimburse CITY for all reasonable costs of any kind incurred as a result of the ENCROACHER’s failure to comply with this Section, including, but not limited to, judicial or administrative fines, penalties, clean-up and disposal costs, and reasonable legal costs incurred as a result of ENCROACHER’s handling, transporting, or disposing of Hazardous Materials on, over, or across any Network Facilities and Public Right-of-Way.

SECTION 17

NOTICES

17.1 ENCROACHER's Network Operations Center shall be available to CITY staff 24 hours a day, 7 days a week, regarding problems or complaints resulting from the facilities installed pursuant to this Agreement and may be contacted by telephone at 877- 353-1695 regarding such problems or complaints. ENCROACHER shall promptly respond to such call(s) and perform the required repair or correct any adverse impact to CITY's use or operations or the use or operations of a third party caused by ENCROACHER's Network Facilities in the Public Right(s)-of-Way at no cost to CITY, except as otherwise set forth in this Agreement.

17.2 All notices given or which may be given pursuant to this Agreement shall be in writing and transmitted by United States mail or by private delivery systems if followed by United States mail or by private delivery systems as follows:

To CITY at:

City of Milpitas
455 E. Calaveras Blvd.

Milpitas, CA 95035-5411
Attn: Engineering Director/City Engineer
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18 To ENCROACHER at:

Bandwidth IG, LLC
530 Lakeside Drive, Suite 190
Sunnyvale, CA 94085
ATTN: Andrew Munn
With a copy to:

Bandwidth IG, LLC
530 Lakeside Drive, Suite 190
Sunnyvale, CA 94085
ATTN: Abbi Dayton
SECTION 18

MISCELLANEOUS

18.1 This Agreement contains the entire understanding between the Parties with respect to the subject matter herein. There are no representations, agreements, or understandings (whether oral or written) between or among the Parties relating to the subject matter of this Agreement which are not fully expressed herein. This Agreement may be not amended except pursuant to a written instruction signed by all Parties.

ENCROACHER and CITY agree to renegotiate this Agreement in good faith if required for CITY to comply with 47 U.S.C. 253, or any similar provision of state law. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement is invalid or unenforceabl e, the remainder of this Agreement shall not be affected by such invalidity or unenforceability.

18.2 The failure of either Party hereto to enforce any of the provisions of this Agreement, or the waiver thereof in any instance shall not be construed as a general waiver or relinquishment on its part of any such provision, but the same shall nevertheless be and remain in full force and effect.

18.3 Payments. If any payment due to CITY under this Agreement is not timely made, CITY may assess interest at a rate of ten percent (10%) per annum from the payment due date up until payment is made. In the event payment is not made within ninety (90) days of its due date, ENCROACHER shall be considered to have materially breached this Agreement. CITY’s exercise of its rights hereof shall not release ENCROACHER from any liability or obligation hereunder, whether of indemnity or otherwise.

18.4 Consent to Jurisdiction and Venue. This Agreement shall be construed in accordance with and governed by the laws of the State of California. Any legal action or proceeding brought to interpret or enforce this Agreement, or which in any 347
Item # C10.
19 way arises out of the Parties’ activities undertaken pursuant to this Agreement, shall be filed and prosecuted in the appropriate California State Court in the County of Santa Clara County, California. Each Party waives the benefit of any provision of state or federal law providing for a change of venue to any other court or jurisdiction including, without limitation, a change of venue based on the fact that a governmental entity is a party to the action or proceeding, or that a federal right or question is involved or alleged to be involved in the action or proceeding. Without limiting the generality of the foregoing waiver, ENCROACHER expressly waives any right to have venue transferred pursuant to California Code of Civil Procedure Section 394.

18.5 This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. (signatures on next page)
348
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20 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate.

CITY OF MILPITAS
Approved By:

Steven G. McHarris, City Manager
Date
Approved As To Form:

Michael Mutalipassi, City Attorney
Approved:

Lauren Lai, CPA, MPA
Finance Director/Risk manager
Approved As To Content:

Steven Erickson, Engineering Director/City Engineer

BANDWIDTH IG, LLC,
a Delaware limited liability company
By: Abbi
Dayton
Its: General
Counsel
349
Item # C10.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Adopt a Resolution Authorizing the City Manager to Execute the Purchase of Two 2023 Ford Super Duty F-250 SRW (W2B) XLT 4WD Crew Cabs for the Fire Department from Through a Sourcewell Cooperative Contract with National Auto Fleet Group in the Amount of $154,270.06 (Staff Contact: Brian Stelling, Interim Fire Chief, 408-586-2827)
Category: Consent Calendar-Public Safety
Meeting Date: 12/6/2022
Recommendation: Adopt a resolution authorizing the City Manager to execute the purchase of two 2023 Ford Super Duty F-250 SRW (W2B) XLT 4WD Crew Cabs for the Fire Department through a Sourcewell Cooperative Contract with National Auto Fleet Group in the amount of $154,270.06 and find a CEQA exemption.

BACKGROUND:

The next priorities for Fire apparatus replacement are Fire command/deployment vehicles. As part of the Fiscal Year 2022/23 budget, Council approved the purchase of two (2) Fire Command Vehicles for the Fire Department.

The two command vehicles are expected to improve reliability of the command fleet when transporting personal protection equipment (PPE) and command staff to sites of emergency calls. The Fire Department is requesting the purchase of two replacement Fire Command Staff vehicles to be stationed at Fire Station One at 777 South Main Street, Milpitas CA. These replacement units will be Ford Super Duty F-250 SRW (W2B) XLT 4WD Crew Cabs.

ANALYSIS:

Staff recommends a cooperative purchase through Sourcewell Contract 091521-NAF for Two 2023 Ford Super Duty F-250 SRW (W2B) XLT 4WD Crew Cabs for the Fire Department from National Auto Fleet Group.

Cooperative purchasing through the Sourcewell Contract is specifically authorized pursuant to Municipal Code Section I-2-3.05 “Public Agency Purchases”, The Purchasing Agent reviewed all of the documentation from the Sourcewell Contract No. 091521-NAF and has determined that the underlying purchase was made using competitive bidding procedures. Contract No. 091521-NAF is currently valid through November 8, 2025. All Sourcewell contracts provide nationally bid volume pricing to member cities not otherwise available for a single purchase. The purchase will be completed by issuing a purchase order with the City’s standard terms and conditions for materials and equipment.

POLICY ALTERNATIVE(S):

Alternative 1: City Council does not adopt a resolution to approve the purchase.

Pros: Savings of expenditures.

Cons: Delay in replacement will increase maintenance of the existing fleet due to age of apparatus as well as increase cost of the purchase of the new vehicles after December 16, 2022.

Reason for Not Recommending: This apparatus is vital to the operations of the Milpitas Fire Department as it has a direct impact on emergency response and reliability of the command fleet when transporting personal protection equipment (PPE).

FISCAL IMPACT:

Purchase of two 2023 Ford Super Duty F-250 SRW (W2B) XLT 4WD Crew Cabs will cost $154,270.06.

Appropriation and funding is included in the FY2022-23 Adopted Budget approved by City Council within the Fire Department budget. 350
Item # C11.

California Environmental Quality Act (CEQA):

Not applicable. The selection and contractual arrangement do not constitute a project, in accordance with Section 15378 of the CEQA Guidelines.

RECOMMENDATION:

Adopt a resolution authorizing the City Manager to execute the purchase of two (2) 2023 Ford Super Duty F250 SRW (W2B) XLT 4WD Crew Cabs for the Fire Department through a Sourcewell Cooperative Contract with National Auto Fleet Group in the Amount of $154,270.06.

Attachment(s):

1. Resolution

2. National Auto Fleet Group Quote No. 22504

3. Purchase Order Terms & Conditions for Materials & Equipment 351
Item # C11.

Resolution No. ____
RESOLUTION NO. ______

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS

AUTHORIZING THE CITY MANAGER TO EXECUTE THE PURCHASE OF

TWO FIRE COMMAND VEHICLES THROUGH A SOURCEWELL

COOPERATIVE PROCUREMENT CONTRACT WITH THE NATIONAL AUTO

FLEET GROUP
WHEREAS, Municipal Code Section I-2-3.05 (“Public Agency Purchase”) specifically authorizes the Purchasing Agent to purchase supplies or services without complying with the quotation or bidding requirements of that Chapter, and to make such purchases based on an agreement or cooperative purchasing program utilizing public agency procurements as the basis for the contract and may be offered by any ‘public agency” as defined by Government Code Section 6500, regardless of whether the City is named a party to the agreement or an actual participant in such a program, provided that the underlying purchase was made using competitive negotiation or procurement procedures and may include a nationally bid cooperative contract; and WHEREAS, Sourcewell is a State of Minnesota local government unit and service cooperative created under the laws of the State of Minnesota through legislative authority of Minnesota Statute 123A.21. Feb 24, 2017 that offers cooperative procurement solutions to government entities; and WHEREAS, on July 28, 2021 Sourcewell solicited Request for Proposal (RFP) No. 091521 for “Automobiles, SUVs, Vans, and Light Trucks with Related Equipment and Accessories”; and WHEREAS, on November 4, 2021 contract No. 091521-NFA was awarded to National Auto Fleet Group and took effect pursuant to the aforementioned RFP; and WHEREAS, to support the Fire Department apparatus replacement, staff wishes to purchase two 2023 Ford Super Duty F-250 SRW (W2B) XLT 4WD Crew Cabs for $154,270.06; and WHEREAS, the Purchasing Agent has reviewed all of the documentation related to the RFP and the original contract awarded to National Auto Fleet Group and has determined that the underlying purchase was made using competitive bidding procedures and that the price for the vehicles are the same as that offered in the original contract.

NOW, THEREFORE, the City Council of the City of Milpitas hereby finds, determines, and resolves as follows:

1. The City Council has considered the full record before it, which may include but is not limited to such things as the staff report, testimony by staff and the public, and other materials and evidence submitted or provided to it. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

2. The City Manager is authorized to execute the purchase two 2023 Ford Super Duty F-250 SRW (W2B) XLT 4WD Crew Cabs for $154,270.06. This is a cooperative purchase from National Auto Fleet Group through the Sourcewell Cooperative.

PASSED AND ADOPTED this ______ day of ______________, 2022, by the following vote:

AYES:

NOES: 352
Item # C11.

Resolution No. ____
ABSENT:

ABSTAIN:

ATTEST: APPROVED:

Suzanne Guzzetta, Acting City Clerk Rich Tran, Mayor
APPROVED AS TO FORM:

Michael Mutalipassi, City Attorney
353
Item # C11.
11/7/2022 Quote ID: 22054
Order Cut Off Date: 12/16/2022
Mr Galahad Zamora
Milpitas Fire Department
777 S. Main St.

Milpitas, California, 95035
Dear Galahad Zamora,
National Auto Fleet Group is pleased to quote the following vehicle(s) for your consideration.

Two (2) New/Unused (2023 Ford Super Duty F-250 SRW (W2B) XLT 4WD Crew Cab 6.75' Box 160" WB, Factory Order ) and delivered to your specified location, each for
One Unit (MSRP) One Unit Total % Savings Extended Unit's (2) Total Savings Contract Price $73,765.00 $70,515.46 4.405 % $141,030.92 $6,499.08 Factory Order $0.00 $0.00
Tax (9.3750 %) $6,610.82 $13,221.64
Tire fee $8.75 $17.50
Total $77,135.03 $154,270.06
- per the attached specifications.

This vehicle(s) is available under the Sourcewell Contract 091521-NAF . Please reference this Contract number on all purchase orders to National Auto Fleet Group. Payment terms are Net 20 days after receipt of vehicle.

Thank you in advance for your consideration. Should you have any questions, please do not hesitate to call.

Sincerely,
Jesse Cooper Quoting Department
Account Manager Account Manager
Email: [email protected] [email protected] Office: (855) 289-6572 (855) 289-6572
Fax: (831) 480-8497
354
Item # C11.

Purchase Order Instructions & Resources
In order to finalize your purchase please submit this purchase packet to your governing body for a purchase order approval and submit your purchase order in the following way:

Email: [email protected]
Fax: (831) 480-8497
Mail: National Auto Fleet Group
490 Auto Center Drive
Watsonville, CA 95076
We will send a courtesy confirmation for your order and a W-9 if needed.

Additional Resources
Learn how to track your vehicle: www.NAFGETA.com
Use the upfitter of your choice: www.NAFGpartner.com
Vehicle Status: [email protected]
General Inquiries: [email protected]
For general questions or assistance please contact our main office at:
1-855-289-6572
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Item # C11.

Vehicle Configuration Options
ENGINE
Code Description
99T
Engine: 6.7L 4V OHV Power Stroke V8 Turbo Diesel B20, -inc: manual push-button engine-exhaust braking and intelligent oillife monitor, Operator Commanded Regeneration (OCR), 34 Gallon Fuel Tank, 3.31 Axle Ratio, Dual AGM 68 AH Battery, Dual 78-AH 750 CCA Batteries

TRANSMISSION
Code Description
44G Transmission: TorqShift 10-Speed Automatic, (STD)
WHEELS
Code Description
64S Wheels: 18" Ebony Black Painted Aluminum
TIRES
Code Description
TDX Tires: LT275/70Rx18E BSW A/T (4), -inc: Spare may not be the same as road tire

PRIMARY PAINT
Code Description
PQ Race Red

SEAT TYPE
Code Description
2S Medium Dark Slate, Cloth 40/Console/40 Front Seats, -inc: 8-way power driver w/power lumbar and 2-way adjustable driver/passenger headrests, Flow-Through Console, 120V/400W outlet in rear

AXLE RATIO
Code Description
X31 3.31 Axle Ratio

ADDITIONAL EQUIPMENT
Code Description
17P
XLT Premium Package, Customers must unlock the navigation service trial by activating the eligible vehicle w/a FordPass member account, If not subscribed by the end of the complimentary period, the connected navigation service will terminate, and the system will revert to embedded offline navigation, Navigation services require SYNC4 and Ford Pass Connect (optional on select vehicles), complimentary connect service and the FordPass app (see FordPass terms for details), Connected service and features depend on compatible AT&T network availability, Evolving technology/cellular networks/vehicle capability may limit functionality and prevent operation of connected features, FordPass app, compatible w/select smartphone platforms, is available via a download, Message and data rates may apply 17K
Sport Appearance Package, -inc: dark fender badge, Foldable & Locking Rear Under-Seat Storage, Tires: LT275/70Rx18E BSW A/T (4), Spare may not be the same as road tire, LED Box Lighting, LED Center High-Mounted Stop Lamp (CHMSL), Black Tow Hooks, Wheels: 18" Ebony Black Painted Aluminum, Body-Color Front & Rear Bumpers, Sport 4x4 Box Side Decal, Dark Painted Grille, Platform Running Boards, LED Center High-Mounted Stop Lamp (CHMSL), Chrome Exhaust Tip, LED Fog Lamps, LED reflector lamps
76S Remote Start System
86M Dual AGM 68 AH Battery
68U GVWR: TBD Payload Package
54F PowerScope Trailer Tow Mirrors w/Heat, -inc: power-folding w/Autofold, telescoping, power glass, turn signal, high intensity LED security approach lamps and utility lighting system (LED side-mirror spotlights) 43B Fixed Rear-Window w/Defrost
18B Platform Running Boards
356
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66L LED Box Lighting, -inc: LED Center High-Mounted Stop Lamp (CHMSL) Radio: B&O Sound System by Bang & Olufsen, digital owner's manual, conversational voice command recognition and connected built-in navigation w/complimentary 3-year trial for eligible vehicles that begins on the new vehicle warranty start date, Customers must unlock the navigation service trial by activating the eligible vehicle w/a FordPass member account, If not subscribed by the end of the complimentary period, the connected navigation service will terminate, and the system will revert to embedded offline navigation, Navigation services require SYNC4 and Ford Pass Connect (optional on select vehicles), complimentary connect service and the FordPass app (see FordPass terms for details), Connected service and features depend on compatible AT&T network availability, Evolving technology/cellular networks/vehicle capability may limit functionality and prevent operation of connected features, FordPass app, compatible w/select smartphone platforms, is available via a download, Message and data rates may apply
874
360-Degree Camera Package, -inc: trailer 360-degree camera and wired auxiliary trailer camera compatibility, Rear Parking Sensors, reverse sensing system w/reverse brake assist, LED Center High-Mounted Stop Lamp (CHMSL), 360-Degree Camera System, TBD camera views and picture in picture capability, BLIS w/Cross-Traffic Alert, trailer coverage

OPTION PACKAGE
Code Description
603A Order Code 603A
357
Item # C11.
2023 Fleet/Non-Retail Ford Super Duty F-250 SRW XLT 4WD Crew Cab 6.75' Box 160" WB

WINDOW STICKER
2023 Ford Super Duty F-250 SRW XLT 4WD Crew Cab 6.75' Box 160" WB

CODE MODEL MSRP
W2B 2023 Ford Super Duty F-250 SRW XLT 4WD Crew Cab 6.75' Box 160" WB $54,510.00

OPTIONS
99T Engine: 6.7L 4V OHV Power Stroke V8 Turbo Diesel B20, -inc: manual push-button engine-exhaust braking and intelligent oil-life monitor, Operator Commanded Regeneration (OCR), 34 Gallon Fuel Tank, 3.31 Axle Ratio, Dual AGM 68 AH Battery, Dual 78 -AH 750 CCA Batteries
$9,995.00
44G Transmission: TorqShift 10-Speed Automatic, (STD) $0.00 64S Wheels: 18" Ebony Black Painted Aluminum INC
TDX Tires: LT275/70Rx18E BSW A/T (4), -inc: Spare may not be the same as road tire INC PQ Race Red $0.00
2S Medium Dark Slate, Cloth 40/Console/40 Front Seats, -inc: 8-way power driver w/power lumbar and 2-way adjustable driver/passenger headrests, Flow-Through Console, 120V/400W outlet in rear $300.00
X31 3.31 Axle Ratio INC
17P XLT Premium Package, Customers must unlock the navigation service trial by activating the eligible vehicle w/a FordPass member account, If not subscribed by the end of the complimentary period, the connected navigation service will terminate, and the s ystem will revert to embedded offline navigation, Navigation services require SYNC4 and Ford Pass Connect (optional on select vehicles), complimentary connect service and the FordPass app (see FordPass terms for details), Connected service and features depend on compatible AT&T network availability, Evolving technology/cellular networks/vehicle capability may limit functionality and prevent operation of connected features, FordPass app, compatible w/select smartphone platforms, is available via a download, Message and data rates may apply
$4,150.00
17K Sport Appearance Package, -inc: dark fender badge, Foldable & Locking Rear Under-Seat Storage, Tires: LT275/70Rx18E BSW A/T (4), Spare may not be the same as road tire, LED Box Lighting, LED Center High-Mounted Stop Lamp (CHMSL), Black Tow Hooks, Wheels: 18" Ebony Black Painted Aluminum, Body-Color Front & Rear Bumpers, Sport 4x4 Box Side Decal, Dark Painted Grille, Platform Running Boards, LED Center High-Mounted Stop Lamp (CHMSL), Chrome Exhaust Tip, LED Fog Lamps, LED reflector lamps $2,955.00
76S Remote Start System INC
86M Dual AGM 68 AH Battery INC
68U GVWR: TBD Payload Package INC
54F PowerScope Trailer Tow Mirrors w/Heat, -inc: power-folding w/Autofold, telescoping, power glass, turn signal, high intensity LED security approach lamps and utility lighting system (LED side-mirror spotlights) INC
43B Fixed Rear-Window w/Defrost $60.00
18B Platform Running Boards INC
66L LED Box Lighting, -inc: LED Center High-Mounted Stop Lamp (CHMSL) INC Radio: B&O Sound System by Bang & Olufsen, digital owner's manual, conversational voice command recognition and connected bui ltin navigation w/complimentary 3-year trial for eligible vehicles that begins on the new vehicle warranty start date, Customers must unlock the navigation service trial by activating the eligible vehicle w/a FordPass member account, If not subscribed by the end of the complimentary period, the connected navigation service will terminate, and the system will revert to embedded offli ne navigation, Navigation services require SYNC4 and Ford Pass Connect (optional on select vehicles), complimentary connect service and the FordPass app (see FordPass terms for details), Connected service and features depend on compatible AT&T network avai lability, Evolving technology/cellular networks/vehicle capability may limit functionality and prevent operation of connected features, FordPass app, compatible w/select smartphone platforms, is available via a download, Message and data rates may apply INC
874 360-Degree Camera Package, -inc: trailer 360-degree camera and wired auxiliary trailer camera compatibility, Rear Parking Sensors, reverse sensing system w/reverse brake assist, LED Center High-Mounted Stop Lamp (CHMSL), 360-Degree Camera System, TBD camera views and picture in picture capability, BLIS w/Cross-Traffic Alert, trailer coverage INC
603A Order Code 603A $0.00
Please note selected options override standard equipment 358
Item # C11.

SUBTOTAL $71,970.00
Advert/ Adjustments $0.00
Manufacturer Destination Charge $1,795.00
TOTAL PRICE $73,765.00
Any performance-related calculations are offered solely as guidelines. Actual unit performance will depend on your operating conditions.

Notes
359
Item # C11.

Standard Equipment

MECHANICAL
Engine: 7.3L 2V DEVCT NA PFI V8 Gas (STD)
Transmission: TorqShift 10-Speed Automatic -inc: SelectShift and selectable drive modes: normal, eco, slippery roads, tow/haul and offroad (STD)

3.73 Axle Ratio (STD)

EXTERIOR

ADDITIONAL EQUIPMENT
50-State Emissions System
Transmission w/Oil Cooler
Electronic Transfer Case
Part-Time Four-Wheel Drive
78-Amp/Hr 750CCA Maintenance-Free Battery w/Run Down Protection HD 190 Amp Alternator
Class V Towing Equipment -inc: Hitch, Brake Controller and Trailer Sway Control Trailer Wiring Harness
3470# Maximum Payload
GVWR: 10,000 lb Payload Package
HD Shock Absorbers
Front Anti-Roll Bar
Firm Suspension
Hydraulic Power-Assist Steering
34 Gal. Fuel Tank
Single Stainless Steel Exhaust
Auto Locking Hubs
Front Suspension w/Coil Springs
Solid Axle Rear Suspension w/Leaf Springs
4-Wheel Disc Brakes w/4-Wheel ABS, Front And Rear Vented Discs, Brake Assist and Hill Hold Control Regular Box Style
Steel Spare Wheel
Spare Tire Stored Underbody w/Crankdown
Clearcoat Paint
Chrome Front Bumper w/Body-Colored Rub Strip/Fascia Accent and 2 Tow Hooks Chrome Rear Step Bumper
Black Side Windows Trim and Black Front Windshield Trim Black Door Handles
Black Power Heated Side Mirrors w/Convex Spotter, Manual Folding and Turn Signal Indicator Manual Extendable Trailer Style Mirrors
Fixed Rear Window
Variable Intermittent Wipers
Privacy Glass
Aluminum Panels
Chrome Grille
Tailgate Rear Cargo Access
Tailgate/Rear Door Lock Included w/Power Door Locks
Tires: LT275/65Rx18E BSW A/S -inc: Spare may not be the same as road tire (STD) Wheels: 18" Sparkle Silver Painted Cast Aluminum -inc: bright hub covers/center ornaments (STD) 360
Item # C11.

Boxside Steps
Cargo Lamp w/High Mount Stop Light
Perimeter/Approach Lights
Autolamp Auto On/Off Aero-Composite Halogen Auto High-Beam Daytime Running Lights Preference Setting Headlamps w/Delay-Off Front Fog Lamps
Headlights-Automatic Highbeams
Radio w/Seek-Scan, Clock and Speed Compensated Volume Control Radio: AM/FM Stereo/MP3 Player -inc: 7 speakers
Fixed Antenna
SYNC 4 -inc: 8" LCD capacitive touchscreen w/swipe capability, wireless phone connection, cloud connected, AppLink w/app catalog, 911 Assist, Apple CarPlay and Android Auto compatibility and digital owner's manual 2 LCD Monitors In The Front
8-Way Power Driver Seat -inc: Power Recline, Height Adjustment, Fore/Aft Movement and Cushion Tilt 4-Way Passenger Seat -inc: Manual Recline and Fore/Aft Movement 60-40 Folding Split-Bench Front Facing Fold-Up Cushion Rear Seat Manual Tilt/Telescoping Steering Column
Gauges -inc: Speedometer, Odometer, Oil Pressure, Engine Coolant Temp, Tachometer, Transmission Fluid Temp, Engine Hour Meter, Trip Odometer and Trip Computer
Power Rear Windows
FordPass Connect 5G Mobile Hotspot Internet Access
Rear Cupholder
3 12V DC Power Outlets
Remote Keyless Entry w/Integrated Key Transmitter, Illuminated Entry and Panic Button Keypad
Cruise Control w/Steering Wheel Controls
Manual Air Conditioning
HVAC -inc: Underseat Ducts
Illuminated Locking Glove Box
Full Cloth Headliner
Urethane Gear Shifter Material
Interior Trim -inc: Metal-Look Instrument Panel Insert and Chrome Interior Accents Cloth 40/20/40 Split Bench Seat -inc: 20% locking center under-seat storage, center armrest, cupholder, storage, 8-way power driver w/power lumbar and 2-way adjustable driver/passenger headrests Day-Night Auto-Dimming Rearview Mirror
Driver And Passenger Visor Vanity Mirrors
Full Overhead Console w/Storage, 3 12V DC Power Outlets and 1 120V AC Power Outlet Fade-To-Off Interior Lighting
Front And Rear Map Lights
Full Carpet Floor Covering -inc: Carpet Front And Rear Floor Mats Pickup Cargo Box Lights
Smart Device Remote Engine Start
Instrument Panel Covered Bin, Dashboard Storage, Driver / Passenger And Rear Door Bins Power 1st Row Windows w/Driver And Passenger 1-Touch Up/Down Delayed Accessory Power
Power Door Locks w/Autolock Feature
Systems Monitor
Trip Computer
Outside Temp Gauge
Digital/Analog Appearance
Seats w/Cloth Back Material
Manual Adjustable Rear Head Restraints
2 Seatback Storage Pockets 361
Item # C11.

Securilock Anti-Theft Ignition (pats) Immobilizer
Air Filtration
3 12V DC Power Outlets and 1 120V AC Power Outlet
AdvanceTrac w/Roll Stability Control Electronic Stability Control (ESC) And Roll Stability Control (RSC) ABS And Driveline Traction Control
Side Impact Beams
Dual Stage Driver And Passenger Seat-Mounted Side Airbags Ford Co-Pilot360 - Pre-Collision Assist with Automatic Emergency Braking (AEB) Collision Mitigation-Front
Tire Specific Low Tire Pressure Warning
Safety Canopy System Curtain 1st And 2nd Row Airbags
Outboard Front Lap And Shoulder Safety Belts -inc: Rear Center 3 Point and Height Adjusters Dual Stage Driver And Passenger Front Airbags
Back-Up Camera
362
Item # C11.
38077.00180\29085216.4 C2

CITY OF MILPITAS - PURCHASE ORDER (EQUIPMENT AND MATERIALS)

PURCHASE ORDER TERMS AND CONDITIONS FOR EQUIPMENT AND MATERIALS

1. Acceptance. This purchase order for equipment and
materials issued by the City of Milpitas (“CITY”) to the Vendor designated in the purchase order must be promptly accepted and acceptance is expressly limited to the terms of this order.

Any additions or different terms in the Vendor's forms are hereby deemed to be material alterations and notice of
objection to them and rejection of them is hereby given.

Vendor's shipment of goods in response to this order shall be considered acceptance by the Vendor.

2. Entire Agreement. Unless Vendor and CITY have entered into a separate written contract covering the purchase of the goods described herein, the entire contract between the parties consists of this order and the Vendor's acceptance as above stipulated, and said contract shall not be changed or added to except in writing signed by authorized
representatives of each party.

3. Price. The price invoiced for the goods on this purchase order shall be no higher than the price stated on the front of this purchase order unless prior notification is received from Vendor prior to shipment and the change is accepted by
CITY. If the Vendor's established price for any item upon the date of delivery shall be lower than the price shown on this purchase order, CITY shall have the benefit of such lower price. Vendor shall deliver to CITY all invoices within 30 days of shipping or service delivery.

4. Payment. Payments will be made net 30 days unless
otherwise specified as per agreements regarding discount terms. The period of computation will commence on the date of receipt of a correctly completed invoice. Payment may be withheld, in whole or in part, due to deficiencies in Vendor’s performance. Payment of an invoice by CITY shall be
without prejudice to any and all claims CITY may have
against Vendor in connection with such goods. Invoices are paid on a weekly basis and such practice may result in minor deviations from payment terms otherwise cited herein.

5. Time of the Essence. Time is of the essence on this order.

If delivery is not made in the quantity or quantities and at the time or times specified, CITY shall have the right, at its option, to cancel the entire order or that part of same not so delivered. If CITY accepts delayed delivery the time of payment shall be extended accordingly.

6. Delivery and Acceptance. Vendor expressly warrants that any article, material or work is free and clear of all liens and encumbrances whatsoever, and that Vendor has good and
marketable title to same. Unless otherwise specified, all goods are to be shipped prepaid, F.O.B. destination. No charge will be allowed for packing, crating, freight, express or other carrier's charges, or cartage, unless specifically agreed to by CITY. Title to equipment and materials
purchased hereunder shall pass to Vendor at the designated F.O.B. point, subject to Vendor’s right to inspect and reject or revoke acceptance.

7. Warranty. Vendor warrants for a period of 12 months
following start of use or 18 months from receipt, whichever occurs first, that the goods described herein will be free of defects in workmanship, design, materials, and title, and notwithstanding anything herein to the contrary, will conform to all applicable proposals, specifications, instructions, drawings, data, descriptions, and samples, and will be of good and merchantable quality and fit and sufficient for the purpose intended. Vendor shall obtain and provide to CITY Material Safety Data Sheets (MSDS) for each product that contains hazardous substances as defined by CalOSHA. ..

8. Rejection of Goods. CITY shall have the right, at its option, to reject or revoke acceptance of any goods which do not conform to these warranties or to the specifications. In case of such rejection or revocation of acceptance,
transportation of the rejected goods, both to and from CITY, shall be at the expense of Vendor, said rejected goods are not to be replaced except upon specific instruction from CITY, and CITY shall have the right at its option to cancel the remainder, if any, of the order, by notice to Vendor at the time notice is given of rejection or revocation of acceptance.

Vendor shall be liable to CITY for all damages proximately caused by breach of any of the foregoing warranties,
including incidental damages but excluding special or
consequential damages.

9. Returns. CITY reserves the right to return for full credit any excess over quantity called for in any order or orders.

Vendor to bear the cost of transportation both ways.

10. Force Majeure. Vendor shall not be held responsible for failure or delay in shipping nor CITY for failure or delay in accepting goods described herein if such failure or delay is due to act of God, war, federal or state legislation or any regulations or orders, fire, accident, or other causes, either similar or dissimilar to the foregoing, beyond their control. In the event of any such excused interference with shipments, CITY shall have the option either to reduce the quantity provided for in the order accordingly or to exercise its right of cancellation as set forth in these terms and conditions.

11. Additional Fees. Unless otherwise required by law or provided herein, Vendor assumes exclusive liability for, and shall pay before delinquency, all sales, use, excise and other taxes, charges or contributions of any kind now or hereafter imposed on or with respect to, or measured by the article sold or material or work furnished hereunder on the wages,
salaries or other remunerations paid to persons employed in connection with performance of this order.

12. No Waiver. No exercise by CITY of its rights hereunder shall constitute a waiver of any rights it may have for breach of contract. CITY's waiver of or failure to enforce its rights on account of Vendor's failure or delay in performing any
obligation of Vendor hereunder, or on account of Vendor's breach of contract in any respect, shall not constitute a waiver of any subsequent failure, delay or breach.

13. Compliance with Law. Vendor shall comply with all
applicable laws and regulations of the federal, state and local government. CITY shall assist Vendor, as requested, in
obtaining and maintaining all permits required of Vendor by Federal, State and local regulatory agencies. Vendor is responsible for all costs of clean up and/or removal of hazardous and toxic substances spilled as a result of his or her Work. Vendor is aware of the requirements of California Labor Code Sections 1720 et seq. and 1770 et seq.
(“Prevailing Wage Laws”), which require the payment of
prevailing wage rates and the performance of other
requirements on certain "public works" and "maintenance" projects. If the Work is being performed as part of an
applicable "public works" or "maintenance" project, as
defined by the Prevailing Wage Laws, and if the total
compensation is $1,000 or more, Vendor agrees to fully
comply with such Prevailing Wage Laws. Vendor shall
defend, indemnify and hold CITY, its officials, officers, employees and agents free and harmless from any claims, liabilities, costs, penalties or interest arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.

Any stop orders issued by the Department of Industrial
363
Item # C11.
38077.00180\29085216.4 C2

CITY OF MILPITAS - PURCHASE ORDER (EQUIPMENT AND MATERIALS) Relations against Vendor or any subcontractor that affect Vendor’s performance of services, including any delay, shall be Vendor’s sole responsibility and Vendor shall indemnify CITY from liability arising out of the same. It shall be mandatory upon the Vendor and all subcontractors to comply with all California Labor Code provisions, which include but are not limited to prevailing wages (Labor Code Sections 1771, 1774 and 1775), employment of apprentices (Labor
Code Section 1777.5), certified payroll records (Labor Code Sections 1771.4 and 1776), hours of labor (Labor Code
Sections 1813 and 1815), contractor registration (Labor Code Sections 1725.5 and 1771.1) and debarment of
contractors and subcontractors (Labor Code Sections
1777.1). The requirement to submit certified payroll records directly to the Labor Commissioner under Labor Code
section 1771.4 and to be registered with the Department of Industrial Relations shall not apply to work performed on a public works project that is exempt pursuant to the small project exemption specified in Labor Code Sections 1771.4, 1725.5 and 1771.1.

14. Insurance. Vendor shall take out and maintain: A.

Commercial General Liability Insurance, of at least
$1,000,000 per occurrence/ $2,000,000 aggregate for bodily injury, personal injury and property damage, at least as broad as Insurance Services Office Commercial General Liability most recent Occurrence Form CG 00 01; B. Automobile
Liability Insurance for bodily injury and property damage including coverage for owned, non-owned and hired
vehicles, of at least $1,000,000 per accident for bodily injury and property damage, at least as broad as most recent
Insurance Services Office Form Number CA 00 01 covering automobile liability, Code 1 (any auto); C. Workers’
Compensation in compliance with applicable statutory
requirements and Employer's Liability Coverage of at least $1,000,000 per occurrence; and D. Pollution Liability
Insurance of at least $1,000,000 per occurrence and
$2,000,000 aggregate shall be provided by those Vendors transporting hazardous materials. Insurance carriers shall be licensed to do business in California and maintain an agent for process within the state. Such insurance carrier shall have not less than an "A:VII" rating according to the latest Best Key Rating unless otherwise approved by CITY.

VENDOR SHALL ENSURE THAT THIRD PARTY

SHIPPERS CONTRACTED BY VENDOR HAVE
ADEQUATE INSURANCE COVERAGE. If attached, Vendor
shall refer to Exhibit “A” – Insurance Requirements, for further insurance requirements applicable to Vendor.

15. Indemnification. The Vendor shall indemnify and hold harmless CITY, its officials, officers, agents and employees from and against any and all claims, liabilities, expenses or damages, including attorneys’ fees, for injury or death of any person, or damage to property, or interference with use of property, or patent infringement or fees for use of patented items, or any claim of the Vendor or sub-contractors for wages or benefits which arise in connection with the sale, delivery and/or installation of equipment or materials, except to the extent caused or resulting from the negligence or willful misconduct of CITY. The foregoing indemnity
includes, but is not limited to, the cost of prosecuting or defending such action with legal counsel acceptable to CITY and CITY’s attorneys’ fees incurred in such an action.

16. Substitutions, Changes and Cancellation. No
substitutions are acceptable unless expressly accepted in writing by CITY. CITY may make changes in the general
scope of this order by giving written notice to Vendor. If any such change affects the cost of or time to deliver or perform under this order, an adjustment in price, delivery or both will be made as CITY determines to be equitable. Vendor may
request changes; however, no such change shall be effective unless accepted in writing by CITY. CITY may cancel this order in whole or in part at any time before acceptance of the equipment and materials due to Vendor’s breach or for
CITY’s convenience.

17. Laws, Venue, and Attorneys' Fees. This purchase order shall be interpreted in accordance with the laws of the State of California. If any action is brought to interpret or enforce any term of this purchase order , the action shall be brought in a state or federal court situated in the County of Santa Clara, State of California. In the event of any such litigation between the parties, the prevailing party shall be entitled to recover all reasonable costs incurred, including reasonable attorney's fees, as determined by the court.

18. Contract Terms. Nothing herein shall be construed to give any rights or benefits to anyone other than CITY and the Vendor. The unenforceability, invalidity or illegality of any provision(s) of this purchase order shall not render the other provisions unenforceable, invalid or illegal. Notice may be given or delivered by depositing the same in any United States Post Office, certified mail, return receipt requested, postage prepaid, addressed to the parties to the addresses set forth in the purchase order. Vendor shall not assign, sublet, or transfer this purchase order, or any rights under or interest in this purchase order, without the written consent of CITY, which may be withheld for any reason. Vendor is
retained as an independent contractor and is not an
employee of CITY. No employee or agent of Vendor shall
become an employee of CITY. This is an integrated
agreement/purchase order representing the entire
understanding of the parties as to those matters contained herein, and supersedes and cancels any prior oral or written understanding or representations with respect to matters covered hereunder. This Contract may not be modified or altered except in writing signed by both parties hereto.

19. Damage to City Facilities. Damage to CITY or public facilities or private property caused by the Vendor or by its subcontractors during delivery or installation shall be repaired and/or replaced in kind at no cost to the CITY.

20. Site Safety and Cleanup. The delivery and installation site shall be kept clean and free of hazards at all times during delivery and installation. After and installation is completed at the site, as applicable, Vendor shall clean the surrounding area to the condition prior to delivery and installation.

21. Installation. If the Vendor is responsible for providing installation services, finished installation work and/or equipment shall be subject to final inspection and
acceptance or rejection by the CITY.

22. Wage Theft Prevention. Vendor, and any subcontractor it employs to complete work under this purchase order, shall comply with all applicable federal, state and local wage and hour laws. Applicable laws may include, but are not limited to, the Federal Fair Labor Standards Act, the California Labor Code and the Milpitas Minimum Wage Ordinance. By
entering into this purchase order, Vendor affirms that it has disclosed any final judgments, decisions or orders from a court or investigatory government agency, finding in the five (5) years prior to the date of this purchase order that Vendor or its subcontractor(s) has violated any applicable wage and hour laws. Vendor further affirms that it or its
subcontractor(s) has either fully satisfied each judgment, decision or order, or, if any judgment, decision or order has not been fully satisfied, Vendor affirms that it or its subcontractor(s) is currently satisfying said judgment, decision or order through a payment or alternative plan approved by the applicable court/government agency and
that Vendor or its subcontractor(s) are in compliance with 364
Item # C11.
38077.00180\29085216.4 C2

CITY OF MILPITAS - PURCHASE ORDER (EQUIPMENT AND MATERIALS) said plan as of the date of this purchase order. If at any time during the term of this purchase order, a court or
investigatory government agency issues a final judgment, decision or order finding that Vendor or a subcontractor it employs to perform work under this purchase order has
violated any applicable wage and hour law, or Vendor learns of such a judgment, decision, or order that was not previously disclosed in its bid/proposal, Vendor shall inform the CITY no more than fifteen (15) calendar days after the judgment, decision or order becomes final or from the date of learning of the final judgment, decision or order. Vendor or its subcontractor(s) shall, within thirty (30) calendar days after notifying the CITY, either (i) fully satisfy any such judgment, decision, or order and provide the CITY with documentary evidence of satisfying said judgment, decision or order; or (ii) provide the CITY documentary evidence of a payment or
other alternative plan approved by the court/government agency to satisfy the judgment, decision or order. If the Vendor or its subcontractor is subject to a payment or other alternative plan, the Vendor or its subcontractor shall continue to submit documentary evidence every thirty (30) calendar days during the term of the purchase order
demonstrating continued compliance with the plan until the judgment, decision or order has been fully satisfied. For purposes of this provision, a “final judgment, decision, or order” refers to one for which all appeals have been
exhausted or the time period to appeal has expired. Relevant investigatory government agencies include: the United
States Department of Labor, the California Division of Labor Standards Enforcement, the CITY, or any other
governmental entity or division tasked with the investigation and enforcement of wage and hour laws. Failure to comply with any part of this provision constitutes a material breach of this purchase order. Such breach may serve as a basis for immediate termination of this purchase order and/or any other remedies available under this purchase order and/or law. Notice provided to the CITY shall be addressed to:

Attention: Finance Director, 455 E. Calaveras Blvd., Milpitas, CA 95035. The notice provisions of this paragraph are
separate from any other notice provisions in this purchase order and, accordingly, only notice provided to the above address satisfies the notice requirements in this provision. *OPTIONAL TERMS: Check box if applicable
 Custom Design: If the goods are produced by Vendor
in accordance with designs, drawings or blueprints
provided by CITY, Vendor shall return same to CITY
upon completion or cancellation of this order. Any
materials, equipment, tools, artwork, designs or other
property furnished by or specifically paid for by CITY
shall be CITY’s property.
365
Item # C11.

CITY OF MILPITAS

HOUSING AUTHORITY &

SUCCESSOR AGENCY

AGENDA REPORT
(AR)
Item Title: Sale of the residential unit located at 600 S. Abel Street Unit #208 (Staff Contact:

Alex Andrade, Economic Development Director, 408-586-3046 and Michelle Silva, Administrative Analyst II, 408-586-3244)
Category: Consent Calendar-Community Development
Meeting Date: 12/6/2022
Recommendation:

1. Adopt the resolution authorizing the Executive Director of the Milpitas Housing Authority to execute documents for the sale of the residential property located at 600 S. Abel Street Unit #208 in the amount of $314,973 and find a CEQA exemption.

2. Approve related budget amendments due to the sale of the property located at 600 S. Abel Street Unit #208 in the amount of $314,973.

BACKGROUND:

On February 1, 2012, Assembly Bill X1 26 resulted in the dissolution of all Redevelopment Agencies throughout the State. In anticipation of the dissolution, the Milpitas City Council adopted Resolution No. 8062 in February 2011. The Resolution established the City of Milpitas Housing Authority as the Successor Housing Agency to the Milpitas Redevelopment Agency. Thirteen real properties were transferred from the former Redevelopment Agency to the Milpitas Housing Authority. The transferred properties and its current disposition are summarized in the table below.

Address Developed with
Affordable Housing
Sold by Housing
Authority
Retained by Housing
Authority
1 340 Celebration Dr. X X
2 600 S. Abel St. #208 X X
3 1101 S. Main St. #313 X X
4 254 Parc Place Dr. X X
5 1432 S. Main St. X
6 1434 S. Main St. X
7 1436 S. Main St. X
8 1438 S. Main St. X
9 1438A S. Main St. X
10 1440 S. Main St. X
11 1444 S. Main St. X
12 1446 S. Main St. X
13 1504-1620 S. Main St. X X
Health and Safety Code section 34176.l(e) requires that all properties acquired by the Redevelopment Agency prior to February 1, 2012, and transferred to the Housing Authority, be developed within certain time frames.

According to Health and Safety Code section 33334.16, within five years, from the date the property is acquired, activities must be initiated consistent with the development of the property for affordable housing purposes, or the property must be sold, and the proceeds deposited into the City’s Low and Moderate Income 366
Item # C12.

Housing Asset Fund. This Health and Safety Code Section also allows for one additional period not to exceed five years.

The sale of properties located at 1432-1446 S. Main Street, also known as Parcel 1, will be brought forward for Council consideration in Quarter 2 of 2023 (Properties 5-12 in the chart above).

The purpose of this agenda is to authorize the sale of 600 S. Abel Street Unit #208 as affordable housing consistent with the Housing Authorities goals.

ANALYSIS:

There is one remaining residential unit of the thirteen total properties owned by the Housing Authority for sale (Property No. 2 in the table above). The residential property located at 600 S. Abel Street Unit #208 was being rented to a low-income household at a low-income rent level. The tenants of this property signed a Lease Agreement with an Option to Purchase from the Housing Authority. The Option to Purchase provided the tenants with the option to purchase the unit. The lease, which was executed in 2013, expired in 2014. Tenants have been on month-to-month since that time.

Housing staff has periodically reached out to the tenants about purchasing their unit. Staff worked with the tenants to purchase their unit so the sale to a low-income household could have occurred before August 31, 2022. The Option to Purchase was not exercised by the tenants of 600 S. Abel Street Unit #208.

On October 4, 2022, the Housing Division held a lottery to procure an eligible buyer for 600 S. Abel Street Unit #208 (Attachment 1). The application period was from August 15, 2022, to August 26, 2022. The lottery was a fair and transparent process. with 7 applicants participating in the lottery.

The initial five-year period to dispose of the property expired on August 31, 2017. The Housing Authority Commission adopted a resolution approving a one-time expiration date extension to August 31, 2022. Due to delays caused by a lack of staffing resources, the City did not meet the deadline to dispose of 600 S. Abel Street Unit #208 by this date. The sale of this property will bring the City into compliance. 600 S. Abel Street #208 Unit Purchase
In total, 10 applications were received by the Housing Division for the 600 S. Abel Street Unit #208 Below Market Rate property. Of the 10 applications received, 7 applications were eligible to proceed to the lottery phase. A buyer was procured at the lottery held on October 4th, 2022. To be eligible for the lottery phase, applicants must meet all requirements and provide the necessary supporting documents.

The Below Market Rate program requirements for 600 S. Abel Street Unit #208 are as follows:
 Must be a first-time home buyer.
 Must be an eligible “Moderate-Income Household.”
 Must have a household size of 1-3.
 Must have the ability to provide at least a 5-10% down payment.  Must provide a Pre-Qualification Letter.
 Must provide necessary supporting documents to validate application details (W2 forms, lease agreement, paycheck stubs, and tax documents).

The following procedure describes the steps in assigning the number of lottery tickets to applicants:

1. Each applicant receives one lottery ticket as a baseline for submitting their application.

2. Each preference category is assigned additional tickets based on the weighting for that preference category.

3. Each applicant identifies which preferences apply to their household. These preferences are then used to determine how many additional lottery tickets each household will receive. The intent of the weighted 367
Item # C12.
number of tickets is to prioritize the selection of a household that meets most of the City Council’s priorities.

Applicants Number of Lottery Tickets
All applicants Receive 1 lottery ticket
Milpitas residents Receive 5 additional lottery tickets Former Milpitas residents who have been displaced Receive 3 additional lottery tickets Households with children enrolled in the Milpitas
Unified School District (MUSD) McKinney-Vento
Homeless Assistance Act
Receive 3 additional lottery tickets
Applicants employed within the boundaries of the city
of Milpitas
Receive 1 additional lottery ticket
A total of 45 tickets were distributed to 7 applicants for the lottery. The selected buyer was assigned 7 lottery tickets as they are an eligible participant (1 lottery ticket), Milpitas Resident (5 additional tickets), and work in Milpitas (1 additional ticket).

As part of the sale, the homebuyer, will be required to sign the City’s Resale Restriction Agreement, Option to Purchase, and adhere to its owner-occupied requirement. The Resale Restriction will limit the appreciation in the unit and will give the City the purchase option on the unit if the unit falls into default. Staff will monitor the unit to ensure that it will continue to be the primary residence of the occupant through the required Annual Occupancy form.

FISCAL IMPACT:

Proceeds from the sale will be posted into the Housing Authority Fund for future appropriation.

California Environmental Quality Act (CEQA):

The recommendations have no potential for causing a significant effect on the environment and are exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3).

RECOMMENDATION:

1. Adopt the resolution authorizing the Executive Director of the Milpitas Housing Authority to execute documents for the sale of the residential property located at 600 S. Abel Street Unit #208 in the amount of $314,973.

2. Approve related budget amendments due to the sale of the property located at 600 S. Abel Street Unit #208 in the amount of $314,973.

Attachment(s):

1. Sale of 600 S. Abel Street Unit #208 Resolution

2. Exhibit A of Resolution, Residential Purchase Agreement

3. Exhibit B of Resolution, Resale Restriction Agreement and Option to Purchase

4. Exhibit C of Resolution, Disclosure Statements

5. 600 S. Abel Street Unit #208 Budget Change Form
368
Item # C12.

Resolution No. ____
RESOLUTION NO. ______

A RESOLUTION OF THE HOUSING AUTHORITY COMMISSION OF THE CITY OF MILPITAS APPROVING THE SALE OF 600 S. ABEL STREET #208 FOR $314,975 WHEREAS, the Redevelopment Agency of the City of Milpitas provided funding to financially support 1,248 affordable housing units; and WHEREAS, on June 16, 2009, the Redevelopment Agency approved Resolution No. RA 334 to purchase 600 S. Abel Street #208; and
WHEREAS, on October 4, 2022, the Housing Division held a lottery to procure an eligible buyer; and
WHEREAS, pursuant to ABx1 26 enacted effective June 28, 2011, as clarified and amended by AB 1484 effective June 27, 2012, (collectively, the "Redevelopment Dissolution Law"):

1. The Redevelopment Agency, together with every redevelopment agency in California, was dissolved as of February 1, 2012; and

2. The City of Milpitas Housing Authority (the "Housing Authority") Commission, the City Council, and the Agency Board of Directors adopted Joint Resolution HA3/8151/RA426 on January 4, 2012, whereby (a) the City, acting in a separate legal capacity and as a separate legal entity, elected to be the successor agency (the "Successor Agency") to the dissolved Redevelopment Agency for purposes of paying the obligations, unwinding the affairs, and liquidating specified assets of the dissolved Redevelopment Agency; and (b) the Housing Authority, acting in a separate legal capacity and as a separate legal entity, assumed the responsibility of performing the housing functions and accepted transfer of all assets of the dissolved Agency pursuant to California Health and Safety Code Section 34176(b)(2); and WHEREAS, the Successor Agency does not have a legal interest in the subject of this Resolution since it involves assets now in the control of the Housing Authority under the Redevelopment Dissolution Law, but out of an abundance of caution, so that no cloud will remain on the validity of actions taken herein, the Successor Agency does act in concurrence with the other Public Entity parties; and
NOW, THEREFORE, the City Council of the City of Milpitas hereby finds, determines, and resolves as follows:

1. The Housing Authority Commission, the City Council, and the Successor Agency Board have considered the full record before them, which includes, but is not limited to, the supporting documentation, testimony by staff and the public, and other materials and evidence submitted or provided to them. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference. 369
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Resolution No. ____

2. The Successor Agency Board and Housing Authority Commission hereby authorize their Executive Director or designees, to negotiate and execute all documents necessary for the sale of 600 S. Abel Street #208 in the amount of $314,975 including but not limited to the Residential Purchase Agreement (Exhibit A), Resale Restriction Agreement and Option to Purchase (Exhibit B), and Disclosure Statements (Exhibit C).

3. The Housing Authority Commission, the City Council, and the Successor Agency Board hereby designate the City Clerk as the custodian of the documents and other materials which constitute the record of proceedings upon which the decision herein is based. These documents may be found at the City Clerk's Office at 445 East Calaveras Street, Milpitas, California 95035.

PASSED AND ADOPTED this day of 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:

Suzanne Guzzetta, City Clerk Rich Tran, Mayor
APPROVED AS TO FORM:

Michael Mutalipassi, City Attorney
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

CITY OF MILPITAS HOUSING AUTHORITY
455 East Calaveras Boulevard
Milpitas, CA 95035
To be recorded without fee.
(Gov. Code, §§ 6103 and 27383.)
(Space Above This Line For Recorder’s Use Only)

RESALE RESTRICTION AGREEMENT

AND OPTION TO PURCHASE
Owners: Neil Hilario
Property 600 S. Abel Street Unit #208
Milpitas, California 95035
Name of Development: Luna at Terra Serena
Income Level: Moderate
Purchase Price: $314,973
Unit Size: 1 bed/ 1 bath
Household Size: 1
This RESALE RESTRICTION AND OPTION TO PURCHASE AGREEMENT (“Agreement”) is entered into by and between the Housing Authority of the City of Milpitas as the housing successor to the former Milpitas Redevelopment Agency (“the Authority”) and Neil Hilario (“Owner”) regarding certain improved real property, which is more particularly described in Exhibit A attached hereto and incorporated herein and commonly known as 600 S. Abel St. #208, Milpitas, CA 95035 (the “Property”) effective as of __________________, 2022 (Effective Date”). Authority and Owner are hereinafter collectively referred to as the “Parties.”

RECITALS
A. The Authority is the successor in interest to the former Milpitas Redevelopment Agency, which was dissolved by operation of law in 2012 (the “Redevelopment Agency”).

Pursuant to the previous Community Redevelopment Law (Health & Safety Code section 33000 et seq.) and the former Redevelopment Plan, the Redevelopment Agency maintained an affordable housing fund, which it used for the purpose encouraging the construction of housing 403
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within the Redevelopment Plan Area that is affordable to persons of low, and moderate income (“the Program”).

B. Pursuant to the Program, the Redevelopment Agency and the Developer of the Luna at Terra Serena development entered into a Memorandum of Understanding, and Owner Participation Agreement (collectively “the Agreements”) pursuant to which Developer agreed to construct and sell 110 homes at prices that are affordable to persons of very low, low and moderate incomes and in exchange the former Milpitas Redevelopment Agency agreed to provided certain financial incentives.

C. In accordance with the Agreements, the Redevelopment Agency entered into a “Property Value Restrictions, Resale Agreement and Option to Purchase” (the “Original Resale Agreement”) with the prior owner of that certain property located within the City of Milpitas, legally described in Exhibit A and commonly known as 600 S. Abel Street #208, Milpitas, CA 95035 (the “Property”), which was recorded in the Official Records of Santa Clara County as Document No. __________ on _______________. The Property is one of the affordable homes constructed by the Developer pursuant to the Agreement. The Original Resale Agreement granted the Redevelopment Agency an Option to Purchase the Property from the prior owner, unless the prior owner sold the Property to a moderate income household for an affordable housing cost, subject to the purchaser agreeing to being subject to resale restrictions similar to those set forth in the Original Resale Agreement.

D. Owner is the owner of Property, which Owner purchased from the prior owner on the condition that Owner would enter into this Agreement to maintain the conditions and restrictions on resale of the Property similar to those set forth in the Original Resale Agreement.

E. Owner is an eligible moderate-income purchaser under the Program, intends to live in the Property as an owner occupant, and agrees to maintain the Property as Owner’s principal residence.

F. In order to maintain and preserve the Property as housing affordable to eligible [very low-, low-, or moderate-] income purchasers, it is necessary to restrict the use and resale of the Property through imposition of the occupancy and resale restrictions set forth in this Agreement.

These restrictions are intended to prevent initial and subsequent purchasers from using the Property for purposes incompatible with the Program and realizing unwarranted gains from sales of the Property at unrestricted prices. The terms and conditions of this Agreement are intended to provide the necessary occupancy and resale restrictions to ensure that the Property is used, maintained, and preserved as housing affordable to eligible [very low-, low-, or moderate-] purchasers. To further serve the purposes of the Program, it is necessary that the Authority be granted an option to purchase the property so that the property may be resold by the Authority to an eligible household.

G. Accordingly, the Parties desire to enter into this Resale Restriction and Option to Purchase Agreement, which provides, generally, that Owner may only sell the property to Eligible Households (i.e. households meeting the household income limitations set forth herein) at a price not to exceed the price equal to the initial purchase price adjusted to reflect increases in median household income since the Property was initially purchased by Owner. Alternatively, 404
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the Agreement provides that the City may exercise its option to purchase the Property at the same price.

H. The Property constitutes a valuable community resource by providing decent, safe, and sanitary housing to persons and families of low and moderate income who otherwise would be unable to afford such housing. To protect and preserve this resource it is necessary, proper, and in the public interest for the Authority to administer occupancy and resale controls consistent with the Program by means of this Agreement.

AGREEMENT
NOW, THEREFORE, in consideration of the substantial economic benefits inuring to Owner and the public purposes to be achieved under the Program, Owner and Authority hereby agree as follows:

1. Definitions.
a. “Affordable Unit Cost” means a sales price that results in annual housing expenses that do not exceed 30% of the maximum income level for persons and families of [very low-, low-, or moderate-], adjusted for household size and as defined below. b. “Area Median Income for Santa Clara County” means those income and eligibility levels determined, updated, and published each year by the California Department of Housing and Community Development, based on Santa Clara County median income levels, adjusted for household size.
c. “Persons and families of [very low-, low-, or moderate-] income” means persons and families whose income do not exceed [fifty percent (50%); eighty percent (80%); or one hundred twenty percent (120%)] of the Area Median Income for Santa Clara County, as adjusted for household size.
d. Persons and families meeting the definition set forth in Paragraph 1(c) above shall be referred to as “Eligible Households.”

2. Program Requirements.
a. Affordability Restrictions. Owner hereby covenants and agrees that during the term of this Agreement all of the requirements and restrictions of this Agreement shall apply, and the Property shall be sold or otherwise transferred only pursuant to the terms and conditions of this Agreement and only to (i) Eligible Households at a price not to exceed the Adjusted Resale Price, as defined in Paragraph 5, (ii) the Authority pursuant to Paragraph 3, or (iii) a permitted transferee pursuant to Paragraph 9.
b. Disclosure. DURING THE TERM OF THIS AGREEMENT THERE

SHALL BE NO SALE OR OTHER TRANSFER OF THE PROPERTY WITHOUT THE

WRITTEN CERTIFICATION BY THE AUTHORITY THAT THE TRANSFEREE

QUALIFIES AS AN ELIGIBLE HOUSEHOLD AND THAT THE PROPERTY IS BEING

TRANSFERRED AT A PRICE NOT TO EXCEED THE ADJUSTED RESALE PRICE, 405
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WHICH IS CAPPED AT THE AFFORDABLE UNIT COST AS DEFINED IN PARAGRAPH

1.a. ANY SALE OR OTHER TRANSFER OF THE PROPERTY IN VIOLATION OF THIS COVENANT SHALL BE VOID.
c. Principal Residence Requirement. OWNER COVENANTS AND

AGREES THAT HE/SHE/THEY SHALL OCCUPY THE PROPERTY AS HIS/HER/THEIR

PRINCIPAL RESIDENCE FOR THE DURATION OF HIS/HER/THEIR OWNERSHIP AND

SHALL NOT RENT OR LEASE THE PROPERTY OR PORTION THEREOF DURING THE TERM OF THIS AGREEMENT. Without limiting the generality of the foregoing, any absence from the Property by Owner for a period of ninety (90) or more days shall be deemed an abandonment of the Property as the principal residence of Owner in violation of the conditions of this Paragraph. Upon request by the Authority made from time to time, the Owner of the Property shall submit an affidavit to the Authority certifying that the Property is the Owner’s principal residence and provide such documents and other evidence as may be requested to verify Owner’s compliance with this requirement. Abandonment of the Property shall constitute an Option Event (as defined in Paragraph 3.c below) and shall entitle the Authority to exercise its Option to purchase the Property.

3. Option to Purchase.
a. Grant of Option to Purchase. Owner hereby grants to the Authority an option (“Option”) to purchase all of Owner’s right, title and interest in and to the Property upon the occurrence of an Option Event (defined in Paragraph 3.c below), subject to the terms and conditions contained herein.
b. Assignment of the Option. The Authority may assign the Option to another government entity, a non-profit affordable housing provider or a person or family that qualifies as an Eligible Household. The Authority’s assignment of the Option shall not extend any time limits contained herein with respect to the exercise period of the Option or the period within which the Property must be purchased.
c. Events Giving Rise to Right to Exercise Option. The Authority shall have the right to exercise its Option upon the occurrence of any of the following events (each, an “Option Event”):
i. Receipt of a Notice of Intent to Transfer (defined in Paragraph

3.d.i below);
ii. Any actual, attempted or pending sale, conveyance, transfer, lease or other attempted disposition of the Property or of any estate or interest therein, except as provided in Paragraph 10 below;
iii. Any actual, attempted or pending encumbrance of the Property, including without limitation by way of mortgage or deed of trust, or by judgment, mechanics, tax or other lien, except as provided in Paragraph 9 below; 406
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iv. Recordation of a notice of default and/or notice of sale pursuant to California Civil Code section 2924 (or successor provisions) under any deed of trust or mortgage with a power of sale encumbering the Property;
v. Commencement of a judicial foreclosure proceeding regarding the Property;
vi. Execution by Owner of any deed in lieu of foreclosure transferring ownership of the Property;
vii. Commencement of a proceeding or action in bankruptcy, whether voluntary or involuntary, pursuant to Title 11 of the United States Code or other bankruptcy statute, or any other insolvency, reorganization, arrangement, assignment for the benefit of creditors, receivership or trusteeship, concerning the Owner; or viii. Any violation by Owner of any provision of this Agreement including, without limitation, the conditions set forth in Paragraph 2 above. d. Method of Exercising the Option.
i. Notice of Intent to Transfer. If Owner desires to sell, convey, transfer (other than pursuant to Paragraph 9), lease, encumber (other than pursuant to Paragraph 10) or otherwise dispose of the Property or of any estate or interest therein, no less than 120 days prior to the date of such proposed sale, conveyance, transfer, lease, encumbrance or disposition, Owner shall notify Authority in writing to that effect (the “Notice of Intent to Transfer”). The Notice of Intent to Transfer shall be in substantially the form attached hereto as Exhibit B. In the case of a proposed sale of the Property to an identified prospective purchaser, the Owner shall submit to the Authority, together with the Notice of Intent to Transfer, a copy of the prospective purchaser’s income certification, a list of all assets owned by the prospective purchaser, and other financial information reasonably requested by Authority, in a form approved by the Authority, along with the income certification to be provided to any lender making a loan to the prospective purchaser. The Authority may require documentation evidencing and supporting the income and other financial information contained in the certifications. ii. Notice of Exercise. Upon the occurrence of any Option Event, the Authority may exercise its Option by delivering notice, pursuant to Paragraph 16 and within the time period specified in Paragraph 3(d) (iv), to Owner of Authority’s intent to exercise such Option pursuant to the terms of this Agreement (“Notice of Exercise”). The Notice of Exercise may be in the form attached hereto and incorporated herein as Exhibit C, or in such other form as the Authority may from time to time adopt. If the Option Event relates to the potential foreclosure of a mortgage under Paragraphs 3.c.iv, 3.c.v, or 3.c.vi, then the Authority shall also deliver the Notice of Exercise to the mortgagee or beneficiary under such mortgage, at such mortgagee’s or beneficiary’s address of record in the Office of the Recorder of Santa Clara County.
iii. Notice of Consent to Transfer. If the Authority does not exercise the Option, it may give its consent to the occurrence of the Option Event (“Consent to Transfer”). If the Option Event involves a proposed sale of the Property to a prospective 407
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purchaser, the Authority’s consent shall be conditioned upon (i) the proposed purchaser’s qualification as an Eligible Household; (ii) the sale of the Property at a price not to exceed the Adjusted Resale Price; (iii) the proposed purchaser’s execution of a Disclosure Statement in the form attached hereto as Exhibit F or such other form or forms as may be promulgated by the Authority ; and (iv) the proposed purchaser’s assumption of Owner’s duties and obligations under this Agreement pursuant to a written assumption agreement in a form acceptable to Authority, or execution of an agreement substantially similar to this Agreement, within One hundred twenty (120) days after the Consent to Transfer has been delivered to Owner and recordation of such assumption agreement or substitute agreement. If the prospective purchaser (i) fails to qualify as an Eligible Household, (ii) fails to execute and deliver the Disclosure Statement to the Authority, or (iii) fails to execute and deliver to the Authority an assumption agreement or an agreement substantially similar to this Agreement within such one hundred twenty (120) day period, then the Consent to Transfer shall expire and the Authority may, at its option, either notify Owner of the disqualification, thereby entitling Owner to locate another purchaser who qualifies as Eligible Household, or exercise the Option, as if no Consent to Transfer had been delivered.
iv. Time Period for Notice. The Authority shall deliver a Consent to Transfer, if applicable, not later than ninety (90) days after the date that it receives notification of an Option Event. The Authority shall deliver a Notice of Exercise, if applicable, on or before the date which is the later to occur of the following: (i) one hundred twenty (120) days after the date that the Authority receives notification of an Option Event or (ii) thirty (30) days after a Consent to Transfer has expired. For purposes of computing commencement of the delivery periods, the Authority shall be deemed to have received notification of an Option Event on the date of delivery of a Notice of Intent to Transfer, pursuant to the terms of Paragraph 16 below or on the date it actually receives notice of default, summons and complaint or other pleading, or other writing specifically stating that an Option Event has occurred. The Authority shall have no obligation to deliver a Notice of Exercise or Consent to Transfer, and the applicable time period for exercise of the Option shall not commence to run, unless and until the Agency has received notification of an Option Event in the manner specified in this subparagraph. If there is a stay or injunction imposed by court order precluding the Authority from delivering its Consent to Transfer or Notice of Exercise within the applicable time period, then the running of such period shall cease until such time as the stay is lifted or the injunction is dissolved and the Authority has been given written notice thereof, at which time the period for delivery of a Consent to Transfer or Notice of Exercise shall again begin to run.
v. Notice of Abandonment. If the Authority fails to deliver a Notice of Exercise or Consent to Transfer within the time periods set forth in paragraph 3.d.iv, upon request by Owner, the Authority shall cause to be filed for recordation in the Office of the Recorder of Santa Clara County, a notice of abandonment, which shall declare that the provisions of the Option are no longer applicable to the Property. Unless Owner requests recordation of notice of abandonment within 30 days of the Authority’s failure to deliver Notice of Exercise or Consent to Transfer, the Authority shall have no obligation to record the notice of abandonment. Upon recordation of a notice of abandonment, the Option shall terminate and have no further force and effect. If the Authority fails to record a notice of abandonment, the sole remedy of Owner shall be to obtain a judicial order instructing prompt recordation of such a notice.
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vi. Right to Reinstatement. If the Option Event is the recordation of a notice of default, then the Agency shall be deemed to be Owner’s successor in interest under California Civil Code Section 2924c (or successor section) solely for purposes of reinstatement of any mortgage on the Property that has led to the recordation of the notice of default. As Owner’s deemed successor in interest, the Authority shall be entitled to pay all amounts of principal, interest, taxes, assessments, homeowners’ association fees, insurance premiums, advances, costs, attorneys’ fees and expenses required to cure the default. If the Agency exercises the Option, then any and all amounts paid by the Authority pursuant to this Paragraph shall be treated as Adjustments to the Base Resale Price for the Property, as defined in Paragraph 5 below.
vii. Inspection of Property. After receiving a Notice of Intent to transfer or delivering a Notice of Exercise, the Authority shall be entitled to inspect the Property one or more times prior to the close of escrow to determine the amount of any Adjustments to the Base Resale Price. Before inspecting the Property, the Authority shall give Owner not less than forty-eight (48) hours’ written notice of the date, time and expected duration of the inspection.

The inspection shall be conducted between the hours of 9:00 a.m. and 5:00 p.m., Monday through Friday, excluding court holidays, unless the parties mutually agree in writing to another date and time. Owner shall make the Property available for inspection on the date and at the time specified in the Authority’s request for inspection. viii. Escrow. Promptly after delivering a Notice of Exercise, the Authority shall open an escrow account for its purchase of the Property. Close of escrow shall take place on the date that is the later to occur of the following, (a) ninety (90) days after a Notice of Exercise has been delivered, or (b) ten (10) days after Owner has performed all acts and executed all documents required for close of escrow. Prior to the close of escrow, the Authority shall deposit into escrow with a title company of Authority’s choosing, an amount equal to the Adjusted Resale Price as defined in Paragraph 5 below and all escrow fees and closing costs to be paid by Authority. Commissions (not to exceed 6% of the actual sales price), closing costs and title insurance shall be paid pursuant to the custom and practice in the County of Santa Clara at the time of the opening of escrow, or as may otherwise be provided by mutual agreement. Owner agrees to perform all acts and execute all documents reasonably necessary to effectuate the close of escrow and transfer of the Property to the Authority. ix. Proceeds of Escrow; Removal of Exceptions to Title. Prior to close of escrow, Owner shall cause the removal of all exceptions to title to the Property that were recorded after the Effective Date with the exception of (i) taxes for the fiscal year in which the escrow for this transaction closes, which taxes shall be prorated as between Owner and Authority as of the date of close of escrow; (ii) quasi-public utility, public alley, public street easements, and rights of way of record, and (iii) such other liens, encumbrances, reservations and restrictions as may be approved in writing by Authority (“Permitted Exceptions”).

The purchase price deposited into escrow by the Authority shall be applied first to the payment of any and all Permitted Encumbrances (as defined in Paragraph 10) recorded against the Property in order of lien priority, and thereafter to the payment of Owner’s share of escrow fees and closing costs. Any amounts remaining after the purchase price has been so applied, if any, shall be paid to Owner upon the close of escrow. If the purchase price is 409
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insufficient to satisfy all liens and encumbrances recorded against the Property, the Owner shall deposit into escrow such additional sums as may be required to remove said liens and encumbrances. In the event that the Authority agrees to proceed with close of escrow prior to the date that Owner has caused all exceptions to title recorded after the Effective Date other than Permitted Exceptions to be removed, then Owner shall indemnify, defend and hold Authority harmless from any and all costs expenses or liabilities (including attorneys’ fees) incurred or suffered by Authority that relate to such exceptions and their removal as exceptions to title to the Property.

4. Base Resale Price. Prior to adjustment pursuant to Paragraph 5 the base resale price (“Base Resale Price”) of the Property shall be the lowest of:
a. Median Income. The original price(“Base Price”) paid by Owner for acquisition of the Property pursuant to the Program as set forth on page 1 of this Agreement, increased (but not decreased) by an amount, if any, equal to the Base Price multiplied by the percentage increase in the median household income (“Median Income”) for Santa Clara County published by the California Department of Housing and Community Development, Division of Housing Policy Development, between the Effective Date and the date that the Authority receives notification of an Option Event; or
b. Index Price. The Base Price increased (but not decreased) by an amount, if any, equal to the Base Price multiplied by the percentage increase in the Consumer Price Index for All Urban Consumers for the San Francisco-Oakland-San Jose published by the U.S.

Department of Labor, Bureau of Labor Statistics (“Index”) between the Recording Date and the date that the City receives notification of an Option Event; or c. Fair Market Value. The fair market value of the Property as determined by an appraiser selected and paid for by Owner and approved in writing by the Authority.

5. Adjustments to Base Resale Price. Subject to the Affordable Unit Cost restriction described in subparagraph (d) below, the Base Resale Price shall be increased or decreased, as applicable, by the following adjustment factors (“Adjustment”):
a. Capital Improvements. An increase for capital improvements made to the Property, but only if the amount of such improvements has been previously approved in writing by the Authority after Owner has submitted original written documentation of the cost to the Authority for verification. The amount of the Adjustment shall equal to the depreciated value of any such capital improvements.
b. Damages. A decrease by the amount necessary to repair damage to the Property, if any, and to place the Property into saleable condition as reasonably determined by the Authority upon Authority’s exercise of its Option hereunder, including, without limitation, amounts attributed to cleaning; painting; replacing worn carpeting and draperies; making necessary structural, mechanical, electrical and plumbing repairs; and repairing or replacing built-in appliances and fixtures. Owner hereby covenants to, at Owner’s expense, maintain the Property in the same condition as in existence on the date of Authority’s Notice of Exercise, reasonable wear and tear excepted.
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c. Advances by the Authority. A decrease in an amount equal to the sum of all costs advanced by the Authority for the payment of mortgages, taxes, assessments, insurance premiums, homeowner’s association fees and/or associated late fees, costs, penalties, interest, attorneys’ fees, pest inspections, resale inspections and other expenses related to the Property, which Owner has failed to pay or has permitted to become delinquent. d. Adjusted Resale Price Not to Exceed Affordable Unit Cost. The Base Resale Price as adjusted, is hereinafter referred to as the “Adjusted Resale Price.” Notwithstanding any other provision hereof to the contrary, in no event shall the Adjusted Resale Price exceed the Affordable Unit Cost.

6. Priority and Effectiveness of the Option.
a. Recordation. This Agreement shall be recorded in the Office of the Recorder of the County of Santa Clara on or as soon as practicable after the Effective Date. The Option shall have priority over any subsequent sale, conveyance, transfer, lease or other disposition or encumbrance of the Property, or of any estate or interest therein, and in the event of exercise of the Option by Authority, the Authority shall take the Property subject only to Permitted Exceptions. Except as otherwise provided in Paragraph 7.a, the exercise of the Option by the Authority at any time and from time to time shall not extinguish the Option or cause a merger of the Option into any estate or other interest in the Property, and the Option shall continue to exist and be effective with respect to the Property against any and all subsequent owners in accordance with the terms and conditions hereof.
b. Request for Notice of Default. The Authority shall file a Request for Notice of Default for recordation in the Office of the Recorder of the County of Santa Clara promptly upon execution of this Agreement (see Exhibit E).

7. Survival of Option Upon Transfer.
a. In General. The Authority’s right to exercise the Option shall survive any transfer of the Property by Owner. Each transferee, assignee or purchaser of the Property during the term hereof shall be required to execute an agreement substantially in the form of this Agreement, provided that the term of any such agreement shall be for the duration of the term hereof as of the date of any such transfer, assignment or sale. The Option may be exercised against the Property throughout the term hereof, regardless of whether the Property is owned, possessed or occupied by Owner or any successor, transferee, assignee, heir, executor, or administrator of Owner, regardless of household income (if applicable) including a debtor-inpossession, debtor or trustee pursuant to Title 11 of the United States Code. Notwithstanding the foregoing, the Option shall not survive (i) the sale and transfer of the Property to a third party purchaser pursuant to a judicial or non-judicial foreclosure or a deed-in-lieu of foreclosure under a power of sale contained in a mortgage or deed of trust held by an institutional lender, provided that the Authority has received timely notice of such Option Event and has failed to either reinstate said mortgage or deed of trust or exercise its Option, or (ii) the recording of an instrument conveying Owner’s interest in the Property to the Authority, or its assignee, provided the conveyance is in accordance with the terms of this Agreement. 411
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b. HUD Insured Mortgage. If Owner has acquired the Property by a mortgage insured by the Secretary of the United States Department of Housing and Urban Development, and a notice of default has been recorded pursuant to California Civil Code Section 2924 (or successor provisions), then this Option shall automatically terminate if title to the Property is transferred by foreclosure or deed-in-lieu of foreclosure, or if the insured mortgage is assigned to the Secretary.

8. Voidable Transfers. As long as the Option has not been abandoned pursuant to Paragraph 3.d.v, any actual or attempted sale, conveyance, transfer or other disposition of the Property, or of any estate or interest therein, in violation of the terms and conditions of this Agreement, shall be voidable at the election of the Authority.

9. Permitted Transfers. Provided that the transferee assumes, within 30 days of a written request by the Authority, all of Owner’s duties and obligations under this Agreement pursuant to a written assumption agreement in a form acceptable to Authority, or at Authority’s election, execution of an agreement substantially similar to this Agreement, the following transfers (“Permitted Transfers”) of title to the Property, or of any estate or interest therein, shall not be subject to the Authority’s prior approval, shall not trigger the exercise of the Option, and shall not be considered Option Events: (a) the creation of a lien or other encumbrance subordinate to Lender’s security instrument which does not relate to a transfer of rights of occupancy; (b) the creation of a purchase money security interest for household appliances; (c) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety; (d) a transfer to a relative resulting from the death of a Borrower; (e) a transfer where a spouse or child of a Borrower becomes an owner of the Property; (f) a transfer resulting from a decree of dissolution of marriage, legal separation agreement, or incidental property settlement agreement by which the spouse of a Borrower becomes a sole owner of the Property; and (g) a transfer into an inter vivos trust in which a Borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the Property, and the Owner continues to occupy the property as his/her primary residence; (h) an acquisition of title, or of any interest therein, in conjunction with marriage; or (i) any good faith transfer to an Eligible Household Notwithstanding any Permitted Transfer, the Option shall remain effective with respect to the Property for the duration of the term hereof.

10. Permitted Encumbrances and Refinancing. This Option shall not become exercisable as the result of Owner’s encumbering the Property for the purpose of securing financing to purchase the Property pursuant to the Program, to refinance indebtedness incurred to purchase the Property pursuant to the Program, provided that the refinance shall not provide Owner with the ability to obtain cash advances or other “cash out” options, unless for the purpose of making necessary repairs to the Property in an amount approved by Authority pursuant to Paragraph 5a (“Permitted Encumbrances”). The maximum aggregate amount of such encumbrances outstanding at any time (the “Permitted Encumbrance Amount”) shall not exceed an amount equal to ninety percent (90%) of the Base Resale Price calculated as provided in Paragraph 4. The Permitted Encumbrance Amount shall be calculated as if the Authority had received notification of an Option Event on the earlier of (a) the date on which the deed of trust or mortgage securing the indebtedness is filed for record in the Office of the Recorder of the 412
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County of Santa Clara, or (b) the date the Authority receives Notice of Intent to Transfer pursuant to Paragraph 3.d.i above. Owner hereby covenants and agrees that he/she/they shall use his/her/their best efforts to ensure that any deed of trust or other agreement encumbering the property shall include provisions providing for notice to be delivered to Authority of any default thereunder and for Authority’s right to cure such default at Authority’s election.

11. Obligation of Owner After Option Abandonment. If the Authority records a notice of abandonment of the Option, then the Property may be sold by Owner to a third party without restriction as to price; however, upon such sale, Owner shall pay to Authority an amount (“Authority’s Share”) equal to eighty-five percent (85%) of the difference between (a) the actual sales price net of reasonable and customary real estate commissions paid (such commissions not to exceed six percent (6%) of the actual sales price), and (b) the Adjusted Resale Price. The Authority’s Share shall be paid to the Authority concurrently with close of escrow on the sale of the Property, or upon receipt by Owner of the sale price for the Property, whichever shall first occur.

12. Limits on Liability. In no event shall the Authority become liable or obligated in any manner to Owner by reason of the assignment of this Agreement or the Option, nor shall Authority be in any way liable or obligated to Owner for any failure of the Authority’s assignee to consummate a purchase of the Property or to comply with the terms of this Agreement or the Option, or any escrow instructions or agreement for the purchase of the Property.

13. Insurance Proceeds and Condemnation Award. In the event the Property is destroyed and insurance proceeds are distributed to Owner instead of being used to rebuild the Property, or, in the event of condemnation, if the proceeds thereof are distributed to Owner, any surplus of proceeds remaining after payment of the senior liens and encumbrances on the Property shall be distributed as follows: that portion of the surplus up to, but not to exceed, the net amount Owner would have received pursuant to Paragraph 3.d.ix had the Authority exercised its Option on the date of the destruction of condemnation valuation date shall be distributed to Owner, and the balance of such surplus, if any, shall be distributed to the Authority.

14. Effective Date. The rights and obligations of the Authority and Owner set forth in this Agreement shall be effective as of the Original Date.

15. Term of Agreement and Option. The restrictions contained herein and the Authority’s option to purchase the Property shall continue until May 28, 2054 which date is forty-five (45) years from the date of the sale of the Property to Owners.

16. Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other Party in accordance with this Section. All such notices shall be sent by:
(a) Personal delivery, in which case notice shall be deemed delivered upon receipt; 413
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(b) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered two (2) business days after deposit, postage prepaid in the United States mail; (c) nationally recognized overnight courier, in which case notice shall be deemed delivered one (1) day after deposit with such courier; or (d) facsimile transmission, in which case notice shall be deemed delivered on transmittal, provided that a transmission report is generated reflecting the accurate transmission thereof.

Agency: City of Milpitas Housing Authority
455 Calaveras Boulevard
Milpitas, CA 95035
Attn: Executive Director
Owner: Neil Hilario
600 S. Abel Street #208
Milpitas, CA 95035

17. Remedies Upon Breach.
a. Specific Performance. Owner acknowledges that any breach in the performance of its obligations under this Agreement shall cause irreparable harm to the Authority. Owner agrees that the Authority is entitled to equitable relief in the form of specific performance upon its exercise of the Option, and that an award of damages shall not be adequate to compensate the Authority for Owner’s failure to perform according to the terms of this Agreement.
b. Other Remedies. Authority shall have all of the remedies provided for at law or equity.

18. General Provisions.
a. Attorneys’ Fees. If either party initiates legal proceedings to interpret or enforce its rights under this Agreement, the prevailing party in such action shall be entitled to an award of reasonable attorneys’ fees and costs in additions to any other recovery to which it is entitled under this Agreement.
b. No Joint Venture; No Third-Party Beneficiary. No joint venture or other partnership exists or is created between the Parties by virtue of this Agreement. Except as expressly stated herein, this Agreement does not benefit any third party. c. Successors; Assignment. This Agreement shall inure to the benefit of and shall be binding upon the Parties to this Agreement and their respective heirs, executors, administrators, successors and assigns. Authority shall have the right to assign all of its rights and obligations under this Agreement without the consent of Owner. 414
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d. Entire Agreement; Amendment. This Agreement constitutes the entire agreement of the Parties with respect to the subject matter hereof, and supersedes any and all other prior negotiations, correspondence, understandings and agreements with respect thereto.

There are no representations, promises, agreements or other understandings between the Parties relating to the subject matter of this Agreement that are not expressed herein. This Agreement may be modified only by an instrument in writing executed by the Parties or their respective successors in interest.
e. Survival; No Merger. All of the terms, provisions, representations, warranties and covenants of the Parties under this Agreement shall survive the close of escrow of any sale of the Property and shall not be merged in any deed transferring the Property. f. Authority And Execution. Each Party represents and warrants that it has full power and authority to enter into this Agreement and to undertake all of its obligations hereunder, that each person executing this Agreement on its behalf is duly and validly authorized to do so.
g. Severability. The invalidity or unenforceability of any term or provision of this Agreement shall not impair or affect the remainder of this Agreement, and the remaining terms and provisions hereof shall not be invalidated but shall remain in full force and effect. h. Waiver; Modification. No waiver or modification of this Agreement or any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the Party to be charged therewith. No evidence or any waiver or modification shall be offered or received in evidence in any proceeding, arbitration, or litigation between the Parties arising out of or affecting this Agreement or the rights or obligations of any Party hereunder, unless such waiver or modification is in writing and duly executed as aforesaid. The provisions of this section may not be waived except as herein set forth. A waiver or breach of any covenant, condition or provision of this Agreement shall not be deemed a waiver of any other covenant, condition or provision hereof.
i. Construction. The section headings and captions used in this Agreement are for convenience of reference only and shall not modify, define, limit or amplify any of the terms or provisions hereof. This Agreement shall not be construed as if it had been prepared by one of the Parties, but rather as if both Parties have prepared it. j. Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of California. k. Time of the Essence. Time is of the essence in this Agreement as to each provision in which time is an element of performance.
l. Further Assurances. Each Party will, upon reasonable request of the other Party, execute, acknowledge, and deliver, or cause to be executed, acknowledged, and delivered, such further instruments and documents as may be reasonably necessary in order to fulfill the intents and purposes of this Agreement.
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m. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.

OWNER(S):
(Name) Neil Hilario
______________________________________
APPROVED AS TO FORM:
______________________________________
Michael Mutalipassi, Housing Authority
Counsel
Date
AUTHORITY:

CITY OF MILPITAS HOUSING

AUTHORITY
________________________________
Steven G. McHarris, Executive Director
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EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF MILPITAS, COUNTY OF SANTA CLARA. STATE OF CALIFORNIA. AND IS DESCRIBED AS FOLLOW:

ASSESSOR’S PARCEL NO. 086-61-177
Or

LEGAL DESCRIPTION
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EXHIBIT B
FORM: NOTICE OF INTENT TO TRANSFER

VIA CERTIFIED MAIL - RETURN RECEIPT REQUESTED
To: CITY OF MILPITAS HOUSING AUTHORITY
455 East Calaveras Boulevard
Milpitas, CA 95035
Attn: Authority Executive Director
Date: ___________________________
Re: Notice of Intent to Transfer
Pursuant to the terms of the Resale Restriction and Option to Purchase Agreement, dated ____, the undersigned Owner(s), _________________________________________, hereby give(s) notice of his/her/their intent to transfer the property located at _________________________________________, Milpitas, California (the “Property”).

Owner may be contacted at the Property or at the following address:
__________________________
__________________________
__________________________
Owner’s daytime telephone number is (___) ________
[If applicable: The proposed transfer of the Property is to the following person(s):

Name: __________________________
Address: __________________________
__________________________
Telephone: (___) _____________________]
The proposed transfer is (check one):
 Sale
 Other Specify: ______________________________
Owner(s) signature(s):
_______________________________
_______________________________
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EXHIBIT C
FORM: NOTICE OF EXERCISE
Date: ___________________________
To: ___________________________
Owner or Transferee
___________________________
Address
Re: Notice of Exercise
The City of Milpitas Housing Authority (“Authority”) hereby gives notice that it is exercising its option to purchase the real property located at ________________________________, Milpitas, California. The option has been granted to the Authority pursuant to the Resale Restriction and Option to Purchase Agreement between Owner and the Authority dated ________________ and recorded on ___________________ as Instrument No. ___________________. [The Authority has assigned its option to purchase the real property to _________________.] An escrow for the purchase will be opened with the Chicago Title Company.

City of Milpitas Housing Authority
By:________________________________
Its:_________________________________
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EXHIBIT D

BASE RESALE PRICE WORKSHEET
Date: _____________________________
Owner: ____________________________
Address: ___________________________
Purchase Price: _____________________
Date of Purchase: ___________________
Years Owned: _________________ years
METHOD #1: CALCULATION BASED ON INCREASE IN MEDIAN INCOME*** Present Median Income: $___________________
Family of four, County of Santa Clara
(at time of sale of unit)
Original Median Income: $___________________
Family of four, County of Santa Clara
(at time of purchase of unit)
Amount of Increase: ____________________
Family of four, County of Santa Clara
(Present median income minus original median income)

Effective Date: ______________
Effective Date: ______________
Increase in Price: ____________________ x ________ x ________ = ________ Method #1 Resale Price: ______________ + = ________
METHOD #2: CALCULATION BASED ON INCREASE IN CONSUMER PRICE INDEX Present CPI: _____________________
Original CPI: _____________________
Rate of Increase: ____________________per annum
Effective Date: ______________
Effective Date: ______________
Increase in Price: ____________________ x ________ x ________ = ________ Method #2 Resale Price: ______________ + = ________
Based on the above, the base resale price as of this date, _____________, is: _________ By: _______________________________
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EXHIBIT E

REQUEST FOR NOTICE OF DEFAULT
Order No.

Escrow No.

Loan No.

WHEN RECORDED MAIL TO:

City of Milpitas Housing Authority
455 East Calaveras Boulevard
Milpitas, CA 95035
Attn: Authority Executive Director
(Space Above This Line For Recorder’s Use Only)
REQUEST FOR NOTICE UNDER SECTION 2924b CIVIL CODE
In accordance with Section 2924b, Civil Code, request is hereby made that a copy of any Notice of Default and a copy of any Notice of Sale under the Deed of Trust recorded as Instrument No. __________________ on ____________________, ____, in the Official Records of Santa Clara County, California, and describing land therein as:
________________________________________________________________________ ________________________________________________________________________ executed by __________________________________________________, as Trustor, in which ________________________________________________________ is named as Beneficiary, and _______________________________________________, as Trustee, be mailed to the City of Milpitas Housing Authority, 455 Calaveras Boulevard, Milpitas, California ______, Attn: _____________________.

By: ______________________________
NOTICE: A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE WILL BE SENT ONLY TO THE ADDRESS CONTAINED IN THIS RECORDED REQUEST. IF YOUR ADDRESS CHANGES, A NEW REQUEST MUST BE RECORDED.

STATE OF CALIFORNIA )
)

COUNTY OF )
On before me, ___________________, a Notary Public in and for said county and state, personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

Signature (This area for official notarial seal)
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EXHIBIT F

DISCLOSURE STATEMENT

THERE ARE RESTRICTIONS ON THE SALE OF THE PROPERTY YOU ARE BUYING. EXCEPT FOR A TRANSFER TO THE CITY FOLLOWING CITY’S

EXERCISE OF ITS OPTION TO PURCHASE, THIS PROPERTY MAY ONLY BE SOLD TO AN “ELIGIBLE HOUSEHOLD” AT A PRICE NOT TO EXCEED THE ADJUSTED RESALE PRICE WHICH IS CAPPED AT AN “AFFORDABLE HOUSING COST.”

THIS MEANS THAT YOU MAY NOT SELL THE PROPERTY FOR MARKET VALUE TO WHOMEVER YOU LIKE.

THESE RESTRICTIONS WILL BE IN EFFECT UNTIL _______________________.

SALE OF THE PROPERTY IN VIOLATION OF THE RESTRICTIONS SHALL BE VOIDABLE AT THE ELECTION OF THE CITY.

TO DETERMINE WHO AN ELIGIBLE HOUSEHOLD IS, AND WHAT THE

ADJUSTED RESALE PRICE AND AFFORDABLE HOUSING COST ARE, YOU

SHOULD CONTACT THE MILPITAS HOUSING AUTHORITY (FORMER CITY OF MILPITAS REDEVELOPMENT AGENCY).

YOU SHOULD ALSO READ THE RESALE RESTRICTION AND OPTION TO PURCHASE AGREEMENT RECORDED AGAINST THE PROPERTY. YOU MAY

OBTAIN A COPY FROM THE MILPITAS HOUSING AUTHORITY OR FROM THE ESCROW COMPANY.

I HAVE READ THE FOREGOING AND I UNDERSTAND WHAT IT MEANS. (Owners) Neil Hilario
_____________________________Date
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City of Milpitas, California

BUDGET CHANGE FORM
From* To*
Type of Change
Account Amount Account Amount
Check one:

Budget Appropriation
Budget Transfer
295-3770 $314,973 295-2909 $314,973

1. Adopt the resolution authorizing the Executive Director of the Milpitas Housing Authority to execute documents for the sale of the residential property located at 600 S. Abel Street Unit #208 in the amount of $314,973.

2. Approve related budget amendments due to the sale of the property located at 600 S. Abel Street Unit #208 in the amount of $314,973.

BACKGROUND:

On February 1, 2012, Assembly Bill X1 26 resulted in the dissolution of all Redevelopment Agencies throughout the State. In anticipation of the dissolution, the Milpitas City Council adopted Resolution No. 8062 in February 2011. The Resolution established the City of Milpitas Housing Authority as the Successor Housing Agency to the Milpitas Redevelopment Agency. Thirteen real properties were transferred from the former Redevelopment Agency to the Milpitas Housing Authority. The transferred properties and its current disposition are summarized in the table below.

Address Developed with
Affordable Housing
Sold by Housing
Authority
Retained by Housing
Authority
1 340 Celebration Dr. X X
2 600 S. Abel St. #208 X X
3 1101 S. Main St. #313 X X
4 254 Parc Place Dr. X X
5 1432 S. Main St. X
6 1434 S. Main St. X
7 1436 S. Main St. X
8 1438 S. Main St. X
9 1438A S. Main St. X
10 1440 S. Main St. X
11 1444 S. Main St. X
12 1446 S. Main St. X
13 1504-1620 S. Main St. X X
Health and Safety Code section 34176.l(e) requires that all properties acquired by the Redevelopment Agency prior to February 1, 2012, and transferred to the Housing Authority, be developed within certain time frames. According to Health and Safety Code section 33334.16, within five years, from the date the property is acquired, activities must be initiated consistent with the development of the property for affordable housing purposes, or the property must be sold, and the proceeds deposited into the City’s Low and Moderate Income Housing Asset Fund. This Health and Safety Code Section also allows for one additional period not to exceed five years.
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Properties located at 1432-1446 S. Main Street, also known as Parcel 1, will be sold in Quarter 2 of 2023 (Properties 5-12 in the chart above).

The purpose of this agenda is to authorize the sale of 600 S. Abel Street Unit #208 to be in compliance with the California Department of Housing and Community Development.

ANALYSIS:

There is one remaining residential unit of the thirteen total properties owned by the Housing Authority for sale (Property 2 on the chart above). The residential property located at 600 S. Abel Street Unit #208 was being rented to a low-income household at a low-income rent level. The tenants of this property signed a Lease Agreement with an Option to Purchase from the Housing Authority. The Option to Purchase provided the tenants with the option to purchase the unit. The lease, which was executed in 2013, expired in 2014.

Tenants have been on month-to-month since that time.

Housing staff has periodically reached out to the tenants about purchasing their unit. Staff worked with the remaining tenants to purchase their unit so the sale to low-income household occurred before August 31, 2022. The Option to Purchase was not exercised by the tenants of 600 S. Abel Street Unit #208.

On October 4, 2022, the Housing Division held a lottery to procure an eligible buyer for 600 S. Abel Street Unit #208 (Attachment 1). The application period to apply for the unit was from August 15, 2022, to August 26, 2022. The lottery, was a fair and transparent process, resulting in 7 applicants participating in the lottery.

The initial five-year period to dispose of the property expired on August 31, 2017. The Housing Authority Commission adopted a resolution approving a one-time expiration date extension to August 31, 2022. Due to delays caused by a lack of staffing resources, the City did not meet the deadline to dispose of 600 S. Abel Street Unit #208 by this date. The sale of this property will bring the City into compliance. 600 S. Abel Street #208 Unit Purchase
In total, 10 applications were received by the Housing Division for the 600 S. Abel Street Unit #208 Below Market Rate property. Of the 10 applications received, 7 applications were eligible to proceed to the lottery phase. A buyer was procured at the lottery held on October 4th, 2022. To be eligible for the lottery phase, applicants must meet all requirements and provide the necessary supporting documents.

The Below Market Rate program requirements for 600 S. Abel Street Unit #208 are as follows:
 Must be a first-time home buyer.
 Must be an eligible “Moderate-Income Household.”
 Must have a household size of 1-3.
 Must have the ability to provide at least a 5-10% down payment.  Must provide a Pre-Qualification Letter.
 Must provide necessary supporting documents to validate application details (W2 forms, lease agreement, paycheck stubs, and tax documents).

The following procedure describes the steps in assigning the number of lottery tickets to applicants:

1. Each applicant receives one lottery ticket as a baseline for submitting their application.

2. Each preference category is assigned additional tickets based on the weighting for that preference category.

3. Each applicant identifies which preferences apply to their household. These preferences are then used to determine how many additional lottery tickets each household will receive. The intent of the weighted number of tickets is to prioritize the selection of a household that meets most of the City Council’s priorities.
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Applicants Number of Lottery Tickets
All applicants Receive 1 lottery ticket
Milpitas residents Receive 5 additional lottery tickets Former Milpitas residents who have been displaced Receive 3 additional lottery tickets Households with children enrolled in the Milpitas
Unified School District (MUSD) McKinney-Vento
Homeless Assistance Act
Receive 3 additional lottery tickets
Applicants employed within the boundaries of the city
of Milpitas
Receive 1 additional lottery ticket
A total of 45 tickets were distributed to 7 applicants for the lottery. The selected buyer was assigned 7 lottery tickets as they are an eligible participant (1 lottery ticket), Milpitas Resident (5 additional tickets), and work in Milpitas (1 additional ticket).

As part of the sale, the homebuyer, will be required to sign the City’s Resale Restriction Agreement, Option to Purchase, and adhere to its owner-occupied requirement. The Resale Restriction will limit the appreciation in the unit and will give the City the purchase option on the unit if the unit falls into default. Staff will monitor the unit to ensure that it will continue to be the primary residence of the occupant through the required Annual Occupancy form.

FISCAL IMPACT:

Proceeds from the sale will be posted into the Housing Authority Fund for future appropriation.

California Environmental Quality Act (CEQA):

The recommendations have no potential for causing a significant effect on the environment and are exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3).

RECOMMENDATION:

1. Adopt the resolution authorizing the Executive Director of the Milpitas Housing Authority to execute documents for the sale of the residential property located at 600 S. Abel Street Unit #208 in the amount of $314,973.

2. Approve related budget amendments due to the sale of the property located at 600 S. Abel Street Unit #208 in the amount of $314,973.

Attachment(s):

1. Sale of 600 S. Abel Street Unit #208 Resolution

2. Exhibit A of Resolution, Residential Purchase Agreement

3. Exhibit B of Resolution, Resale Restriction Agreement and Option to Purchase

4. Exhibit C of Resolution, Disclosure Statements

5. 600 S. Abel Street Unit #208 Budget Change Form
Check if City Council Approval required. Meeting Date: December 06, 2022 428
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Requested by: Department Head: Alex Andrade Date: December 06, 2022 Reviewed by: Finance Director: Lauren Lai Date: December 06, 2022 Date approved by City Council, if required: Confirmed by:

FI/24786/V Form 30-222 (Rev. 1/92)
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CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Adopt a Resolution Appointing Roger Lee as Interim Public Works Director (Liz Brown, Interim Human Resources Director, 408-586-3086)
Category: Leadership and Support Services
Meeting Date: 12/6/2022
Recommendation: Adopt a resolution appointing Roger Lee as Interim Public Works Director in accordance with California Government Code Sections 7522.56 and 21221(h) and approve, and authorize the City Manager to execute, an employment agreement with Roger Lee.

BACKGROUND:

The California Public Employees Reform Act of 2013 requires a 180-day “wait” period before a retiree can return to work for a public agency, subject to exceptions that do not apply in this instance. In addition to the requirements of PEPRA, the appointment of a retiree to a vacant position must comply with Section 21221(h) of the Public Employees’ Retirement Law (“PERL”). In accordance with PERL, the appointment is permissible if it is made during the recruitment for a permanent appointment to the position and it is approved by the governing body of the employer in a public meeting. Staff has worked with the City Attorney to ensure that additional requirements, such as ones that relate to compensation and hours worked, will be met.

ANALYSIS:

On November 15, 2022, The City Council approved appointing Roger Lee as the Interim Public Works Director; however, the resolution attached to the staff report had inadvertent clerical errors. Therefore, staff is requesting that Council approve the same action with the clerical errors corrected.

Roger Lee retired from the City of Cupertino and served as Public Works Director position with more than 13 years of Public Works leadership experience in the public sector. His last day of work was December 30, 2021, thereby satisfying the statutory 180-day “wait” period. Given his Public Works background, Mr. Lee has significant experience and knowledge related to the management and operation of the Public Works Department.

Consistent with the requirements of Government Code Section 21221(h), the City has initiated a recruitment for a regular appointment to the Public Works Director vacancy. Staff recommends Mr. Lee be appointed to serve as the Interim Public Works Director pending the conclusion of the recruitment process for a regular appointment to assist in the transition of leadership in the Public Works Department. Included in the Council’s agenda packet is the required resolution to appoint a retiree pursuant to Government Code Sections 7522.56 and 21221(h) and the employment agreement.

POLICY ALTERNATIVE(S):

Alternative 1: Do not adopt the resolution appointing Roger Lee as Interim Public Works Director and do not approve and authorize the City Manager to execute, a retroactive employment agreement with Mr. Lee.

Pros: None
Cons: This will create difficulty in the smooth transition of leadership in the Public Works Department.

Reason for Not Recommending: This will create difficulty in the smooth transition of leadership in the Public Works Department.

FISCAL IMPACT:
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The compensation paid to retirees cannot be less than the minimum nor exceed the maximum hourly rate paid to other employees performing comparable duties and is limited to 960 hours per fiscal year. Accordingly, the hourly rate to be paid is $86.32 or up to $120.85 per fiscal year. Funding is available from staff vacancies within the FY2022-23 adopted budget.

California Environmental Quality Act (CEQA):

Approval of the recommendation is not an activity defined as a “project” under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines 15061(b)(3) and 15378(b)(4) either because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment and/or because the action is financial and/or administrative and does not directly impact the environment.

RECOMMENDATION:

Adopt a resolution appointing Roger Lee as Interim Public Works Director in accordance with California Government Code Sections 7522.56 and 21221(h) and approve, and authorize the City Manager to execute, an employment agreement with Roger Lee.

Attachment(s):

1. Resolution appointing Roger Lee as Interim Public Works Director in accordance with California Government Code Section 7522.56 and 21221(h). 2. Employment Agreement 431
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Resolution No. ___1
RESOLUTION NO. ________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY

OF MILPITAS APPOINTING ROGER LEE AS INTERIM

PUBLIC WORKS DIRECTOR AND APPROVING

EMPLOYMENT AGREEMENT
WHEREAS, Government Code Section 21221(h) permits the City Council to appoint a retired annuitant to a vacant position requiring specialized skills during recruitment for a permanent appointment, and provides that such appointment will not subject the retired person to reinstatement from retirement or loss of benefits so long as it is a single appointment that does not exceed 960 hours in a fiscal year; and
WHEREAS, the position of Public Works Director become vacant at close of business on September 2, 2022; and
WHEREAS, Government Code Section 7522.56(f) requires that post-retirement employment commence no earlier than 180 days after the retirement date; and WHEREAS, Section 7522.56 provides that this exception to the 180-day wait period shall not apply if the retiree accepts any retirement-related incentive; and WHEREAS, the Milpitas City Council, the City of Milpitas, and Roger Lee certify that Roger Lee has not and will not receive a Golden Handshake or any other retirement-related incentive; and
WHEREAS, the Milpitas City Council desires to appoint Roger Lee, who retired from the City of Cupertino in the position of Public Works Director, effective December 31, 2021, as an interim appointment retired annuitant to the vacant position of Public Works Director for the City of Milpitas under Government Code Section 21221(h), effective August 29, 2022; and WHEREAS, Roger Lee has over 13 years of experience in leadership as Public Works Director and Assistant Director with an extensive history in public sector; and WHEREAS, an appointment under Government Code Section 21221(h) requires an active, publicly posted recruitment for a permanent replacement; and WHEREAS, information regarding the recruitment for the Public Works Director has been posted and is on the City’s webpage for job opportunities available at https://www.ci.milpitas.ca.gov/milpitas/departments/about-human-resources-2/38914-2/; and WHEREAS, this Section 21221(h) appointment shall only be made once and therefore will end on the date immediately preceding the date on which the permanent replacement for the vacant position of Public Works Director for the City of Milpitas commences his or her 432
Item # C13.

Resolution No. ___2
employment or, if earlier, the date that this appointment is terminated by the City or Roger Lee; and
WHEREAS, the entire employment agreement between Roger Lee and the City of Milpitas has been reviewed by this body and is attached hereto as Exhibit A; and WHEREAS, the employment shall be limited to 960 hours per fiscal year; and WHEREAS, the compensation paid to retirees cannot be less than the minimum nor exceed the maximum monthly base salary paid to other employees performing comparable duties, divided by 173.333 to equal the hourly rate; and
WHEREAS, the minimum hourly rate for this position is $86.32, and the maximum hourly rate for this position is $120.85, and
WHEREAS, the hourly rate to be paid to Roger Lee is $120.65; and WHEREAS, Roger Lee has not and will not receive any other benefit, incentive compensation in lieu of benefits or any other form of compensation in addition to this hourly pay rate.

NOW, THEREFORE, the City Council of the City of Milpitas hereby finds, determines, and resolves as follows:

1. The City Council has considered the full record before it, which may include but is not limited to such things as the staff report, testimony by staff and the public, and other materials and evidence submitted or provided to it. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

2. The City Council hereby appoints Roger Lee as interim Public Works Director effective August 29, 2022, pursuant to the authority provided under Government Code Section 21221(h) and 7522.56, during the recruitment, selection and employment of a permanent Public Works Director, to provide the criticallyneeded, specialized skills necessary to assist the City Manager with the management of the Public Works Department.

3. The employment agreement with Roger Lee, a copy of which is incorporated herein as Exhibit A, is approved by the City Council, effective August 29, 2022.

4. The City Manager is authorized to execute said agreement on behalf of the City, with such technical amendments as may be deemed appropriate by the City Manager and City Attorney.

PASSED AND ADOPTED this ______, day of _______, 2022, by the following vote:
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Resolution No. ___3
AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:
_____________________________ _________________________ Suzanne Guzzetta, City Clerk Rich Tran, Mayor
APPROVED AS TO FORM:
_____________________________
Michael Mutalipassi, City Attorney
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Resolution No. ___4

EXHIBIT A

EMPLOYMENT AGREEMENT FOR

INTERIM PUBLIC WORKS DIRECTOR
This Employment Agreement (“Agreement”) is made by and between the City of Milpitas, a municipal corporation of the State of California (“City”) and Roger Lee, an individual (“Retiree”) as of August 29, 2022 (“Effective Date”).

RECITALS
A. Retiree was previously employed by the City of Cupertino as Public Works Director and Assistant Director, serving the City of Cupertino for approximately 13 years; and B. Retiree retired from the City of Cupertino effective December 30, 2021, and is collecting a retirement pension from the California Public Employees’ Retirement System (CalPERS); and
C. The City has a vacancy in the position of Public Works Director, a regular position for which the City is conducting a recruitment for a permanent appointment; and D. The City has an immediate need for an employee to temporarily perform the duties of Public Works Director, a position involving specialized skills and training, and which is critically necessary to the on-going duties and functions of the City’s Public Works Department; and
E. Retiree has the necessary qualifications, experience and abilities to fulfill the duties of the Public Works Director position on an interim basis; and F. Retired Annuitant’s employment is authorized by Government Code section 21221(h), which permits the City to appoint a CalPERS retired annuitant to a vacant position requiring specialized skills during recruitment for a permanent replacement; and G. City desires to retain the services of Retiree in accordance with California Government Code Section 21221(h) and Retiree agrees to provide certain services to City under the strict terms and conditions set out in this Agreement.

In consideration of this matter described above and of the mutual benefits and obligations set forth in this Agreement, the receipt and sufficiency of which consideration is hereby acknowledged, the parties of this Agreement agree as follows:
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Item # C13.

Resolution No. ___5

AGREEMENT
Section 1. Term of Services
The term of this Agreement is from August 29, 2022, until such time as a permanent replacement for the position of Public Works Director has been selected and has commenced employment, unless terminated sooner as provided below.

Section 2. Scope of Services
Retiree agrees to perform the duties of the Public Works Director position on an interim basis as set forth in the job description for the position. Retiree will report directly to the Deputy City Manager. Retiree shall comply with all City rules, policies, guidelines, regulations, and laws.

Section 3. Compensation; Hours
City agrees to compensate Retiree at $120.65 per hour for all services provided under this Agreement. Payments from City to Retiree shall be made during the normal payroll cycles of other City employees.

City has reviewed and compared the hourly rate set forth in this Section with other employees performing comparable duties and the hourly rate set forth in this Section does not exceed such other employee’s compensation.

Retiree agrees and acknowledges that he shall not perform any services under this Agreement exceeding a total of nine hundred sixty (960) hours during any fiscal year (July 1 to June 30).

Retiree shall record his hours on a pre-approved timesheet that shall be submitted to the City every week.

The position is a temporary, hourly assignment which is generally not expected to exceed 40 hours per week. The City, through the Deputy City Manager, will assign Retiree hours to work. Due to the nature of the position, it is understood that the work day and work week hours may vary.

There are no other benefits, incentives, compensation in lieu of benefits or other forms of compensation in addition to the hourly pay rate set forth in this Section.

Section 4. Location
The primary location for services will be at the following address:

Milpitas Public Works, 1265 N. Milpitas Blvd., Milpitas, California 95035 Section 5. Compliance with Laws
This Agreement will be construed in accordance with and governed by the laws in the State of California. In the event that suit shall be brought by any of the parties, the parties agree that venue 436
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Resolution No. ___6
shall be exclusively vested in the state courts of the County of Santa Clara, or if federal jurisdiction is appropriate, exclusively in the United States District Court, Northern District of California, San Jose, California. Retiree shall comply with all applicable laws, rules, policies, and guidelines.

Retiree agrees and acknowledges that the State of California and the governing body of the California Public Employees’ Retirement System enact strict laws, regulations and guidelines relating to services provided by “retired annuitants” to public agencies contracting with the California Public Employees’ Retirement System. Retiree agrees to comply with all applicable laws, regulations and guidelines relating to the services provided under this Agreement.

Section 6. Termination
This Agreement may be terminated by either party for convenience by providing written notice to the other party.

Section 7. Miscellaneous
a. Retiree has read each and every part of this Agreement and Retiree freely and voluntarily has entered into this Agreement. This Agreement is a negotiated document and shall not be interpreted for or against any party by reason of the fact that such party may have drafted this Agreement or any of its provisions.
b. If a court of competent jurisdiction finds or rules that any provision of this Agreement is invalid, void, or unenforceable, the provisions of this Agreement not so adjusted shall remain in full force and effect. The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of any other provision of this Agreement. c. This Agreement, including the exhibits, represents the entire and integrated agreement between City and Retiree and supersedes all prior negotiations, representations, or agreements, either written or oral.

In witness where of the parties have duty affixed their signatures on this __ day of December, 2022.

CITY: RETIREE:

Steve McHarris, City Manager Roger Lee
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Item # C13.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Waive the Second Reading and Adopt Ordinance No. 38.849 Amending the Zoning Map of the City of Milpitas in Accordance with the Provisions of Section

3.03 of Chapter 10 of Title XI of the Milpitas Municipal Code to Change the Zoning Classification of Certain Parcels (APNs 086-38-021, -022, and -037), Located on the East Side of South Hillview Drive and Extending Approximately 1,200 Feet Southerly From Los Coches Street, From the M2 Heavy Industrial Zoning District to the M1 Light Industrial Zoning District (Staff Contact: Ned Thomas, Planning Director, 408-586-3273)
Category: Consent Calendar-Community Development
Meeting Date: 12/6/2022
Recommendation: Recommendations: Move to waive the second reading and adopt Ordinance 38.849 amending the Zoning map of the City of Milpitas in accordance with the provisions of Section 3.03 of Chapter 10 of Title XI (Zoning Ordinance) of the Milpitas Municipal Code to change the Zoning Classification of Certain Parcels (APNs 086-38-021, -022, and –037), located on the east side of South Hillview Drive and extending approximately 1200 feet southerly from Los Coches Street, from the M2 Heavy Industrial Zoning District to the M1 Light Industrial Zoning District and find CEQA exemption under sections 15061(b)(3) and 15183.

Background:

This Ordinance was introduced at the City Council meeting held on November 15, 2022. The Ordinance is now ready for its second reading and adoption.

Fiscal Impact:

The adoption of Ordinance No. 38.849 to amend the zoning classifications for three parcels on South Hillview Avenue will have no fiscal impact. The zoning map amendment does not involve a change of use or the construction of new buildings or facilities on the affected parcels.

California Environmental Quality Act:

The adoption of Ordinance No. 38.849 is exempt from environmental review under the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15061(b)(3) (Common Sense Exemption). As a separate and independent basis, the project is also exempt from further environmental review under CEQA Guidelines Section 15183 (Project Consistent with General Plan, Community Plan, or Zoning).

Recommendation:

Move to waive the second reading and adopt Ordinance No. 38.849 amending the Zoning map of the City of Milpitas in accordance with the provisions of Section 3.03 of Chapter 10 of Title XI (Zoning Ordinance) of the Milpitas Municipal Code to change the Zoning Classification of Certain Parcels (APNs 086-38-021, -022, and – 037), located on the east side of South Hillview Drive and extending approximately 1200 feet southerly from Los Coches Street, from the M2 Heavy Industrial Zoning District to the M1 Light Industrial Zoning District.

Attachments:

A) Ordinance No. 38.849
438
Item # C14.

REGULAR
NUMBER: 38.849
TITLE: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MILPITAS AMENDING

THE ZONING MAP OF THE CITY OF MILPITAS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3.03 OF CHAPTER 10 OF TITLE XI OF THE MILPITAS

MUNICIPAL CODE TO CHANGE THE ZONING DESIGNATION OF CERTAIN PARCELS (APNs 086-38-021, -022, AND -037), LOCATED ON THE EAST SIDE OF SOUTH HILLVIEW DRIVE AND EXTENDING APPROXIMATELY 1,200 FEET SOUTHERLY FROM LOS COCHES STREET, FROM THE M2 HEAVY INDUSTRIAL ZONING DISTRICT TO THE M1 LIGHT INDUSTRIAL ZONING DISTRICT.

HISTORY: This Ordinance was introduced (first reading) by the City Council at its meeting of November 15, 2022, upon motion by Mayor Rich Tran and was adopted (second reading) by the City Council at its meeting of December 6, 2022, upon motion by ____________________________. The Ordinance was duly passed and ordered published in accordance with law by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:
________________________________ __________________________ Suzanne Guzzetta, City Clerk Rich Tran, Mayor
APPROVED AS TO FORM:
________________________________
Michael Mutalipassi, City Attorney
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RECITALS AND FINDINGS:

WHEREAS, the City of Milpitas, California (the “City”) is a municipal corporation, duly organized under the constitution and laws of the State of California; and WHEREAS, California Government Code Section 65800 et seq. authorizes the adoption and administration of zoning laws, ordinances, rules and regulations by cities as a means of implementing the General Plan; and
WHEREAS, Section 3.03 of Chapter 10 Zoning of Title XI of the Milpitas Municipal Code, divides the City into zoning districts; and
WHEREAS, the City Council is the final authority on General Plan, Specific Plan, and Zoning amendments, including amendments to the Zoning Map; and WHEREAS, the City wishes to create an appropriate safety and noise buffer between the existing R1 Single-Family Residential neighborhoods and M2 Heavy Industrial areas located south of Los Coches Street and west of Interstate 680 and the adjacent M2 Heavy Industrial area located west of South Hillview Drive; and WHEREAS, the City has prepared a Zoning Amendment (“Amendment”) to the City’s Municipal Code; and
WHEREAS, on October 26, 2022, the Planning Commission of the City of Milpitas held a lawfully noticed public hearing to solicit public comment and consider the proposed Amendment, take public testimony, and make a recommendation to the City Council on the project; and WHEREAS, per Milpitas Municipal Code Section XI-10-57.02(G)(3), the City Council finds that the Zoning Amendment set forth herein to be consistent with the General Plan, and specifically with Land Use Element Policy LU 1-1 (Support a full spectrum of conveniently located residential, commercial, public, and quasi-public uses that support and enhance business development and regional transportation objectives and promote the livability of residential neighborhoods), because the Project will allow a larger variety of commercial, medical, quasi-public, and light industrial uses at the project site. The change promotes the livability of the adjacent residential neighborhood to the east because the types of uses allowed under the M1 Light Industrial Zoning District are more compatible than the uses allowed under the existing M2 Heavy Industrial Zoning Direct.

Creating a safety and noise buffer between low-density residential and heavy industrial uses will enhance the livability of the residential neighborhoods and the existing mix of uses along South Hillview Drive; and WHEREAS, per Milpitas Municipal Code Section XI-10-57.02(G)(3), the City Council finds that the Zoning Amendment set forth herein to be consistent with the General Plan, and specifically with Land Use Element Policy LU 1-7 (Recognize that the Land Use Map may be amended in accordance with State law to ensure that there is an adequate supply of commercial, business park, industrial, public facility, parks, residential, and other desired land uses to serve the City’s needs), because the Project allows a variety of commercial, medical, quasi-public, while also preserving the City’s industrial land to serve the City’s needs. The proposed zone change will allow staff to better implement City policies and actions. It will also allow the property owner/landlord a wider range or potential commercial and light industrial tenants in the existing multi-tenant buildings on the site; and
WHEREAS, per Milpitas Municipal Code Section XI-10-57.02(G)(3), the City Council finds that the Zoning Amendment set forth herein to be consistent with the General Plan, and specifically with Land Use Element Policy LU 5-6 (In existing industrial and manufacturing areas adjacent to neighborhoods and other 440
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sensitive receptors, promote clean creative industrial uses that are environmentally sustainable and do not create nuisances such as noise and odors), because the Project creates an appropriate buffer between the existing LowDensity Single-Family Residential neighborhoods to the east and the Heavy Industrial zones to the south and west. Rezoning the parcels to M1 Light Industrial will allow a wider variety of commercial, medical, quasi-public, and light industrial uses that are environmentally sustainable and more compatible with the existing building sizes and site design. The M1 Light Industrial zoning designation and its allowable types of uses are more appropriate for the project site due to its proximity to sensitive receptors and the residential neighborhood; and WHEREAS, per Milpitas Municipal Code Section XI-10-57.02(G)(3), the City Council likewise finds that the Zoning Amendment set forth herein will not adversely affect the public health, safety and welfare, in that the Project, as the new zoning designation will create a safety buffer between the R1 Low-Density Single-Family Residential neighborhoods to the east and M2 Heavy Industrial areas to the west and south. Moreover, the zoning change from M2 Heavy Industrial to M1 Light Industrial will allow a wider variety of commercial, medical, quasi-public, and clean light industrial uses that are environmentally sustainable and more appropriate for the project site and the public health, safety and welfare of nearby residents, workers, and customers; and WHEREAS, this ordinance is exempt from environmental review under the California Environmental Quality Act (“CEQA”), Public Resources Code Section 21000, et seq., each as a separate and independent basis, pursuant to CEQA Guidelines Section 15183 (Projects consistent with the General Plan) and Section 15061(b)(3) (Common Sense Exemption); and
WHEREAS, as a separate and independent basis, the City Council hereby finds and determines that the project is exempt from further CEQA review pursuant to CEQA Guidelines section 15183 (projects consistent with a Community Plan, General Plan or Zoning.

NOW, THEREFORE, the City Council of the City of Milpitas does ordain as follows:

SECTION 1. RECORD AND BASIS FOR ACTION
The City Council has duly considered the full record before it, which may include but is not limited to such things as the City staff report, testimony by staff and the public, and other materials and evidence submitted or provided to the City Council. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

SECTION 2. AMENDMENT OF MILPITAS MUNICIPAL CODE TITLE XI, CHAPTER 10, SECTION 3.03
Title XI, Chapter 10, Section 3.03 (“Zoning Map”) is hereby amended, as attached hereto in Exhibit 1.

SECTION 3. ZONING MAP AMENDMENT FINDINGS (XI-10-57.02)
The City Council makes the following findings based on the evidence in the public record in support of Zoning Amendment No. ZA22-0006:

A. The proposed amendment is consistent with the General Plan.

The proposed amendment is consistent with the Milpitas General Plan because the new zoning designation creates an appropriate safety buffer between the R1 Low-Density Single-Family Residential and M2 Heavy Industrial zones along Hillview Drive. This zone change allows for more appropriate uses, such as a variety of commercial, medical, quasi-public uses, as well as clean light industrial uses to operate at the project site. 441
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B. The proposed amendment will not adversely affect the public health, safety and welfare.

The proposed amendment will not adversely affect the public health, safety and welfare, as the new zoning designation will create a safety buffer between the R1 Low-Density Single-Family Residential neighborhoods to the east and M2 Heavy Industrial areas to the west and south. Moreover, the zoning change from M2 Heavy Industrial to M1 Light Industrial will allow a wider variety of commercial, medical, quasi-public, and clean light industrial uses that are environmentally sustainable and more appropriate for the project site and the public health, safety and welfare of nearby residents, workers, and customers.

SECTION 4. CALIFORNIA ENVIRONMENTAL QUALITY ACT
Based on its review of the entire record, including the staff report, public comments and testimony presented to the Planning Commission and City Council, and the facts outlined below, the City Council hereby finds and determines that the adoption of Ordinance No. 38.849 is categorically exempt from environmental review under the California Environmental Quality Act (“CEQA”) in accordance with CEQA Guidelines Section 15061(b)(3) (Common Sense Exemption). As a separate and independent basis, adoption of Ordinance No. 38.849 is further exempt from environmental review under CEQA pursuant to CEQA Guidelines Section 15183 (Projects Consistent with a Community Plan, General Plan, or Zoning).

SECTION 5. SEVERABILITY
The provisions of this Ordinance are separable, and the invalidity of any phrase, clause, provision, or part has no effect on the validity of the remainder.

SECTION 6. EFFECTIVE DATE AND POSTING
In accordance with Section 36937 of the Government Code of the State of California, this Ordinance takes effect 30 days from the date of its passage. The City Council hereby directs the City Clerk to cause this Ordinance or a summary thereof to be published in accordance with Section 36933 of the Government Code of the State of California.
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Exhibit 1: Zoning Map
443
Item # C14.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Waive the Second Reading and Adopt Ordinance No. 38.850 Amending Section 13 “Special Uses” of Chapter 10 “Zoning” of Title XI of the Milpitas Municipal Code Relating to Outdoor Dining (Staff Contact: Ned Thomas, Planning Director, 408-586-3273)
Category: Consent Calendar-Community Development
Meeting Date: 12/6/2022
Recommendation Move to waive the Second Reading and Adopt Ordinance No. 38.850, amending Section 13 “Special Uses” of Chapter 10 “Zoning” of Title XI of the Milpitas Municipal Code and adding a new Subsection 13.19 Relating to Outdoor Dining and find a CEQA exemption under sections 15183 and 15061(b)(3).

Background:

This Ordinance was introduced at the City Council meeting held on November 15, 2022. The Ordinance is now ready for its second reading and adoption.

Fiscal Impact:

The adoption of Ordinance 38.850 to amend Section 13 “Special Uses” of Chapter 10 “Zoning” of Title XI of the Milpitas Municipal Code to add a new Subsection 13.19 Relating to Outdoor Dining will have no fiscal impact.

The zoning ordinance text amendment will establish new standards and regulations for the location and operation of outdoor dining area in conjunction with restaurants, cafés, and bars citywide. New outdoor dining areas may result in increased revenue to the City from permit fees and sales tax. The amount is unknown.

California Environmental Quality Act (CEQA):

The proposed text amendment to the Milpitas Municipal Code is exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15183 (Projects Consistent with a General Plan) and 15061(b)(3) (Common Sense Exemption).

Recommendation:

Move to waive the Second Reading and Adopt Ordinance No. 38.850, amending Section 13 “Special Uses” of Chapter 10 “Zoning” of Title XI of the Milpitas Municipal Code and adding a new Subsection 13.19 Relating to Outdoor Dining.

Attachments:

Ordinance No. 38.850
444
Item # C15.

PLEASE NOTE:

This copy of Ordinance No. 38.850 is a “redlined” version for your convenience. Text additions are designated by an underline and text deletions are designated with a strikethrough.
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Item # C15.
2 Ordinance No. XX.XXX

REGULAR
NUMBER: 38.850
TITLE: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MILPITAS AMENDING SECTION 13 “SPECIAL USES” OF CHAPTER 10 “ZONING” OF TITLE XI OF THE

MILPITAS MUNICIPAL CODE RELATING TO OUTDOOR DINING, AND MAKING

FINDINGS OF CEQA EXEMPTION
HISTORY: This Ordinance was introduced (first reading) by the City Council at its meeting of November 15, 2022, upon motion by Mayor Rich Tran and was adopted (second reading) by the City Council at its meeting of December 6, 2022, upon motion by ____________________________. The Ordinance was duly passed and ordered published in accordance with law by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:
________________________________ __________________________ Suzanne Guzzetta, City Clerk Rich Tran, Mayor
APPROVED AS TO FORM:
________________________________
Michael Mutalipassi, City Attorney
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RECITALS AND FINDINGS:

WHEREAS, the City of Milpitas, California (the “City”) is a municipal corporation, duly organized under the constitution and laws of the State of California; and WHEREAS, California Government Code Section 65800 et seq. authorizes the adoption and administration of zoning laws, ordinances, rules and regulations by cities as a means of implementing the General Plan; and
WHEREAS, in 2020 the City established a Temporary Outdoor Dining Program, allowing the limited use of parking areas and other outdoor spaces on a temporary basis, to help local restaurants survive financially during the COVID-19 pandemic; and
WHEREAS, in July 2021 following the lifting of state and local COVID-19 health restrictions on indoor dining, and in light of interest among local restaurant owners in continuing to offer outdoor dining areas on a long-term basis, the City of Milpitas extended its temporary guidelines for outdoor dining until permanent regulations and a formal approval process for outdoor dining areas could be established; and WHEREAS, the City desires to establish new standards and regulations for the location, site design, and operation of outdoor dining areas and to provide an efficient permitting process for outdoor dining as an accessory use to restaurants and cafes; and
WHEREAS, the City has prepared a Zoning Amendment (“Amendment”) to the City’s Municipal Code, adding a new Subsection 13.19 “Outdoor Dining” under Chapter 10 “Zoning” of Title XI; and WHEREAS, on October 26, 2022, the Planning Commission held a duly noticed public hearing on the subject application, at which all those in attendance were given the opportunity to speak on the Zoning Text Amendment; and
WHEREAS, this ordinance is exempt from the California Environmental Quality Act, Public Resources Code Section 21000, et seq. (“CEQA”), each as a separate and independent basis, pursuant to CEQA Guidelines Section 15183 (projects consistent with the General Plan) and Section 15061(b)(3) (no possibility of significant environmental effect).

NOW, THEREFORE, the City Council of the City of Milpitas does ordain as follows:

SECTION 1. RECORD AND BASIS FOR ACTION
The City Council has duly considered the full record before it, which may include but is not limited to such things as the City staff report, testimony by staff and the public, and other materials and evidence submitted or provided to the City Council. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT
This ordinance is categorically exempt from environmental review under the California Environmental Quality Act (“CEQA”) in accordance with CEQA Guidelines Section 15061(b)(3) (Common Sense Exemption), which exempts from CEQA any project where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. 447
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This ordinance would create new regulations related to outdoor dining in conjunction with restaurants and cafés (which are existing permitted uses in commercial areas under the zoning ordinance). It would enact standards for the location, siting, design, and operational elements of outdoor dining that are comparable to standards for other commercial land uses, and City staff review would be required to ensure that outdoor dining areas are appropriately designed and maintained and that they comply with all applicable requirements. Therefore, it can be seen with certainty that there is no possibility that this Ordinance would have a significant effect on the environment; accordingly, this Ordinance is exempt from CEQA review.

As a separate and independent basis, this Ordinance is categorically exempt from CEQA pursuant to CEQA Guidelines Section 15183 (Projects Consistent with a Community Plan, General Plan, or Zoning). The proposed zoning amendments serve to implement several goals and policies in the Land Use and Community Design Elements by allowing safe, well-designed outdoor dining areas in appropriate locations to support Milpitas restaurants and cafes while also promoting active commercial areas. Therefore, the proposed Amendment is consistent with the General Plan and is exempt from CEQA review.

SECTION 3. GENERAL PLAN CONSISTENCY
The Land Use and Community Design Elements of the City’s General Plan include several policies and actions related to supporting local business development and promoting vibrant, livable commercial areas in Milpitas through land use standards and design guidelines that allow public gathering places, outdoor uses and amenities, and high-quality design in both the public and private realms. The proposed municipal code amendments would facilitate implementation of these policies by permitting and encouraging outdoor dining in well-designed and appropriately located spaces in commercial districts. Allowing high-quality outdoor dining spaces on a permanent basis would contribute to vibrant, visually appealing, and pedestrian-oriented commercial areas in Milpitas.

SECTION 4. AMENDEMENT TO MILPITAS MUNICIPAL CODE TITLE XI, CHAPTER 10 Section 13 (“Special Uses”) of Chapter 10 (“Zoning”) of Title XI of the Milpitas Municipal Code is hereby amended to add Subsection 13.19 as follows:

XI-10-13.19 – Outdoor Dining
A. Purpose and Intent. The purpose of the outdoor dining regulations is to increase opportunities for restaurants to expand dining area into outdoor spaces, supporting local businesses and enhancing dining experience for Milpitas residents and visitors; to promote active, vibrant, pedestrian-oriented commercial districts and shopping centers; and to ensure that outdoor dining spaces are safe, well designed, and attractive.

B. Definitions

1. Outdoor dining area: Any privately owned outdoor area serving as an extension of the indoor customer seating area for a café or restaurant, which occupies space adjacent to the business that was formerly used for vehicle parking, pedestrian circulation, or similar use unrelated to the seating or customers.
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C. Review and Approval Procedures

1. New or modified outdoor dining areas on private property may be approved with a Minor Site Development Permit (Staff Review) pursuant to Subsection XI-10-57.03(B)(2) of this Chapter.

2. In cases where the underlying zoning district requires a Conditional Use Permit (CUP) for a restaurant, an existing establishment with an approved CUP may add or modify an outdoor dining area with approval of a Minor Site Development Permit. No amendment to the approved CUP shall be required.

3. Written permission from the owner of record of the subject property shall be required as part of the Minor Site Development Permit application for outdoor dining. This requirement shall apply to stand-alone restaurants as well as those located within a multi-tenant commercial center or mixeduse development.

D. Location and Siting Requirements

1. Outdoor dining shall be permitted in any zone where restaurants are a permitted use (or where restaurants are conditionally permitted and a CUP has been approved for the restaurant).

2. Outdoor dining areas may be established on privately owned lots subject to the following requirements:
a. Dining areas may be located within outdoor areas adjacent to restaurants, such as existing private sidewalks and walkways, patios, etc. A minimum five (5) foot wide path of travel shall be maintained along all pedestrian walkways from parking areas and public sidewalks to all public building entrances.
b. Outdoor dining areas may be located within, and may replace, existing off-street parking spaces (see also Subsection XI-10-13.19(E)) on privately owned parcels. i. Parking spaces to be converted to outdoor dining areas must be immediately adjacent to the restaurant establishment. An outdoor dining area shall not be separated from the restaurant by any vehicular drive aisle.
ii. No existing accessible parking spaces required per Title 24, California Building Standards Code, and the Americans with Disabilities Act may be removed to accommodate outdoor dining areas.
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c. Outdoor dining areas shall be subject to the base zone regulations for minimum setbacks from property lines. Any permanent canopies, pergolas or similar shade structures requiring a building permit shall be subject to base zone regulations for maximum lot coverage. d. Outdoor dining areas shall not be located within required loading zones or stormwater treatment areas, nor be located so as to obstruct access to utilities. e. Outdoor dining areas shall be subject to all emergency access regulations per the California Fire Code.
f. Outdoor dining areas shall not be located in a manner that creates a potential safety hazard.

E. Allowed Reductions to Required Off-Street Parking

1. For restaurants located in the MXD, MXD2, and MXD3 zones or in any commercial zone within the Milpitas Metro Specific Plan or Milpitas Gateway-Main Street Specific Plan areas, total required off-street parking as specified in Subsection XI-10-53.09 – Off-Street Parking Required by Land Use may be reduced by up to 50 percent to accommodate new or expanded outdoor dining areas in existing parking areas.

2. No minimum parking requirements shall apply to restaurants located within one-half mile of the Milpitas Transit Center.

3. For restaurants located in any other area of the city, required off-street parking may be reduced by up to 15 percent to accommodate new or expanded outdoor dining areas in existing parking areas, provided that the size of the outdoor dining area is 800 square feet or less.

4. For multi-tenant commercial properties with shared parking, allowed reductions to required parking to accommodate outdoor dining shall be based on the total parking requirement for all uses and establishments on the subject property, not solely on the parking requirement for the restaurant(s) proposing to add or expand outdoor dining areas. The shared parking standards established in Section XI-10-53.11 shall apply to locations with shared parking arrangements.

F. Design Standards

1. Barriers and Materials
a. Outdoor dining areas shall be delineated by a substantial and durable barrier that separates the dining area from vehicular drive aisles and parking spaces. 450
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b. Materials. Barriers should be made from high-quality materials (e.g., wood or iron railings and fencing, planter boxes, decorative concrete barriers).
i. Materials and design of barriers and associated amenities should be consistent with the design and appearance of the restaurant and complementary to the character and design of the surrounding district.
ii. Plywood or other unfinished materials used for construction of a barrier to delineate and protect an outdoor dining area shall be painted or covered in siding or other finished materials approved by the Planning Department.
iii. Chain link fencing, corrugated metal, unfinished wood materials, stanchions, retractable belts, screens, and small landscape planters are not acceptable materials for barriers for outdoor dining areas and shall be prohibited.
c. Solid portions of barriers for outdoor dining areas shall be no more than three (3) feet in height.

Transparent, shatterproof glass (plexiglass or similar material) may be placed above a three-foot solid barrier, up to a total maximum height of six (6) feet (for freestanding plexiglass over a solid barrier). If the outdoor dining area has a permanent shade or roof structure, plexiglass or other transparent materials may extend to the height of the ceiling. d. Barriers may be permanent or movable. If movable, they should be well secured and designed to support weight leaning against them.
e. Barriers shall have one opening for emergency access, with a minimum width of 36 inches, for every 20 linear feet of barrier.
f. Barriers adjacent to parking spaces shall be marked with reflective material, such as tape or plastic reflective strips.

2. Shade Structures, Tables and Chairs, and Other Amenities a. Permanent overhead shade structures (e.g. pergolas) may be allowed for outdoor dining areas.

The design and location of any permanent overhead shade structure shall complement the main restaurant and shall be subject to review and approval by the Planning Department. All permanent overhead shade structures shall require a building permit. 451
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b. Permanent overhead shade structures shall be durable and made from high-quality materials such as wood or metal. Plywood, corrugated metal, and corrugated polycarbonate are prohibited as materials for roofing or shade structures.
c. The maximum height for all overhead shade structures for outdoor dining areas shall be 12 feet. d. Non-permanent shade equipment, such as umbrellas, fabric canopies, or retractable awnings, are permitted, provided they are made from high-quality materials and removed or stored when the outdoor dining area is not in use.
i. For awnings projecting from buildings, the minimum vertical clearance shall be eight (8) feet and the maximum extension from the face of a building shall be seven (7) feet. ii. Awnings and umbrellas should have no words or advertising other than the name and logo of restaurant establishment.
e. Tables and chairs should be of a high-quality and visually appealing material such as wood or metal. Inexpensive plastic or vinyl tables and chairs are not permitted. f. The layout of outdoor dining areas should incorporate spaces for landscape planters with decorative plants and flowers.

3. Traffic Safety. A minimum two (2) foot setback shall be required between an outdoor dining area barrier and any adjacent parking space(s).

4. Accessibility Requirements
a. Outdoor dining areas shall have hard, non-slip surfaces, such as concrete, tile, stone, or wood/composite decking. Soft surfaces such as dirt, gravel, and lawn are not permitted. b. If an outdoor dining area is located on a raised platform or in a sunken area, a ramp must be provided that meets the requirements of the California Building Code and the Americans with Disabilities Act.
c. A minimum of five (5) percent of the seats provided in an outdoor dining area shall be wheelchair accessible.
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9 Ordinance No. XX.XXX
d. Minimum dimensions for wheelchair accessible seating spaces shall be 30 inches wide by 48 inches deep. Access to all such seating spaces shall be provided via a path with a minimum unobstructed width of 36 inches.

5. Fire Safety. All outdoor dining areas shall comply with the requirements of the California Fire Code.

Minor Site Development Permit applications for new or modified outdoor dining areas are subject to review and approval by the Milpitas Fire Department.

6. Lighting. No electrical wires for lighting elements shall cross the required clear path of travel along a public sidewalk or private pedestrian walkway. Solar lighting is encouraged for outdoor dining areas.

7. Signage. All restaurant signage shall comply with Section XI-10-24 – Signs of this Chapter. No additional signage shall be permitted in outdoor dining areas.

G. Operational Standards

1. Hours of Operation.
a. The hours of operation for outdoor dining areas shall be limited to the hours the restaurant is open for ordering and serving of meals.
b. In addition to Subsection XI-10-13.19(G)(1)(a), in no case shall outdoor dining be permitted before 7:00 am, seven (7) days per week, or after 10:00 pm Sunday through Thursday and after 11:00 pm Friday and Saturday.

2. Alcoholic Beverages.
a. The restaurant owner or manager shall coordinate with the California Department of Alcoholic Beverage Control (ABC) regarding alcohol sales in conjunction with outdoor dining. b. The restaurant owner or manager shall obtain approval from ABC for a modified license to extend the permitted area for serving alcohol to include all outdoor dining areas associated with the restaurant and shall provide proof of such approval to the City of Milpitas Planning Department.

3. No smoking or vaping shall be permitted within outdoor dining areas.

4. Outdoor preparation and/or storage of food is not permitted within outdoor dining areas. 453
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5. All live entertainment in outdoor dining areas is subject to the provisions of Subsections XI-10-

5.04(E) and XI-10-6.06(B) of this Chapter.

6. Maintenance Requirements.
a. Outdoor dining areas shall be kept clean and free of litter and debris at all times. b. All plants and landscaping shall be maintained in good health. c. All plexiglass or other transparent materials used as part of an outdoor seating barrier shall be regularly cleaned and provide a clear view from the outdoor seating area. Cracked, broken, or discolored materials are prohibited and shall be replaced immediately.

SECTION 5. EFFECTIVE DATE AND POSTING
In accordance with Section 36937 of the Government Code of the State of California, this Ordinance takes effect 30 days from the date of its passage. The City Council hereby directs the City Clerk to cause this Ordinance or a summary thereof to be published in accordance with Section 36933 of the Government Code of the State of California.

SECTION 6. CERTIFICATION
The City Clerk shall either: (a) have this ordinance published in a newspaper of general circulation within 15 days after its adoption, or; (b) have a summary of this ordinance published twice in a newspaper of general circulation, once five days before its adoption and again within 15 days after its adoption.

SECTION 7. SEVERABILITY
If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance, or the application thereof to any person or place, is for any reason held to be invalid or unconstitutional by a court of competent jurisdiction, such decision shall not affect the validity of the remainder of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each and every section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional.

SECTION 8. NOTICE OF CEQA EXEMPTION
The City Council hereby directs staff to prepare, execute, and file with the County of Santa Clara Clerk a notice of CEQA exemption within five (5) working days of the adoption of this Ordinance. 454
Item # C15.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Report on Bids and Award Construction Contract to G&G Builders Inc. in the Amount of $872,029.00 for Rehabilitation of Up to Eleven City Parks Project (Staff Contact: Roger Lee, Interim Public Works Director, 408-586-2602) Category: Consent Calendar-Community Services and Sustainable Infrastructure Meeting Date: 12/6/2022
Recommendation: (1) Receive report on bids and award a construction contract to the lowest responsible and responsive bidder, G&G Builders Inc., in the amount of $872,059.00 for the Rehabilitation of Up to Eleven City Parks project; and (2) Authorize the City Manager to negotiate and execute contract change order(s) in an aggregate amount not to exceed $468,514.00 subject to appropriation of funds and find a CEQA exemption as modifications to existing facilities.

BACKGROUND:

On August 9, 2021, Council approved an allocation of $4,386,815 of American Rescue Plan Act (ARPA) funding for repairs and improvements to 20 of the City’s 36 parks. Of this amount, $1,116,000 has been scheduled to the repair and improvement of up to 11 parks. Additionally, on April 5, 2022, the City Council adopted a Resolution approving the application for $224,543 Per Capita Grant Funds from the State Department of Parks and Recreation. Per an allocation formula, the City will receive the funds and allocate it for the Sunnyhills Augustine Park in the amount of $224,543, which are scheduled to be used as part of the park improvements outlined in this staff report and a forthcoming construction contract bid award, which is currently in design.

Completion of up to eleven parks, including Sunnyhills Augustine, are being managed by both the Public Works and Engineering Departments. Project priorities are to complete potential health and safety repairs and improve the condition of parks in “critical” and “poor” condition in the recently adopted Park & Recreation Master Plan Update. To provide greater flexibility in project completion and ensure critical parks are completed, the project to rehabilitate 11 parks was organized with a base bid improvement of seven parks and add alternates of four parks.

Base bid parks include Sunnyhills Augustine, Memorial, Cerano, John McDermott, O’Toole Elms, Pinewood, Selwyn, and Tom Evatt. Add alternate parks include Parc Metro Central, Parc Metro East, Parc Metro West, and Sinnott.

ANALYSIS:

On October 6, 2022, the Purchasing Division released an Invitation for Bid (IFB) 23-035 for the Rehabilitation of Eleven City Parks Project (Project). The IFB was publicly noticed in accordance with the City’s municipal code and advertised on the City’s website. Email notifications were sent to companies registered with the City via OpenGov Procurement, the City’s eProcurement system and the City maintained construction contractor list. As required by State law, four local plan rooms also received notification of the release of the project on OpenGov Procurement. To comply with Federal ARPA solicitation requirements, the City also invited 43 bids from women and minority-owned construction firms identified via the U.S. Small Business Administration database at www.SBA.gov.
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Upon release, 921 firms received the solicitation notification, 54 firms downloaded the IFB documents, and six firms participated in the non-mandatory pre-bid meeting. The City issued one addendum to the solicitation and answered three questions submitted by interested firms.

The Purchasing Division received four bids by the November 10, 2022 deadline to respond to the IFB. After reviewing the required bid documents, G&G Builders, Inc. was the lowest responsible bidder submitting a responsive base bid. The base bid submitted for seven parks exceeded City's 2019 estimated cost of $696,885. Several factors, including the age of the estimate and pandemic related supply chain issues each contribute to higher-than-expected bids. Alternate bids to rehabilitate four parks were not part of bidder evaluation and exceeded the City's estimated cost of $355,237.

Bid Rank Contractor Base Bid Estimated Cost
1 G&G Builders Inc. $872,059.00
2 Redwood Engineering Construction $899,000.00 $696,885 3 Paulson Cox Construction Inc. $937,677.00
4 Itech Solution $966,700.00
Add alternate bid pricing from G&G Builders is as follows:

Add Alternate Park Add Alternate Bid Pricing Estimated Cost Parc Metro Central $88,700 $42,525
Parc Metro East $98,164 $28,612.50
Parc Metro West $474,200 $102,675
Sinnott $743,400 $181,425
TOTAL: $1,404,464 $355,237.50
Pricing for add alternate parks is subject to change as additional information is provided to the contractor. If changed pricing can be determined reasonable, both Parc Metro Central and Parc Metro East Parks may be improved. It is unlikely that there will be enough available funds to complete Parc Metro West and/or Sinnott Parks.

The proposed Project will at a minimum provide the seven City parks with much needed play structures and play surface repairs while updating the parks to current Certified Playground Safety Inspector (CPSI) standards. Work under the Project includes repair and/or replacement of sections of failed pour-in-place play surfaces, replacing sand with engineered wood fiber, and replacement of old playground structures.

Staff recommends the City Council award the contract for the Project to G&G Builders Inc., for the base bid amount of $872,059.00 for the rehabilitation of seven parks and authorize the City Manager to execute contract change orders (up to the scheduled ARPA and State Grant amounts) in an aggregate amount not to exceed $468,514.00 for unforeseen conditions and/or proceed with add alternates for the remaining four parks. This change order authority will allow for the more efficient administration of the improvements outlined in this Project.

POLICY ALTERNATIVE(S):

Alternative 1: Direct city staff to reject all bids and not proceed with the Project.

Pros: The City would be able to use $1,116,000.00 for other projects.

Cons: Not proceeding with the Project would defer improvements that would update the parks to current CPSI standards. City would risk losing State Grant for Sunnyhills Augustine Park.

Reason for Not Recommending: The recommendations of the CPSI consultant to make improvements to the parks identified in the project were reviewed and staff believes the Project will address the items in the report and bring the City parks listed to current safety specification.

FISCAL IMPACT:

There are sufficient funds available in Capital Improvement Project No. 3500, ARPA Park Rehabilitation – DPW, for this project. As of November 28, 2022, the balance in CIP 3500 is $1,116,000. Upon future Council456 Item # C16.
action to appropriate State Grant funds and completion of improvements at Sunnyhills Augustine Park, City will receive the State Grant amount of $224,543.00. The cost to perform the rehabilitation of seven City parks through a construction contract with G&G Builders is $872,029.00. Staff also requests City Council authorize the City Manager to negotiate and execute contract change order(s) in an aggregate amount not to exceed $468,514.00 for unforeseen conditions and/or to proceed with add alternates for the remaining four parks subject to Council action to appropriate the State grant funds.

California Environmental Quality Act (CEQA):

This Project is exempt from CEQA under Class 1 - Section 15301 - Existing Facilities because they relate to the operation, repair, maintenance or minor alterations to a public facility involving no or negligible expansion of use.

RECOMMENDATION:

1. Receive report on bids and award a construction contract to the lowest responsible bidder submitting a responsive bid, G&G Builders Inc., in the amount of $872,029.00 for Rehabilitation of up to Eleven City Parks project.

2. Authorize the City Manager to negotiate and execute contract change order(s) in an aggregate amount not-to-exceed $468,514.00 subject to appropriation of funds and find a CEQA exemption as modifications to existing facilities.

Attachment(s):

1. Long-Form Construction Contract with G&G Builders Inc. for Project 23-035 for the Rehabilitation of Eleven City Parks Project
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Item # C16.

View the attachment for this item at:
https://www.milpitas.gov/_pdfs/council/2022/120622/
attachment_parks.pdf
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Item # C16.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Conduct a Public Hearing and Adopt Ordinance No. 65.152 for Adoption by Reference the 2022 California Building Codes and Amendments (Staff Contact:

Bill Tott, Building Official, 408-586-3263)
Category: Public Hearings-Community Development
Meeting Date: 12/6/2022
Recommendation: (1) Open the Public Hearing; hear testimony, then move to close the public hearing. (2) Waive the second reading and adopt Ordinance No. 65.152 amending Chapters 3, 3.5, 4, 5, 6, 7, 10,14,150, and 170 of Title II of the Milpitas Municipal Code adopting by reference the 2022 California Building Code, 2022 California Residential Code, 2021 International Property Maintenance Code, 2022 California Mechanical Code, 2022 California Electrical Code, 2022 California Plumbing Code, 2021 International Swimming Pool and Spa Code, 2022 California Existing Building Code, and 2022 California Historical Building Code, with amendments and find a CEQA exemption.

BACKGROUND:

On October 18, 2022 the Council introduced Ordinance No. 65.152 and set a public hearing on December 6, 2022 for adoption of the ordinance pursuant to Government Code Section 50022.3. Notice of the public hearing was published on October 4 and October 11, 2022 pursuant to Government Code Section 6066. There were no changes to the Ordinance from the first reading; the Ordinance is now ready for its second reading and adoption.

ANALYSIS:

Adoption of the new 2022 codes will ensure that buildings and structures in Milpitas will safeguard the health, safety, and general welfare of the public. Staff recommends that the Council adopt Ordinance No. 65.152 adopting the new codes with amendments. Please refer to the October 18 Council meeting agenda report (Attachment B) for a brief description of the amendments.

FISCAL IMPACT:

There is no cost to the City other than administrative staff time and expense. Staff training on the new codes is needed and has been planned for in the budget. Training has begun and will be ongoing.

CALIFORNIA ENVIRONMENTAL QUALITY ACT:

The action being considered has no potential for causing a significant effect on the environment and is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3).

RECOMMENDATIONS:

Following the City Attorney’s reading of the title, move to waive the first reading beyond the title and introduce Ordinance No. 65.152 amending Chapters 3, 3.5, 4, 5, 6, 7, 10, 14, and 150 of Title II of the Milpitas Municipal Code relating to Code Administration; adopting by reference the 2022 California Building Code, 2022 California Residential Code, 2021 International Property Maintenance Code, 2022 California Mechanical Code, 2022 California Electrical Code, 2022 California Plumbing Code, 2021 International Swimming Pool and Spa Code, 2022 California Existing Building Code, and 2022 California Historical Building Code, with amendments. Set a public hearing on December 6, 2022, pursuant to California Government Code Section 50022.3, for adoption of the Ordinance.
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Attachment(s):

A. Ordinance No. 65.152
B. October 18, 2022 City Council Agenda Report
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1 Ordinance No. 65.152

REGULAR
NUMBER: 65.152
TITLE: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MILPITAS AMENDING CHAPTERS 3, 3.5, 4, 5, 6, 7, 10, 13, 14, AND 150, OF TITLE II OF THE MILPITAS MUNICIPAL CODE RELATING TO CODE ADMINISTRATION; ADOPTING BY REFERENCE THE 2022 CALIFORNIA BUILDING CODE, 2022 CALIFORNIA RESIDENTIAL CODE, 2022 CALIFORNIA MECHANICAL CODE, 2022 CALIFORNIA ELECTRICAL CODE, 2022 CALIFORNIA PLUMBING CODE, 2021 INTERNATIONAL PROPERTY MAINTAINENANCE CODE, 2021 INTERNATIONAL SWIMMING POOL AND SPA CODE, 2022 CALIFORNIA EXISTING BUILDING CODE, AND 2022 CALIFORNIA HISTORICAL BUILDING CODE, WITH AMENDMENTS.

HISTORY: This Ordinance was introduced (first reading) by the City Council at its meeting of __________, 2022, upon motion by _________________________, and was adopted (second reading) by the City Council at its meeting of ____________________, upon motion by __________________________. The Ordinance was duly passed and ordered published in accordance with law by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:
________________________________ __________________________ Suzanne Guzzetta ,City Clerk Rich Tran, Mayor
APPROVED AS TO FORM:
________________________________
Michael Mutalipassi , City Attorney
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RECITALS:

WHEREAS, the California Building Standards Commission has adopted and published an updated Title 24 of the California Code of Regulations, also referred to as the 2022 California Building Standards Code, that will become effective statewide on January 1, 2023; and
WHEREAS, California Health and Safety Code Sections 17958, 17958.5, 17958.7 and 18941.5 establish the authority for a city to adopt and make local amendments and modifications to the building standards in the California Building Standards Code to establish more restrictive building standards than those contained in the California Building Standards Code; and
WHEREAS, California Health and Safety Code Sections 17958, 17958.5, 17958.7 and 18941.5 permit a city to make such local amendments and modifications as the city determines are reasonably necessary because of local climatic, geological or topographical conditions; and
WHEREAS, California Health and Safety Code Sections 17958, 17958.5, 17958.7 and 18941.5 require a city, before making any amendments and modifications to the California Building Standards Code, make an express finding that such amendments and modifications are reasonably necessary because of local climatic, geological or topographical conditions; and
WHEREAS, the City of Milpitas has reviewed and intends to adopt the 2022 California Building Standards Code and the 2021 International Property Maintenance Code and 2021 International Swimming Pool and Spa Code.

WHEREAS, the City Council wishes to amend portions of the California Building Standards Code to better address local conditions and makes express findings that such amendments are reasonably necessary because of local climatic, geological or topographical conditions as set forth in this Ordinance.

NOW, THEREFORE, the City Council of the City of Milpitas does ordain as follows:

SECTION 1. RECORD AND BASIS FOR ACTION
The City Council has duly considered the full record before it, which may include but is not limited to the staff report, testimony by staff and the public, and other materials and evidence submitted or provided to the City Council. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT
The City Council hereby finds and determines that this Ordinance has been assessed in accordance with the California Environmental Quality Act (Cal. Pub. Res. Code, § 21000 et seq.) (“CEQA”) and the State CEQA Guidelines (14 Cal. Code Regs. § 15000 et seq.) and is categorically exempt from CEQA under CEQA Guidelines, § 15061(b)(3), which exempts from CEQA any project where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. Adoption of the proposed Ordinance would not be an activity with potential to cause significant effect on the environment because the changes made to the California Building Standards Code within are enacted to mitigate the threats posed to public peace, health and safety from earthquakes, storms, floods, high winds and fire, and therefore is exempt from CEQA. Therefore, it can be seen with certainty that there is no possibility that the Ordinance in question may have a significant effect on the environment; accordingly, the Ordinance is categorically exempt from CEQA.

SECTION 3. AMENDMENT OF MILPITAS MUNICIPAL CODE TITLE II Chapters 3, 3.5, 4, 5, 6, 7, 10, 13, 14, and 150, of Title II of the Milpitas Municipal Code are hereby amended with the text below to read as follows:

Section 4 Appeals
II-1-4.01
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Chapter 3 – BUILDING CODE
Chapter 3 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Sections:

Section 1 – Adoption of the Building Code
Section 2 – Amendments to the Building Code
Section 1 Adoption of the Building Code
II-3-1.01
The 2022 California Building Code, published and copyrighted by the International Code Council, Inc. and the California Building Standards Commission in Part 2 of Title 24 of the California Code of Regulations, is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. This adoption includes Appendix I. The 2022 California Building Code shall be designated and referred to as the “Building Code” for the City of Milpitas. There is one copy of said Code on file in the office of the Building Official for use and examination by the public.

Section 2 Amendments to the Building Code
II-3-2.01 Amendments: Chapter 4
Amend Section 402.5 of the California Building Code by deleting the exception.

Amend Section 403.3 of the California Building Code by deleting all exceptions.

Amend Section 404.3 of the California Building Code by deleting all exceptions.

Amend Section 410.6 of the California Building Code by deleting all exceptions.

II-3-2.02 Amendment: Section 1505.1.5
Amend Section 1505 of the California Building Code by adding Section 1505.1.5 to read as follows:
1505.1.5 Roofing requirements for hillside construction. Class A or Class B roof covering shall be required for all hillside construction.

II-3-2.03 Amendment: Section 1705.3 Exception 1
Amend Section 1705.3 Exception 1 of the California Building Code to read as follows:

1. Isolated spread concrete footings of buildings three stories or less above grade plane that are fully supported on earth or rock, where the structural design of the footing is based upon a specified compressive strength, f’c , no greater than 2,500 pounds per square inch (psi) (17.2 MPa).

II-3-2.04 Amendment: Section 1808.1
Amend Section 1808.1 of the California Building Code to read as follows:

All new foundations for building additions to R-3 occupancies shall be of the same type of foundation system as the existing structure, unless foundation design recommendation from a soils engineer is provided and the foundation system is designed, and plans, calculations, and specifications are prepared, stamped and signed, by a California licensed engineer or architect.

II-3-2.05 Amendment: Table 2308.6.1
Amend Table 2308.6.1 title and footnotes to read as follows:

1. TABLE 2308.6. 1
a, f, g

2. Footnotes “f” and “g” are added to Table 2308.6.1, to read:
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f. Methods PBS, HPS, and SFB are not permitted in Seismic Design Categories D or E. g. Methods GB, DWB and PCP are not permitted in Seismic Design Category E.

Chapter 3.5 – RESIDENTIAL CODE
Chapter 3.5 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Sections:

Section 1 – Adoption of the Residential Code
Section 2 – Amendments to the Residential Code
Section 1 Adoption of the Residential Code
II-3.5-1.01
The 2022 California Residential Code, published by the International Code Council, Inc. and the California Building Standards Commission in Part 2.5 of Title 24 of the California Code of Regulations, is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. This adoption includes Appendix AH and Appendix AK. The 2022 California Residential Code shall be designated and referred to as the
“Residential Code” for the City of Milpitas. There is one copy of said Code on file in the office of the Building Official for use and examination by the public.

Section 2 Amendments to the Residential Code
II-3.5-2.01 Amendment: Section R902.1.5
Amend Section R902 of the California Residential Code by adding Section R902.1.5 to read as follows:

R902.1.5 Roofing requirements for hillside construction. Class A or Class B roof covering shall be required for all hillside construction.

II-3-3.5-2.02 Amendment: Table R602.10.3(3)
Amend Table R602.10.3(3) title and footnotes to read:

TABLE R602.10.3(3)i, j
Footnotes:
i. Methods PBS, HPS, SFB and CS-SFB are not permitted in Seismic Design Categories D0, D1, and D2. j. Methods GB, DWB and PCP are not permitted in Seismic Design Categories D0, D1, and D2 where S1 is greater than or equal to 0.75.

II-3.5-2.03 Amendment: Section R403.1
Amend Section R403.1 of the California Residential Code to read as follows:

All new foundations for building additions to R-3 occupancies shall be of the same type of foundation system as the existing structure, unless foundation design recommendation from a soils engineer is provided and the foundation system is designed, and plans, calculations, and specifications are prepared, stamped and signed, by a California licensed engineer or architect
Chapter 4 – PROPERTY MAINTENANCE CODE
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Chapter 4 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Sections:

Section 1 – Adoption of the Property Maintenance Code
Section 2 – Amendments to the Property Maintenance Code Section 1 Adoption of the Property Maintenance Code
II-4-1.01
The 2021 International Property Maintenance Code, published by the International Code Council, Inc., is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. The 2021 International Property Maintenance Code shall be designated and referred to as the “Property Maintenance Code” for the City of Milpitas. There is one copy of said Code on file in the office of the Building Official for use and examination by the public.

Section 2 – Amendments to the Property Maintenance Code II-4-1.02
Delete Section 404.5 of the International Property Maintenance Code.

Delete Table 404.5 of the International Property Maintenance Code.

Delete Section 404.5.1 of the International Property Maintenance Code.

Delete Section 404.5.2 of the International Property Maintenance Code.

Chapter 5 – MECHANICAL CODE
Chapter 5 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Sections:

Section 1 – Adoption of the Mechanical Code
Section 1 Adoption of the Mechanical Code
II-5-1.01
The 2022 California Mechanical Code, published and copyrighted by the International Association of Plumbing and Mechanical Officials and the California Building Standards Commission in Part 4 of Title 24 of the California Code of Regulations, is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. The 2022 California Mechanical Code shall be designated and referred to as the “Mechanical Code” for the City of Milpitas. There is one copy of said Code on file in the office of the Building Official for use and examination by the public.

Chapter 6 – ELECTRICAL CODE
Chapter 6 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Sections:

Section 1 – Adoption of the Electrical Code
Section 2 – Amendments to the Electrical Code
Section 1 Adoption of the Electrical Code
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II-6-1.01
The 2022 California Electrical Code, published and copyrighted by the National Fire Protection Agency and the California Building Standards Commission in Part 3 of Title 24 of the California Code of Regulations, is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. The adoption includes Annexes A, B, C, D, and F. The 2022 California Electrical Code shall be designated and referred to as the “Electrical Code” for the City of Milpitas. There is one copy of said Code on file in the office of the Building Official for use and examination by the public.

Section 2 Amendments to the Electrical Code
II-6-2.01
Amend Section 230.2 of the California Electrical Code by adding subsection (F) to read as follows:
230.2(F). Underground Service. All new electrical services shall be underground and installed per Section 230.30, Underground Service-Lateral Conductors. Exception: Relocation or replacement of existing electrical services at existing buildings.

II-6-2.02
Amend Section 230.70(A) of the California Electrical Code by adding subsection (4) to read as follows:
(4) Main Service Disconnect Location. The building main service disconnect and/or disconnects shall be installed on the first floor level of the building, in accordance with 230.70(A)(1), (A)(2), and (A)(3).

II-6-2.03
Amend Section 250.50 of the California Electrical Code by adding subsection (A) to read as follows:
250.50(A). Grounding System in New Buildings. Grounding electrode systems in all new buildings shall be an electrode encased by at least 50 mm (two inches) of concrete, located horizontally near the bottom or vertically, and within that portion of a concrete foundation or footing that is in direct contact with earth. The electrode shall consist of at least 6.0 m (20 feet) of one or more steel reinforcing bars or rods, of not less than 13 mm (½ inch) diameter, or consisting of at least 6.0 m (20 feet) of bare copper conductor not smaller than 4 AWG. The connection side of this concrete-encased electrode shall be located remotely away from the main electrical service equipment.

Chapter 7 – PLUMBING CODE
Chapter 7 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Sections:

Section 1 – Adoption of the Plumbing Code
Section 1 Adoption of the Plumbing Code
II-7-1.01
The 2022 California Plumbing Code, published and copyrighted by the International Association of Plumbing and Mechanical Officials and the California Building Standards Commission in Part 5 of Title 24 of the California Code of Regulations, is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. The adoption includes Appendices A, B, C, D, I, and M. The 2022California Plumbing Code shall be designated and referred to as the “Plumbing Code” for the City of Milpitas.

There is one copy of said code on file in the office of the Building Official for use and examination by the public.

Chapter 10 – SWIMMING POOL AND SPA CODE
Chapter 10 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:
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Sections:

Section 1 – Adoption of the Swimming Pool and Spa Code
Section 1 Adoption of the Swimming Pool and Spa Code
II-10-1.01
The 2021 International Swimming Pool and Spa Code, published by the International Code Council, Inc., is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. The 2021 International Swimming Pool and Spa Code shall be designated and referred to as the “Swimming Pool and Spa Code” for the City of Milpitas. There is one copy of said Code on file in the office of the Building Official for use and examination by the public.

Chapter 14 – EXISTING BUILDING CODE
Chapter 14 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Sections:

Section 1 – Adoption of the Existing Building Code
Section 1 Adoption of the Existing Building Code
II-14-1.01
The 2022 California Existing Building Code, published and copyrighted by the International Code Council, Inc. and the California Building Standards Commission in Part 10 of Title 24 of the California Code of Regulations, is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. The adoption includes Appendices A1, A2, A3, and A5. The 2022 California Existing Building Code shall be designated and referred to as the “Existing Building Code” for the City of Milpitas. There is one copy of said Code on file in the office of the Building Official for use and examination by the public.

Chapter 150 – HISTORICAL BUILDING CODE
Chapter 150 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Sections:

Section 1 – Adoption of Historical Building Code
Section 1 Adoption of the Historical Building Code
II-150-1.01
The 2022 California Historical Building Code, published and copyrighted by the International Code Council, Inc. and the California Building Standards Commission in Part 8 of Title 24 of the California Code of Regulations, is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. The 2022 California Historical Building Code shall be designated and referred to as the “Historical Building Code” for the City of Milpitas. There is one copy of said Code on file in the office of the Building Official for use and examination by the public. .

SECTION 4. EXPRESS FINDINGS
Pursuant to California Health and Safety Code Sections 17958.7 and 18941.5, the City Council hereby finds that the above amendments are necessary due to local climatic, geological or topographical conditions as set forth in Exhibit A. 467
Item # 17.
8 Ordinance No. 65.152
SECTION 5. REPEAL OF CONFLICTING ORDINANCES
Upon adoption of each new California Building Standards Code, the Ordinance adopting the previously adopted California Building Standards Code is superseded in its entirety. This Ordinance does not repeal Ordinance No. 65.148, which adopts by reference and amends the 2019 California Energy Code, Ordinance No. 65.149, which adopts by reference and amends the 2019 California Green Building Standards Code, nor Ordinance No. 113.25, which adopts by reference and amends the 2019 California Fire Code.

SECTION 6. SEVERABILITY
The provisions of this Ordinance are separable, and the invalidity of any phrase, clause, provision or part shall not affect the validity of the remainder.

SECTION 7. EFFECTIVE DATE AND POSTING
In accordance with Section 36937 of the Government Code of the State of California, this Ordinance shall take effect thirty (30) days from and after the date of its final adoption by the City Council, but no sooner than January 1, 2023. The City Clerk of the City of Milpitas shall cause this Ordinance or a summary thereof to be published in accordance with Section 36933 of the Government Code of the State of California. 468
Item # 17.
9 Ordinance No. 65.152

EXHIBIT A

FINDINGS IN SUPPORT OF AMENDMENTS
TO TITLE 24 OF THE CALIFORNIA CODE OF REGULATIONS:

LOCAL CLIMATIC, GEOLOGICAL OR TOPOGRAPHICAL CONDITIONS
Chapter 3 – BUILDING CODE
The proposed substantive amendments to the Building Code involve the following:
(1) Automatic sprinkler systems
(2) Roofing cover requirement for hillside areas
(3) Special inspection exception
(4) Foundations and foundation reinforcement
(5) Restrict use of bracing methods
The following findings support that the above amendments and modifications are reasonably necessary because of local climatic, geological or topographical conditions:
(1) Automatic sprinkler systems
Amending the Code to remove exceptions where automatic sprinklers are not required is due to Milpitas being situated in an area of high seismic activities as indicated by the United States Geological Survey and the California Division of Mines and Geology. There is a higher level of risk for significant building damage and fire due to the higher incidence and magnitude of earthquakes in this area. Maintaining a higher level of life-safety of building occupants by providing removal of exceptions to installation of automatic fire sprinkler systems is therefore required.
(2) Roofing cover requirement for hillside areas
Amending the Code to require that the roof covering for structures in the hillside area is a minimum Class B is necessary due to the climatic conditions of the area. The hillside area has a long history of high winds, with an associated higher risk of accelerated and more significant structure damage and higher potential for related casualties.
(3) Special inspection exception
Amending the Code to require special inspection for isolated spread concrete footings of buildings of three stories or less where the structural design of the footing is based upon a specified compressive strength of concrete greater than 2,500 psi is necessary due to expansive (clay) soils and seismic activity common to this geological area.
(4) Foundations and foundation reinforcement
Amending the Code to require all new foundations for building additions to R-3 occupancies shall be of the same type of foundation system as the existing structure, unless foundation design recommendation from a soils engineer is provided, and the foundation system is designed, and plans, calculations, and specifications are prepared, stamped and signed, by a California licensed engineer or architect, is necessary due to expansive (clay) soils and seismic activity common to this geological area. (5) Restrict use of bracing methods
Amending the Code Table 2308.6.1 with added footnotes f and g to prohibit the use of bracing methods PBS, HPS, and SFB in seismic design categories D or E, and prohibit the use of bracing methods GB, DWB and PCP in seismic design category E due to their poor performance in earthquakes. Milpitas is in seismic design category D2 with potential for frequent and more intense seismic activity 469
Item # 17.
10 Ordinance No. 65.152
Chapter 3.5 – RESIDENTIAL CODE
The proposed substantive amendments to the Residential Code involve the following:
(1) Roofing cover requirement for hillside areas
(2) Restrict use of bracing methods
(3) Foundations and foundation reinforcement
The following findings support that the above amendments and modifications are reasonably necessary because of local climatic, geological or topographical conditions:
(1) Roofing cover requirement for hillside areas
Amending the Code to require that the roof covering for structures in the hillside area is a minimum Class B is necessary due to the climatic conditions of the area. The hillside area has a long history of high winds, with an associated higher risk of accelerated and more significant structure damage and higher potential for related casualties.
(2) Restrict use of bracing methods
Amending the Code Table R602.10.3(3) and adding footnotes I and j to restrict the use of bracing methods PBS, HPS, SFB, CS-SFB, GB, DWB and PCP in Seismic Design Categories D0, D1 and D2 due to their poor performance in earthquakes. Milpitas is in seismic design category D2. (3) Foundations and foundation reinforcement
Amending the Code to require all new foundations for building additions to R-3 occupancies shall be of the same type of foundation system as the existing structure, unless foundation design recommendation from a soils engineer is provided, and the foundation system is designed, and plans, calculations, and specifications are prepared, stamped and signed, by a California licensed engineer or architect, is necessary due to expansive (clay) soils and seismic activity common to this geological area.

Chapter 6 – ELECTRICAL CODE
The proposed substantive amendments to the Electrical Code involve the following:
(1) Requirement for all new electrical services to be underground (2) Disconnects of electrical power for each building to be in a readily accessible location on the first floor
(3) Grounding systems in new buildings shall be an electrode encased in concrete The following findings support that the above amendments and modifications are reasonably necessary because of local climatic, geological or topographical conditions:
(1) Requirement for all new electrical services to be underground Buildings in many areas of Milpitas are located in high wind areas and flood plains. Due to these local climatic conditions, amending the Code to provide for elimination of overhead services that are inherently less safe in the event of windstorms and floods will provide a higher level of safety. (2) Disconnects of electrical power for each building to be in a readily accessible location on the first floor 470
Item # 17.
11 Ordinance No. 65.152
Amending the Code provides for a quicker means of finding the location of the main power disconnects to buildings in the event of seismic events and related potential for fire and other emergencies. This is critical as Milpitas is located in in an area of high seismic activities. (3) Grounding systems in new buildings shall be an electrode encased in concrete Amending the Code allows significantly higher assurances that the grounding of the building electrical system will not deteriorate and fail due to the acidic and expansive properties of local soils. Other types of grounding, such as rods, will be subject to deterioration in local soils, whereas an encased electrode will not be in contact with the soils.

Providing equipment grounding conductors enhances capability of keeping electrical systems grounded, which is important in high amperage electrical services common to the City of Milpitas. 471
Item # 17.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Introduce Ordinance No. 65.152 Relating to Adopting by Reference the 2022 California Building Codes with Amendments and Set a Public Hearing on December 6, 2022 for Adoption of the Ordinance (Staff Contact: Bill Tott, Building Official, 408-586-3263)
Category: Consent Calendar-Community Development
Meeting Date: 10/18/2022
Recommendation: (1) Following the City Attorney’s reading of the title, move to waive the first reading beyond the title and introduce Ordinance No. 65.152 amending Chapters 3,

3.5, 4, 5, 6, 7, 10,14,150, and 170 of Title II of the Milpitas Municipal Code relating to adopting by reference the 2022 California Building Code, 2022 California Residential Code, 2021 International Property Maintenance Code, 2022 California Mechanical Code, 2022 California Electrical Code, 2022 California Plumbing Code, 2021 International Swimming Pool and Spa Code, 2022 California Existing Building Code, and 2022 California Historical Building Code, with amendments; and (2) Set a public hearing on December 6, 2022, pursuant to California Government Code Section 50022.3, for adoption of the Ordinance.

BACKGROUND:

Title 24 of the California Code of Regulations, also referred to as the California Building Standards Code, governs the design and construction of buildings and associated facilities and equipment throughout California.

It is updated and published on a triennial basis by the California Building Standards Commission (CBSC) by order of the California legislature. Each code cycle update improves safety, sustainability, and resiliency, and incorporates new technology, design, and construction methods. Throughout each code adoption cycle, amendments to the codes are developed through an extensive public participation process. In July 2022, the CBSC published the 2022 edition of the California Building Standards Code, making this year a code adoption year. The building regulations in the California Building Standards Code have the same force of law and take effect 180 days after their publication. On January 1, 2023, the 2022 California Building Standards Code will become effective statewide. This 2022 Code has prompted jurisdictions statewide to adopt the new code and complete local amendments as necessary. In accordance with California Health and Safety Code, a city may establish more restrictive building standards than those in the California Building Standards Code if the city makes an express finding that each amendment is reasonably necessary because of local climatic, geological, or topographical conditions.

ANALYSIS:

As part of the triennial code adoption cycle, and pursuant to California Health and Safety Code Sections 17958 and 18941.5, staff recommends that the City of Milpitas adopt the 2022 California Building Standards Code.

The parts of the 2022 California Building Standards Code that are included in this proposed adoption ordinance are: The California Building Code, Residential Code, Mechanical Code, Electrical Code, Plumbing Code, Existing Building Code, and Historical Building Code. Staff also proposes several local amendments be adopted as part of the code adoption. The amendments along with the findings that support them are included in the proposed ordinance. If approved, the Building Official will file a copy of this ordinance with the California Building Standards Commission. The 2022 California Building Code is adopted by reference, with amendments. Close examination of the current and prior California Building Code and Municipal Code was performed. The Residential Code was adopted and amended in a similar way as the Building Code. Same was done with the Mechanical, Plumbing, Electrical, Existing Building, and Historical Building Codes. In addition to the California codes, the 2021 International Swimming Pool and Spa Code (ISPSC) and the 2021 International Property Maintenance Code (IPMC) are included. The 2019 ISPSC and IPMC were previously adopted and will be replaced by the 2022 versions. The California Energy Code and Green Building Standards Code are 472 Item # 17.
being adopted under separate ordinances which were established in the previous code adoption cycle due to the introduction of “reach code” amendments as part of the adoption of these codes. Adoption of the new 2022 codes will ensure that buildings and structures in Milpitas will safeguard the health, safety, and general welfare of the public. Staff recommends that the Council introduce the proposed ordinance adopting the new codes with amendments and set a public hearing on December 6, 2022. This timeline will allow notice of the public hearing to be published once a week for two successive weeks pursuant to Government Code Section 6066.

POLICY ALTERNATIVE(S):

Alternative : Adopt the new codes with modifications to the amendments and / or include only a portion of the amendments.

Pros: Would provide a limited increase over the baseline minimum safety standards.

Cons: Would not give full consideration for local conditions in Milpitas.

Reason for Not Recommending: Would not provide the complete code adoption with amendments to address local conditions in Milpitas.

FISCAL IMPACT:

There is no cost to the City other than administrative staff time and expense. Staff training on the new codes is needed and has been planned for in the budget. Training has begun and will be ongoing.

California Environmental Quality Act (CEQA):

The action being considered has no potential for causing a significant effect on the environment and is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3).

RECOMMENDATION:

Following the City Attorney’s reading of the title, move to waive the first reading beyond the title and introduce Ordinance No. 65.152 amending Chapters 3, 3.5, 4, 5, 6, 7, 10, 14, and 150 of Title II of the Milpitas Municipal Code relating to Code Administration; adopting by reference the 2022 California Building Code, 2022 California Residential Code, 2021 International Property Maintenance Code, 2022 California Mechanical Code, 2022 California Electrical Code, 2022 California Plumbing Code, 2021 International Swimming Pool and Spa Code, 2022 California Existing Building Code, and 2022 California Historical Building Code, with amendments. Set a public hearing on December 6, 2022, pursuant to California Government Code Section 50022.3, for adoption of the Ordinance.

Attachment(s):

Ordinance No. 65.152
473
Item # 17.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Conduct a Public Hearing and Adopt Ordinance No. 65.153 Adopting by Reference the 2022 California Energy Code; and Adopt Ordinance No. 65.154 Adopting by Reference the 2022 California Green Building Standards Code with Amendments; (Staff Contact: Bill Tott, Building Official, 408-586-3263) Category: Public Hearings - Community Development
Meeting Date: 12/6/2022
Recommendation: (1) Open the public hearing, hear testimony, then move to close the public hearing; (2) Waive the second reading and adopt Ordinance No. 65.153 amending Chapter 11 of Title II of the Milpitas Municipal Code adopting by reference the 2022 California Energy Code; and (3) Waive the second reading and adopt Ordinance No.

65.154 amending Chapter 19 of Title II of the Milpitas Municipal Code adopting by reference the 2022 California Green Building Standards Code with amendments and find a CEQA exemption.

BACKGROUND:

On October 18, 2022, the Council introduced Ordinances No. 65.153 and No. 65.154 and set a public hearing on December 6, 2022 for adoption of the ordinances pursuant to Government Code Section 50022.3. Notice of the public hearing was published on October 4 and October 11, 2022 pursuant to Government Code Section 6066.

There were no changes to the Ordinances from the first reading; the Ordinances are now ready for their second reading and adoption. However, during the discussion with Council regarding certain aspects of the proposed ordinances, four specific concerns were brought forward: 1. What is the impact on the grid from requiring new development to be all-electric? 2. What are the economic impacts on the housing market from the all-electric reach code? 3. Why should the City require affordable multifamily housing to install EV infrastructure when it is perceived by some that most of the residents can’t afford an EV? 4. Potential lack of availability of rebates for electric vehicles. Response to these concerns will be given in the following analysis portion of the AR.

Council also asked if a P.G.& E. representative could be invited to attend the December 6th Council meeting.

On November 8, 2022 the City Manager extended the invitation to P.G.& E. representatives to speak at the December 6th Council Meeting to share P.G.& E.’s perspective and plans supporting neighborhood electrification, share an update on what P.G.& E. is doing / planning to do to improve long term electrical grid capacity and grid reliability for our customers, and address and provide an update on P.G.& E.’s near term efforts to improve electrical infrastructure reliability for an area of Milpitas that has been experiencing frequent outages. P.G.&E. representatives confirmed that they will be attending the December 6, 2022 Council Meeting to provide the requested information.

The City of Milpitas is participating in the Silicon Valley Clean Energy reach code grant offering, which will provide $10,000 to the City for presenting reach codes to the City Council for consideration. After Council introduced the ordinances on October 18, 2022 staff submitted the request for the $10,000 Reach Code Grant.

Please see Attachment C for the SVCE Letter of Interest and the City’s request for payment of the $10,000 grant.

ANALYSIS:

Response to the three main concerns raised by Council members at the first reading on October 18, 2022:

1. What is the impact on the grid from requiring new development to be all-electric? 474
Item # 18.

California's power grid needs improvement and State agencies have ordered significant upgrades to the electrical supply grid to be built without delay. Battery storage, which is needed to bridge over times of peak demand, is rapidly expanding. Over 3,000 MW of battery power was active during the September heat wave and was key in avoiding rolling blackouts. The State forecasts only ~1% growth in load per year which can be easily managed. Looking at it from a long term perspective, many of the major stresses on the grid are caused by the very thing electrification will help stop: the use of fossil fuels. Burning fossil fuels has greatly accelerated global warming which is a significant cause of grid alerts from overheated electrical infrastructure. The allelectric reach codes for new construction together with solar PV with battery backup will lessen peak demand at critical times of the day when the use of electricity is highest, which will significantly lessen the impact on the grid.

2. What are the economic impacts on the housing market from the all-electric reach code? In Climate Zone 4 which includes Milpitas, constructing an average size all-electric single-family home is generally about $6,000 less to construct than building a mixed-fuel home. Most of the savings come from not having to install gas infrastructure. This is also true for all-electric Multifamily Midrise, Medium Offices, Medium Retail and Small Hotel occupancies, as represented in the table below where the benefit/cost ratios for all of these occupancies is 1 or greater which indicates cost-effectiveness based on studies completed in 2019 and 2022. See Attachment D for links to these studies.

C-E
Study
Vintage
BenefitCost
Ratio1
Net
Present
Value2
Construction
Cost Savings
vs Mixed-Fuel
Single-Family 2022 >1 $6,947 $6,000
ADU 2022 >1 $2,393 $2,100
Multifamily Midrise 2019 >1 $1,231 $888 per unit
Medium Office 2019 1.0 $32,786 $106,083
Medium Retail 2019 >1 $22,676 $23,087
Small Hotel 2019 >1 $1,246,730 $1,311,651
Notes:

1. This ratio is used by the CEC to determine cost-effectiveness. A ratio of 1.0 or greater indicates cost-effectiveness.

2. Net present value is based on a 30-year timeline and includes costs for construction, maintenance, equipment replacement, and operation.

3. Why should the City require affordable multifamily housing to install EV chargers when it is perceived by some that most of the residents can’t afford an EV? One aspect of the proposed reach code is that it does increase construction costs for the installation of EV infrastructure in multifamily projects with shared parking. To counter this SVCE will provide a subsidy to offset this cost for low-income and very low-income developments built during this building code cycle. Regarding the cost of an EV, even though the initial cost is more, the overall 5-year cost of ownership is often less, especially given the high cost of gas and maintenance for an internal combustion engine car. Another consideration in response to the question is that multi-family buildings generally have a life of at least 50 years, and now that California law specifies that nearly all new vehicles sold in 2035 (just 13 years away) will be electric, we need to look at the long term value of installing EV infrastructure now during new construction and not later when it will be significantly more expensive to retrofit while inconveniencing the occupants. Residents, even lower income residents, will be predominantly driving EVs for the majority of the life of the building. Charging at your residence is preferred and much more convenient than charging at offsite locations. That’s why adding EV chargers during initial construction, whether for lower income residents or others when the costs are minimal, 475 Item # 18.
is optimal. EV Charging infrastructure at multi-family properties is severely trailing and many renters cite lack of access to charging as a reason for not buying an EV. This requirement aims to address this equity issue and increase access to EV charges for renters and multi-family occupants.

For the proposed Milpitas EV reach code, the table below show that costs for new construction are significantly lower, at almost four times less per spot compared to the retrofit scenario, for both market rate and affordable housing. An office building scenario is also included to provide comparison for a non-residential project. This table indicates that increasing code requirements for charging infrastructure could potentially save significant amounts of money to building owners in the new construction context rather than waiting for tenants to become interested in electric vehicles, at which point significant costs related to invasive demolition and electrical infrastructure replacement would be necessary.

Scenario
Market Rate
25% Level 2
75% Level 1
Affordable Housing
20% Level 2
80% Level 1
Building Type New
Construction
Retrofit New
Construction
Retrofit
60-Unit
Residential
$1,410 $4,443 $1,049 $3,982
150-Unit
Residential
$1,197 $4,101 $1,002 $3,854
60-Space Office
Building
$1,166 $3232 N/A N/A
Notes:

1. Table based on Electric Vehicle Infrastructure Cost Analysis Report for Peninsula Clean Energy (PCE) & Silicon Valley Clean Energy (SVCE) November 2019.

2. “New Construction" and “Retrofit” costs are relative to a CALGreen 2019 mandatory baseline building

4. What incentives are available for electric vehicles? There are multiple financial incentives available for electric vehicles. The California Clean Vehicle Rebate Project offers incentives for the purchase or lease of qualified vehicles, and low-income applicants are eligible for higher incentives. These incentives range from $1,000 to $7,000 depending on vehicle type, location, and applicant income. Staff have confirmed that this program is still accepting rebate applications. Additionally, qualified electric vehicle purchases may be eligible for a federal tax credit through the Clean Vehicle Credit program. The minimum credit amount is $2,500 and the maximum credit amount is $7,500 for electric vehicles that meet the new requirement for final assembly in North America. SVCE’s EV Assistant tool can provide a personalized list of incentives for individuals shopping for EVs. Electric vehicle drivers also benefit from lower operating and maintenance costs as all-electric cars do not require as much maintenance as internal combustion engines and it is cheaper to charge an electric vehicle compared to raising gas prices.

The proposed reach codes are largely based on the model codes developed by Silicon Valley Clean Energy which have been vetted through considerable research and public review. Staff also incorporated adjustments to the proposed model reach codes as a result of stakeholder input from the Milpitas community. The proposed reach codes for Milpitas provide pathways / options that offer a more aggressive but balanced approach to newly constructed residential and non-residential projects for electrification and EV charging infrastructure in response to State mandates for greenhouse gas emission reductions and carbon free electricity.

Given that building emissions of GHG account for approximately 35-40% of total GHG emissions, and transportation accounts for 50% of all GHG, the need for all-electric standards for new construction and enhanced EV charging infrastructure is compelling. Elimination of natural gas usage through the use of allelectric standards for new construction would greatly reduce greenhouse gas emissions at an accelerated rate through the adoption of the reach codes.

FISCAL IMPACT: 476
Item # 18.

There is no cost to the City other than administrative staff time and expense. The City of Milpitas is participating in the Silicon Valley Clean Energy reach code grant offering, which will provide $10,000 to the City for presenting reach codes to the City Council for consideration.

CALIFORNIA ENVIRONMENTAL QUALITY ACT:

The action being considered has no potential for causing a significant effect on the environment and is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3).

RECOMMENDATION:
(1) Open the Public Hearing; hear testimony, then move to close the public hearing.(2) Waive the second reading and adopt Ordinance No. 65.153 amending Chapter 11 of Title II of the Milpitas Municipal Code adopting by reference the 2022 California Energy Code and (3) Waive the second reading and adopt Ordinance No. 65.154 amending Chapter 19 of Title II of the Milpitas Municipal Code adopting by reference the 2022 California Green Building Standards Code with amendments.

Attachment(s):

A. Ordinance No. 65.153 – adopting by reference the 2022 California Energy Code B. Ordinance No. 65.154 – adopting by reference the 2022 California Green Building Standards Code with amendments
C. SVCE Letter of Interest (LOI) and the City’s request for the $10,000 Reach Code Grant D. AR Introduce Ordinances 65.153 and 65.154 for the 2022 Energy and Green Building Standards Codes 477
Item # 18.

Ordinance No. 65.153
1 REGULAR
NUMBER: 65.153
TITLE: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MILPITAS AMENDING CHAPTER 11 OF TITLE II OF THE MILPITAS MUNICIPAL CODE ADOPTING BY REFERENCE THE 2019 CALIFORNIA ENERGY CODE
HISTORY: This Ordinance was introduced (first reading) by the City Council at its meeting of _________, 2022, upon motion by , and was adopted (second reading) by the City Council at its meeting of ____________________, upon motion by ___________________.

The Ordinance was duly passed and ordered published in accordance with law by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:
________________________________ __________________________ Suzanne Guzzetta, City Clerk Rich Tran, Mayor
APPROVED AS TO FORM:
________________________________
Michael Mutalipassi, City Attorney
478
Item # 18.
2 Ordinance No. 65.153
RECITALS:

WHEREAS, the California Building Standards Commission has adopted and published an updated Title 24 of the California Code of Regulations, also referred to as the 2022 California Building Standards Code, that will become effective statewide on January 1, 2023; and WHEREAS, California Health and Safety Code Sections 17958, 17958.5, 17958.7 and 18941.5 establish the authority for a city to adopt and make local amendments and modifications to the building standards in the California Building Standards Code to establish more restrictive building standards than those contained in the California Building Standards Code; and WHEREAS, California Health and Safety Code Sections 17958, 17958.5, 17958.7 and 18941.5 permit a city to make such local amendments and modifications as the city determines are reasonably necessary because of local climatic, geological or topographical conditions; and WHEREAS, the City of Milpitas has reviewed and intends to adopt the 2022 California Energy Code; NOW, THEREFORE, the City Council of the City of Milpitas does ordain as follows:

SECTION 1. RECORD AND BASIS FOR ACTION
The City Council has duly considered the full record before it, which may include but is not limited to the staff report, testimony by staff and the public, and other materials and evidence submitted or provided to the City Council. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT
The City Council hereby finds and determines that this Ordinance has been assessed in accordance with the California Environmental Quality Act (Cal. Pub. Res. Code, § 21000 et seq.) (“CEQA”) and the State CEQA Guidelines (14 Cal. Code Regs. § 15000 et seq.) and is categorically exempt from CEQA under CEQA Guidelines, § 15061(b)(3), which exempts from CEQA any project where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. Adoption of the proposed Ordinance would not be an activity with potential to cause significant effect on the environment because the changes made to the California Energy Code within are enacted to provide more protection to the environment, and therefore is exempt from CEQA. It is also exempt from CEQA pursuant to CEQA Guidelines, § 15038 which exempts actions taken by regulatory agencies for the enhancement and protection of the environment. As such, the Ordinance is categorically exempt from CEQA.

SECTION 3. AMENDMENT OF MILPITAS MUNICIPAL CODE TITLE II, CHAPTER 11 Chapter 11 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Chapter 11 ENERGY CODE
Sections:

Section 1 – Adoption of the Energy Code
479
Item # 18.
3 Ordinance No. 65.153
Section 1 Adoption of the Energy Code
II-11-1.01
The 2022 California Energy Code, published and copyrighted by the International Code Council, Inc. and the California Building Standards Commission in Part 6 of Title 24 of the California Code of Regulations, is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. The adoption includes Appendices 1-A and 1-B. The 2022 California Energy Code shall be designated and referred to as the “Energy Code” for the City of Milpitas. There is one copy of said Code on file in the office of the Building Official for use and examination by the public.

SECTION 5. REPEAL OF CONFLICTING ORDINANCES
Upon adoption of each new California Building Standards Code, the Ordinance adopting the previously adopted California Building Standards Code is superseded in its entirety. This Ordinance does not repeal Ordinance No. 65.147, which adopts by reference and amends the 2022 California Building Standards Code, Ordinance No. 65.149, which adopts by reference and amends the 2019 California Green Building Standards Code, nor Ordinance No. 113.25, which adopts by reference and amends the 2019 California Fire Code.

SECTION 6. SEVERABILITY
The provisions of this Ordinance are separable, and the invalidity of any phrase, clause, provision or part shall not affect the validity of the remainder.

SECTION 7. EFFECTIVE DATE AND POSTING
In accordance with Section 36937 of the Government Code of the State of California, this Ordinance shall take effect thirty (30) days from and after the date of its final adoption by the City Council, and after approval of the City of Milpitas application to enforce its locally adopted energy standards by the California Energy Commission, but no sooner than January 1, 2023. The City Clerk of the City of Milpitas shall cause this Ordinance or a summary thereof to be published in accordance with Section 36933 of the Government Code of the State of California.
480
Item # 18.
1 Ordinance No. 65.154

REGULAR
NUMBER: 65.154
TITLE: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MILPITAS AMENDING CHAPTER 19 OF TITLE II OF THE MILPITAS MUNICIPAL CODE ADOPTING BY REFERENCE THE 2022 CALIFORNIA GREEN BUILDING

STANDARDS CODE WITH AMENDMENTS
HISTORY: This Ordinance was introduced (first reading) by the City Council at its meeting of _______, 2022, upon motion by , and was adopted (second reading) by the City Council at its meeting of ____________________, upon motion by __________________.

The Ordinance was duly passed and ordered published in accordance with law by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:
________________________________ __________________________ Suzanne Guzzetta, City Clerk Rich Tran, Mayor
APPROVED AS TO FORM:
________________________________
Michael Mutalipassi City Attorney
481
Item # 18.
2 Ordinance No. 65.154
RECITALS:

WHEREAS, the California Building Standards Commission has adopted and published an updated Title 24 of the California Code of Regulations, also referred to as the 2022 California Building Standards Code, that will become effective statewide on January 1, 2023; and WHEREAS, California Health and Safety Code Sections 17958, 17958.5, 17958.7 and 18941.5 establish the authority for a city to adopt and make local amendments and modifications to the building standards in the California Building Standards Code to establish more restrictive building standards than those contained in the California Building Standards Code; and WHEREAS, California Health and Safety Code Sections 17958, 17958.5, 17958.7 and 18941.5 permit a city to make such local amendments and modifications as the city determines are reasonably necessary because of local climatic, geological or topographical conditions; and WHEREAS, California Health and Safety Code Sections 17958, 17958.5, 17958.7 and 18941.5 require a city, before making any amendments and modifications to the California Building Standards Code, make an express finding that such amendments and modifications are reasonably necessary because of local climatic, geological or topographical conditions; and
WHEREAS, the City of Milpitas has reviewed and intends to adopt the 2022 California Green Building Standards Code; and
WHEREAS, the City Council wishes to amend portions of the California Green Building Standards Code to better address local conditions and makes express findings that such amendments are reasonably necessary because of local climatic, geological or topographical conditions as set forth in this Ordinance.

NOW, THEREFORE, the City Council of the City of Milpitas does ordain as follows:

SECTION 1. RECORD AND BASIS FOR ACTION
The City Council has duly considered the full record before it, which may include but is not limited to the staff report, testimony by staff and the public, and other materials and evidence submitted or provided to the City Council. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT
The City Council hereby finds and determines that this Ordinance has been assessed in accordance with the California Environmental Quality Act (Cal. Pub. Res. Code, § 21000 et seq.) (“CEQA”) and the State CEQA Guidelines (14 Cal. Code Regs. § 15000 et seq.) and is categorically exempt from CEQA under CEQA Guidelines, § 15061(b)(3), which exempts from CEQA any project where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. Adoption of the proposed Ordinance would not be an activity with potential to cause significant effect on the environment because the changes made to the California Green Building Standards Code are enacted to provide more protection to the environment, and therefore is exempt from CEQA. Therefore, it can be seen with certainty that there is no possibility that the Ordinance in question may have a significant effect on the environment; accordingly, the Ordinance is categorically exempt from CEQA.

SECTION 3. AMENDMENT OF MILPITAS MUNICIPAL CODE TITLE II, CHAPTER 19 482
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Chapter 19 of Title II of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Chapter 19 GREEN BUILDING STANDARDS CODE
Sections:

Section 1 – Adoption of the Green Building Standards Code Section 2 – Amendments to the Green Building Standards Code Section 1 Adoption of the Green Building Standards Code II-19-1.01
The 2022 Edition of the California Green Building Standards Code, published and copyrighted by the International Code Council, Inc. and the California Building Standards Commission in Part 11 of Title 24 of the California Code of Regulations, also known as the CALGreen Code is hereby adopted and referred to, and by this reference expressly incorporated and made a part of this Chapter as though fully set forth herein. The 2022 California Green Building Standards Code shall be designated and referred to as the “Green Building Standards Code” for the City of Milpitas. There is one copy of said Code on file in the office of the Building Official for use and examination by the public.

Section 2 Amendments to the Green Building Standards Code II-19-2.01
Amend Section 202 of the Green Building Standards Code by adding the following definitions to read as follows:

Addition. An extension or increase in floor area of an existing building or structure.

Affordable Housing. Residential buildings that consist entirely of below market rate units and whose rents or sales prices are governed by local agencies to be affordable based on area median income.

All-Electric Building. A building that contains no combustion equipment or plumbing for combustion equipment serving space heating (including fireplaces), water heating (including pools and spas), cooking appliances and clothes drying, within the building or building property lines, and instead uses electric heating appliances for service.

Alteration orAlter. Any construction or renovation to an existing structure other than repair for the purpose of maintenance or addition.

Automatic Load Management System (ALMS). A control system designed to manage load across one or more electric vehicle supply equipment (EVSE), circuits, panels and to share electrical capacity and/or automatically manage power at each connection point. ALMS systems shall be designed to deliver no less than 3.3 kVa (208/240 volt, 16-ampere) to each EV Capable, EV Ready or EVCS space served by the ALMS, and meet the requirements of California Electrical Code Article 625. The connected amperage to the building site for the EV charging infrastructure shall not be lower than the required connected amperage per California Green Building Standards Code, Title 24 Part 11.

Combustion Equipment. Any equipment or appliance used for space heating, water heating, cooking, clothes drying and/or lighting that uses fuel gas.

Commercial Food Heat-Processing Equipment. Equipment used in a food establishment for heatprocessing food or utensils and that produces grease vapors, steam, fumes, smoke, or odors that are 483
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required to be removed through a local exhaust ventilation system, as defined in the California Mechanical Code.

Direct Current Fast Charging (DCFC). A vehicle space provided with electrical infrastructure that meets the following conditions:
i. A minimum of 48 kVa (480 volt, 100-ampere) capacity wiring. ii. Electric vehicle supply equipment (EVSE) located within three (3) feet of the vehicle space providing a minimum capacity of 80-ampere.

Electric Heating Appliance. A device that produces heat energy to create a warm environment by the application of electric power to resistance elements, refrigerant compressors, or dissimilar material junctions, as defined in the California Mechanical Code.

Electric Vehicle Charging Station (EVCS). An EV Ready vehicle space that includes the installation of electric vehicle supply equipment (EVSE). An EVCS space may be used to satisfy EV Ready space requirements. EVSE shall be installed in accordance with the California Electrical Code, Article 625.

Electric Vehicle Supply Equipment (EVSE). The electric vehicle charging connectors, attachment plugs, and all other fittings, devices, power outlets, or apparatus installed specifically for the purpose of transferring energy between the premises wiring and the electric vehicle.

Fuel Gas. A gas that is natural, manufactured, liquefied petroleum, or a mixture of these.

Level 2 EV Capable. A vehicle space provided with electrical infrastructure that meets the following requirements:
i Conduit that connects a listed electrical panel of sufficient capacity to a junction box with or without a receptacle located within three (3) feet of the vehicle space. ii The conduit shall accommodate at least 8.3 kVa (208/240 volt, 40-ampere) per vehicle space.

Conduit shall have a minimum nominal trade size of 1 inch inside diameter and may be sized for multiple circuits as allowed by the California Electrical Code. Conduit shall be installed in spaces that will be inaccessible after construction, either trenched underground or where penetrations to walls, floors, or other partitions would otherwise be required for future installation of branch circuits, and such additional elements deemed necessary by the Building Official. Construction documents shall note future installation of conduit from the panel to the vehicle space, via the installed inaccessible conduit.
iii The electrical panel shall reserve a space for a 40-ampere overcurrent protective device(s) for EV charging, labeled in the panel directory as “EV CAPABLE.” iv The EV vehicle space shall have signage with at least a 12” font adjacent to the parking space indicating the space is EV Capable.
v. Electrical load calculations shall demonstrate that the electrical panel service capacity and electrical system, including any on-site distribution transformer(s), have sufficient capacity to simultaneously charge all EVs at all required EV spaces at a minimum of 40 amperes.

Level 1 EV Ready. A vehicle space that is served by a complete electric circuit with the following requirements:
i A minimum of 2.2 kVa (110/120 volt, 20-ampere) capacity wiring. ii A receptacle labeled “Electric Vehicle Outlet” or electric vehicle supply equipment located within three (3) feet of the vehicle space. If EVSE is provided, the minimum capacity of the EVSE shall be 16-ampere.
iii Conduit oversized to accommodate future Level 2 EV Ready (208/240 volt, 40-ampere) at each vehicle space.
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Level 2 EV Ready. A vehicle space that is served by a complete electric circuit with the following requirements:
i A minimum of 8.3 kVa (208/240 volt, 40-ampere) capacity wiring. ii A receptacle labeled “Electric Vehicle Outlet” or electric vehicle supply equipment located within three (3) feet of the vehicle space. If EVSE is provided, the minimum capacity of the EVSE shall be 30-ampere.

Low Power Level 2 EV Ready. A vehicle space that is served by a complete electric circuit with the following requirements:
i A minimum of 4.1 kVA (208/240 Volt, 20-ampere) capacity wiring. ii A receptacle labeled “Electric Vehicle Outlet” or electric vehicle supply equipment located within three (3) feet of the vehicle space. If EVSE is provided, the minimum capacity of the EVSE shall be 16-ampere.
iii Conduit oversized to accommodate future Level 2 EV Ready (208/240 volt, 40-ampere) circuit at each vehicle space.

Section 2 – Amendments to the Green Building Standards Code II-19-2.02
Amend Section 301.1.1 of the Green Building Standards Code to read as follows:
301.1.1 Additions and alterations. [HCD] The mandatory provisions of Chapter 4 shall be applied to additions or alterations of existing residential buildings where the addition or alteration increases the building’s conditioned area, volume, or size. The requirements shall apply only to and/or within the specific area of the addition or alteration. (No change to existing California amendment.) The mandatory provisions of Section 4.106.4.2 may apply to additions or alterations of existing parking facilities or the addition of new parking facilities serving existing multifamily buildings.

The mandatory provisions of Section 5.106.5.3 may apply to additions or alterations of existing parking facilities or the addition of new parking facilities serving existing nonresidential buildings.

NOTE: Repairs including, but not limited to, resurfacing, restriping, and repairing or maintaining existing lighting fixtures are not considered alterations for the purpose of this section.

II-19-2.03
Amend Section 4.106.4 through Section 4.106.4.3 of the Green Building Standards Code to read as follows:

4.106.4 Electric vehicle (EV) charging. Residential construction shall comply with Section 4.106.4.1 or

4.106.4.2,and 4.106.4.3, to facilitate future installation and use of EV chargers. Electric vehicle supply equipment (EVSE) shall be installed in accordance with the California Electrical Code, Article 625.

Calculation for spaces shall be rounded up to the nearest whole number.

Exceptions:

1. On a case-by-case basis, where the local enforcing agency has determined EV charging and infrastructure are not feasible based upon one or more of the following conditions:

1.1. Where there is no local utility power supply, or the local utility is unable to supply 485
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adequate power.

2. Accessory Dwelling Units (ADU) and Junior Accessory Dwelling Units (JADU) without additional parking facilities.

3. Multifamily residential R-2 building projects that have City Council approved entitlements before the code effective date.

4.106.4.1 One-and two-family dwellings and town-houses with attached private garages.

4.106.4.1.1 New Construction. If one vehicle space is provided, it shall be a Level 2 EV Ready space. If a second vehicle space is provided, it shall be provided with a Level 1 EV Ready space.

4.106.4.1.1 Identification.

Deleted.

4.106.4.1.2. Existing Building. Parking additions shall provide electrical capacity and EV infrastructure in accordance with the requirements of 4.106.4.1.1.

4.106.4.2 Multifamily dwellings with residential parking facilities.

4.106.4.2.1 New Construction. Twenty-five percent (25%) of vehicle spaces for dwelling units shall have access to EVCS with Level 2 EV Ready infrastructure. ALMS shall be permitted to reduce load when multiple vehicles are charging. Seventy-five percent (75%) of vehicle spaces for dwelling units shall be Low Power Level 2 EV Ready. EV ready spaces and EVCS in multifamily developments shall comply with California Building Code, Chapter 11A, Section 1109A. EVCS shall comply with the accessibility provisions for EV chargers in the California Building Code, Chapter 11B.

4.106.4.2.2 New Construction. Affordable Housing. Five percent (5%) of vehicle spaces for dwelling units shall have access to EVCS with Level 2 EV Ready infrastructure. ALMS shall be permitted to reduce load when multiple vehicles are charging. Fifteen percent (15%) of vehicle spaces shall have access to Low Power Level 2 Ready infrastructure. Eighty percent (80%) of vehicle spaces for dwelling units shall have access to Level 1 EV Ready infrastructure. EV ready spaces and EVCS in multifamily developments shall comply with California Building Code, Chapter 11A, Section 1109A.

EVCS shall comply with the accessibility provisions for EV chargers in the California Building Code, Chapter 11B.

Note: The total number of EV spaces should be one-hundred percent (100%) of dwelling units or onehundred percent (100%) of parking spaces, whichever is less.

4.106.4.2.3 Existing Buildings.

1. When new vehicle spaces are added and the work requires a building permit, ten percent (10%) of the total number of vehicle spaces added shall be EVCS Level 2 Ready. Any existing EV Capable spaces on the building property required by the locally adopted codes at the time of building permit shall be upgraded to a minimum of Level 1 EV Ready. Upgraded vehicle spaces shall meet the accessibility requirements of California Building Code Chapters 11A and 11B.

2. When new vehicle spaces are added and ALMS is installed, the ALMS must be designed to deliver no less than 2.2 kVa (110/120 volt, 20-ampere).

4.106.4.2.4 Electric Vehicle Ready Space Signage.

Electric vehicle ready spaces shall be identified by signage or pavement markings, in compliance with Caltrans Traffic Operations Policy Directive 13-01 (Zero Emissions Vehicle Signs and Pavement Markings) or its successor (s).
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4.106.4.3 Electric Vehicle Charging Stations (EVCS). Electric vehicle charging stations required by Section 4.106.4.2 shall comply with Section 4.106.4.3.

Exception: Electric vehicle charging stations serving public accommodations, public housing, motels, and hotels shall not be required to comply with this section. See California Building Code, Chapter 11B, for applicable requirements.

4.106.4.3.1 Location. EVCS shall comply with at least one of the following options:

1.The charging space shall be located adjacent to an accessible parking space meeting the requirements of the California Building Code, Chapter 11A, to allow use of the EV charger from the accessible parking space.

2.The charging space shall be located on an accessible route, as defined in the California Building Code, Chapter 2, to the building.

Exception: Electric vehicle charging stations designed and constructed in compliance with the California Building Code, Chapter 11B, are not required to comply with Section

4.106.4.3.1 and Section 4.106.4.3.2.

4.106.4.3.2 Dimensions. The charging spaces shall be designed to comply with the following:

1.The minimum length of each EV space shall be 18 feet (5486 mm).

2. The minimum width of each EV space shall be 9 feet (2743 mm).

3. One in every 25 charging spaces, but not less than one, shall also have an 8- foot (2438 mm) wide minimum aisle. A 5-foot (1524 mm) wide minimum aisle shall be permitted provided the minimum width of the EV space is 12 feet (3658 mm).
a. Slope for the EV space and the access aisle shall not exceed 1 unit vertical in 48 units horizontal (2.083 percent slope) in any direction.

Exception: Where the Milpitas Municipal or Zoning Code permits parking space dimensions that are less than the minimum requirements stated in this section 4.106.4.3.2, and the compliance with would be infeasible due to particular circumstances of a project, an exception may be granted while remaining in compliance with California Building Code Section Table 11B-228.3.2.1 and 11B-812, as applicable.

4.106.4.2.2.1.3 Accessible EV Spaces.

Deleted.

4.106.4.2.3 EV space requirements.

Deleted.

4.106.4.2.4 Identification.

Deleted.

4.106.4.2.5 Electric Vehicle Ready Space Signage.

Deleted.

4.106.4.3 Electric vehicle charging for additions and alterations of parking facilities serving existing multifamily buildings.

Deleted.
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4.106.4.4 Direct current fast charging stations. One DCFC may be substituted for up to five (5) EVCS to meet the requirements of 4.106.4.1 and 4.106.4.2. Where ALMS serve DCFC stations, the power demand from the DCFC shall be prioritized above Level 1 and Level 2 spaces.

II-19-2.04
Amend Section 4.106 Site Development to add the following sections for all-electric buildings and qualifying alteration projects:

4.106.5 All-electric buildings. New construction buildings and qualifying alteration projects shall comply with Section 4.106.5.1 or 4.106.5.2 so that they do not use combustion equipment or are ready to accommodate installation of electric heating appliances.

4.106.5.1. New construction and qualifying alteration projects. All newly constructed buildings shall be all-electric buildings. Alterations that include replacement or addition of over 50 percent of the existing foundation for purposes other than a repair or reinforcement as defined in California Existing Building Code Section 202; or where over 50 percent of the existing framing above the sill plate is removed or replaced for purposes other than repair, shall be all-electric buildings. If either of these criteria are met within a three-year period, measured from the date of the most recent previously obtained permit final date, the project shall be subject to the all-electric building’s requirements.

Tenant improvements shall not be considered new construction. The final determination whether a project meets the definition of substantial reconstruction/alteration shall be made by the local enforcing agency.

Exceptions:

1. Multifamily residential building projects that have approved entitlements before the effective date of this ordinance may install fuel gas for water heating systems serving multiple dwelling units. The applicant shall comply with Section 4.106.5.2.

2. If the applicant establishes that there is not an all-electric prescriptive compliance pathway for the building system under the California Building Energy Efficiency Standards, and that the building is not able to achieve the performance compliance standard applicable to the building under the Energy Efficiency Standards using commercially available technology and an approved calculation method, then the local enforcing agency may grant a modification. The applicant shall comply with Section

4.106.5.2.

Inactive Fuel Gas Infrastructure may be extended to spaces that are anticipated to qualify for the exceptions contained in this chapter. The inactive Fuel Gas Infrastructure shall not be activated, have a meter installed, or otherwise used unless the exemptions specified in this chapter have been confirmed as part of the issuance of a building permit. If the Fuel Gas Infrastructure is no longer serving one of the exceptions contained in this chapter, it shall either be capped, otherwise terminated, or removed by the entity previously entitled to the exemption, in a manner pursuant to all applicable Codes.

The City of Milpitas shall have the authority to approve alternative materials, design and methods of construction or equipment per California Building Code Section 104.

4.106.5.2 Requirements for combustion equipment. Where combustion equipment is allowed per Exceptions under 4.106.5.1, the construction drawings shall indicate electrical infrastructure and physical space accommodating the future installation of an electrical heating appliance in the following ways, as certified by a registered design professional or licensed electrical contractor:
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1. Branch circuit wiring, electrically isolated and designed to serve all electrical heating appliances in accordance with manufacturer requirements and the California Electrical Code, including the appropriate voltage, phase, minimum amperage, and an electrical receptacle or junction box within five feet of the appliance that is accessible with no obstructions. Appropriately sized conduit may be installed in lieu of conductors; and

2. Labeling of both ends of the unused conductors or conduit shall be with “For Future Electrical Appliance”; and

3. Reserved circuit breakers in the electrical panel for each branch circuit, appropriately labeled (e.g. “Reserved for Future Electric Range”), and positioned on the opposite end of the panel supply conductor connection; and

4. Connected subpanels, panelboards, switchboards, busbars, and transformers shall be sized to serve the future electrical heating appliances. The electrical capacity requirements shall be adjusted for demand factors in accordance with the California Electric Code; and

5. Physical space for future electrical heating appliances, including equipment footprint, and if needed a pathway reserved for routing of ductwork to heat pump evaporator(s), shall be depicted on the construction drawings. The footprint necessary for future electrical heating appliances may overlap with non-structural partitions and with the location of currently designed combustion equipment.

II-19-2.05
Amend Section 5.106.5.3 through Section 5.106.5.3.3 of the Green Building Standards Code to read as follows:

5.106.5.3 Electric Vehicle (EV) Charging. Nonresidential construction shall comply with Section

5.106.5.3.1 or Section 5.106.5.3.2 to facilitate future installation and use of EV chargers. Accessible EVCS shall be provided in accordance with the California Building Code Chapter 11B Section 11B-228.3. For EVCS signs, refer to Caltrans Traffic Operations Policy Directive 13-01 (Zero Emission Vehicle Signs and Pavement Markings) or its successor(s).

Exception: Where there is no commercial power supply.

Notes:

1. Load balancing systems may be installed to increase the number of EV chargers or the amperage or voltage beyond the minimum requirements in this code. The option does not allow for installing less electrical panel capacity than would be required without load balancing.

5.106.5.3.1 Office Buildings. In nonresidential new construction buildings designated primarily for office use, when 10 or more parking spaces are constructed:

1. 5% of the available parking spaces on site shall be equipped with Level 2 EVCS;

2. An additional 10% shall be provided with at least Level 1 EV Ready circuits; and

3. An additional 20% shall be at least EV Capable or EV Ready.

Calculations for the required minimum number of spaces equipped with Level 2 EVCS, Level 2 EV Ready spaces and EV Capable spaces shall all be rounded up to the nearest whole number.

Construction plans and specifications shall demonstrate that all raceways shall be a minimum of 1” and sufficient for installation of EVCS at all required Level 1 EV Ready and EV Capable spaces; Electrical calculations shall substantiate the design of the electrical system to include the rating of equipment and any on-site distribution transformers, and have sufficient capacity to simultaneously charge EVs at all 489
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required EV spaces including Level 1 EV Ready and EV Capable spaces; and service panel or subpanel(s) shall have sufficient capacity to accommodate the required number of dedicated branch circuit(s) for the future installation of the EVSE.

5.106.5.3.2 Other Nonresidential Buildings. In nonresidential new construction buildings that are not designated primarily for office use, such as retail or institutional uses, when 10 or more parking spaces are constructed:

1. 5 % of the available parking spaces on site shall be equipped with Level 2 EVCS;

2. An additional 15% shall be at least Level 2 EV Capable.

3. Over 100 spaces: option for one 80kW Fast Charger per 100 spaces.

Exception: Installation of each Direct Current Fast Charger with the capacity to provide at least 80 kW output may substitute for 6 Level 2 EVCS and 5 EV Ready spaces after a minimum of 6 Level 2 EVCS and 5 Level 1 EV Capable spaces are installed.

Note: Calculations for the required minimum number of spaces equipped with Level 2 EVCS and Level 1 EV Capable spaces shall be rounded up to the nearest whole number.

5.106.5.3.3 Design Requirements. For all projects subject to Title 24, Part 2, Chapter 11B, construction documents shall indicate how many accessible EVCS would be required under the California Code of Regulations Title 24, Chapter 11B, if applicable, in order to convert Level 1 EV Ready infrastructure to EVCS. Construction documents shall also demonstrate that the facility is designed such that compliance with accessibility standards, including Chapter 11B accessible routes, will be feasible for the required accessible EVCS at the time of EVCS installation. Surface slope for any area designated for accessible EVCS shall meet slope requirements in Chapter 11B and vertical clearance requirements in Chapter 11B at the time of original building construction.

II-19-2.06
Amend Section 5.106.5.3.5 of the Green Building Standards Code to read as follows:

5.106.5.3.5 Clean Air Vehicle Parking Designation. EVCS qualify as designated parking as described in Section 5.106.5.2 Designated parking for clean air vehicles.

Notes:

1. The California Department of Transportation adopts and publishes the California Manual on Uniform Traffic Control Devices (California MUTCD) to provide uniform standards and specifications for all official traffic control devices in California. Zero Emission Vehicle Signs and Pavement Markings can be found in the New Policies & Directives number 13-01. www.dot.ca.gov/hq/traffops/policy/13-

01.pdf.

2. See Vehicle Code Section 22511 for EV charging spaces signage in off-street parking facilities and for use of EV charging spaces.

3. The Governor’s Office of Planning and Research published a Zero-Emission Vehicle Community Readiness Guidebook which provides helpful information for local governments, residents and businesses. www.opr.ca.gov/ docs/ZEV_Guidebook.pdf.

4. Section 11B-812 of the 2022 California Building Code requires that a facility providing EVCS for public and common use also provide one or more accessible EVCS as specified in Table 11B228.3.2.1. Chapter 11B applies to certain facilities including, but not limited to, public accommodations and publicly funded housing (see section 1.9 of Part 2 of the California Building Code). Section 11B-812 requires that “Parking spaces, access aisles and vehicular routes serving them shall provide a vertical clearance of 98 inches (2489 mm) minimum.” It also requires that parking spaces and access aisles meet maximum slope requirements of 1 unit vertical in 48 units horizontal 490
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(2.083 percent slope) in any direction at the time of new building construction or renovation. Section 11B-812.5 contains accessible route requirements.

II-19-2.07
Amend section 5.106 Site Development to add the following sections for all-electric buildings and qualifying alteration projects.:

5.106.13 All-electric buildings. New construction buildings and qualifying alteration projects shall comply with Section 4.106.5.1 or 4.106.5.2 so that they do not use combustion equipment or are ready to accommodate installation of electric heating appliances.

5.106.13.1 New construction and qualifying alteration projects. All newly constructed buildings shall be all-electric buildings. Alterations that include replacement or addition of over 50 percent of the existing foundation for purposes other than a repair or reinforcement as defined in California Existing Building Code Section 202; or where over 50 percent of the existing framing above the sill plate is removed or replaced for purposes other than repair, shall be all-electric buildings. If either of these criteria are met within a three-year period, measured from the date of the most recent previously obtained permit final date, the project shall be subject to the all-electric building’s requirements.

Tenant improvements shall not be considered new construction. The final determination whether a project meets the definition of substantial reconstruction/alteration shall be made by the local enforcing agency.

Exceptions:

1. Nonresidential buildings containing kitchens located in a place of public accommodation, as defined in the California Building Code Chapter 2, may apply to the local enforcing agency for a modification to install commercial food heat-processing equipment served by fuel gas. The local enforcing agency may grant the modification if they find:
a. A business-related need to cook with combustion equipment; and b. The need cannot be achieved equivalently with an electric heating appliance; and c. The applicant has installed energy efficient equipment based on Energy Star or California Energy Wise qualifications, as available.
d. The applicant shall comply with Section 5.106.13.2.

2. If the applicant establishes that there is not an all-electric prescriptive compliance pathway for the building system under the California Building Energy Efficiency Standards, and that the building is not able to achieve the performance compliance standard applicable to the building under the Energy Efficiency Standards using commercially available technology and an approved calculation method, then the local enforcing agency may grant a modification. The applicant shall comply with Section

5.106.13.2.

Inactive Fuel Gas Infrastructure may be extended to spaces that are anticipated to qualify for the exceptions contained in this chapter. The inactive Fuel Gas Infrastructure shall not be activated, shall not have a meter installed, and/or shall not otherwise be used unless the exemptions specified in this chapter have been confirmed as part of the issuance of a building permit. If the Fuel Gas Infrastructure is no longer serving one of the exceptions contained in this chapter, it shall either be capped, otherwise terminated, or removed by the entity previously entitled to the exemption, in a manner pursuant to all applicable Codes.
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The City of Milpitas shall have the authority to approve alternative materials, design and methods of construction or equipment per California Building Code Section 104.

5.106.13.2. Requirements for combustion equipment. Where combustion equipment is allowed per exceptions under Section 5.106.13.1, the construction drawings shall indicate electrical infrastructure and physical space accommodating the future installation of an electrical heating appliance in the following ways, as certified by a registered design professional or licensed electrical contractor:

1. Branch circuit wiring, electrically isolated and designed to serve all electrical heating appliances in accordance with manufacturer requirements and the California Electrical Code, including the appropriate voltage, phase, minimum amperage, and an electrical receptacle or junction box within five feet of the appliance that is accessible with no obstructions. Appropriately sized conduit may be installed in lieu of conductors; and

2. Labeling of both ends of the unused conductors or conduit shall be with “For Future Electrical Appliance”; and

3. Reserved circuit breakers in the electrical panel for each branch circuit, appropriately labeled (e.g. “Reserved for Future Electric Range”), and positioned on the opposite end of the panel supply conductor connection; and

4. Connected subpanels, panelboards, switchboards, busbars, and transformers shall be sized to serve the future electrical heating appliances. The electrical capacity requirements shall be adjusted for demand factors in accordance with the California Electric Code; and

5. Physical space for future electrical heating appliances, including equipment footprint, and if needed a pathway reserved for routing of ductwork to heat pump evaporator(s), shall be depicted on the construction drawings. The footprint necessary for future electrical heating appliances may overlap with non-structural partitions and with the location of currently designed combustion equipment.

SECTION 4. EXPRESS FINDINGS
Pursuant to California Health and Safety Code Sections 17958.7 and 18941.5, the City Council hereby finds that the above amendments are necessary due to local climatic, geological or topographical conditions as set forth in Exhibit A
SECTION 5. REPEAL OF CONFLICTING ORDINANCES
Upon adoption of each new California Building Standards Code, the Ordinance adopting the previously adopted California Building Standards Code is superseded in its entirety. This Ordinance does not repeal Ordinance No. 65.147, which adopts by reference and amends parts of the 2022 California Building Standards Code, Ordinance No. 65.148, which adopts by reference the 2022 California Energy Code, nor Ordinance No. 113.25, which adopts by reference and amends the 2022 California Fire Code.

SECTION 6. SEVERABILITY
The provisions of this Ordinance are separable, and the invalidity of any phrase, clause, provision or part shall not affect the validity of the remainder.

SECTION 7. EFFECTIVE DATE AND POSTING
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In accordance with Section 36937 of the Government Code of the State of California, this Ordinance shall take effect thirty (30) days from and after the date of its final adoption by the City Council, but no sooner than January 1, 2023. The City Clerk of the City of Milpitas shall cause this Ordinance or a summary thereof to be published in accordance with Section 36933 of the Government Code of the State of California. 493
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EXHIBIT A

FINDINGS IN SUPPORT OF AMENDMENTS
TO TITLE 24 OF THE CALIFORNIA CODE OF REGULATIONS:

LOCAL CLIMATIC, GEOLOGICAL OR TOPOGRAPHICAL CONDITIONS
Amendments to the Green Building Standards Code:

II-19-2.01 Section 202
Definitions
II-19-2.02 Section 301.1.1
Mandatory provisions of Chapter 4 shall be applied to additions and remodels II-19-2.03 Section 4.106.4 through 4.106.4.3 through 5.106.5.3.3 EV charging for single family, duplex, townhouse, and multi-family II-19-2.04 Add Section 4.106.5 and 4.106.5.1 to Site Development for all-electric new residential construction
II-19-2.05 Add Section 5.106.5.3 through 5.106.5.3.3
EV charging for new office and other non-residential buildings II-19-2.06 Add Section 5.106.5.3.5
Clean air vehicle parking designation - EVCS qualify as designated parking II-19-2.07 Add Section 5.106.13 and Section 5.106.13.1 to Site Development for all-electric new nonresidential construction
The following findings support that the above amendments and modifications are reasonably necessary because of local climatic, geological or topographical conditions:

Express Findings – Climatic
The effects of climate change caused by Green House Gas (GHG) emissions are increasingly self-evident, and very costly. Higher temperatures are contributing to record heat waves and droughts, rising sea levels, more intense storms, wildfires and floods.

Climate change is the fundamental design problem of our time. The threat that climate change poses is existential, and buildings together with transportation are large contributors.

Amending all of the above referenced code sections is necessary to combat the ever-increasing harmful effects of climate change. Implementation of the proposed reach code amendments will provide an accelerated path to reduce Green House Gas (GHG) emissions and carbonization in an effort to stem the effects of global warming and climate change.
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333 W El Camino Real, Ste. 330 | Sunnyvale, CA 94087 | SVCleanEnergy.org | 1-844-474-SVCE Liz Gibbons, Chair
City of Campbell
George Tyson, Vice Chair
Town of Los Altos Hills
Jon Willey
City of Cupertino
Zach Hilton
City of Gilroy
Neysa Fligor
City of Los Altos
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Javed Ellahie
City of Monte Sereno
Yvonne Martínez Beltrán
City of Morgan Hill
Margaret Abe-Koga
City of Mountain View
Tina Walia
City of Saratoga
Larry Klein
City of Sunnyvale
Otto Lee
County of Santa Clara
March 18, 2022
Steven McHarris
City Manager
455 East Calaveras Blvd.

Milpitas, CA 95035
Re: SVCE Letter of Interest (LOI) for $10,000 Reach Code Grant Dear Mr. McHarris,
SVCE partnered with our member jurisdictions in 2019 to facilitate the adoption of amendments to the Building Code that encouraged allelectric buildings and/or expanded electric vehicle (EV) infrastructure during the new construction process. Milpitas adopted a reach code promoting building electrification and EV charging. For the 2022 code cycle, Milpitas has the opportunity to readopt the reach code, to extend its scope to all-electric requirements, to increase EV charging requirements, or to adopt a municipal ordinance.

SVCE has hired a consultant to provide technical support, draft model language, and facilitate stakeholder engagement. In recognition of the required staff resources, SVCE will also provide a $10,000 grant to jurisdictions that bring code(s) to a vote. SVCE staff will work with your staff to determine your preferred approach.

Our organization requests the signature and return of this letter indicating your likely interest in receiving $10,000 from SVCE to help defray costs associated with developing or readopting code amendments (“reach code”) that support building electrification and EV charging. The $10,000 grant will be provided to jurisdictions completing the following three steps:
• Return this signed Letter of Interest (LOI) to SVCE by April 30, 2022
• City staff to present valid amendments to the 2022 California Building Standards Code (Title 24) or to the municipal code that exceed statewide minimum requirements for building
electrification and/or EV infrastructure for a vote of their respective city council (typically August–October)
• City staff complete the Payment Request document (to be released shortly) and return to SVCE by November 30, 2022 – regardless of Council vote.
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333 W El Camino Real, Ste. 330 | Sunnyvale, CA 94087 | SVCleanEnergy.org | 1-844-474-SVCE Liz Gibbons, Chair
City of Campbell
George Tyson, Vice Chair
Town of Los Altos Hills
Jon Willey
City of Cupertino
Zach Hilton
City of Gilroy
Neysa Fligor
City of Los Altos
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Javed Ellahie
City of Monte Sereno
Yvonne Martínez Beltrán
City of Morgan Hill
Margaret Abe-Koga
City of Mountain View
Tina Walia
City of Saratoga
Larry Klein
City of Sunnyvale
Otto Lee
County of Santa Clara
We understand this letter is nonbinding and constitutes an indication of interest only.

Signed: Printed Name: Date:
___________________ __________________ __________
Job Title: Email Address:
___________________ __________________
Please complete and sign a copy of this letter and send an electronic copy via email to [email protected]. If you prefer to mail a hard copy, the address is: 333 W. El Camino Real, Suite 330, Sunnyvale, CA 94087.

Upon receipt, an email confirmation will be sent to the email address entered above. Please contact Zoe at (408) 721-5301 ext 1022 if you desire any additional information. In addition, I will be presenting information about this opportunity at the Santa Clara County/Cities Managers’ Association meeting in April.

Sincerely,
Girish Balachandran
CEO, Silicon Valley Clean Energy
Bill Tott April 13, 2022
Building Official [email protected]
496
Item # 18.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Introduce Ordinance No. 65.153 Adopting by Reference the 2022 California Energy Code; introduce Ordinance No. 65.154 Adopting by Reference the 2022 California Green Building Standards Code with Amendments; Set a Public Hearing on December 6, 2022 for Adoption of the Ordinances (Staff Contact: Bill Tott, Building Official, 408-586-3263)
Category: Community Development
Meeting Date: 10/18/2022
Recommendation: (1) Following the City Attorney’s reading of the title, move to waive the first reading beyond the title and introduce Ordinance No. 65.153 amending Chapter 11 of Title II of the Milpitas Municipal Code adopting by reference the 2022 California Energy Code; (2) Following the City Attorney’s reading of the title, move to waive the first reading beyond the title and introduce Ordinance No. 65.154 amending Chapter 19 of Title II of the Milpitas Municipal Code adopting by reference the 2022 California Green Building Standards Code with amendments; and (3) Set a public hearing on December 6, 2022, pursuant to California Government Code Section 50022.3, for adoption of the ordinances.

EXECUTIVE SUMMARY:

Staff recommends adopting the 2022 California Energy Code and the 2022 California Green Building Standards Code pertaining to all-electric requirement for newly constructed buildings, and electric vehicle (EV) charging for new residential and non-residential construction. These local amendments, referred to as reach codes, would exceed the requirements in the 2022 state codes to more effectively combat climate change and meet established state targets for reducing greenhouse gas emissions (GHG). The proposed reach codes for Milpitas were largely based on the model code amendment initiated by Silicon Valley Clean Energy with adjustments incorporated as a result of outreach and stakeholder input from the Milpitas community. Adopting the proposed reach codes will help reduce GHG emissions for new construction, improve indoor air quality and the safety of our building stock, support affordable housing, and stimulate the use of electric vehicles in the Milpitas community. Adopting reach codes for all-electric new construction and increased EV charging station standards align with Milpitas Climate Action Plan initiatives BE-2.1.1 and TR-2.1.2 for electrification and EV charging.

In order to make amendments to the California Building Standards Code, of which the Green Building Standards Code ( CalGreen) is a part of, the City must make express findings that the amendments and modifications are reasonably necessary because of local climatic, geological or topographical conditions.

These findings are contained in the proposed ordinance.

This report provides an overview of 1) the reach code adoption process; 2) proposed Milpitas reach code amendments to the 2022 Green Building Standards Code (CALGreen) for the triennial code adoption cycle; 3) benefits of the reach code amendments; 4) regional reach code focus and local engagement efforts; 5) benefits to low-income communities
BACKGROUND:

Every three years, the State of California adopts new building standards that are organized in Title 24 of the California Code of Regulations, referred to as the California Building Standards Code. This regular update is referred to as a “code cycle.” The last code cycle was adopted in 2019 and was effective on January 1, 2020.

The next code cycle will be adopted in 2022 and will be effective January 1, 2023. Cities and counties have the authority to adopt local amendments (reach codes) that require new development projects to exceed minimum 497
Item # 18.
requirements in the California Energy Code and California Green Building Standards Code (also known as CALGreen).

The City of Milpitas has demonstrated leadership in sustainability, especially over the past ten years in which the City installed solar photovoltaic panels at four City facilities including the Sports Center and more recently in conjunction with shade structures in parking areas adjacent to the Senior Center; and installed 12 EV charging stations for fleet vehicles at City Hall. Milpitas also adopted its first Climate Action Plan (CAP) for reducing greenhouse gas emissions (GHG), initially through 2020 which has now been updated to 2040. In 2018 Milpitas also launched a community scale carbon-free electricity endeavor through participation in the Silicon Valley Clean Energy (SVCE) program to provide decarbonized electricity sourced from providers of solar photovoltaic, wind, and hydro generated power.

Through the SVCE community choice energy provider of carbon-free electricity (with opt-up to 100% renewable electricity), almost 100% of Milpitas resident and businesses now enjoy receiving carbon-free electricity and millions in savings in on-bill charges while significantly reducing GHG emissions. Even though these savings and reductions in GHG emissions represent significant actions, more needs to be done to minimize climate change and meet State established GHG reduction targets.

The State target was set by Governor Brown’s Executive Order EO B-55-18, signed on September 10, 2018, which establishes the goal for the state to be carbon neutral as soon as possible, and no later than 2045.

Based on the City’s Climate Action Plan and State goals to reduce GHG emissions, all-electric requirements for new buildings and electrification retrofits will be necessary and ultimately required for renovation of existing buildings constructed under current standards. Addressing electrification now in new buildings avoids hardships for tenants and retrofit costs for building owners in the future and acknowledges the GHG impacts under current construction practices, especially when considering the benefits of building and transportation electrification when paired with carbon-free electricity that is provided by SVCE.

The City of Milpitas is participating in the Silicon Valley Clean Energy reach code grant offering, which will provide $10,000 to the City for presenting reach codes to the City Council for consideration. Please see Attachment C for the SVCE Letter of Interest for the $10,000 grant.

ANALYSIS:

A. Energy Code
Given that the 2022 proposed Milpitas reach codes are not considered as “energy efficiency” code requirements as they do not include energy conservation such as photovoltaics (PV), or energy storage and are for all-electric for newly constructed buildings and not electric readiness, the proposed Milpitas reach codes will only be referencing the Green Building Standards Code (CalGreen).

For purposes of energy efficiency standards, the California Energy Commission (CEC) will continue to adopt those standards for the Energy Code, whereas in the CalGreen code under Residential and Nonresidential Mandatory Measures, Divisions 4.1 and 5.1 for Planning and Design, measures such as allelectric requirements can reside in these sections as all-electric requirements for newly constructed buildings are not considered energy efficiency requirements.

Similarly, EV charging requirements have resided in CalGreen since the advent of this code for the same reason. In other words, EV charging infrastructure requirements are also not considered as energy efficiency requirements.

The upcoming 2022 California Energy Code has greatly enhanced the standards for new construction electrical readiness for heat pumps, cooktops, and clothes dryers. energy storage, and solar photovoltaic (PV) infrastructure, including base line requirements for the use of heat pumps. These new standards mirror the main electric readiness requirements of the Milpitas 2019 reach codes, providing a high level of continuity as these electric readiness standards perpetuate. 498
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The proposed reach code is largely based on the model code amendment developed by Silicon Valley Clean Energy, which has been vetted through considerable research and public review. Staff also incorporated adjustments in the proposed model reach code as a result of stakeholder input from the Milpitas community. The proposed reach codes for Milpitas provide pathways / options that offer a balanced approach to new residential and non-residential construction.

B. Green Building Standards Code (CALGreen)
It is widely known that availability of electric vehicle (EV) charging infrastructure is a critical component to EV adoption. Retrofitting existing buildings with EV charging infrastructure is significantly more expensive than it is during new construction.

EV reach codes will ensure that newly constructed buildings have ample EV charging capability to reduce long term costs of EV infrastructure installation while helping to increase EV adoption and decrease transportation related GHG emissions which account for approximately 50% of total GHG emissions.

The proposed reach code amendments will provide a higher percentage of charging infrastructure in new construction through a combination of Level 1 and Level 2 circuits with varying readiness.

Here is a Summary of the proposed reach code amendments to the Green Building Standards Code:

Section 202
Definitions added such as for Automatic Load Management (ALMS) and All-Electric Building Section 4.106.4 through 4.106.4.3 through 5.106.5.3.3
Increases EV charging infrastructure requirements for single family, duplex, townhouse, and multi-family occupancies
Add Section 4.106.5 and 4.106.5.1 to Site Development.

Provides the requirement for all-electric new residential construction Add Section 5.106.5.3 through 5.106.5.3.3
Increases EV charging infrastructure requirements for new office and other non-residential buildings Add Section 5.106.5.3.5
Provides clean air vehicle parking designation for EVCS as designated parking Add Section 5.106.13 and Section 5.106.13.1 to Site Development.

Provides for all-electric new nonresidential construction Costs/Benefits of Proposed Amendments
A. Statewide Cost-Effectiveness Study
Funded by California Investor-Owned Utilities (IOUs) such as Pacific Gas and Electric (PG&E), the California Statewide Codes and Standards Program (Statewide Program) and Energy Solutions completed cost-effectiveness studies for new residential and non-residential construction, for use in the current building code cycle. The proposed Milpitas reach codes are based on data in these studies, specific to Climate Zone 4, for cost effectiveness. For EV infrastructure go to Electric Vehicle Infrastructure Cost Analysis. For new residential and non-residential all-electric cost-effectiveness studies go to; Low-rise Residential, Mid-rise Residential, High-rise Residential, Non-Residential. 499
Item # 18.

B. Project Feasibility
While the environmental benefits of reach codes for all-electric and EV charging have been welldocumented, there have been concerns expressed by the development community on the financial impact on project feasibility due to increased construction costs associated with reach codes.

According to the cost-effectiveness studies noted in the previous section, all-electric buildings offer savings on “first” construction costs for all building types when compared to mixed fuel buildings in all 16 California climate zones. Similarly, the cost-effectiveness studies for EV charging infrastructure show that “first” construction costs compared to the cost to retrofit buildings for EV infrastructure are significantly less and do not impact or inconvenience residents.

C. Building Electrification
Given that building emissions of GHG account for approximately 35-40% of total GHG emissions, and transportation accounts for 50% of all GHG, the need for all-electric standards for new construction and enhanced EV charging infrastructure is compelling. Elimination of natural gas usage through the use of allelectric standards for new construction would greatly reduce greenhouse gas emissions at an accelerated rate through the adoption of the reach codes
Other benefits of all-electric standards include on-bill savings for Milpitas SVCE customers, cleaner, heathier indoor air quality, and greater safety due to the elimination of toxic and potentially lethal products of gas combustion such as carbon monoxide. For these reasons, there is considerable interest in promoting higher levels of all-electric new construction.

SVCE has taken the lead in Santa Clara County for researching and developing prototype standards for reach codes. Staff have worked closely with SVCE and its consultants to interpret and apply the 2022 costeffectiveness studies for all-electric residential and nonresidential new construction to the Milpitas reach code.

This does not apply to single-family homes.

Staff have also worked with SVCE and the Statewide Program’s team to establish new construction EV requirements which are more in-line with local EV adoption trends, while providing flexibility for the developer and keeping construction costs as low as possible.

Note that while construction costs will be incurred, there are numerous utility, state and federal incentive programs available to offset or reduce “first” costs for all-electric standards and EV charging infrastructure.

One such program is P.G.& E’s Electric Infrastructure Rule 29. Under this rule, P.G.& E. will pay for and coordinate the design and deployment of electric service extensions from P.G.&E. electrical distribution line facilities to the service delivery point for separately metered EV charging stations. P Local residents are showing a significant interest in electric vehicles. According to the Bay Area Air Quality Management 2022 Climate! Program, at the end of 2021, there were more than 266,000 EVs registered to Bay Area drivers.

Recent data compiled through surveys of potential electric vehicle customers and other sources indicates that the availability of EV charging infrastructure is a critical component to EV adoption. It is significantly more expensive to install charging infrastructure as a retrofit than during new construction. As such, ensuring that newly constructed residential and non-residential parking has ample EV charging capability will reduce long-term costs of EV infrastructure installation, while helping to increase EV adoption and decrease transportation-related greenhouse gas emissions.

While California’s new minimum requirements are a step forward, it is unlikely that the requirements for multi-family dwellings and non-residential buildings are enough to keep pace with expected EV growth looking towards 2030. The Statewide Program’s team reviewed approaches to increase the amount of EV infrastructure in new construction, while keeping construction costs as low as possible.

E. Low-Income Communities 500
Item # 18.

A recent study by U.S. Environmental Protection Agency (EPA) scientists shows that low-income communities are disproportionally affected by air pollution. It is imperative that clean fuel options such as electricity produced using solar, wind and hydro power are incorporated into Milpitas’ low-income housing community to promote reduction of indoor and outdoor air pollution.

EV charging requirements have been perceived by some to be incongruent with low-income housing needs, however, recent studies suggest otherwise. EVs and hybrids are becoming more affordable and their fuel costs are considerably lower than fossil fuel powered vehicles.

There are many incentives available for California buyers such as; The Clean Vehicle Rebate Program, which provides rebates from $1,000 to $7,000 for the purchase or lease of new zero-emission vehicles (ZEV). These can include electric, plugin-hybrid electric and fuel cell vehicles. Since 2010, the program has issued more than 450,000 rebates totaling more than $1 billion, which accounts for nearly 43 percent of light-duty ZEVs sold in the state, say officials.

The Clean Vehicle Assistance Program provides low-interest loans, vehicle purchase grants and vehicle charging incentives for income-qualified car owners. More than 80 percent of participants have a household income at or below federal poverty level.

Another program, which is led by California’s Air Resources Board (CARB), is the Clean Cars 4 All, which provides vouchers to income-qualified participants to be used toward the purchase or lease of a new or used ZEV or hybrid in exchange for scrapping an older gas-burning car. The program also has incentives for transit passes and micromobility.

The California Clean Fuel Reward Program is a time-of-sale program, also funded by CARB, and administered by Southern California Edison. This program can be included in the financing, which makes it very easy for dealers to apply, and gives immediate gratification to the customer.

The Clean Fuel Reward Program was initially offered as an instant “on-the-hood” rebate. By the end of 2021 nearly 200,000 customers had received this rebate, and 21 percent of the customers were in underserved communities, and 72 percent of customers replaced an internal combustion engine vehicle.

For these reasons, accelerating the rate of EV charging access infrastructure through the proposed Milpitas reach codes is just as relevant if not more critical to low-income below market rate housing as market-based or commercial projects.

Reach Code Efforts in Other Jurisdictions
Current regional reach code efforts are focused on new residential and non-residential construction and electric vehicle infrastructure (EVCI), to incentivize or require the following:
o All-electric buildings for new construction
o Mixed fuel (e.g. natural gas and electric) buildings, including electrification readiness o Additional EVCI requirements for all building types to further prepare for current and future anticipated electric vehicle (EV) uptake.

According to the CEC, over 55 Bay Area cities and Counties have adopted or are considering reach codes, with a focus on requiring all-electric requirements for new buildings and EV charging infrastructure for implementation in the 2022 building code cycle. Bay area jurisdictions include the following:
o 8 in Alameda County
o 24 in San Mateo County
o 16 in Santa Clara County
o 7 in Sonoma County
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Milpitas Public Outreach
A. Comments at Community Meetings
Staff conducted a series of outreach and engagement meetings with stakeholders and community members on the proposed reach codes. These include the August 15 Community Development Roundtable initial discussion, September 14 Stakeholder Workshop, and presentation to the Energy and Environmental Sustainability Commission on October 19.

The feedback from the outreach meetings was supportive ,and Milpitas residents acknowledged the growing climate change crisis and applauded the City’s reach code efforts.

B. Other Stakeholder Comments
Pacific Gas and Electric (PG&E) has repeatedly stated its commitment to helping communities achieve their energy goals and efforts to promote efficient and cost-effective electrification in new construction.

Effective Date of Code Amendments
The Green Building Standards Code ( CalGreen) amendments pertaining to all-electric requirements for new residential and non-residential building construction and EV charging infrastructure, if adopted by the City Council on December 6, 2022, would then be filed with the California Building Standards Commission (BSC) for ministerial review and documentation. Once the letter of acknowledgement and approval is received, the reach code amendments would then become effective on January 1, 2023.

POLICY ALTERNATIVE(S):

Alternative 1: Adopt the 2022 California Green Building Standards Code as written without local amendments (reach codes).

Pros: No additional work is needed. The section for amendments would be removed from the Ordinance.

Cons: Without reach codes, it would be increasingly difficult to achieve some of the established goals in the Milpitas Climate Action Plan. Also, the opportunity to join with other local jurisdictions in the efforts to accelerate code requirements to achieve the state mandated goals for greenhouse gas emission reductions by 2020, 2030, and 2045, would be a lost opportunity. Instituting all-electric for new construction and electric vehicle charging requirements with this code cycle will have lasting impacts as buildings constructed under this code cycle will have significant carbon reductions for the 30-40 year life span of the buildings. An added benefit to enacting the reach codes now is the avoidance of the higher costs to retrofit buildings later, and the inconvenience to tenants.

Reason for Not Recommending: This alternative is not recommended because of the loss of opportunity to increase the City’s efforts toward achieving a higher, earlier use of renewable energy, the reduction of GHG emissions, and achieving Milpitas Climate Action Plan milestones.

FISCAL IMPACT:

There is no cost to the City other than administrative staff time and expense.

California Environmental Quality Act (CEQA):

The action being considered has no potential for causing a significant effect on the environment and is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3).

RECOMMENDATION:
(1) Following the City Attorney’s reading of the title, move to waive the first reading beyond the title and introduce Ordinance No. 65.153 amending Chapter 11 of Title II of the Milpitas Municipal Code adopting by reference the 2022 California Energy Code; (2) Following the City Attorney’s reading of the title, move to waive the first reading beyond the title and introduce Ordinance No. 65.154 amending Chapter 19 of Title II of the 502 Item # 18.

Milpitas Municipal Code adopting by reference the 2022 California Green Building Standards Code with amendments; and (3) Set a public hearing on December 6, 2022, pursuant to California Government Code Section 50022.3, for adoption of the ordinances.

Attachment(s):

A. Ordinance No. 65.153 – adopting by reference the 2022 California Energy Code B. Ordinance No. 65.154 – adopting by reference the 2022 California Green Building Standards Code with amendments
C. SVCE Letter of Interest for the $10,000 grant
503
Item # 18.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Conduct a Public Hearing. Waive the Second Reading and Adopt Ordinance No. 133.26, Adopting by Reference with Certain Local Amendments the 2022 Edition of the California Fire Code (Staff Contact: Arthur Belton, Deputy Chief/Fire Marshal, 408-586-3384)
Category: Public Hearings-Public Safety
Meeting Date: 12/6/2022
Recommendation: (1) Following the City Attorney reading aloud the title, waive the second reading beyond the title of Ordinance No. 113.26; (2) Open the public hearing and move to close following comments; and (3) Adopt Ordinance No. 113.26 adopting by reference with certain local amendments the 2022 edition of the California Fire Code, enacted as Chapter 300, Title V of the Milpitas Municipal Code.

BACKGROUND:

The California State Building Standards Commission adopted the 2021 International Fire Code with State Amendments, known as the 2022 Edition of the California Fire Code, which becomes effective by all local jurisdictions on January 1, 2023. For jurisdictions to maintain their current level of regulation without interruption, the code must be adopted with local amendments. As with past code adoptions, the Santa Clara County Fire Marshals Association collaborated to develop standardized amendments for use throughout the County that maintain the existing level of regulation for the protection of public health and safety The proposed Ordinance includes certain findings necessary to locally amend portions of the California Fire Code. Such findings shall be based on but not limited to Health and Safety Code Sections 18941.5, as well as 17958.5 and 17958.7, relative to local climatic, geographical, or topographical conditions.

Ordinance No. 113.26 was introduced at its first reading during the City Council Meeting on October 18, 2022.

The Ordinance repeals and replaces Chapter 300 of Title V of the Milpitas Municipal Code, adopting by reference the 2022 California Fire Code along with specified local amendments.

The City Council did not request any changes to the Ordinance and directed staff to notice a public hearing for this meeting at the first reading.

ANALYSIS:

The California Fire Code and local amendments are typically adopted every three years. The 2019 Edition of the California Fire Code with certain local amendments was adopted by the Milpitas City Council on December 3, 2019 and became effective January 1, 2020.

The California Fire Code is Part 9 of 13 parts of the official compilation and publication of adoptions, amendment, and repeal of building regulations to the California Code of Regulations, Title 24 which is also referred to as the California Building Standards Code. The California Building Standards Code incorporates by adoption the 2021 International Fire Code of the International Code Council with necessary California Amendments.

The purpose of the California Fire Code is to establish the minimum requirements consistent with nationally recognized best practices to safeguard public health, safety and general welfare from the hazards of fire, 504
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explosion or dangerous conditions in new and existing buildings, structures, and premises, and to provide safety and assistance to fire fighters and emergency responders during emergency operations.

The provisions of the California Fire Code shall apply to the construction, alterations, movement, enlargement, replacement, repair, equipment, use and occupancy, location, maintenance, removal and demolition of every building or structure or any appurtenances connected or attached to such building structures throughout the State of California.

POLICY ALTERNATIVE(S):

Alternative 1: Do Not Adopt Certain Local Amendments for the 2022 California Fire Code Pros: None
Cons: Not adopting certain local amendments in conjunction with the 2022 California Fire Code, does not address some of the unique concerns and nuances relative to the residential, commercial, and industrial communities within the City of Milpitas.

Reason for Not Recommending: To further save lives and preserve property, as well as ensuring the highest level of public safety for the community of Milpitas, local amendments must be addressed.

FISCAL IMPACT:

Section 66014 of the California Government Code as referenced in the Health & Safety Code Section 13146, as well as the 2022 California Fire Code Sections 1.11.2.1.1, and Section 106.2, allows fire departments to charge fees for permit, inspection, and enforcement activities. The recently adopted City of Milpitas Master Fee Schedule that became effective on July 1, 2022, aligns with the above Code Sections.

California Environmental Quality Act (CEQA):

The action being considered has no potential for causing a significant effect on the environment and is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA guidelines Section 15061(b)(3) RECOMMENDATION:

1. Following the City Attorney reading aloud the title, waive the second reading beyond the title of Ordinance No. 113.26

2. Open the public hearing and move to close following comments

3. Adopt Ordinance No. 113.26 adopting by reference with certain local amendments the 2022 edition of the California Fire Code, enacted as Chapter 300, Title V of the Milpitas Municipal Code.

Attachment(s):

Draft Ordinance No. 113.26 (Milpitas Municipal Code Title V, Chapter 300) 505
Item # 19.

REGULAR
NUMBER: 113.25
TITLE: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MILPITAS REPEALING AND REPLACING CHAPTER 300 OF TITLE V OF THE MILPITAS MUNICIPAL CODE AND ADOPTING BY REFERENCE THE 2022 EDITION OF THE CALIFORNIA FIRE CODE WITH

SPECIFIED LOCAL AMENDMENTS
HISTORY: This Ordinance was introduced (first reading) by the City Council at its meeting of ____________, upon motion by _________________, and was adopted (second reading) by the City Council at its meeting of _____________________ upon motion by Councilmember __________. The Ordinance was duly passed and ordered published in accordance with law by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:
________________________________ ________________________________ Suzanne Guzzetta, City Clerk Rich Tran, Mayor
APPROVED AS TO FORM:
________________________________
Michael Mutalipassi, City Attorney
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Item # 19.

Ordinance No. 113.25
2 RECITALS AND FINDINGS:

WHEREAS, the City Council of the City of Milpitas intends to adopt by reference into the Milpitas Municipal Code the 2022 California Fire Code; and
WHEREAS, in doing so, the City Council wishes to amend portions of the California Fire Code to better address local concerns and to be consistent with amendments made by the other jurisdictions in Santa Clara County as well as neighboring counties in the Bay Area
WHEREAS, Health and Safety Code Sections 17958.5, 17958.7, and 18941.5 require such amendments to be reasonably necessary because of local climatic, geological or topographical conditions; and WHEREAS, the City Council hereby makes the following findings with respect to the amendments to the 2022 California Fire Code:

A. The local climatic conditions of the City of Milpitas can affect the acceleration, intensity, and size of fires.

Average annual rainfall for the City of Milpitas (approximately 14.9 inches per year), and drought conditions in the State of California require water-use restrictions and may also limit access to water during emergencies. Prevailing winds from the Northwest have velocities ranging from 5-mph to 15-mph, but the region has experienced extreme winds up to 60 mph.

Times of little rainfall and high winds can exacerbate and spread fires.

B. The local geological and topographical conditions of the City of Milpitas can affect the response time of emergency service providers. The San Francisco Bay area region is densely populated and located in an area of high seismic activities. In particular, the City of Milpitas is located near the San Andreas Fault zone, which is capable of producing major earthquakes. Should a significant seismic event occur, hazardous materials and gases may be leaked and expose members of the public to significant health risks. Severe seismic events could disrupt communications, damage gas mains, and cause extensive electrical hazards that may exacerbate the size and number of emergencies, and consequently hinder the Fire Department’s ability to respond to emergencies effectively and in a timely manner.

NOW, THEREFORE, the City Council of the City of Milpitas does ordain as follows:

SECTION 1. RECORD AND BASIS FOR ACTION
The City Council has duly considered the full record before it, which may include but is not limited to such things as the City staff report, testimony by staff and the public, and other materials and evidence submitted or provided to the City Council. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

The City Council finds that the above-listed findings correspond with the following amendments to the 2022 California Fire Code:

Amendment Finding(s)
101.1 Administrative
102.3 Administrative
102.4 Administrative
102.5 Administrative
103.2 Administrative
104.10 Administrative
105.1 Administrative
105.2 Administrative
105.5-105.5.63 Administrative
105.6-105.6.25 Administrative
107.2 Administrative
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Ordinance No. 113.25
3 108.1-108.7 Administrative
111.1-111.3 Administrative
112.1.1-112.1.8 Administrative
202 Findings A & B
316.7 Finding A
503-503.1 Finding A
503.2.1 Finding A
503.2.4 Finding B
503.7 Finding A
504.3.1 Finding A
504.5 Finding A
504.6 Finding A
505.3 Finding A
507.5.1.1 Finding A
507.5.7 Finding A
508.1-508.1.2 Finding A
508.1.6 Finding A
510.1 Finding B
510.5 Finding B
510.5.3 Finding B
605.5 Finding A
605.5.2.1.1 Finding A
606.1.1 Findings A & B
903.1.2 Findings A & B
903.2 Findings A & B
903.2.11.7 Finding B
903.3.1.1 Findings A & B
903.3.1.4 Findings A & B
903.3.5.3-903.3.5.7 Findings A & B
907.2.9.1 Findings A & B
913.7 Findings A & B
914.2.1 Findings A & B
914.3.1 Findings A & B
914.3.9-914.3.10 Findings A & B
914.4.1 Findings A & B
914.6.1 Findings A & B
914.12 Findings A & B
916.8 Findings A & B
1103.2 Findings A & B
1207.6.1-1207.6.1.2 Findings A & B
1207.6.2-1207.6.2.1.2 Findings A & B
2807.6 Findings A & B
2808.11 Findings A & B
3103.2 Findings A & B
3304.8 Findings A & B
3311.1-3311.1.1 Findings A & B
3315.1 Finding B
5001.2.2.2 Finding B
5001.5.1-5001.5.1.1 Finding B
508
Item # 19.

Ordinance No. 113.25
4 5003.1.3.1 Finding B
5003.1.5 Finding B
5003.1.6 Finding B
5003.2.2.1-5003.2.2.2 Finding B
5003.3.1 Finding B
5003.5.2-5003.5.3 Finding B
5003.9.8 Finding B
5003.9.11 Finding B
5003.9.12 Finding B
5003.10.4.3 Finding B
5004.2.1 Findings A & B
5004.2.2 Findings A & B
5004.2.2.2 Findings A & B
5004.2.2.5 Findings A & B
5004.2.3 Findings A & B
5005.4.4 Findings A & B
5303.5.3 Finding B
5601.1.3 Findings A & B
5704.2.7.5.8-5704.2.7.5.9 Finding B
5707 Finding B
5707.3.3 Finding B
5707.3-5707.4 Finding B
5707.5.5 Finding B
5707.6.4-5707.6.7 Finding B
5809.3.4 Finding B
6004-6004.1.1.3 Finding B
6004.1.2-6004.1.14 Finding B
6004.2-6004.2.2.10.4 Finding B
6004.3-6004.3.3 Finding B
6405.3.1 Finding B
D101.1 Finding A
D103.1 Finding A
D104.1-D104.2 Finding A
D105.2 Finding A
D106.1 Findings A & B
D106.2 Findings A & B
D107.1 Findings A & B
H103, Appendix H Finding B
H3, Appendix H Finding B
SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT
The City Council hereby finds and determines that this Ordinance has been assessed in accordance with the California Environmental Quality Act (Cal. Pub. Res. Code, § 21000 et seq.) (“CEQA”) and the State CEQA Guidelines (14 Cal. Code Regs. § 15000 et seq.) and is categorically exempt from CEQA under CEQA Guidelines, § 15061(b)(3), which exempts from CEQA any project where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment Adoption of the proposed Ordinance would not be an activity with potential to cause significant effect on the environment because the changes made to the California Building Standard Code within are enacted to mitigate the threats posed to public peace, health and safety from earthquakes, high winds and fire, and therefore is exempt from CEQA. Therefore, it can be seen with certainty that there is no possibility that the Ordinance in question may have a significant effect on the environment; accordingly, the Ordinance is categorically exempt from CEQA. 509
Item # 19.

Ordinance No. 113.25
5 SECTION 3. AMENDMENT OF MILPITAS MUNICIPAL CODE TITLE V, CHAPTER 300 Chapter 300 of Title V of the Milpitas Municipal Code is hereby repealed in its entirety and replaced with the text below to read as follows:

Chapter 300

FIRE CODE
Sections:

V-300-1 Adoption of the California Fire Code, 2022 Edition V-300-2 Amendments to the 2022 California Fire Code
V-300-1.01 Adoption of the California Fire Code, 2022 Edition An Ordinance of the City of Milpitas adopting the 2022 edition of the California Fire Code, regulating and governing the safeguarding of life and property from fire and explosion hazards arising from the storage, handling and use of hazardous substances, materials and devices, and from conditions hazardous to life or property in the occupancy of buildings and premises in the City of Milpitas providing for the issuance of permits and collection of fees. That a certain document, except as herein amended, one (1) copy of which is on file in the office of the City Clerk, known as the California Fire Code, including Chapter 1, Chapter 4, and Appendices B, BB, C, CC, D, H and K as published by the International Code Council, based on the International Fire Code, 2018 Edition, is hereby adopted by reference as the Fire Code for the City of Milpitas in the State of California regulating and governing the safeguarding of life and property from fire and explosion hazards arising from the storage, handling and use of hazardous substances, materials and devices, and from conditions hazardous to life or property in the occupancy of buildings and premises as herein provided; providing for the issuance of permits and collection of fees therefore; and each and all of the regulations, provisions penalties, conditions and terms of said Fire Code on file in the office of the City Clerk are hereby referred to, adopted, and made a part hereof, as if fully set out in this Ordinance, with the additions, insertions, deletions and changes, if any, prescribed in Section 2 of this Ordinance.

V-300-2.01 Amendments to the 2022 California Fire Code
Chapter 1, Scope and Administration, of the California Fire Code, 2022 Edition, is hereby adopted and amended as follows:

V-300-2.02
Section 101.1 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
101.1 Title. These regulations shall be known as the Fire Code of the City of Milpitas, herein referred to as ‘this Code.’
V-300-2.03
Section 102.3 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
102.3 Changes in use or occupancy. No change shall be made in the use or occupancy of any structure that would place the structure in a different division of the same group or occupancy or in a different group of occupancies, unless such structure is made to comply with the requirements of this Code and the City of Milpitas Building Codes adopted under Title II of the Milpitas Municipal Code. Subject to the approval of the fire code official, the use or occupancy of an existing structure shall be allowed to be changed and the structure is allowed to be occupied for purposes in other groups without conforming to all of the requirements of this Code and the City of Milpitas Building Codes for those groups, provided the new or proposed use is less hazardous, based on life and fire risk, than the existing use.

V-300-2.04
510
Item # 19.

Ordinance No. 113.25
6 Section 102.4 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
102.4 Application of Building Code. The design and construction of new structures shall comply with the City of Milpitas Building Codes adopted under Title II of the Milpitas Municipal Code, and any alterations, additions, changes in use or changes in structures required by this Code, which are within the scope of the City of Milpitas Building Codes, shall be made in accordance therewith.

V-300-2.05
Section 102.5 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
102.5 Application of Residential Code. Where structures are designed and constructed in accordance with the City of Milpitas Building Codes adopted under Title II of the Milpitas Municipal Code, the provisions of this Code shall apply as follows:

1. Construction and design provisions: Provisions of this Code pertaining to the exterior of the structure shall apply, including, but not limited to premises identification, fire apparatus access and water supplies. Where interior or exterior systems or devise are installed, construction permits required by Section 105.7 of this Code shall also apply.

2. Administrative, operational and maintenance provisions: All such provision of this Code shall apply.

V-300-2.06
Section 103.2 of the California Fire Code, 2022 Edition, is deleted in its entirety.

V-300-2.07
Section 104.10 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
104.10 Fire Investigations. The fire code official, the fire department or other responsible authority shall have the authority to investigate the cause, origin and circumstances of any fire, explosion or other hazardous condition.

Information that could be related to trade secrets or processes shall not be made part of the public record except as directed by a court of law.

The fire code official and authorized members of the fire department shall have the powers of a peace officer pursuant to Penal Code Section 830.37. Other members of the fire department, as designated by the Fire Chief, may issue citations for violations of fire-related laws and ordinances pursuant to Penal Code Section 836.5.

V-300-2.08
Section 105.1 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
105.1 General. Permits shall be in accordance with Sections 105.1.1 through 105.7.26.

V-300-2.09
Section 105.2 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
105.2 Application. Applications for a permit required by this Code shall be made to the fire code official in such form and detail as prescribed by the fire code official. Applications for permits shall be accompanied by such plans as prescribed by the fire code official. Said application shall be accompanied by a fee in the amount set by Section 106.2 of this Code.

V-300-2.10
Section 105.5 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
105.5 Required operational permits. The fire code official is authorized to issue operational permits for the operations set forth in Sections 105.5.1 through 105.5.63. 511
Item # 19.

Ordinance No. 113.25
7 V-300-2.11
Table 105.5.9 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:

TABLE 105.5.9
PERMIT AMOUNTS FOR COMPRESSED GASES1
TYPE OF GAS AMOUNT (cubic feet)2
X 0.0283 for m3
Carbon dioxide used in carbon dioxide enrichment systems 875 (100lb) Carbon dioxide used in insulated liquid carbon dioxide beverage dispensing applications
875 (100lb)
Corrosive 200
Flammable (except cryogenic and liquefied petroleum gases) 200 Highly toxic Any amount
Inert and simple asphyxiant 200
Irritant 200
Moderately toxic 20
Other health hazards 200
Oxidizing (including oxygen) 200
Pyrophoric Any amount
Radioactive Any amount
Sensitizer 200
Toxic Any Amount
Unstable (reactive) Any amount
For SI: 1 cubic foot = 0.02832m3.
1 Refer to Chapters 27, 30, 32, 35, 37, 40 and 41 for additional requirements and exceptions. 2 Cubic feet measured at normal temperature and pressure. 3 V-300-2.12
Tab of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:

TABLE 105.5.11

PERMIT AMOUNTS FOR CRYOGENIC FLUIDS

TYPE OF CRYOGENIC FLUID INSIDE BUILDING
(gallons)

OUTSIDE BUILDING
(gallons)
Flammable More than 1 55
Inert 55 55
Oxidizing (includes oxygen) 10 50
Physical or health hazard not indicated above Any Amount Any Amount For SI: 1 gallon = 3.785 L
V-300-2.13
Section 105.5.18 , subsections (3.), (10.) and (11.) of the California Fire Code, 2022 Edition, are amended to read as follows:

3. To store, handle or use Class II or Class IIIA liquids in excess of 25 gallons (95L) in a building or in excess of 55 gallons (227 L) outside a building, except for fuel oil used in connection with oil-burning equipment. 512
Item # 19.

Ordinance No. 113.25
8 10. To engage in the dispensing of liquid fuels into the fuel tanks of motor vehicles at commercial, industrial, governmental or manufacturing establishments in accordance with Section 5706.5.4 or to engage in on-demand mobile fueling operations in accordance with Section 5707.

11. To utilize a site for the dispensing of liquid fuels from tank vehicle into the fuel tanks of motor vehicles, marine craft and other special equipment at commercial, industrial, governmental or manufacturing establishments in accordance with Section 5706.5.4 or to utilize a site for on-demand mobile fueling operations in accordance with Section 5707.

V-300-2.14
Table 105.5.22 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:

TABLE 105.5.22

PERMIT AMOUNTS FOR HAZARDOUS MATERIALS

TYPE OF MATERIAL AMOUNT
Carcinogens 10 pounds
Combustible liquids
Inside
Outside
25 gallons
55 gallons
Corrosive materials:

Gases See Table 105.5.9
Liquids 55 gallons
Solids 500 pounds
Cryogens See Table 105.5.11
Explosive materials Any Amount
Flammable materials:

Gases See Table 105.5.9
Liquids See Section 105.5.18
Solids 10 pounds
Highly toxic materials:

Gases Any amount
Liquids Any amount
Solids Any amount
Moderately toxic gas 20 cubic feet
Organic peroxides:

Liquids: Class I-II Any Amount
Liquids: Class III 1 gallon
Liquids: Class IV 2 gallons
Liquids: Class V No Permit Required
Solids: Class I-II Any Amount
Solids: Class III 10 pounds
Solids: Class IV 20 pounds
Solids: Class V No Permit Required
Oxidizing materials:

Gases See Table 105.5.9
Liquids: Class 4 Any amount
Liquids: Class 3 1 gallon
Liquids: Class 2 10 gallons
Liquids: Class 1 55 gallons
Solids: Class 4 Any amount
Solids: Class 3 10 pounds
Solids: Class 2 100 pounds
Solids: Class 1 500 pounds
513
Item # 19.

Ordinance No. 113.25
9 TYPE OF MATERIAL AMOUNT
Other health hazards and Class IIIB Combustible Liquids:

Liquids 55 gallons
Solids 500 pounds
Pyrophoric materials:

Gases Any amount
Liquids Any amount
Solids Any amount
Radioactive materials:

Gases Any Amount
Liquids See Section 105.5.61
Solids See Section 105.5.61
Toxic materials:

Gases Any amount
Liquids 10 gallons
Solids 100 pounds
Unstable (reactive) materials:

Liquids
Class 4 & 3
Class 2
Class 1
Solids
Class 4 & 3
Class2
Class 1
Any Amount
5 gallons
10 gallons
Any Amount
50 pounds
100 pounds
Water-reactive materials:

Liquids
Class 3
Class 2
Class 1
Solids
Class 3
Class 2
Class 1
Any amount
5 gallons
55 gallons
Any Amount
50 pounds
500 pounds
For SI: 1 gallon = 3.785 L, 1 pound = 0.454kg.

V-300-2.15
Section 105.5.49 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
105.5.49 Temporary membrane structures, tents and canopies. An operational permit is required to operate an air-supported temporary membrane structure or a tent having an area in excess of 200 square feet (19 m2), or a canopy in excess of 400 square feet (37 m2). Smaller tents or canopies set side by side are considered as one, unless separated from each other by 10 feet on all sides.

Exceptions:

1. Tents used exclusively for recreational camping purposes.

V-300-2.16
Section 105.5.55 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
105.5.55 B Occupancy restaurants. An operational permit is required to operate a B Occupancy restaurant. 514
Item # 19.

Ordinance No. 113.25
10 V-300-2.17
Section 105.5.57 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
105.5.57 Day care facility. An operational permit is required to operate a large family day care home facility, a Group E day care facility or a Group I-4 day care facility.

V-300-2.18
Section 105.5.58 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
105.5.58 Emergency responders radio coverage system. An operational permit is required to operate an emergency responders radio coverage system in accordance with Section 510.

V-300-2.19
Section 105.5.59 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
105.5.59 On-demand mobile fueling operations. An operational permit is required to conduct on-demand mobile fueling operations. An independent permit is required for the site and the vendor/mobile fuel operator.

V-300-2.20
Section 105.5.60 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
105.5.60 Private School. An operational permit is required to operate a private school Occupancy Group E or a heritage school (CA Education Code Section 33195.4).

V-300-2.21
Section 105.5.61 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
105.5.61 Radioactive materials. To store or handle at any installation more than one microcurie (37,000 becquerel) of radioactive material not contained in a sealed source or more than 1 millicurie (37,000,000 becquerel) of radioactive material in a sealed source or sources, or any amount of radioactive material for which a specific license(s) from the Nuclear Regulatory Commission is required.

V-300-2.22
Section 105.5.62 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
105.5.62 Water base fire protection systems. An operational permit is required to conduct inspections, testing and maintenance of a water base fire protection system in conformance with the CA Code of Regulations, Title 19, Division 1, Chapter 5.

V-300-2.23
Section 105.5.63 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
105.5.63 Woodworking. An operational permit is required to conduct woodworking operations involving mass production or involving more than one of each type of machine, or where machines are used continuously (as opposed to intermittently) or substantial products of sawdust may be a problem.

V-300-2.24
Section 105.6 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
105.6 Required construction permits. The fire code official is authorized to issue construction permits for work as set forth in Sections 105.6.1 through 105.6.25.
515
Item # 19.

Ordinance No. 113.25
11 V-300-2.2.25
Section 105.6.3 of the California Fire Code, 2022 Edition, is amended to read as follows:
105.6.3 Cryogenic fluids. A construction permit is required for the installation of or alteration to stationary cryogenic fluid storage systems where the system capacity exceeds the amounts listed in Table 105.5.11. Maintenance performed in accordance with this Code is not considered to be an alteration and does not require a construction permit.

V-300-2.26
Section 105.6.24 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
105.6.24 Temporary membrane structures, tents and canopies. A construction permit is required to erect an airsupported temporary membrane structure or a tent having an area in excess of 200 square feet (19 m2 ), or a canopy in excess
of 400 square feet (37 m2). Smaller tents or canopies set side by side are considered as one, unless separated from each other by 10 feet on all sides.

Exceptions:

1. Tents used exclusively for recreational camping purposes V-300-2.27
Section 105.6.25 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
105.6.25 Other building permits. The Building Department shall transmit to the Fire Department a copy of each plan submitted for construction, alteration, or change of use or occupancy for all occupancy classifications for review and approval for conformance to the fire code of the City of Milpitas. The fee for each permit shall be as set by Section 107.2 of this Code.

V-300-2.28
Section 106.1.1 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
106.1.1 Electronic documents. The fire code official may require electronic base documents for all construction documents, operational permits, and/or modified drawings for the need of Fire Department inspections and/or operations.

The fire code official shall designate the software base format for the electronic documents.

V-300-2.29
Section 107.2 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
107.2 Schedule of permit fees. The fee for each permit shall be as set forth by resolution of the City of Milpitas City Council. The City Council may establish fees sufficient to recover its costs in administering this Code and no permit shall be issued until such fees have been paid. For work not disclosed in the fee schedule set by Council, the fire code official has the right to assess the necessary fees to recover the Fire Department’s cost.

Operational Permits. All fees for annual operational fire permits under the provision of Section 105.5 of this Chapter shall be due and payable at the time of commencement of occupancy and said permit shall expire by December 31 of the same year. Fees for the renewal of such permit(s) shall be due and payable upon the expiration of the prior permit. No permit fee hereunder shall be refundable by reason of the cessation of occupancy during the permit period. Every annual permit fee that is not paid within a period of thirty (30) days from the time the same become due is hereby declared to be delinquent, and a penalty of 100% shall be added to say fee.

V-300-2.30
Section 108.1 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
108.1 Inspection authority. The fire code official is authorized to inspect, as often as necessary, buildings and premises, including such other hazards or appliances designated by the fire code official for the purposes of ascertaining and causing to be corrected any conditions which would reasonably tend to cause fire or contribute to its spread, result in 516
Item # 19.

Ordinance No. 113.25
12 an unauthorized discharge of hazardous materials, or any violation of this Code or any other law or standard affecting fire and life safety. The fee for each inspection shall be as set forth by resolution of the City Council. The City may establish fees sufficient to recover its costs in administering this Chapter.

V-300-2.31
Section 108.5 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
108.5 Documents. Any person or party who prevents or attempts to prevent any fire code official from examining any relevant books or records in the conduct of his or her official duties under this Code shall be in violation of this Code.

V-300-2.32
Section 108.6 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
108.6 Evidence. Any person or party who prevents or interferes with the preservation of evidence of any violation of any of the provisions of this Code or of the rules and regulations promulgated pursuant to this Code or any other Federal, State, or local law, rule, or regulation shall be in violation of this Code.

V-300-2.33
Section 108.7 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
108.7 Interference. Any person or party who willfully prevents, interferes with, or attempts to hinder in any way the work of the fire code official in the lawful enforcement of any provision of this Code, or fails to promptly permit entry for the purpose of inspection and examination pursuant to this Code shall be in violation of this Code.

V-300-2.34
Section 111.1 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
111.1 Appeals. Whenever the Fire Chief or his or her designee disapproves an application or refuses to grant a permit applied for, or when it is claimed that the provisions of this Code do not apply or that the true intent and meaning of this Code have been misconstrued or wrongly interpreted, the applicant may appeal from the decision of the Fire Chief to the City Council or designee within ten (10) calendar days from the date of the decision appealed. Appeals shall be carried out pursuant to the provisions of Section 5 Appeals to Council of Chapter 20 Standard Procedures of Title I of the Milpitas Municipal Code. An appeal shall stay all proceedings in furtherance of the act or decision appealed unless the Fire Chief or his or her designee whose act is appealed shall certify in writing that a stay would, in his or her opinion, cause peril to life or property. Said certificate shall contain a detailed statement of the facts of which said peril arises and of the reasons for said opinion. The decision of the City Council or designee shall be final.

V-300-2.35
Section 111.2 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
111.2 Limitations on authority. An application for appeal shall be based on a claim that the intent of this Code or the rules legally adopted hereunder have been incorrectly interpreted, the provisions of this Code do not fully apply, or an equivalent method of protection or safety is proposed.

V-300-2.36
Section 111.3 of the California Fire Code, 2022 Edition, is deleted in its entirety. 111.3 Qualifications. This section is deleted.

V-300-2.37
Section 112.1.1 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
112.1.1 Abatement of fire and life safety hazards by fire code official. If any person fails to comply with the orders of the fire code official, or if the fire code official is unable to locate the owner, operator, occupant or other person responsible 517
Item # 19.

Ordinance No. 113.25
13 within a reasonable time, the fire code official or any authorized representative may take such steps as are necessary to abate the hazard for the protection of the public safety. In no event is notice necessary before abatement, when the hazard is a clear and present danger to the public welfare. All costs related to such abatement shall become a lien or special assessment on the subject property.

V-300-2.38
Section 112.1.2 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
112.1.2 Criminal or civil penalty for violation; payment of funds to account. Pursuant to the City's prosecutorial discretion, the City may enforce violations of the provisions of this Code in any manner authorized by this section or by any other law, including but not limited to issuance of criminal citations, referral to the District Attorney, referral to the City Attorney, referral to other appropriate agencies, administrative actions and civil actions.

V-300-2.39
Section 112.1.3 hereby added to the California Fire Code, 2022 Edition, to read as follows:
112.1.3 Misdemeanors – continuing violations. Any person who violates any of the provisions of this Code, any of the provisions of any written authority of the City Manager or his or her duly authorized agents and representatives or any provision of any permit issued pursuant to this Code shall be guilty of an infraction/misdemeanor. Each and every day, or any part thereof, during which any such violation is committed, continued or allowed shall be a separate offense. Penalties for violations shall be as set forth by resolution of the City Council.

V-300-2.40
Section 112.1.4 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
112.1.4 Prosecution. Every violation of this Code shall be a misdemeanor; provided, however, that where the City Attorney or his or her duly authorized agents has determined that such action would be in the best interest of justice, the City Attorney may specify in the accusatory pleading, citation or amendment thereto that the violation shall be prosecuted as an infraction.

V-300-2.41
Section 112.1.5 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
112.1.5 Penalty for infraction. Each and every violation of this Code, which is deemed an infraction, is punishable by:
(1) A fine not exceeding one hundred dollars ($100.00) for the first violation; (2) A fine not exceeding two hundred dollars ($200.00) for the second violation of the same provision within one-year period; or,
(3) A fine not exceeding five hundred dollars ($500.00) for each additional violation, after the second, of the same provision of this Chapter within a one-year period of the first violation.

V-300-2.42
Section 112.1.6 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
112.1.6 Penalty for misdemeanor. Each and every violation of this Code, which is deemed a misdemeanor, is punishable by a penalty of not more than one thousand dollars ($1,000.00) or by imprisonment in the City or County jail for a period not exceeding six (6) months, or, by both penalty and imprisonment.

V-300-2.43
Section 112.1.7 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
112.1.7 Enforcement authority. The following designated employee positions may enforce the provisions of this Code by issuance of citations. Peace officers and persons employed in such positions are authorized to exercise the authority 518
Item # 19.

Ordinance No. 113.25
14 provided in Penal Code Section 836.5 and are authorized to issue citations for violations of this Code. The designated employee positions are: the City Manager or his or her duly authorized agents and representatives.

V-300-2.44
Section 112.1.8 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
112.1.8 Civil penalties. Any person who intentionally, accidentally or negligently violates any provision of this Code, any written authority of the City Manager or his or her duly authorized agents and representatives, or any provision of any permit issued pursuant to this Code may be civilly liable to the City in the sum of not less than one hundred dollars ($100.00) but not to exceed one thousand dollars ($1,000.00) per day for each day in which such violation occurs or continues. The City may petition the municipal or superior court to impose, assess, and recover such sums. The civil penalty provided in this Section excludes inspection costs and abatement costs, is cumulative and not exclusive, and shall be in addition to all other remedies available to the City under state and federal law and local ordinances. Funds collected pursuant to this Section shall be paid to the City's Fire Prevention account, which shall be a holding account to be used solely for Fire Code enforcement, fire prevention and hazardous materials training, and for the purchase of equipment as needed for the performance of the fire code official duties.

V-300-2.45
Section 202 of the California Fire Code, 2022 Edition, is amended by adding the following definitions:

CARCINOGEN is a substance that causes the development of cancerous growths in living tissue. A chemical is considered a carcinogen if:

1. It has been evaluated by the International Agency for Research on Cancer and found to be a carcinogen or potential carcinogen,

2. It is listed as a carcinogen or potential carcinogen in the latest edition of the Annual Report on Carcinogens published by the National Toxicology program, or

3. It is regulated by OSHA as a carcinogen.

CORROSIVE LIQUID. Corrosive liquid is:

1. any liquid which, when in contact with living tissue, will cause destruction or irreversible alteration of such tissue by chemical action; or

2. any liquid having a pH of 2 or less or 12.5 or more; or

3. any liquid classified as corrosive by the U.S. Department of Transportation; or

4. any material exhibiting the characteristics of corrosivity in accordance with Title 22, California Code of Regulations §66261.22.

DEVICE is an appliance or piece of equipment that plays an active part in the proper functioning of the regulated systems.

Examples include, but are not limited to the following: smoke detectors, heat detectors, flame detectors, manual pull stations, horns, alarms, bells, warning lights, hydrants, risers, FDCs, standpipes, strobes, control panels, transponders, and other such equipment used to detect, transmit, initiate, annunciate, alarm, or respond according to the system design criteria.

LARGE-SCALE FIRE TESTING. Testing a representative energy storage system that induces a significant fire into the device under test and evaluates whether the fire will spread to adjacent energy storage system units, surrounding equipment, or through an adjacent fire-resistance-rated barrier.

MAXIMUM THRESHOLD QUANTITY (MAX TQ). Maximum Threshold Quantity (Max TQ) is the maximum quantity of a moderately toxic or toxic gas, which may be stored in a single vessel before a more stringent category of regulation is applied.

MINIMUM THRESHOLD QUANTITY. Minimum threshold quantity is the aggregate quantity of highly toxic, toxic or moderately toxic gas in a control area which, due to the minimum aggregate quantities, need only comply with the requirements set forth in Section 6004.1.
519
Item # 19.

Ordinance No. 113.25
15 MODERATELY TOXIC GAS. A chemical or substance that has a median lethal concentration (LC50) in air more than 2000 parts per million but not more than 5000 parts per million by volume of gas or vapor, when administered by continuous inhalation for an hour, or less if death occurs within one hour, to albino rats weighing between 200 and 300 grams each.

OTHER HEALTH HAZARD MATERIAL is a material which is an irritant, sensitizer, or carcinogen or a material which affects target organs of the body, including but not limited to, those materials which produce liver damage, kidney damage, damage to the nervous system, act on the blood to decrease hemoglobin function, deprive the body tissue of oxygen or affect reproductive capabilities, including mutations (chromosomal damage) or teratogens (effect on fetuses).

SECONDARY CONTAINMENT. Secondary containment is that level of containment that is external to and separate from primary containment and is capable of safely and securely containing the material, without discharge, for a period of time reasonably necessary to ensure detection and remedy of the primary containment failure.

SENSITIZER is a chemical that causes a substantial proportion of exposed people or animals to develop an allergic reaction in normal tissue after repeated exposure to the chemical.

SPILL CONTROL. That level of containment that is external to and separate from the primary containment and is capable of safely and securely containing the contents of the largest container and prevents the materials from spreading to other parts of the room.

TEMPORARY shall not exceed one year.

WORKSTATION is a defined space or independent principal piece of equipment using hazardous materials with a hazard rating of 3 or 4 in accordance with NFPA 704 where a specific function, laboratory procedure or research activity occurs. Approved or listed hazardous materials storage cabinets, flammable liquid storage cabinets or gas cabinets serving a workstation are included as part of the workstation. A workstation is allowed to contain ventilation equipment, fire protection devices, electrical devices, and other processing and scientific equipment.

V-300-2.46
Section 316.7 is hereby added to the California Fire Code, 2022 Edition, as follows:
316.7 Roof guardrails at interior courts. Roof openings into interior courts that are bounded on all sides by building walls shall be protected with guardrails. The top of the guardrail shall not be less than 42 inches in height above the adjacent roof surface that can be walked on. Intermediate rails shall be designed and spaced such that a 12-inch diameter sphere cannot pass through.

Exception: Where the roof opening is greater than 600 square feet in area.

V-300-2.47
Section 503 of the California Fire Code, 2022 Edition is adopted and Section 503.1 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
503.1 Where required. Fire apparatus access roads shall be provided and maintained in accordance with Sections 503.1.1 through 503.7, Appendix D of this Code, and or as directed by the fire code official.

V-300-2.48
Section 503.2.1 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
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Ordinance No. 113.25
16 503.2.1 Dimensions. Fire apparatus access roads shall have an unobstructed width of not less than 20 feet (6096 mm) or as required by Appendix D, except for approved security gates in accordance with Section 503.6, and an unobstructed vertical clearance of 13 feet 6 inches (4115 mm).

Exception: When there are not more than two Group R, Division 3 or Group U occupancies less than 3 stories, the access road width may be modified by the fire code official.

V-300-2.49
Section 503.2.4 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
503.2.4 Turning radius. The required turning radius of a fire apparatus access road shall be a minimum of 28 feet (8534.4 mm) inside, and a minimum of 48 feet 6 inches (14782.8 mm) outside.

V-300-2.50
Section 503.6 the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
503.6 Security gates. The installation of security gates across a fire apparatus access road shall be approved by the fire code official. Where security gates are installed, they shall have an approved means of emergency operation. The security gates and the emergency operation shall be maintained operational at all times. Electric gate operators, where provided, shall be listed in accordance with UL 325. Gates intended for automatic operation shall be designed, constructed and installed to comply with the requirements of ASTM F2200. The minimum width for commercial applications is 20 feet (6096 mm) , and 14 feet (4268 mm) for single-family dwellings.

V-300-2.51
Section 503.7 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
503.7 Adjacent access. No source of access from lands adjoining a property to be developed shall be considered fire apparatus access roads, unless there is obtained the irrevocable and unobstructed rights and recorded as an ingress/egress access easement with the Country of Santa Clara.

V-300-2.52
Section 504.3.1 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
504.3.1 Number of stairways. The fire code official shall determine the required number and location of stairway(s) to the roof.

V-300-2.53
Section 504.5 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
504.5 Enclosed courts. Buildings with enclosed courts shall be provided with readily accessible access for fire department personnel to bring in a 36 feet long ground ladder into the court. The access height and width shall be large enough to accommodate the ladder and the personnel carrying the ladder.

V-300-2.54
Section 504.6 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
504.6 Access Control Devices. When access control devices including bars, grates, gates, electric or magnetic locks or similar devices, which would inhibit rapid fire department emergency access to the building, are installed, such devices shall be approved by the fire code official. All access control devices shall be provided with an approved means for deactivation or unlocking by the fire department. Access control devices shall also comply with Chapter 10 Egress.

V-300-2.55
Section 505.3 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
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Ordinance No. 113.25
17 505.3 Address illumination. All required address numbers shall be provided with illumination.

V-300-2.56
Section 507.5.1.1 of the California Fire Code, 2022 Edition, is amended to read in its entirety as follows:
507.5.1.1 Hydrant for automatic fire sprinkler and or standpipe systems. Buildings equipped with an automatic fire sprinkler system and or a standpipe system installed in accordance with Sections 903 and or 905 shall have a fire hydrant within 50 feet of the fire department connections.

Exception: The distance shall be permitted to exceed 50 feet (30 m) where approved by the fire code official.

V-300-2.57
Section 507.5.7 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
507.5.7 Private hydrants. Private hydrants shall have the bottom 6 inches of the hydrant painted, with a weather resistive paint, white in color.

V-300-2.58
Section 508.1 of the California Fire Code, 2022 Edition, is amended to read as follows:
508.1 General. Where required by other sections of this Code and in all R-1 buildings with more than 200 rooms, R-2 buildings with more than 100 dwellings, and buildings classified as high-rise buildings by the California Building Code and Group I-2 occupancies having occupied floors located more than 75 feet above the lowest level of fire department vehicle access, a fire command center for fire department operations shal1 be provided and shall comply with Sections 508.1.1 through 508.1.7.

V-300-2.59
Section 508.1.2 of the California Fire Code, 2022 Edition, is amended to read as follows:
508.1.2 Separation. The fire command center shall be separated from the remainder of the building by not less than a 2-hour fire barrier constructed in accordance with Section 707 of the California Building Code or horizontal assembly constructed in accordance with Section 711 of the California Building Code, or both.

V-300-2.60
Section 508.1.6 of the California Fire Code, 2022 Edition, is amended by adding the following:

20. A locking key box, approved by the fire code official, large enough for ten (10) sets of master keys.

21. Ten (10) sets of master keys for the building.

22. A complete set of architectural, electrical, mechanical and plumbing plans for the building.

V-300-2.61
Section 510.1 of the California Fire Code, 2022 Edition, is amended to read as follows:
510.1 Emergency responder radio coverage in new buildings. Approved radio coverage for emergency responders shall be provided within all buildings meeting any one of the following conditions:

1. There are more than 3 stories above grade plane (as defined by the Building Code Section 202);

2. The total building area is 30,000 square feet or more;

3. The total basement area is 5,000 square feet or more; 522
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Ordinance No. 113.25
18 4. Where required by the fire code official and radio coverage signal strength levels are not consistent with the minimum levels set forth in Section 510.4.1
Exceptions:

1. Where approved by the fire code official, a wired communication system in accordance with Section 907.2.12.2 shall be permitted to be installed or maintained in lieu of an approved radio coverage system.

2. Where it is determined by the fire code official that the radio coverage system is not needed.

3. In facilities where emergency responder radio coverage is required and such systems, components or equipment required could have a negative impact on the normal operations of that facility, the fire code official shall have the authority to accept an automatically activated emergency responder radio coverage system.

4. Buildings and areas of buildings that have minimum radio coverage signal strength levels of the Silicon Valley Regional Interoperability Authority (SVRIA) P25 Phase 2 700 MHz Digital Trunked Radio System within the building in accordance with Section 510.4.1 without the use of an indoor radio coverage system.

The radio coverage system shall be installed and maintained in accordance with Sections 510.4 through 510.6.4 of this Code and with the applicable provisions of NFPA 1221, Standard for the Installation, Maintenance and Use of Emergency Services Communications Systems.

The coverage shall be based upon the existing coverage levels of the public safety communication systems of the jurisdiction at the exterior of the building. This section shall not require improvement of the existing public safety communication systems.

V-300-2.62
Section 510.4 of the California Fire Code, 2019 Edition, is amended to read as follows:
510.4 Technical requirements. Systems, components, and equipment required to provide emergency responder radio coverage systems shall comply with the current Emergency Responders Radio Coverage Systems Standard Details and Specifications enforced by the Milpitas Fire Department.

V-300-2.63
Section 510.5 of the California Fire Code, 2022 Edition, is amended to read as follows:
510.5 Installation requirements. The installation of the emergency responder radio coverage system shall be in accordance with NFPA 1221 and the current Emergency Responder Radio Coverage Systems Standard Details and Specification enforced by the Milpitas Fire Department.

V-300-2.64
Section 510.5.3 first paragraph of the California Fire Code, 2022 Edition, is amended to read as follows:
510.5.3 Acceptance test procedure and system certification. Where an emergency responder radio coverage system is required, and upon completion of installation, the building owner shall have the radio system tested to verify that two-way coverage on each floor of the building is not less than 95 percent. Final system acceptance will require ERRCS power level and DAQ testing with agency FCC license holder, systems administrators, or designee. The test procedure shall be conducted in accordance with NFPA 1221 and the current Emergency Responder Radio Coverage System Standard Details and Specification enforced by the Milpitas Fire Department. 523
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Ordinance No. 113.25
19 V-300-2.65
Section 605.54 of the California Fire Code, 2022 Edition, is amended to read as follows:
605.5 Portable unvented heaters. Portable unvented fuel-fired heating equipment shall be prohibited in occupancies in Groups A, B, E, I, R-1, R-2, R2.1, R2.2, R-3, R3.1 and R-4 and ambulatory care facilities.

Exceptions:

1. Portable unvented fuel-fired heaters listed in accordance with UL 647 are permitted to be used in one and twofamily dwellings, where operated and maintained in accordance with the manufacturer’s instructions.

2. Portable outdoor gas-fired heating appliances in accordance with Section 605.5.2.

V-300-2.66
Section 605.5.2.1.1 of the California Fire Code, 2022 Edition, is amended to read as follows:
605.5.2.1.1 Prohibited locations. The storage or use of portable outdoor gas-fired heating appliances is prohibited in any of the following locations:

1. Inside of any occupancy where connected to the fuel gas container.

2. Inside of tents, canopies and membrane structures.

3. On exterior balconies, and rooftops.

V-300-2.67
Section 606.1.1 hereby added to the California Fire Code, 2022 Edition, to read as follows:
606.1.1 New elevators. All new passenger service elevators shall meet the medical service elevator requirements in the California Building Code, 2022 Edition, Chapter 30.

V-300-2.68
Section 903.1.2 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
903.1.2 Fire Walls and Fire Barriers. Fire walls and fire barriers shall not be considered to create separate buildings for the purpose of automatic fire sprinkler requirements as set forth in Chapter 9 of this Code.

Exception: Buildings separated by continuous fire wall of 4-hour fire resistive construction without openings or penetrations. Buildings required to have automatic fire sprinkler protection as set forth in Section 13113 of Health and Safety Code are prohibited from using fire walls in lieu of automatic fire sprinkler protection.

V-300-2.69
Section 903.2 of the California Fire Code, 2022 Edition, is amended to read as follows:
903.2 Where Required. Approved automatic sprinkler systems in new and existing buildings and structures shall be provided in the locations described in this Section or per the requirements set forth in Sections 903.2.1 through 903.2.20, whichever is the more restrictive:

1. In other than residential buildings which require the installation of fire sprinkler for all new buildings according to the California Residential Code, an automatic sprinkler system shall be provided throughout all new buildings and structures greater than 1,000 square feet of building area.

Exception: Group S-2 or U occupancies used exclusively for vehicle parking and which meet all of the following:
a. Noncombustible construction.
b. Maximum building area not to exceed 5,000 square feet. Structures with less than 10’ horizontal separation are considered as one.
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20 c. Structure is open on three (3) or more side.
d. Minimum of 10 feet separation from existing buildings unless area is separated by fire walls complying with California Building Code.

2. An automatic fire sprinkler system shall be provided throughout existing Group A, B, E, F, L, M, S and U buildings and structures, when additions are made that increase the building area to more than 3,600 square feet or that create conditions described in Sections 903.2.1 through 903.2.2018.

3. An automatic sprinkler system shall be provided throughout existing Group R occupancies when additions are made that increase the building area to more than 3,600 square feet, or when the Building Department determines that the home needs to comply with the current CA Building Codes due to extensive remodel/renovation.

Exception: Additions where all of the following are met:
a. Building addition does not exceed 500 square feet.
b. The resultant structure meets all water supply requirements of Chapter 5 and Appendix B of the 2022 California Fire Code.

4. Any change in the character of occupancy or in use of any building with a building area equal to or greater than 3,600 square feet which, in the opinion of the fire code official or building official, would place the building into a more hazardous division of the same occupancy group or into a different group of occupancies and constitutes a greater degree of life safety1 or increased fire risk2, shall require the installation of an approved fire automatic fire sprinkler system.

1. Life Safety – Increased occupant load, public assembly areas, public meeting areas, churches, indoor amusement attractions, buildings with complex exiting systems due to increased occupant loads, large schools/day-care facilities, large residential care facilities with non-ambulatory

2. Fire Risks – High-piled combustible storage, woodworking operations, hazardous operations using hazardous materials, increased fuel loads (storage of moderate to highly combustible materials), increased sources of ignition (welding, automotive repair with the use of flammable liquids and open flames).

V-300-2.70
Section 903.2.11.7 is hereby added to the California Fire Code, 2022 Edition, to read as follows:
903.2.11.7 Chemical Fume Hood Fire Protection.

NFPA 45, section 7.10.1 approved automatic fire extinguishing systems shall be provided in chemical fume hoods in the following cases:

3. Existing hoods having interiors with a flame spread index greater than 25 in which flammable liquids are handled

4. If a hazard assessment determines that an automatic extinguishing system is required for the chemical fume hood, then the applicable automatic fire protection system standard shall be followed.