Milpitas City Council
December 5, 2023

December 5, 2023 Milpitas City Council Agenda Page 1

REGULAR MEETING OF THE MILPITAS

CITY COUNCIL
AGENDA
TUESDAY, DECEMBER 5, 2023
CITY COUNCIL CHAMBER, 455 E. CALAVERAS BLVD, MILPITAS, CA 6:00 PM (CLOSED SESSION)
7:00 PM (PUBLIC BUSINESS)
For assistance in the following languages, you may call:

Đối với Việt Nam, gọi 408-586-2400
Para sa Tagalog, tumawag sa 408-586-3051
Para español, llame 408-586-3072
The City Council meeting is held in the City Council Chamber at City Hall, 455 E. Calaveras Blvd., Milpitas and via teleconference/Zoom webinar.

You may watch the Council meeting without providing public comment by accessing it via links here.

Meeting shall be livestreamed - Go to:

Facebook: https://www.facebook.com/CityofMilpitas/
YouTube: https://www.milpitas.gov/youtube
Web Streaming: https://www.milpitas.gov/webstreaming

PUBLIC COMMENT INSTRUCTIONS
Oral public comments may be provided live during the City Council meeting in person or by registering for the zoom meeting in advance. To register you will need to provide an email address (not disclosed) and a name. To minimize technical difficulties, please make sure that you have the latest version of the Zoom Application. Below is the link to register for this meeting only:
https://ci-milpitas-ca-gov.zoom.us/webinar/register/WN_FP1VmABCTxCLYK3mY2-fxw After you register a link will be sent to you to join the City Council meeting in order to give your comments. All Zoom meeting attendees who wish to speak must click on the “raise hand” icon when the Mayor calls for public comments. If participating via phone, dial *9 to use the “raise hand” feature, and when called to speak, dial *6 to unmute your phone.

Your phone number will be displayed in the live meeting. The Mayor will call speakers by name to address the City Council.

All comments provided shall be limited to three minutes or less as determined by the Mayor. All members of the public will be limited to one comment per agenda item, and one comment for non-agenda items.

NOTE: If a member of the public wishes to share any presentation materials for Council consideration, they must be submitted to the Clerk’s Office by email to [email protected] by 12:00 p.m. on the day of the meeting. No presentations will be accepted in person in the Council Chambers.

MILPITAS CITY COUNCIL CODE OF CONDUCT
• Be respectful and courteous (words, tone, and body language). • Model civility.
• Avoid surprises.
• Praise publicly and criticize privately.
• Focus on the issue, not the person.
• Refrain from using electronic devices while on the Council dais. • Disclose conflicts of interest and affiliations related to agenda items. • Separate governing from campaigning.
• The Council speaks with one voice after making policy on issues. • Respect the line between policy and administration.
• Council will hold one another accountable to comply with this Code of Conduct.

December 5, 2023 Milpitas City Council Agenda Page 2
CALL MEETING TO ORDER by Mayor and ROLL CALL by City Clerk (6:00 PM)

ADJOURN TO CLOSED SESSION
(a) CONFERENCE WITH LABOR NEGOTIATORS
Pursuant to Government Code Section 54957.6
Agency designated representative: Rick Bolanos, LCW
Bargaining unit: LIUNA, UPEC (Pro-Tech, MEA, MidCon), IAFF, MPOA CLOSED SESSION ANNOUNCEMENT:

Report on action taken in Closed Session, if required per Government Code Section 54957.1, including the vote or abstention of each member present.

PLEDGE OF ALLEGIANCE
INVOCATION (Vice Mayor Chua)
PRESENTATIONS (7:05 PM)
● Posthumous Commendation for Navy Veteran Phil Coneeny PUBLIC FORUM (7:10 PM)
Members of the public are invited to speak on any item that does not appear on today’s agenda. Comments will be limited to three minutes or less at the Mayor’s discretion. When called to speak, you are encouraged to state your name for the record.

As an item not listed on the agenda, no action can be taken, however the City Council may instruct the City Manager to place the item on a future meeting agenda.

ANNOUNCEMENT OF CONFLICT OF INTEREST AND CAMPAIGN CONTRIBUTIONS

READING OF THE CITY COUNCIL CODE OF CONDUCT

APPROVAL OF AGENDA
CONSENT CALENDAR (7:20 PM)
Consent calendar items are considered to be routine and will be considered for adoption by one motion. There will be no separate discussion of these items unless a City Councilmember, member of the audience or staff requests the Council to remove an item from (or be added to) the consent calendar. Any person desiring to speak on any item on the consent calendar should ask to have that item removed from the consent calendar.

C1. Receive City Council Calendar of Meetings for December 2023 (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Recommendation: Receive City Council Calendar of Meetings for December 2023.

C2. Approve City Council City Council Meeting Minutes of November 7 and 14, 2023 (Staff Contact:

Suzanne Guzzetta, City Clerk, 408-586-3001)
Recommendation: Approve City Council Meeting minutes of November 7 and 14, 2023.

C3. Receive the Preview List of Anticipated Items for the Next Regular City Council Meeting (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Recommendation: Receive the list of anticipated agenda items for the next regular City Council meeting.

C4. Receive and Review the List of Agenda Items Requested by City Councilmembers (Staff

December 5, 2023 Milpitas City Council Agenda Page 3
Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Recommendation: Review the list of items that have been requested by City Councilmembers and provide direction to staff as necessary. No substantive discussion about any specific item shall occur and the City Council shall hold all debate about the item until it is scheduled as a full agenda item.

C5. Consider the Recommendation from Mayor Montano for Appointments to and Removals from City Commissions (Contact: Mayor Montano, 408-586-3024) Recommendation: Receive the recommendation from Mayor Montano and approve commission appointments and removals and direct the City Clerk to post a notice of unscheduled vacancy.

C6. Accept the FY 2022-23 Commissioners Annual Report for Three (3) Commissions and Approve Three (3) City of Milpitas Commission Work Plans for FY 2023-24 (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Recommendation: (1) Accept the 2022-23 Commissioners Annual Report; and (2) Approve proposed Fiscal Year 2023-24 Work Plans for (a) Energy and Environmental Sustainability Commission, (b) Planning Commission, and (c) Public Safety and Emergency Preparedness Commission.

C7. Accept the City’s Annual Comprehensive Financial Report and Other Related Annual Audited Reports for the Fiscal Year Ended June 30, 2023 (Staff Contact: Lauren Lai, Finance Director, 408-586-3111)
Recommendation: Accept the City’s Annual Comprehensive Financial Report (ACFR) and other related annual audited reports for the Fiscal Year ended June 30, 2023.

C8. FY 2023-24 1st Quarter Financial Status Report for the Quarter Ended September 30, 2023 (Staff Contact: Lauren Lai, Finance Director, 408-586-3111)
Recommendation: Review the FY 2023-24 Quarterly Financial Status Report for the quarter ended September 30, 2023.

C9. Adopt a Resolution Reviewing and Accepting the Annual Development Impact Fee Annual Report for the Calaveras Boulevard Widening Traffic Impact Fee, the Transit Area Specific Plan (TASP) Impact Fee, and the Storm Drain Fee for the Fiscal Year Ended June 30, 2023 (Staff Contact: Lauren Lai, Finance Director, 408-586-3111)
Recommendation: Adopt a resolution consistent with the Mitigation Fee Act to review and accept the annual development impact fee disclosure information for the Calaveras Blvd Widening Traffic Impact Fee, Transit Area Specific Plan Impact Fee and Storm Drain Fee for the Fiscal Year Ended June 30, 2023.

C10. Adopt a Resolution Approving a Site Development Permit and PUD Amendment Permit to Develop a New One-and-a-Half Story Single-Family Residence and to Deviate from the Approved Designs, on a Vacant 1.1-acre Lot Located in the R1-H Single-family Residential Zoning District with a Hillside Combining District at 1321 Terra Vista Court (Staff Contact: Jay Lee, Planning Director, 408-586-3077)
Recommendation: Consider the exemption in accordance with CEQA and adopt a resolution approving Site Development Permit No. SD22-0013 and Planned Unit Development Amendment No. PA23-0001 to allow the development of a new single-family residence at 1321 Terra Vista Court, subject to the attached Conditions of Approval.

December 5, 2023 Milpitas City Council Agenda Page 4
C11. Adopt a Resolution Approving a Site Development Permit to Develop a New Two-Story, SingleFamily Residence with an Attached Accessory Dwelling Unit, an In-Ground Swimming Pool, and Associated Site Improvements on a Vacant 1.3-Acre Lot Located in the R1-H Single-Family Residential Zoning District with a Hillside Combining District at 490 Vista Ridge Drive (Staff Contact: Jay Lee, Planning Director, 408-586-3077)
Recommendation: Consider the exemption in accordance with CEQA and adopt a resolution approving Site Development Permit SD23-0003 to allow development of a new single-family residence with an attached ADU, an in-ground swimming pool, and associated site improvements at 490 Vista Ridge Drive, subject to the attached Conditions of Approval.

C12. Waive the Second Reading and Adopt Ordinance No. 38.854 Amending the Zoning Code Contained in Title XI, Chapter 10, Section 3.03 of the Milpitas Municipal Code to Allow a Zoning Designation Change of a Certain Parcel (APN 022-38-007) Within the Zoning Map (Staff Contact:

Jay Lee, Planning Director, 408-586-3077; and Lillian VanHua, Senior Planner, 408-586-3073) Recommendation: Move to waive the second reading and adopt Ordinance 38.854 amending the Zoning Code contained in Title XI, Chapter 10, Section 3.03 of the Milpitas Municipal Code to allow a Zoning Designation change of a Certain Parcel (APN 022-38-007), located on the west side of California Circle, from the MP Industrial Park Zoning District to the MXD Mixed Use Zoning District.

C13. Receive an Update on Storm Drain System Emergency Repairs and Improvements at Evans Road and Piedmont Creek and Determine that the Condition Continues to Constitute an Emergency (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602) Recommendation: (1) Receive an update on the storm drain system emergency repairs and improvements at Evans Road and Piedmont Creek (in the amount of $137,519); and (2) Determine by a four-fifths vote that the condition continues to constitute an emergency.

C14. Receive an Update on the Emergency Repairs to the HVAC System and Equipment at City Hall and at the Public Works/Information Technology/Police Department Buildings (Staff Contact:

Christian DiRenzo, Public Works Director, 408-586-2602) Recommendation: (1) Receive an update on the emergency repairs to the HVAC system and equipment at City Hall and at the Public Works/Information Technology/Police Department Buildings; and (2) Approve the termination of the emergency declaration.

C15. Approve and Authorize the City Manager to Execute an Agreement with Imperial Maintenance Services, Inc. For a Five-Year Term in an Amount Not-to-Exceed $2,486,863.50 to Provide Janitorial Services for City Facilities, Subject to Annual Appropriation of Funds (Staff Contact:

Christian Di Renzo, Public Works Director, 408-586-2602) Recommendation: (1) Approve and authorize the City Manager to execute an agreement with Imperial Maintenance Services, Inc. for a five-year term in an amount not-to-exceed $2,486,863.50 to provide janitorial services for city facilities, subject to the annual appropriation of funds; and (2) Approve a budget amendment to appropriate $50,000.00 to the Department of Public Works FY 2023-24 Operating Budget.

LEADERSHIP AND SUPPORT SERVICES (7:30 PM)

16. Legislative Update from California State Senator Aisha Wahab (Staff Contact: Matt Cano, Deputy City Manager, 408-586-3012)
Recommendation: Accept the Legislative Update presentation from California State Senator Aisha Wahab.

December 5, 2023 Milpitas City Council Agenda Page 5

17. Consider A Request from the Cities Association of Santa Clara County and Adopt a Resolution Supporting a Formal Agreement to Establish the Cities Association of Santa Clara County Joint Powers Authority (Staff Contact: Ned Thomas, City Manager, 408-586-3059) Recommendation: Receive a presentation from a representative of the Cities Association of Santa Clara County and approve of agreement to establish the Cities Association of Santa Clara County Joint Powers Agency.

ANNOUNCEMENTS AND FUTURE AGENDA ITEMS (8:30 PM)
Members of the City Council or City Manager may make brief announcements at this time. Members of the City Council may also suggest future agenda items. For future agenda items, the City Council shall not debate the topic or engage in discussion but shall simply state a “yes” or “no” as whether to move the item forward. If a majority of the City Council agrees to move the item forward, the City Manager shall place the item on a future agenda.

ADJOURNMENT (8:35 PM)

KNOW YOUR RIGHTS UNDER THE OPEN GOVERNMENT ORDINANCE
Government’s duty is to serve the public, reaching its decisions in full view of the public. Commissions and other City agencies exist to conduct the people’s business. This ordinance assures that deliberations are conducted before the people and City operations are open to the people’s review. For more information on your rights under the Open Government Ordinance or to report a violation, contact the City Attorney’s office at Milpitas City Hall, 455 E. Calaveras Blvd., Milpitas, CA 95035 e-mail:[email protected] / Phone: 408-586-3040
The Open Government Ordinance is codified in the Milpitas Municipal Code as Title I Chapter 310 and is available online at the City’s website www.milpitas.gov by selecting the Milpitas Municipal Code link.

Materials related to an item on this agenda submitted to the City Council after initial distribution of the agenda packet are available for public inspection at the City Clerk’s office at Milpitas City Hall, 3rd floor 455 E. Calaveras Blvd., Milpitas and on City website. City Council agendas and related materials can be viewed online: https://www.milpitas.gov/129/Agendas-Minutes (select meeting date)

APPLY TO SERVE ON A CITY COMMISSION
Commission application forms are available online at www.milpitas.gov or at Milpitas City Hall.

Contact the City Clerk’s Office at 408-586-3001 for more information.

If you need assistance, per the Americans with Disabilities Act, for any City of Milpitas public meeting, please call the City Clerk at 408-586-3001 or send an e-mail to [email protected] prior to the meeting. You may request a larger font agenda.

Milpitas City Council Calendar
December 2023
Sunday Monday Tuesday Wednesday Thursday Friday Saturday 1 7:00 PM-Tree Lighting Ceremony
2 3 4
7:00 PM-Parks, Recreation & Cultural
Resources Commission (HL)
5 6:00 PM-Closed Session
7:00 PM-City Council
6 1:00 PM-Santa Clara VTA Monthly
Briefing - Northeast Group (CM)
3:00 PM-City/School Collaborative
Subcommittee (CM/EC)
5:30 PM-Veterans Commission (CM)
7:00 PM-Community Advisory
Commission (EC)
7 5:30 PM-Milpitas Chamber of
Commerce Board (GB)
5:30 PM-Santa Clara VTA Board of
Directors (CM)
8 9
10 11 12
5:30 PM-Special Council Meeting
with Closed Session at 5:30 PM
13 7:00 PM-Silicon Valley Clean Energy
Board of Directors (EC) (Cupertino)
14 4:00 PM-Treatment Plant Advisory
Committee (CM) (San Jose)
4:00 PM-Santa Clara VTA Policy
Advisory Committee (EC)
6:00 PM-Youth Advisory Commission
(HL)
15 16
17 18
7:00 PM-Science, Technology, and
Innovation Commission (GB)
19 20
6:00 PM-Energy and Environmental
Sustainability Commission (EC)
21 3:00 PM-VTA Security, and Transit
Planning and Operations Committee
(CM) (San Jose)
22 23
24 25
City Observed Holiday
26 City Observed Holiday
27 28 29 30
31 November 2023

S M T W T F S
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30
January 2024

S M T W T F S
1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31
City Hall and City Facilities Closed (Fire and Police are not affected)

November 7, 2023 Milpitas City Council Minutes Page 1

REGULAR MEETING OF THE MILPITAS

CITY COUNCIL

MINUTES
TUESDAY, NOVEMBER 7, 2023
CITY COUNCIL CHAMBER, 455 E. CALAVERAS BLVD, MILPITAS, CA The City Council of the City of Milpitas convened on the regular City Council meeting day in a Meeting of the Milpitas City Council on November 7, 2023, in the City Council Chamber, 455 E. Calaveras Blvd, Milpitas, CA, and via teleconference/Zoom webinar.

CALL MEETING TO ORDER by Mayor and ROLL CALL by City Clerk Mayor Montano called the Regular City Council meeting to order at 7:02 PM. Roll Call was taken by City Clerk Guzzetta.

PRESENT: Mayor Montano, Vice Mayor Chua, Councilmember Barbadillo, Councilmember Lien, and Councilmember Phan (7:09 PM).

ABSENT: None.

PLEDGE OF ALLEGIANCE
Mayor Montano lead the Pledge of Allegiance.

INVOCATION
Mayor Montano presented the invocation.

PUBLIC FORUM
The following people spoke under Public Forum:

1. Stephen Balsbaugh

2. Vikas Seth

3. Voltaire Montemayor

ANNOUNCEMENT OF CONFLICT OF INTEREST AND CAMPAIGN CONTRIBUTIONS City Attorney Mutalipassi asked the Mayor and City Councilmembers if they had any personal conflicts of interest. By roll call, there were no conflicts of interest. City Attorney Mutalipassi asked the Mayor and City Councilmembers if they had any reportable campaign contributions. By roll call, there were no reportable campaign contributions.

READING OF THE CITY COUNCIL CODE OF CONDUCT
Mayor Montano read the Code of Conduct.

APPROVAL OF AGENDA
Motion: to approve the November 7, 2023 Regular Meeting Agenda, moving Presentations after Item 16.

Motion/Second: Vice Mayor Chua / Councilmember Barbadillo by the following:

AYES: Mayor Montano, Vice Mayor Chua, Councilmember Barbadillo, Councilmember Lien, Councilmember Phan
NOES: None

November 7, 2023 Milpitas City Council Minutes Page 2

CONSENT CALENDAR
Councilmember Lien asked to pull Item C6 from the Consent Calendar.

There were no public speakers.

After discussion, motion: to remove Item C6 from and approve the Consent Calendar.

Motion/Second: Vice Mayor Chua / Councilmember Lien
by the following:

AYES: Mayor Montano, Vice Mayor Chua, Councilmember Barbadillo, Councilmember Lien, Councilmember Phan
NOES: None

1. Receive City Council Calendar of Meetings for November 2023 (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Received City Council Calendar of Meetings for November 2023.

2. Approve City Council City Council Meeting Minutes of October 17, 2023 (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Approved City Council Meeting minutes of October 17, 2023.

3. Receive the Preview List of Anticipated Items for the Next Regular City Council Meeting (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Received the list of anticipated agenda items for the next regular City Council meeting.

4. Adopt a Resolution Granting Acceptance of Public Improvements and Approve a Reduction of the Faithful Performance Bond for the District 1 Lot 4 (Gideon) Project located at 150 Market Street and Grant Authorization to the City Engineer to Release the Remaining Portion of the Lot 4 Performance Bond after the One-Year Warranty Period (Staff Contact: Matt Cano, Deputy City Manager, 408-586-3012; and Roberto Alonzo, Transportation and Traffic Manager, 408-586-3316) Adopted Resolution No. 9278 granting acceptance of the completed public improvements for the District 1 Lot 4 (Gideon) Project as shown on Public Improvement Plans No. 2-1295; and approve a reduction in the faithful performance bond of $38,085.00 which is 25% of the security’s original value for the Lot 4 public improvements construction cost, the remaining amount of the Lot 4 performance bond cost shall be in effect for the duration of the warranty period; and grant authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided that all required warranty work is completed to the satisfaction of the City Engineer.

5. Adopt a Resolution Granting Acceptance of Public Improvements and Approve a Reduction of the Faithful Performance Bond for the Thind Residence Residential Project and Grant Authorization to the City Engineer to Release the Performance Bond after the One-Year Warranty Period (Staff Contact: Matt Cano, Deputy City Manager, 408-586-3012; and Roberto Alonzo, Transportation and Traffic Manager, 408-586-3316) Adopted Resolution No. 9279 granting acceptance of the completed public improvements for the Thind Residence Residential Project as shown on Public Improvement Plans No. 2-1371; and approve a reduction in the Phase 1 faithful performance bond to $15,989.00 and a reduction in the Phase 2 faithful performance bond to $1,792.00, which are 25% of the securities’ original values which shall be in effect

November 7, 2023 Milpitas City Council Minutes Page 3
for the duration of the warranty period; and grant authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided that all required warranty work is completed to the satisfaction of the City Engineer.

7. Approve and Authorize City Manager to execute a Lease Agreement with Pacific West Builders, Inc. to Lease City Owned Land at 1700 Sango Court in the Amount of $34,800.00 (Staff Contact:

Alex Andrade, Economic Development Director, 408-586-3046; and Robert Musallam, Housing Division Manager, 408-586-3275)
Approved and authorized City Manager to execute a lease agreement with Pacific West Builders, Inc. to lease City owned land at 1700 Sango Court in the amount of $34,800.00.

8. Authorize the City Manager to Accept the 2023 Bulletproof Vest Partnership Grant in the Amount of $7,628.91 and Approve a Related Budget Appropriation (Staff Contact: Jared Hernandez, Chief of Police, 408-586-2406)
Authorized the City Manager to accept the 2023 Bulletproof Vest Partnership Grant in the amount of $7,628.91 and approve a related budget appropriation.

9. Authorize the City Manager to Execute the Grant Agreement with the Office of Traffic Safety to Accept the Fiscal Year 2024 Office of Traffic Safety Selective Traffic Enforcement Program Grant and Approve a Related Budget Appropriation in the Amount of $110,000.00 (Staff Contact: Jared Hernandez, Chief of Police, 408-586-2406)
Authorized the City Manager to execute the grant agreement with the Office of Traffic Safety to Accept the Fiscal Year 2024 Office of Traffic Safety Selective Traffic Enforcement Program Grant and approve a related budget appropriation in the amount of $110,000.00.

10. Adopt a Resolution to Reject a Bid Protest from Iteris; Award IFB 24-025 and Authorize the City Manager to Execute the Purchase Order with Econolite Control Products, Inc. in the amount of $127,871.66 for the Purchase of 25 Citywide Traffic Detection Cameras (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602)
Adopted Resolution No. 9280 to reject a bid protest from Iteris; award IFB 24-025 and authorize the City Manager to execute the purchase order with Econolite Control Products, Inc. in the amount of $127,871.66 for the purchase of 25 citywide traffic detection cameras.

11. Receive an Update on the Emergency Repairs to the HVAC System and Equipment at City Hall and at the Public Works/Information Technology/Police Department Buildings and Determine that the Condition Continues to Constitute an Emergency (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602)
(1) Received an update on the emergency repairs to the HVAC system and equipment at City Hall and at the Public Works/Information Technology/Police Department Buildings; and (2) Determined by a fourfifths vote that the condition continues to constitute an emergency.

12. Authorize the City Manager to enter into a Funding Agreement Between the City of Milpitas and the Santa Clara Valley Transportation Authority for Grant Funds from the 2010 Measure B Vehicle Registration Fee Countywide Program in an Amount Not to Exceed $120,000.00 (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602) Authorized the City Manager to enter into a funding agreement between the City of Milpitas and the Santa Clara Valley Transportation Authority for grant funds from the 2010 Measure B Vehicle Registration Fee Countywide Program in an amount not to exceed $120,000.00.

November 7, 2023 Milpitas City Council Minutes Page 4

13. Authorize the City Manager to Execute the Third Amendment to the Agreement with the Santa Clara Valley Water District for Water Conservation Program Cost Sharing and to Execute an Amendment to the Professional Services Agreement with Our City Forest to Administer the Lawn Bust Milpitas Pilot Program (Staff Contact: Christian Di Renzo, Public Works Director, 408- 586-2602; and Elaine Marshall, Deputy Public Works Director, 408-586-2603) Authorized the City Manager to execute the third amendment to the Agreement with the Santa Clara Valley Water District for Water Conservation Program Cost Sharing to extend term by an additional year and increase Valley Water cost share payment to City for Lawn Bust Milpitas for additional not to exceed of $40,000.00; and an amendment to the Professional Services Agreement with Our City Forest to administer the Lawn Bust Milpitas Pilot Program to implement program for an additional year at a cost not to exceed $120,000.00.

14. Waive Second Reading of Ordinance No. 196.12: an Ordinance of the City Council of the City of Milpitas Amending Section 4.05 of Chapter 9 ("Parks") of Title V ("Public Health, Safety, and Welfare") of the Milpitas Municipal Code (Staff Contact: Michael Mutalipassi, City Attorney, 408- 858-3040)
Waived the second reading and adopted Ordinance No. 196.12, An Ordinance of the City Council of the City of Milpitas Amending Section 4.05 of Chapter 9 (“Parks”) of Title V (“Public Health, Safety, and Welfare”) of the Milpitas Municipal Code.

15. Authorize International Travel for One (1) Member of the Milpitas Police Department’s Criminal Investigations Bureau to Provide Technical Assistance in Support of an Out-of-Country Criminal Investigation, as a Member of the Santa Clara County Regional Enforcement Allied Computer Task Force (REACT) and in Coordination with the United States Secret Service (Staff Contact:

Jared Hernandez, Chief of Police, 408-586-2406; and Stephen Parodi, Police Captain, 408-586- 2523)
Authorized international travel for one (1) member of the Milpitas Police Department’s Criminal Investigations Bureau currently assigned to REACT to assist in an out-of-country criminal investigation.

PUBLIC HEARINGS

16. Adopt a Resolution Certifying an Environmental Impact Report (SCH No: 2022110251) and Approving a General Plan Text Amendment, Zoning Map Amendment, Site Development Permit, Conditional Use Permit, Vesting Tentative Map, Density Bonus Permit, Tree Removal Permit, and Environmental Assessment; and Introduce an Ordinance Amending the Zoning Map in Accordance with the Provisions of Section 3.03 of Chapter 10 of Title XI (Zoning) of the Milpitas Municipal Code to Change the Zoning Classification of a Certain Parcel (APN 022-38-007) from the MP Industrial Park Zoning District to the MXD Mixed Use Zoning District; and Allow Development of a Multi-Family Residential Project Consisting of 13 Residential Buildings, up to 51 feet in Height, and One Residential Apartment Building, up to 78 feet in Height, for a Total of 206 Residential Units, and Associated Site Improvements on an Approximately 6.7-acre Site Located at 1355 California Circle. (Staff Contact: Jay Lee, Planning Director, 408-586-3077 and Lillian VanHua, Senior Planner, 408-586-3073)
City Manager Thomas introduced the item. Senior Planner VanHua presented the report, joined by Planning Director Lee.

Mayor Montano opened the public hearing.

Applicant representative Jim Sullivan made a presentation.

November 7, 2023 Milpitas City Council Minutes Page 5
There were the following speakers:

1. Matthew Beeston

2. Voltaire Montemayor
Mayor Montano closed the public hearing.

Vice Mayor Chua asked for clarification on the changes to the conditions of approval 25 & 26 and what the differences were between the staff and applicant recommendations.

Councilmember Lien asked for timelines on building and questioned if the Conditions of Approval were the only area of disagreement. Applicant representative Jim Sullivan noted that he had met with staff, and they were in agreement on everything else.

Councilmember Barbadillo asked staff what earlier concerns were when this project was initially presented to staff. Planning Director Lee noted staff waited for better coordinated efforts on use of the area between different developers and applicants. Councilmember Barbadillo questioned if the recommended zoning update would apply to the entirety of the affected Specific Plan area. Senior Planner VanHua explained that the General Plan text amendment would remove the requirement for the California Circle Specific Plan. Planning Director Lee followed up that this project would not preclude a specific plan in the future. Councilmember Barbadillo highlighted the importance of reaching a common ground between staff and developers.

Councilmember Phan questioned the applicant and expressed thanks to both staff and the applicant.

He suggested accepting the developer's proposals to modify the conditions of approval.

Mayor Montano paused the discussion to issue proclamations.

PRESENTATIONS
Diwali (Proclamation)
Mayor Montano, joined by the City Council, presented proclamations in recognition of Diwali.

PUBLIC HEARINGS (Cont’d.)

16. (Cont’d.)
Mayor Montano spoke on the importance of affordable housing and asked to keep lines of communication with Pulte to ensure regular updates on efforts.

Councilmember Lien thanked staff and spoke about the need to approve the developer's recommendation for updates to the conditions of approval.

Councilmember Barbadillo asked the City Attorney to speak on the significance of removing the California Circle Specific Plan overlay. City Manager Thomas and Planning Director Lee noted that this amendment only removes the overlay from this site.

Vice Mayor Chua moved to approve the staff recommendation incorporating the Developer recommendations to modify the conditions of approval.

City Attorney Mutalipassi read the title of the ordinance and restated the motion.

November 7, 2023 Milpitas City Council Minutes Page 6
After discussion, motion: to
(1) Adopt Resolution No. 9281 certifying an Environmental Impact Report pursuant to Public Resources Code Section 21080(d) and 21082.2(d) and CEQA Guidelines Section 15064; (2) Waive the first reading beyond the title and introduce Ordinance No. 38.854 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 a Certain Parcel (APN 022-38-007), located on the west side of California Circle, from the MP Industrial Park Zoning District to the MXD Mixed Use Zoning District;
(3) Adopt Resolution No. 9282 to approve General Plan Text Amendment No. GP22-0001; and (4) Adopt Resolution No. 9283 to approve Zoning Map Amendment No. ZA22-0001, Site Development Permit No. SD22-0003 incorporating the developer recommendation to modify conditions of approval no. 25 and 26, Conditional Use Permit No. UP22-0001, Vesting Tentative Map MT22-0001, Density Bonus Permit No. DB23-0003, Tree Removal Permit No. TR23-0021, and Environmental Assessment No. EA22-0002, subject to the findings and Conditions of Approval. Additions to the Conditions of Approval are approved as follows:
• COA No. 25: add Section XII-1-3.03, which would require concurrent construction of both the for sale and rental product types, shall not be applicable. Given the current extenuating circumstances, concurrent construction may prove to be infeasible and impractical. Permittee agrees to diligently pursue an affordable builder, acceptable to the City of Milpitas, who will expeditiously Permittee will be limited to 65% of it’s units (85 units) receiving Certificates of Occupancy, before a building permit has been issued and construction has begun on the Below Market Rate (rental product) site. At such time of the rental product beginning construction, the remaining 35% of Permittee’s units (46 units), shall be eligible for release for Certificate of Occupancy.
• COA No. 26 add: Furthermore, Permittee agrees to work with City Attorney’s Office to include within the Affordable Housing Agreement, language that would be of benefit to qualified employees of the Milpitas Unified School District in securing rental opportunities for both lowand moderate-income units to be provided. (5) Developer to make scheduled reports to staff with staff regularly reporting to the City Council on the status of the project.

Motion/Second: Vice Mayor Chua/Councilmember Phan
by the following:

AYES: Mayor Montano, Vice Mayor Chua, Councilmember Barbadillo, Councilmember Lien, Councilmember Phan
NOES: None

LEADERSHIP AND SUPPORT SERVICES

17. Receive a Presentation and Provide Direction to Staff on Community Outreach for Potential Revenue Measures for the November 2024 Election (Staff Contact: Matt Cano, Deputy City Manager, 408-586-3012)
City Manager Thomas introduced the item. Deputy City Manager Cano presented the report.

Council Discussion ensued.

Councilmember Lien spoke in support of business tax modernization.

Vice Mayor Chua voiced concerns with polling for so many items and suggested prioritizing what the

November 7, 2023 Milpitas City Council Minutes Page 7
City needs now.

Councilmember Phan suggested, if taking any action, to move forward with polling about the General Obligation bond measure, noting community support for public safety. He questioned the impact of too many survey questions on public participation and voter impact. Councilmember Phan indicated he wouldn't support business modernization or a sales tax extension as the funds are too flexible.

Councilmember Barbadillo emphasized the importance of having a Plan B since there's no guarantee a revenue measure would be approved by the electors.

Councilmember Lien suggested providing direction to conduct the poll due to the urgent nature of all the needs.

Vice Mayor Chua disagreed and suggested conducting a survey on only one measure.

Mayor Montano questioned if the Measure F extension polling need to go now. Finance Director Lai noted that polling could wait until 2026. Mayor Montano spoke in support of polling only about the Public Safety General Obligation Bond.

Councilmember Phan asked about the cost of the survey when polling on one or multiple topics. Deputy City Manager replied that cost was roughly the same whether polling for one or multiple items.

Councilmember Phan suggested making the most of that poll now as related to budget concerns to get an overall sense of public opinion.

Vice Mayor Chua supported polling primarily for the Public Safety General Obligation Bond, and going back if the response was negative.

There were the following speakers:

1. Voltaire Montemayor
After discussion, Vice Mayor Chua made a motion: to proceed with community outreach surveys for a potential Public Safety Infrastructure General Obligation Bond Measure as a focus and including other items as necessary and follow-up with questions as recommended by the Polling Consultant, FM3.

Motion/Second: Vice Mayor Chua / Councilmember Phan
by the following:

AYES: Mayor Montano, Vice Mayor Chua, Councilmember Barbadillo, Councilmember Lien, Councilmember Phan
NOES: None

18. Introduce Ordinance 298.1, An Ordinance of The City Council of the City of Milpitas Amending the Milpitas Municipal Code Title Xi (“Zoning, Planning and Annexation”), Chapter 10 (“Zoning”), Section 13 (“Special Uses”), Subsection 13.15 (“Cannabis Uses”) to Prohibit and Regulate Cannabis Uses, Establishments, and Operations to the Fullest Extent Allowed By State Law, and Making Findings of Exemption From Environmental Review Pursuant To CEQA Guidelines Sections 15061(b)(3) 15183, 15305, and 15378 (Staff Contact: Michael Mutalipassi, City Attorney, 408-586-3040)
City Attorney Mutalipassi introduced the item. Assistant City Attorney Creech presented the report.

November 7, 2023 Milpitas City Council Minutes Page 8
There were the following public speakers:

1. Voltaire Montemayor
Council Discussion ensued.

Vice Mayor Chua questioned how the ordinance would affect Milpitas. Assistant City Attorney Creech noted that the only thing that would change would be a limited allowance for medical cannabis delivery pursuant to State law.

Councilmember Barbadillo asked clarifying questions regarding the ordinance. Assistant City Attorney Creech, City Attorney Mutalipassi, and Chief of Police Hernandez responded. Councilmember Barbadillo expressed concerns regarding illegal deliveries in the city.

Councilmember Phan noted that if the city had its own ordinance, they would have some control.

Councilmember Barbadillo made a motion: to defer the introduction of the ordinance and amend it to tighten enforcement on illegal distribution and delivery of cannabis in Milpitas.

City Attorney Mutalipassi cautioned that medical cannabis would be legal on January 1, 2024 if the City Council doesn't adopt this ordinance.

Motion/Second: Councilmember Barbadillo / Councilmember Phan by the following:

AYES: Vice Mayor Chua, Councilmember Barbadillo, Councilmember Phan NOES: Councilmember Lien
ABSTAIN: Mayor Montano

19. Review the List of Agenda Item Requests From Individual Councilmembers and Provide Direction to Staff Through the Council-Approved Prioritization Process (Staff Contact: Matt Cano, Deputy City Manager, 408-586-3012)
Deferred to November 14, 2023.

ITEMS PULLED FROM CONSENT CALENDAR

6. Approve and Authorize the City Manager to Execute Amendment #1 to the Agreement with HdL and Associates for Sales Tax Audit, Analysis, Reports and Forecasting Services in an Amount of $300,000 (Staff Contact: Lauren Lai, Finance Director, 408-586-3111) Finance Director Lai responded to questions from the City Council.

After discussion, motion: to approve and authorize the City Manager to execute Amendment #1 to the agreement with HdL and Associates for sales tax audit, analysis, reports and forecasting services in an amount of $300,000.00.

Motion/Second: Councilmember Lien / Vice Mayor Chua
by the following:

AYES: Mayor Montano, Vice Mayor Chua, Councilmember Barbadillo, Councilmember Lien, Councilmember Phan
NOES: None

November 7, 2023 Milpitas City Council Minutes Page 9

ANNOUNCEMENTS AND FUTURE AGENDA ITEMS
Vice Mayor Chua relayed a request from residents to bring back Bingo and the Tour at the Senior Center.

Upon polling the City Council, there was unanimous consensus to add the request to the prioritization list.

Mayor Montano requested adding consideration of a parade on Main Street to the list. Upon polling the City Council, there was consensus to add the item to the prioritization list (NOES: Councilmember Phan).

ADJOURNMENT
Mayor Montano adjourned the meeting at 11:39 PM.

Draft meeting minutes submitted by City Clerk, Suzanne Guzzetta

November 14, 2023 Milpitas City Council Minutes Page 1

SPECIAL MEETING OF THE MILPITAS

CITY COUNCIL

MINUTES
TUESDAY, NOVEMBER 14, 2023
CITY COUNCIL CHAMBER, 455 E. CALAVERAS BLVD, MILPITAS, CA The City Council of the City of Milpitas convened on the Special City Council meeting day in a Meeting of the Milpitas City Council on November 14, 2023, in the City Council Chamber, 455 E. Calaveras Blvd, Milpitas, CA, and via teleconference/Zoom webinar.

CALL MEETING TO ORDER by Mayor and ROLL CALL by City Clerk Mayor Montano called the Regular City Council meeting to order at 5:34 PM. Roll Call was taken by City Clerk Guzzetta.

PRESENT: Mayor Montano, Councilmember Lien, Councilmember Phan ABSENT: Vice Mayor Chua, Councilmember Barbadillo
City Attorney Mutalipassi announced the closed session items.

There were no public speakers.

The City Council adjourned to Closed Session at 5:36 PM.

ADJOURN TO CLOSED SESSION
(a) CONFERENCE WITH LABOR NEGOTIATORS
Pursuant to Government Code Section 54957.6
Agency designated representative: Rick Bolanos, LCW
Bargaining unit: LIUNA, UPEC (Pro-Tech, MEA, MidCon), IAFF, MPOA (b) CONFERENCE WITH LEGAL COUNSEL
Existing Litigation pursuant to Government Code Section 54956.9:

In re: Aqueous Film-Forming Foams Products Liability Litigation, MDL No. 2:18-mn-02873 City as a Class Member
The City Council reconvened in open session at 6:32 PM.

CLOSED SESSION ANNOUNCEMENT:

City Attorney Mutalipassi announced that there was nothing to report out.

PLEDGE OF ALLEGIANCE
Mayor Montano led the Pledge of Allegiance.

INVOCATION
Mayor Montano presented the invocation.

PRESENTATIONS
There were no presentations.

November 14, 2023 Milpitas City Council Minutes Page 2

PUBLIC FORUM
The following people spoke under Public Forum:

1. Jim Arthur

2. Vy Joel

ANNOUNCEMENT OF CONFLICT OF INTEREST AND CAMPAIGN CONTRIBUTIONS City Attorney Mutalipassi asked the Mayor and City Councilmembers if they had any personal conflicts of interest. By roll call, there were no conflicts of interest (Absent: Councilmember Barbadillo, Vice Mayor Chua).

City Attorney Mutalipassi asked the Mayor and City Councilmembers if they had any reportable campaign contributions. Councilmember Phan reported a possible contribution by the development project applicant for Item 15. By roll call, there were no additional reportable campaign contributions (Absent: Councilmember Barbadillo, Vice Mayor Chua).

READING OF THE CITY COUNCIL CODE OF CONDUCT
Mayor Montano read the Code of Conduct.

APPROVAL OF AGENDA
Mayor Montano moved to defer Item 12 to the next City Council meeting. Without a second, the motion failed.

Councilmember Lien made a motion: to approve the agenda.

Motion/Second: Councilmember Lien / Councilmember Phan
by the following:

AYES: Mayor Montano, Councilmember Lien, Councilmember Phan NOES: None
ABSENT: Vice Mayor Chua, Councilmember Barbadillo

CONSENT CALENDAR
Mayor Montano requested to pull Item C5.

After discussion, motion: to approve the Consent Calendar, pulling Item C5.

Motion/Second: Councilmember Lien / Councilmember Phan
Motion carried by the following:

AYES: Mayor Montano, Councilmember Lien, Councilmember Phan NOES: None
ABSENT: Vice Mayor Chua, Councilmember Barbadillo

1. Receive City Council Calendar of Meetings for November and December 2023 (Staff Contact:

Suzanne Guzzetta, City Clerk, 408-586-3001)
Received City Council Calendar of Meetings for November and December 2023.

2. Receive the Preview List of Anticipated Items for the Next Regular City Council Meeting (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Received the list of anticipated agenda items for the next regular City Council meeting.

November 14, 2023 Milpitas City Council Minutes Page 3

3. Approve the 2024 City Council Meeting Schedule (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001)
Approved the 2024 Milpitas City Council meeting schedule, with any changes requested at the City Council meeting.

4. Authorize and Approve Travel to San Francisco, CA, for Councilmember Hon Lien to Attend (1) the 9th Annual CALNET Leadership Retreat to be Held on November 16 – 17, 2023; and (2) the National API Elected Officials Summit to be held on November 18 -19, 2023, for an Estimated Total Not-to-Exceed Amount of $1000 Budgeted Under the Individual Elected Official Allocation for Conferences/Meetings/Trainings (Staff Contact: Ned Thomas, City Manager, 408-586-3053) Authorized and approved travel to San Francisco, CA, for Councilmember Hon Lien to attend (1) the 9th Annual CALNET Leadership Retreat to be held on November 16 – 17, 2023; and (2) the National API Elected Officials Summit to be held on November 18 -19, 2023, for an estimated total not-to-exceed amount of $1,000 budgeted under the Individual Elected Official allocation for Conferences/Meetings/Trainings.

6. Approve and Authorize the City Manager to Execute a Software License and Professional Services Agreement with TriTech Software Systems, Inc. for Computerized Maintenance Management System Subscription License Fees for a Total Amount Not-to-Exceed $374,105.21, Subject to the Annual Appropriation of Funds (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602)
Approved and authorized the City Manager to execute a software license and professional services agreement with TriTech Software Systems, Inc. for computerized maintenance management system subscription license fees for a total amount not-to-exceed $374,105.21, subject to the annual appropriation of funds.

7. Report on Bids and Adopt a Resolution Authorizing the City Manager to Award the Construction Contract to I & A Contractor, Inc. in the Amount of $428,300.00 for the Sports Center Roof Rehabilitation Project (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602) Received a report on bids and adopted Resolution No. 9284 authorizing the City Manager to award a construction contract to the lowest responsible and responsive bidder, I & A Contractor, Inc., in the amount of $428,300.00 for the Sports Center Roof Rehabilitation Project; and authorized the City Manager to negotiate and execute contract change order(s) in an aggregate amount not to exceed $64,245.00 for the Sports Center Roof Rehabilitation Project.

8. Consider One Fee Waiver from Kiwanis Club of Milpitas Foundation and one Donation Request from Knights of Columbus St. John’s Council 5796 (Staff Contact: Renee Lorentzen, Recreation and Community Services Director, 408-586-3409)
Approved a Fee Waiver of $900.00 for the Kiwanis Club of Milpitas Foundation’s 20th Annual MUSD Crab Feed and Auction Event scheduled for February 9, 2024; and approved a donation request of $500.00 for the Knights of Columbus St. John’s Council 5796 for their 45th Annual Free Thanksgiving Dinner event at the St. John the Baptist Catholic Church on Thursday, November 23, 2023.

COMMUNITY DEVELOPMENT

9. Receive Report on Manufacturing Day 2023 and Issue Certificates of Commendation to Event Collaborators (Staff Contact: Alex Andrade, Director of Economic Development, 408-586-3046; and Michael Thomas, Economic Development Specialist, 408-586-3045)

November 14, 2023 Milpitas City Council Minutes Page 4
The City Council received a report on Manufacturing Day 2023 and issued certificates of commendation to event collaborators:

There were no public speakers.

Economic Development Director Andrade introduced the item and Economic Development Specialist Thomas presented the report and the City Council issued certificates of commendation to event collaborators: Paul Okoye and something Christensen, noting that a representative from KAL was not available to accept their certificate, and Public Information Officer Angelo.

10. Receive Presentation on Proposed Mixed-Use Development at 70 N. Main St. and Provide Direction on Preferred Alternative regarding Shared Parking Agreement (Staff Contact: Jay Lee, Planning Director, 408-586-3077; and Michael Fossati, Senior Planner, 408-586-3274) City Manager Thomas introduced the item. Senior Planner Fossati presented the report. Applicant Terry Pries provided additional comment.

There were no public comments.

Council discussion ensued.

Councilmember Lien noted she met with the applicant recently and encouraged the applicant to work with staff.

Mayor Montano thanked staff and the applicant for their commitment to revitalizing Main Street. She expressed concerns about parking for apartment tenants and asked the applicant to continue working with staff.

Planning Director Lee clarified that they were asking for feedback from the Council and if they would support a shared parking agreement. Upon polling council, there was consensus for support of a shared parking agreement.

11. Receive a Presentation from Staff and Applicant and Provide Direction Regarding Conceptual Plans for Proposed Development (“600 Valley Way”) to Subdivide Three Existing Lots into Two Parcels Totaling 7.22 Acres to Facilitate up to 104 Townhome Units and 140 Rental Affordable Units, for a Total of 244 Residential Units at 461, 538, and 602 Valley Way (APNs 022-28-022, - 024, and -025) (Staff Contact: Jay Lee, Planning Director, 408-586-3077; and Lillian VanHua, Senior Planner, 408-586-3073)
City Manager Thomas introduced the item and Senior Planner VanHua presented the report. Tim Steele, Senior Vice President of Development from the Sobrato Organization made additional remarks.

Councilmember Lien questioned as to why the developer is dedicating the land rather than developing the land. Tim Steele from the Sobrato Organization provided additional information. Economic Development Director Andrade spoke on the pros and cons of dedicating the land.

Councilmember Phan voiced support for the land dedication.

Mayor Montano suggested a senior housing development might be a good use for the site. She questioned aspects of the project including qualifications for density bonuses and dedicating the land versus developing it, and ended voicing support for the land dedication.

City Manager Thomas presented additional remarks.

November 14, 2023 Milpitas City Council Minutes Page 5

LEADERSHIP AND SUPPORT SERVICES

12. Review the List of Agenda Item Requests From Individual Councilmembers and Provide Direction to Staff Through the Council-Approved Prioritization Process (Staff Contact: Matt Cano, Deputy City Manager, 408-586-3012)
Deputy City Manager Cano presented the report.

Council reviewed the list of agenda item requests from individual Councilmembers, and individually voted electronically for two items in group one to advance as a priority.

City Clerk Guzzetta read the results of the first voting round with the following items receiving a majority of votes and moving forward:
- CC#1 - Charter City Evaluation
- CC#5 - International Festival on Main Street
After discussion, motion: to review the list of agenda item requests from individual Councilmembers and provide direction to staff, through the prioritization process, on which Group 1 items should be advanced.

Motion/Second: Councilmember Phan / Councilmember Lien
Motion carried by the following:

AYES: Mayor Montano, Councilmember Lien, Councilmember Phan NOES: None
ABSENT: Vice Mayor Chua, Councilmember Barbadillo

ITEMS PULLED FROM CONSENT CALENDAR

5. Authorize the City Manager to Negotiate and Execute an Extension of the Existing Sister Cities Memorandum of Understanding with the City of Dagupan, Philippines (Staff Contact: Matt Cano, Deputy City Manager, 408-586-3012)
Deputy City Manager Cano presented the report.

There were no public speakers.

Councilmember Phan made a motion: to integrate the requested amendments into the Memorandum of Understanding:
1) adding language to make the agreement in perpetuity
2) to specifically name the Dagupan Sister City Association 3) form a Sister Cities' Committee/Commission
Councilmember Lien noted that the recommendation is to authorize the City Manager to negotiate.

Deputy City Manager Cano asked for clarification if the commission can be incorporated into an existing commission. Councilmember Phan requested a separate commission.

Mayor Montano asked for further discussion and to bring the item back to City Council. She noted that the formation of a committee was in a gray area.

Deputy City Manager Cano asked if the Council would be amenable to incorporating the committee or

November 14, 2023 Milpitas City Council Minutes Page 6
commission into another advisory body. Councilmember Phan voiced a desire to eventually see a separate commission and suggested bringing it back to further discussion options.

After discussion, motion: to Authorize the City Manager to negotiate and execute an extension of the existing Memorandum of Understanding with the City of Dagupan, Philippines, incorparating the following amendments: 1) adding language to make the agreement in perpetuity; 2) to specifically name the Dagupan Sister City Association; and 3) to discuss options for the formation of a committee/commission at a later time.

Motion/Second: Councilmember Phan / Councilmember Lien
Motion carried by the following:

AYES: Mayor Montano, Councilmember Lien, Councilmember Phan NOES: None
ABSENT: Vice Mayor Chua, Councilmember Barbadillo

ANNOUNCEMENTS AND FUTURE AGENDA ITEMS
There were the following announcements:

City Manager Thomas announced the closure of City Hall in observation of Thanksgiving.

ADJOURNMENT
Mayor Montano adjourned the meeting at 8:57 PM.

Draft meeting minutes submitted by City Clerk, Suzanne Guzzetta

TENTATIVE CITY COUNCIL AGENDA ITEM LIST
as of 12/1/2023
December 12, 2023 – Special Meeting (5:30 PM)

CLOSED SESSION
• Labor Relations
INVOCATION (Vice Mayor Chua)

PRESENTATION

CONSENT CALENDAR

1. Receive City Council calendar for December 2023 and January 2024 (City Clerk)

2. Approve City Council Meeting minutes of December 5, 2023 (City Clerk)

3. Preview list of items for January 9, 2024 (City Clerk)

4. Councilmember Request List (City Clerk)

5. Commission Appointments (City Clerk)

6. ERP Contract (Finance)

7. Council Chamber A/V Replacement Agreement (Information Technology)

8. On-Call CEQA Consultants Contracts (Planning)

9. Purchase of One (1) Bucket Truck (Public Works)

10. Disposition of Fleet and Equipment (Public Works)

11. Utility Box Repainting (Recreation)

LEADERSHIP AND SUPPORT SERVICES

12. Vice Mayor Appointment (Mayor)

13. Council Handbook (Part A) (City Manager / City Clerk)

14. Potential Departmental Realignments (Human Resources)

15. Pushcart Regulation (City Attorney)

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS

OPEN ITEMS
Request
No. Topic Submitted by:

Date
Requested
STATUS and/or DATE scheduled on City
Council meeting agenda:

ACTIVE ITEMS
Request
No. Topic Submitted by:

Date
Requested
STATUS and/or DATE scheduled on City
Council meeting agenda:
1 Bring back Bingo and the Tour at the Senior
Center Chua 11/7/2023
This item was included in the November 7,
2023 council prioritization list as an item that
is underway as it is less than 4 hours work.
2 Consideration of a parade on Main Street Montano 11/7/2023 This item was included in the November 7,
2023 council prioritization list as an item that
is underway as it is less than 4 hours work.
3 Referral for utility infrastructure cost on Main Street from Carlo to Corning Streets Montano 10/17/2023
Staff will provide this information by
December 2023.
4 Graywater Rebates Program Montano 10/17/2023
This item was included in the November 7,
2023 council prioritization list as an item that
is underway as it is less than 4 hours work.
5 Consider a possible ordinance or policy regarding
solicitations at home Barbadillo 10/3/2023
This item was included in the November 7,
2023 council prioritization list as an item that
is underway as it is less than 4 hours work.
6 Discussion of what the City Council can do
regarding shoplifting Barbadillo 10/3/2023
This item was included in the November 7,
2023 council prioritization list as an item that
is underway as it is less than 4 hours work.
7 Main Street International Festival Lien 10/3/2023
Approved to move forward as part of the
November 7, 2023 Council prioritization.
8 Bring back Capital Projects that haven’t yet been
named for the Council to review and as an
overview of CIP Projects in the works
Phan 9/19/2023
This item was included in the November 7,
2023 council prioritization list as an item that
is underway as it is less than 4 hours work.
9 Have the Police Chief direct staff to complete an
analysis in partnership with the County to
determine if it would be beneficial to have a
location where residents can pickup Narcan Chua 9/5/2023 This item was included in the November 7,
2023 council prioritization list as an item that
is underway as it is less than 4 hours work.
10 Explore taking steps towards becoming a Charter
City Phan 9/5/2023
Approved to move forward as part of the
November 7, 2023 Council prioritization.
11 Look into what would be needed to convert the
unused Teen Center space at the Sports Center to
an indoor pickleball court.

Chua 8/8/2023
An update was included in the November
7th Council prioritization reprt.
12 Human Resources Director to conduct a job fair
specific to the job openings at City Hall Chua 5/2/2023 An update was included in the November
7th Council prioritization reprt.
13 Satellite Consulate Office Montano 2/28/2023
An update was included in the November
7th Council prioritization reprt.
14 Have the City look into the possibility of a Citywide Senior Discount Barbadillo 2/7/2023
An update was included in the November
7th Council prioritization reprt.
15 City Manager to look into defining either a
standalone teen center or updating information to
indicate the Senior Center also functions as a Teen
Center Chua 9/20/2022
An update was included in the November
7th Council prioritization reprt.
16 Discuss converting vacant lot that was a basketball
court into a community garden at Vasona and
Adobe
Montano 8/16/2022
An update was included in the November
7th Council prioritization reprt.
17 City Manager look into implementing a workshop
for small businesses on the bidding process for
projects in the city Chua 8/9/2022
An update was included in the November
7th Council prioritization reprt.

NOTE: Deferred and Completed Items are not listed

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
18 Quarterly or Monthly crime statistics on Homekey
Project Chua 6/7/2022
An update on this item will be provided at
the next City Council prioritization meeting
19 Memorial Plaque in honor of youth skateboarder
that passed away Montano 6/7/2022
An update was included in the November
7th Council prioritization reprt.
20 Funding to hire a consultant for the Sunnyhills
Historical Designation on a state level Tran 6/7/2022
An update was included in the November
7th Council prioritization reprt.
21 Explore the policy for locking mechanisms on
shopping carts for large commercial businesses Tran 4/19/2022 An update was included in the November
7th Council prioritization reprt.
22 Explore an ordinance or policy to reduce thefts and
increase security in the commercial retail parking
areas Chua 4/5/2022
An update was included in the November
7th Council prioritization reprt.
23 Request for Crossing Guards at McCandless and
Montague Expressway and review wages for
Crossing Guards Montano 4/5/2022
An update was included in the November
7th Council prioritization reprt.
24 Evaluate reopening the childcare center with a nonprofit organization running the center Montano 2/1/2022An update was included in the November 7th Council prioritization reprt.
25 Requested an appropriation in an amount not to
exceed $250,000 to procure a contract to address
the streetlights that are pending fieldwork. Tran 2/1/2022 An update was included in the November
7th Council prioritization reprt.
26 Staff to look into mural Art on Great Mall Parkway
on the VTA owned Light rail pillars Montano 11/16/2021
An update was included in the November
7th Council prioritization reprt.
27 Request for the City to make the temporary thirdparty food deliver fee caps permanent and add additional provisions for enforcement Phan 11/16/2021
An update was included in the November
7th Council prioritization reprt.
28 Have a picture of Albert Vogel Sr. put up in the
Senior Center Montano 10/19/2021
An update was included in the November
7th Council prioritization reprt.
29 Include a bust of Maria Lemire on the Mural in front of the Senior Center Montano 8/17/2021
An update was included in the November
7th Council prioritization reprt.
30 Staff to create a plan on how to increase the
number of local businesses doing business with
the City Chua 4/6/2021
An update was included in the November
7th Council prioritization reprt.
31 Staff to provide information on a landmark policy
for the City of Milpitas Tran 3/16/2021
An update was included in the November
7th Council prioritization reprt.
32 Amendment to the existing ordinance for thirdparty food delivery vendor services to prohibit regulatory response fees Phan 2/16/2021
An update was included in the November
7th Council prioritization reprt.
33 Consider Community Museum and Park on Main
St.

Phan 8/20/2019 to Rules Subcommittee 8/23/2019. Moved
to Specific Plan Community Conversation
events.

ACTIVE ITEMS
Request
No. Topic Submitted by:

Date
Requested
STATUS and/or DATE scheduled on City
Council meeting agenda:

NOTE: Deferred and Completed Items are not listed

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Consider the Recommendation from Mayor Montano for Appointments to and Removals from City Commissions (Contact: Mayor Montano, 408-586-3024) Category: Consent Calendar-Leadership and Support Services Meeting Date: 12/5/2023
Recommendation: Receive the recommendation from Mayor Montano and approve commission appointments and removals and direct the City Clerk to post a notice of unscheduled vacancy.

Background:

The City of Milpitas has 13 Commissions (including the Measure F Oversight Committee), with members appointed by the Mayor and confirmed by the City Council. The Commissions advise the Milpitas elected officials on a variety of community interests and policy areas.

Any resident interested in serving on a City Commission must complete a Commission Application and submit the form to the City Clerk. Copies of the applications are provided to the Mayor for her consideration. Per Government Code 40605, in a general law city where the office of Mayor is an elective office, the Mayor with the approval of the City Council, shall make all appointments to boards, commissions, and committees unless otherwise specifically provided by statute.

Current Commissioners may seek to be reappointed upon the expiration of their current term, but reappointment to a new term is not automatic. Those Commissioners seeking reappointment must contact the City Clerk and the Mayor to convey their request. Re-appointment must be recommended by the Mayor and confirmed by the City Council.

Most City of Milpitas Commissions have one non-voting student member. In order to qualify to be appointed as a non-voting student commissioner, applicants must be a Milpitas resident enrolled in grades 9-12. There are two non-voting student commissioners appointed to the Arts Commission, each representing one of the high schools located in Milpitas.

Analysis:

Mayor Montano is making the following recommendations for appointment and/or removal:

Arts Commission:

1. Reappoint Cheryl Oldham to a term ending October 2026

2. Appoint Vickie Young to a term ending October 2026

3. Appoint Darra Cacao to a term ending October 2026

4. Remove America Yulissa Irineo from the non-voting student member (CHHS) seat with an unexpired term ending October 2026

5. Remove Christine Lee from the non-voting student member (MHS) seat with an unexpired term ending October 2024
Both student members are no longer eligible to sit on the Arts Commission due to high school graduation.

Community Advisory Commission:

1. Appoint Tien H. Mai as Alternate No. 1 with an unexpired term ending January 2026 Economic Development and Trade Commission:

1. Appoint Vasista Ramachandruni as a non-voting student member with an unexpired term ending April 2024

Energy and Environmental Sustainability Commission:

1. Appoint Pranav Parikh as the Business representative to a term ending October 2026

2. Appoint Mario Cayabyab as Alternate No. 2 with an unexpired term ending October 2024 Parks, Recreation and Cultural Resources Commission:

1. Appoint Becky Strauss to an unexpired term ending June 2025

2. Appoint Sedrick Ashby as Alternate No. 1 with an unexpired term ending June 2026 Public Safety and Emergency Preparedness Commission:

1. Reappoint Joe Nichols to a term ending June 2026
Science, Technology and Innovation Commission:

1. Appoint Simon Chu to a term ending January 2027

2. Appoint Eric Bernal to an unexpired term ending January 2026

3. Appoint Kulwant Virdi as Alternate No. 1 with a term ending January 2027 Senior Advisory Commission:

1. Appoint Neelam Wadhwani as Alternate No. 1 with an unexpired term ending December 2024.

All recommended Commissioner appointments have been reviewed and confirmed by the City Clerk’s office.

According to the Commissioner Handbook, commissioners may only serve on one City of Milpitas Commission. The appointment of Simon Chu to the Science, Technology and Innovation Commission creates a vacancy on the Senior Advisory Commission for an alternate member. By state law, a Notice of an Unscheduled Vacancy must be posted by the City Clerk to advertise vacant commission seats. Final appointment to the board, commission, or committee for the Unscheduled Vacancy shall not be made by the legislative body for at least ten working days after the posting of the notice in the Clerk’s office. The notice of the unscheduled vacancy for the Arts Commission and Senior Advisory Commission will be posted Wednesday, December 6, 2023.

Fiscal Impact:

There is no fiscal impact associated with this item.

California Environmental Quality Act (CEQA):

The action is an organizational or administrative activity of the City government that will not result in direct or indirect physical changes in the environment and is not a project pursuant to Cal. Code of Regs., tit. 14, § 15378.

Recommendation:

Receive the recommendation from Mayor Montano and approve commission appointments and removals and direct the City Clerk to post a notice of unscheduled vacancy.

Attachments:

1. Application for Appointments

From: [email protected]
To: City Clerk
Subject: Online Form Submittal: Commission Applications Date: Saturday, September 23, 2023 4:26:32 PM
CAUTION: EXTERNAL SENDER
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Commission Applications
Commission /
Committee Applying
for:

Arts Commission
First Name Darra
Last Name Cacao
Address Type Residence
Address
City Milpitas
State CA
Zip Code 95035
Phone Number
Email Address
Present Employer Milpitas Unified School District
Other Phone Field not completed.

Business Address
(Optional)
Field not completed.

City Field not completed.

State Field not completed.

Zip Code Field not completed.

Occupation Teacher
Education: If Youth Field not completed.

Advisory Commission
applicant, indicate your
grade / school:

College, Professional,
Vocational, or other
schools attended
CSU, Long Beach
Major Subject Physical Education, Life Science
Degree B.A.

List community organizations to which you belong or have belonged (additional information may be attached).

Name of Organization HeART
Member advisor
Name of Organization Field not completed.

Member Field not completed.

Name of Organization Field not completed.

Member Field not completed.

If application is for Veterans Commission, indicate branch and service in any U.S. military organization (retired or active duty).

Branch of Military N/A
Officer Field not completed.

Briefly describe the
personal qualifications
you possess which you
believe would be an
asset (additional
information may be
attached):

I am a Biology teacher at Milpitas High School. My focus is not only science, I also have a passion for art Thus, I incorporate lessons that incorporate various art mediums. After all, it is not just STEM, it is STEAM - science, technology, engineering, ART, and mathematics. I understand the theories of art and I am familiar with the masters as well as contemporary artists.

Upload a File Field not completed.

Date 9/23/2023
By submitting this form, I confirm I have sufficient time to devote to this responsibility and will attend the required meetings if I am appointed to fill a future vacancy. I hereby certify that all statements contained in this application are true.

Darra Cacao

Name
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From: Cheryl Oldham
To: Suzanne Guzzetta
Cc: Justin Yount; Tegan McLane
Subject: Re: Arts Commission Reappointment
Date: Thursday, August 24, 2023 3:31:24 PM
Attachments: image004.png
image001.png
image002.png
image003.png
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Yes Totally!
I LOVE this group!
Cheryl Oldham
On Thursday, August 24, 2023 at 03:30:24 PM PDT, Suzanne Guzzetta <[email protected]> wrote:

Good afternoon Cheryl,
Your term on the Milpitas Arts Commission is set to expire October 2023. By way of responding to this email, please let me know if you would like to be considered for reappointment to the commission. The Mayor will consider all requests for reappointment and applications received in response to our recruitment efforts.

Thank you.

Suzanne Guzzetta, CMC
City Clerk
Phone (408) 586-3001
Email [email protected]
455 E. Calaveras Blvd., Milpitas CA 95035
www.milpitas.gov

From: [email protected]
To: City Clerk
Subject: Online Form Submittal: Commission Applications Date: Tuesday, October 17, 2023 10:53:32 AM
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Commission Applications
Commission /
Committee Applying
for:

Arts Commission
First Name Vicki
Last Name Young
Address Type Residence
Address
City MILPITAS
State CA
Zip Code 95035
Phone Number
Email Address
Present Employer Field not completed.

Other Phone Field not completed.

Business Address
(Optional)
Field not completed.

City Field not completed.

State Field not completed.

Zip Code Field not completed.

Occupation retired
Education: If Youth Field not completed.

Advisory Commission
applicant, indicate your
grade / school:

College, Professional,
Vocational, or other
schools attended
Temple University
Major Subject Management of Information System
Degree BBA
List community organizations to which you belong or have belonged (additional information may be attached).

Name of Organization Chinese Information and Networking Association Member 2004 - present
Name of Organization Chinese Historical & Cultral Project Member 2017-2022
Name of Organization Field not completed.

Member Field not completed.

If application is for Veterans Commission, indicate branch and service in any U.S. military organization (retired or active duty).

Branch of Military Field not completed.

Officer Field not completed.

Briefly describe the
personal qualifications
you possess which you
believe would be an
asset (additional
information may be
attached):

I, Vicki Young, have been a resident of Milpitas since 1993.

Before I retired I was a staff software engineer at companies such as Automatic Data Processing, S & P 500, and Harmonic for over 20 years. I received numerous awards while working there. Meanwhile, I have been a volunteer for various non-profit organization since 2004. I have a passion to serve the
community and give back in a meaningful way. On my pare times, I study arts and practice painting regularly. I love arts and wanted to use art to express my feeling of gratitude. I love nature and feel very appreciative to live in Milpitas. I like to be part of volunteering team and serve the community.

Upload a File Field not completed.

Date 10/17/2023
By submitting this form, I confirm I have sufficient time to devote to this

responsibility and will attend the required meetings if I am appointed to fill a future vacancy. I hereby certify that all statements contained in this application are true.

Name Vicki Young
Email not displaying correctly? View it in your browser.

From: [email protected]
To: City Clerk
Subject: Online Form Submittal: Commission Applications Date: Friday, September 8, 2023 11:31:25 AM
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Commission Applications
Commission /
Committee Applying
for:

Energy and Environmental Sustainability Commission
First Name MARIO
Last Name CAYABYAB
Address Type Residence
Address
City MILPITAS
State CA
Zip Code 95035
Phone Number
Email Address
Present Employer NA
Other Phone NA
Business Address
(Optional)
NA
City NA
State NA
Zip Code NA
Occupation ASSOCIATE ENGINEERING
Education: If Youth NA

Advisory Commission
applicant, indicate your
grade / school:

College, Professional,
Vocational, or other
schools attended

BACHELOR OF SCIENCE IN CIVIL ENGINEERING
Major Subject STRUCTURAL DESIGN
Degree BSCE
List community organizations to which you belong or have belonged (additional information may be attached).

Name of Organization NA
Member NA
Name of Organization NA
Member NA
Name of Organization NA
Member NA
If application is for Veterans Commission, indicate branch and service in any U.S. military organization (retired or active duty).

Branch of Military NA
Officer NA
Briefly describe the
personal qualifications
you possess which you
believe would be an
asset (additional
information may be
attached):

INVESTOR, OWNED HOUSES AND TRIPLEXES IN THE BAY

AREA, ADMINISTRATOR FOR RESIDENTIAL FACILTY FOR
ELDERLY (RCFE) 4 YEARS. WORKED AT THERMOFISHER

SCIENTIFIC INCRESEARCH AND DEVELOPMENT, AS A
ASSOCIATE ENGINEERING. MEMBER OF EXECUTIVES
LIONS CLUB MILPITAS CA. USA.

Upload a File Field not completed.

Date 9/8/2023
By submitting this form, I confirm I have sufficient time to devote to this responsibility and will attend the required meetings if I am appointed to fill a future vacancy. I hereby certify that all statements contained in this application are true.

MARIO E. CAYABYAB

Name
Email not displaying correctly? View it in your browser.

From: [email protected]
To: City Clerk
Subject: Online Form Submittal: Commission Applications Date: Tuesday, September 26, 2023 10:24:47 PM
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Commission Applications
Commission /
Committee Applying
for:

Energy and Environmental Sustainability Commission
First Name Pranav
Last Name Parikh
Address Type Residence
Address
City Milpitas
State CA
Zip Code 95035
Phone Number
Email Address
Present Employer Walmart
Other Phone Field not completed.

Business Address
(Optional)
Field not completed.

City Field not completed.

State Field not completed.

Zip Code Field not completed.

Occupation Software Engineering Manager
Education: If Youth Masters in Computer Science

Advisory Commission
applicant, indicate your
grade / school:

College, Professional,
Vocational, or other
schools attended
The University of Texas at Dallas
Major Subject Computer Science
Degree Masters
List community organizations to which you belong or have belonged (additional information may be attached).

Name of Organization Field not completed.

Member Field not completed.

Name of Organization Field not completed.

Member Field not completed.

Name of Organization Field not completed.

Member Field not completed.

If application is for Veterans Commission, indicate branch and service in any U.S. military organization (retired or active duty).

Branch of Military Field not completed.

Officer Field not completed.

Briefly describe the
personal qualifications
you possess which you
believe would be an
asset (additional
information may be
attached):

As a concerned citizen, I am a big advocate for energy & water savings at my home as well as in my neighborhood. With my passion to conserve energy and help with environmental
sustainability blended with my technical knowhow in areas of data analysis, technology implementation etc, I believe I can contribute to and drive the sustainability initiatives in Milpitas.

Thanks,
Pranav Parikh
Upload a File Field not completed.

Date 9/26/2023
By submitting this form, I confirm I have sufficient time to devote to this responsibility and will attend the required meetings if I am appointed to fill a future vacancy. I hereby certify that all statements contained in this application are true.

Name Pranav Parikh
Email not displaying correctly? View it in your browser.

From: [email protected]
To: City Clerk
Subject: Online Form Submittal: Commission Applications Date: Friday, November 3, 2023 9:42:39 AM
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Commission Applications
Commission /
Committee Applying
for:

Parks, Recreation and Cultural Resources Commission
First Name Sedrick
Last Name Ashby
Address Type Residence
Address
City Milpitas
State CA
Zip Code 95035
Phone Number
Email Address
Present Employer Abbott Laboratories- Diabetes Division Other Phone Field not completed.

Business Address
(Optional)
2701 Harbor Parkway
City Alameda
State CA
Zip Code 94502
Occupation Supply Base Manager
Education: If Youth Field not completed.

Advisory Commission
applicant, indicate your
grade / school:

College, Professional,
Vocational, or other
schools attended
Field not completed.

Major Subject Field not completed.

Degree Field not completed.

List community organizations to which you belong or have belonged (additional information may be attached).

Name of Organization Milpitas PAL
Member Field not completed.

Name of Organization Milpitas MYSL Soccer
Member Field not completed.

Name of Organization Emergency Response Team- Abbott
Member Field not completed.

If application is for Veterans Commission, indicate branch and service in any U.S. military organization (retired or active duty).

Branch of Military Field not completed.

Officer Field not completed.

Briefly describe the
personal qualifications
you possess which you
believe would be an
asset (additional
information may be
attached):

I was a soccer coach for both my daughter's soccer teams from 2006 to 2014, my wife and I coached and managed teams for PAL and MYSL
Upload a File Field not completed.

Date 11/3/2023
By submitting this form, I confirm I have sufficient time to devote to this responsibility and will attend the required meetings if I am appointed to fill a future vacancy. I hereby certify that all statements contained in this application are true.

Sedrick Ashby

Name
Email not displaying correctly? View it in your browser.

From: Joe Nichols
To: Suzanne Guzzetta
Subject: Re: Revised Commissioner Handbook
Date: Monday, July 31, 2023 10:56:28 AM
Attachments: image001.png
image002.png
image003.png
image004.png
CAUTION: EXTERNAL SENDER
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Suzanne,
i am sorry for my late reply. Toni stated that if i wanted to extend my tenure on the commission all i had to do is texts you being as my term has technically expired. If this isnot the case please let me know what i need to do to stay on the public safety commission.

Thank You,
Joe W Nichols
On Fri, Jun 23, 2023 at 12:05 PM Suzanne Guzzetta <[email protected]> wrote:

Good afternoon Commissioners,
On Tuesday, June 20, 2023, the City Council adopted a revised Commissioner Handbook. It is available for you to review and download at: https://camilpitas.civicplus.com/DocumentCenter/View/1824/Commissioner-Handbook-PDF.

The revisions to the handbook approved by the Council include:
- Updating the Welcome Letter
- Renaming Section Titles
- Clarifying Alternate Member duties and actions taken when seated - Providing information on the City Council Liaison role - Defining qualifications for Arts Commission non-voting student members - Revising sections for clarity including “Terms of Service” and “California’s Ralph M.

Brown Act”
- Adding a section to define possible reasons a Commissioner may be removed from office - Removing language that did not apply to all Commissions - Defining when motions do and do not occur and removing reference to Roll Call votes. - Including the City’s Anti-Discrimination Policy as an Appendix to the handbook - Other non-substantive grammatical and clarifying changes.

The changes may be reviewed in a red-line version by viewing the June 20, 2023, City Council agenda packet.

If you have any questions regarding these changes, do not hesitate to contact me.

Best regards,
Suzanne Guzzetta, CMC
City Clerk
Phone (408) 586-3001
Email [email protected]
455 E. Calaveras Blvd., Milpitas CA 95035
www.milpitas.gov

From: [email protected]
To: City Clerk
Subject: Online Form Submittal: Commission Applications Date: Monday, September 4, 2023 10:05:16 PM
CAUTION: EXTERNAL SENDER
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Commission Applications
Commission /
Committee Applying
for:

Senior Advisory Commission
First Name Neelam
Last Name Wadhwani
Address Type Residence
Address
City Milpitas
State California
Zip Code 95035
Phone Number
Email Address
Present Employer Retired
Other Phone None
Business Address
(Optional)
N/A
City Field not completed.

State Field not completed.

Zip Code Field not completed.

Occupation Field not completed.

Education: If Youth Masters in English Literature
Bachelors in psychology and philosophy

Advisory Commission
applicant, indicate your
grade / school:

College, Professional,
Vocational, or other
schools attended
Project Management
Program Development
Major Subject Field not completed.

Degree Field not completed.

List community organizations to which you belong or have belonged (additional information may be attached).

Name of Organization Research and Human Subjects Review Committee for SCCo Valley Medical Center
Member Member -2011 to 2016
Name of Organization Data Evaluation Work Group Member Santa Clara County Member Member -2013 to 2016
Name of Organization Reentry Strategic Planning Workgroup member Santa Clara County
Member Member -2012 to 2016
If application is for Veterans Commission, indicate branch and service in any U.S. military organization (retired or active duty).

Branch of Military N/A
Officer Field not completed.

Briefly describe the
personal qualifications
you possess which you
believe would be an
asset (additional
information may be
attached):

I advocated and worked with vulnerable and at-risk incarcerated populations in the County of Santa Clara for over 25 years. After retiring from the county as the manager of the Sheriffs' Rehabilitation Unit, I continued the advocacy, working with the homeless population for a local non-profit agency. As the director of emergency shelters, I managed and led eight shelters.

Providing services and improving the quality of life of the seniors' facing homelessness was challenging and yet rewarding. I have the experience, education and knowledge of local resources and most importantly the drive to serve the seniors within our community.

Upload a File Field not completed.

Date 9/4/2023

By submitting this form, I confirm I have sufficient time to devote to this responsibility and will attend the required meetings if I am appointed to fill a future vacancy. I hereby certify that all statements contained in this application are true.

Name Neelam Wadhwani
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From: [email protected]
To: City Clerk
Subject: Online Form Submittal: Commission Applications Date: Friday, September 8, 2023 4:22:27 PM
CAUTION: EXTERNAL SENDER
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Commission Applications
Commission /
Committee Applying
for:

Science, Technology and Innovation Commission
First Name Kulwant
Last Name Virdi
Address Type Residence
Address
City Milpitas
State CA
Zip Code 95035
Phone Number
Email Address
Present Employer 1Life Healthcare Inc
Other Phone Field not completed.

Business Address
(Optional)
Field not completed.

City San Francisco
State CA
Zip Code 94111
Occupation Sr. Systems Engineer
Education: If Youth Field not completed.

Advisory Commission
applicant, indicate your
grade / school:

College, Professional,
Vocational, or other
schools attended
Field not completed.

Major Subject Field not completed.

Degree BS in Science
List community organizations to which you belong or have belonged (additional information may be attached).

Name of Organization Field not completed.

Member Field not completed.

Name of Organization Field not completed.

Member Field not completed.

Name of Organization Field not completed.

Member Field not completed.

If application is for Veterans Commission, indicate branch and service in any U.S. military organization (retired or active duty).

Branch of Military Field not completed.

Officer Field not completed.

Briefly describe the
personal qualifications
you possess which you
believe would be an
asset (additional
information may be
attached):

Field not completed.

Upload a File Field not completed.

Date 9/8/2023
By submitting this form, I confirm I have sufficient time to devote to this responsibility and will attend the required meetings if I am appointed to fill a future vacancy. I hereby certify that all statements contained in this application are true.

Kulwant Virdi

Name
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CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Accept the FY 2022-23 Commissioners Annual Report for Three (3) Commissions and Approve Three (3) City of Milpitas Commission Work Plans for FY 2023-24 (Staff Contact: Suzanne Guzzetta, City Clerk, 408-586-3001) Category: Consent Calendar-Leadership and Support Services Meeting Date: 10/17/2023
Recommendation: (1) Accept the 2022-23 Commissioners Annual Report; and (2) Approve proposed Fiscal Year 2023-24 Work Plans for (a) Energy and Environmental Sustainability Commission, (b) Planning Commission, and (c) Public Safety and Emergency Preparedness Commission.

BACKGROUND:

The City of Milpitas has 13 Commissions and Committees, appointed by the Mayor and City Council. On April 16, 2019, the City Council approved the City of Milpitas Standard Commission By-Laws (By-Laws). Per Section 1, titled “Purpose” of the By-Laws, “A Commission serves as an active advisory group to the City Council on a variety of topics as directed by the City Council.” Therefore, annually, City Commissions develop and recommend a work plan to outline tasks, goals, and or projects related to their advisory area. Staff works with commissions to develop their respective workplans and takes them to Council for review and approval.

ANALYSIS:

The Energy and Environmental Sustainability Commission; Planning Commission; and Public Safety and Emergency Preparedness Commission meet at different frequencies such as monthly, bi-monthly, or specially designated months as determined by their By-Law addenda. Commissions began meeting and discussing their FY 2023-24 workplans and have prepared new work plans. Commission accomplishments for and carry-overs from Fiscal Year 2022-2023 are as follows:

Commission Accomplishments
Energy and Environmental Sustainability Commission
The EESC advises the City Council on matters pertaining to sustainability, climate action, recycling, and waste diversion.

FY 2022-23 Work Plan Item Accomplished Carryover Notes
Earth Day Event Planning X X Staffed an EESC table at the event. Will continue in annually.

Earth Day Essay Contest X X Developed and hosted Earth Day Essay Contest and awarded 3 prizes to winners
from Milpitas High School. Will continue
this and other possible challenges/
contests in FY 23-24.

Advanced Power Strip
Community Engagement
X X Developed training and engagement script
for Advanced Power Strip education and
community engagement survey. Staffed
several events, and engaged with over 40
community members at Earth Day Event.

Legislative Review for
Possible Positions
X Due to lack of quorum, Commission did
not meet to review pending legislation
during the last FY. This item will be
conducted annually and is included on the
FY 23-24 work plan.

Planning Commission
The Planning Commission advises the City Council on issues and policies related to land use planning, zoning regulations, urban design, and community development. The Planning Commission meets bi-weekly to review, consider, and discuss proposals for new development throughout the City, and is empowered to make decisions on certain land use matters or formal recommendations to the City Council. The Planning Commission met 17 times during Fiscal Year 2022-2023 and accomplished the following: (1) approved 8 planning entitlements; (2) recommended approval of 6 development projects, 3 zoning text amendments, 2 zoning map amendments, and 1 general plan amendment; and (3) held study sessions and adoption hearings for various long-range planning policy efforts including the Milpitas Metro Specific Plan, Gateway/Main St.

Specific Plan, Comprehensive Zoning Ordinance Update, and Objective Design Standards.

FY 2022-23 Work Plan Item Accomplished Carryover Notes
Development Review X X Ongoing (held public hearings for 14 development projects)
Milpitas Metro Specific Plan
(TASP Update)
X Completed (held two adoption
hearings; Plan adopted by City Council
in February 2023)
Gateway/Main St. Specific Plan
(Midtown Update)
X X Ongoing (held one study session)
Comprehensive Zoning Ordinance
Update
X X Ongoing (held one study session and
served on the Zoning Ordinance
Update Advisory Committee)
Misc. Development Policies X X Annual (held one study session and one adoption hearing for the Objective
Design Standards)
Annual CIP Conformance with
General Plan
X X Annual (held one public hearing)
Public Safety and Emergency Preparedness Commission
The Public Safety and Emergency Preparedness Commission (PSEPC) advises the City Council on emergency preparedness and education. The PSEPC met six times over the calendar year 2023. During the year the PSEPC made significant accomplishments in educating the public on emergency preparedness. For 2024, the commission has re-organized its commission work plan goals. The intent of the re-organization is to continue with the same objectives, public outreach and education in emergency preparedness, however Commissioners will partner with a public safety liaison – Law, Fire, Emergency Management, and work on specific events focused in the area they are teamed with.

FY 2022-23 Work Plan Item Accomplished Carryover Notes
Access and Functional Needs (AFN)
outreach X X
All public education will incorporate
AFN.

Multi-lingual Outreach X X
All public education will incorporate
multi-lingual outreach
Neighborfest Program X
Not eliminated, but on hold. Won’t be
a primary goal this year.

Business Preparedness Outreach X X
All public education will incorporate
the business community.

Public Safety Collaboration
Outreach X X
This will be the focus of the 2024 work
plan.

FISCAL IMPACT:

Each Commission, except for Measure F Oversight Committee is allocated $1,000 annually by the City Council in the adopted budget. These funds are budgeted and approved as part of the FY 2023-24 budget and are to be used towards City Council approved tasks and projects, and administrative costs related to the Commission.

California Environmental Quality Act (CEQA):

By the definition provided in the California Environmental Quality Act (CEQA) Guidelines Section 15378, this action does not qualify as a “project” for the purpose of CEQA.

RECOMMENDATION:
(1) Accept the 2022-23 Commissioners Annual Report; and (2) Approve proposed Fiscal Year 2023-24 Work Plans for (a) Energy and Environmental Sustainability Commission; (b) Planning Commission; and
(c) Public Safety and Emergency Preparedness Commission.

Attachment(s):
(a) Energy and Environmental Sustainability Commission FY 23-24 Workplan (b) Planning Commission FY 23-24 Workplan
(c) Public Safety and Emergency Preparedness Commission FY 23-24 Workplan

City of Milpitas
Energy and Environmental Sustainability Commission
Work Plan FY 23-24
The Energy and Environmental Sustainability Commission advises the City Council on matters pertaining to sustainability, climate action, recycling, and waste diversion.

Workplan includes several contests/challenges with monetary prizes which the Commission would like to fund from the Commission budget.

Month Issue/Agenda Topic Commission Objective
July NO MEETING NO MEETING
August NO MEETING • NO MEETING
September • FY – 23-24 Work Plan • Develop FY 22-23 Work Plan for City Council approval
• FY – 23-24 Work Plan • Develop FY 22-23 Work Plan for City Council approval
October
• Community Engagement and Event
Opportunities
• Receive update on community
engagement opportunities and sign
up for events; discuss opportunities
to recruit additional volunteers
• Recycling and Garbage Services and
Diversion/SB 1383 Status Update
• Provide feedback on diversion
programs and solid waste services
November
• Discuss
Environmental/Sustainability Bingo
Challenge
• Discuss the requirements for the
Challenge including timeframe,
potential tracking of Utility bills for
results; identify potential prizes
options
• Planning for 2023 Earth Day Event • Brainstorm and begin planning for 2024 Earth Day event
December
• Milpitas SMART Shuttle Update • Receive update on the Shuttle Program
• Planning for 2023 Earth Day Event
and Essay Contest
• Brainstorm and begin planning for
2024 Earth Day event and Essay
Contest
January
• Silicon Valley Clean Energy
Decarbonization Programs Update
• Receive an update from Silicon
Valley Clean Energy on available
Decarbonization Programs

Month Issue/Agenda Topic Commission Objective
• Planning for 2023 Earth Day Event,
Essay Contest, and Strategy to Invite
other Commissions to attend
• Brainstorm and begin planning for
2024 Earth Day event and Essay
Contest
February
• Climate Action Plan Implementation
Update
• Receive update on status of CAP
implementation
• Carbon Neutral Home Incentive
Program Update
• Receive update on status of the
program
March
• Earth Day Event Planning • Continue planning for Earth Day event
April • Inflation Reduction Act/Bipartisan
Infrastructure Investment Act
Funding Opportunities and
Deadlines
• Update on what funds are available;
what City is pursuing and what
plans are for use of funding
• Debrief Earth Day Event • Discuss event and improvement opportunities for next time
May
• Invite Valley Transportation Agency • Learn what VTA is doing to incentivize use of Public Transit
June • Legislative Review for Possible
Positions
• Identify and review proposed
environmental legislation and make
potential position
recommendations

City of Milpitas
Planning Commission
Work Plan FY 2023-24
Purpose:

As established under Chapter 500 of Title I of the Milpitas Municipal Code, the Planning Commission advises the City Council on issues and policies related to land use planning, zoning regulations, urban design, and community development. The Commission meets bi-monthly to review, consider, and discuss proposals for new development throughout the City, and it is empowered to make decisions on certain land use matters or to make formal recommendations to the City Council.

Topic/Activity Tasks Required Resources Completion
Development Review*
Attend meetings (2x/month); read meeting packets;
active participation; site visits; Vote to approve/deny a project or make a recommendation to the Council
Commission, Staff Ongoing
Housing Opportunity
Districts
Participate in meetings; review draft plan and make
recommendations to Council
Commission, Staff,
Consultants
Early
2024
Transit Area Development
Impact Fee Update
Participate in meetings; review draft study and make
recommendations to Council
Commission, Staff,
Consultants
Mid
2024
Gateway/Main St. Specific
Plan (Midtown Update)
Participate in meetings; review draft plan and make
recommendations to Council
Commission, Staff,
Consultants
Mid
2024
Main St. Sense of Place
Plan and Impact Fee Study
Receive presentations; provide feedback and make
recommendations to Council
Commission, Staff,
Consultant
Mid
2025
Innovation Districts Parks
and Trails Master Plan
Receive presentations; provide feedback and make
recommendations to Council
Commission, Staff,
Consultant
Mid
2025
Comprehensive Zoning
Ordinance Update
Receive presentations; provide feedback and make
recommendations to Council
Commission, Staff,
Consultant
Mid
2025
Misc. Development Policies
(State legislation
implementation)
Receive presentations; provide feedback and make
recommendations to Council Commission, Staff Annual
Annual CIP Conformance
with General Plan
Receive presentations; provide feedback and make
recommendations to Council Commission, Staff Annual
* The Commission Reviews and Acts Upon the Following:

1. General Plan and General Plan amendments;

2. Specific Plans and Specific Plan amendments;

3. Zoning and Subdivision Ordinance amendments

City of Milpitas
Planning Commission
Work Plan FY 2023-24

4. Environmental Impact Reports and Negative Declarations under CEQA;

5. Tentative Subdivision Maps;

6. Planned Development permit applications;

7. Subdivision Ordinance exceptions;

8. Special Studies and Reports

9. Master Plans (e.g., Bike and Ped Master Plan, Open Space Plan, Green Infrastructure Plan, etc.)

10. Appeals of Decisions by the Zoning Administrator.

Public Safety and Emergency Preparedness Commission
Commission Adopted Work Plan 2024
Topic/Advisory Area Tasks Required Resources End Goal
Public Safety Public Education
Team with MPD staff Liaison to create a presentation,
brochures and present on public safety matters, such
as "smash and grab", neighborhood watch program,
delivery theft mitigation, etc. Once materials are
prepared, presentations will be provided to
professional organizations, religious organizations,
social, PTA and housing organizations, et. al.

Commissioners, Staff
Quantifiable
data at the end
of the calendar
year, such as
number of
presentations.

Fire Safety/Prevention Education
Team with MFD staff Liaison to create a presentation,
brochures and present on fire safety matters, such as
fire extinguisher education, storage and use, smoke
detector and CO monitor awareness, Once materials
are prepared, presentations will be provided to
professional organizations, religious organizations,
social, PTA and housing organizations, et. al.

Commissioners, Staff
Quantifiable
data at the end
of the calendar
year, such as
number of
presentations.

Emergency Preparedess Education
Team with OEM staff Liaison to create a presentation,
brochures and present on emergency preparedness,
alert and warning systems, AFN needs, and
introduction of the CERT and RACES team
information. Once materials are prepared,
presentations will be provided to professional
organizations, religious organizations, social, PTA and housing organizations, et. al.

Commissioners, Staff
Quantifiable
data at the end
of the calendar
year, such as
number of
presentations.

Work Plan Goals:

Educate the community in emergency preparedness and personal safety and security.

CITY OF MILPITAS

AGENDA REPORT
(AR)
Item Title: Accept the City’s Annual Comprehensive Financial Report and Other Related Annual Audited Reports for the Fiscal Year Ended June 30, 2023 Category: Consent Calendar-Leadership and Support Services Meeting Date: 12/5/2023
Recommendation: Accept the City’s Annual Comprehensive Financial Report (ACFR) and other Related Annual Audited Reports for the Fiscal Year ended June 30, 2023.

Background:

Annually, Maze and Associates, the City’s external auditor audits the City’s books and staff prepares the Annual Comprehensive Financial Report (ACFR) of the City of Milpitas. In conjunction with the ACFR for the fiscal year ended June 30, 2023, this staff report presents, Bicycle/Pedestrian Project Financial Statement, Agreed Upon Procedures Report on Compliance with the Appropriations Limit Increment, Required Communications, and the Memorandum on Internal Control (MOIC) to the City Council for review.

Analysis:

The ACFR presents the operations and financial activity of all the City’s various funds, including the General Fund. It includes an unqualified (“clean”) audit opinion from Maze & Associates which means that the financial statements present fairly the results of operations for the fiscal year ended June 30, 2023, in conformance with Generally Accepted Accounting Principles (GAAP). The completion of ACFR has met the debt reporting obligation requirement. The City also intends to apply for Government Finance Officer Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting Award timely before December 31, 2023.

Highlights and items to note from the ACFR for the fiscal year ended June 30, 2023 are detailed below:

The City’s revenues in Fiscal Year 2023 have been slowly recovering since the start of the Pandemic over three years ago. The unemployment rate for the San Jose-Sunnyvale-Santa Clara metropolitan area was 3.7%, an increase of 1.5% from 2.2 % when compared to Fiscal Year 2022. General Fund revenues were higher compared to Fiscal Year 2022, especially in property tax, sales tax, and hotel/motel tax. These increases were primarily due to one-time revenues such as sales tax payments in arrears, sales tax collected through audit and property tax ERAF (Educational Revenue Augmentation Funds) subject to audit and litigation. However, license, permits and fines revenues were significantly lower in fiscal year 2023 compared to fiscal year 2022.

The increase in Property taxes is due to ongoing increases in secured and supplemental property tax due to higher property valuation. Sales and use tax increased significantly due to higher consumption and historically high inflation. As people started to travel again post-pandemic, hotel/motel tax has recovered but not quite returning to pre-pandemic revenue level.

As the economy remains uncertain in the fourth year after the COVID-19 pandemic, we are optimistic about the future but remain tempered by possible near-term economic impacts that may stem from the continued war in Ukraine, recently intensified Israel-Hamas war in the Middle East, high interest rates, fluctuating inflation rates, high mortgage rates, local unemployment trend, continued supply chain challenges, and the banking concerns following the recent collapse of Silicon Valley Bank.

Fiscal 2023 financial highlights include the following:

City-wide:
• The City’s total net position was $663.3 million on June 30, 2023. Of this total, $ 430.3 million were Governmental and $232.9 million were Business-type, a net increase of total $16.9 million from the prior year’s total of $646.4 million primarily due to a net increase in assets over liabilities. Net asset increases were primarily due to increases in cash and investments and capital assets and liability decreases primarily due to a decrease in pension liabilities.
• City-wide revenues include program revenues of $ 106.0 million, general revenues and transfers of $109.4 million, totaling $ 215.4 million, an increase of $ 15.4 million from the prior year’s total of $200 million primarily due to increase in charges for services, capital grants and contributions and general revenues.
• Total City-wide expenses were $194.6 million, an increase of $27.5 million from the prior year’s $167.1 million primarily due to increases in primary government expenditure related to net pension liability increases in public safety, recreation and building safety and housing functions and sewer utility expenses.

Fund Level:
• Governmental Fund balances were $246.0 million, a net increase of $8 million from fiscal 2022 primarily due to revenues exceeding expenditures by $8 million in General Fund. • Governmental Fund revenues were $148.6 million in fiscal 2023, up $15.6 million from the prior year’s $133 million, primarily due to increases in General Fund revenues such as Property Tax, Sales and Use tax, Hotel/Motel taxes and positive return in Use of Money and Property. • Governmental Fund expenditures were $144.3 million compared to $151.4 million in fiscal year 2022 primarily due to decrease in General government capital projects, capital outlay in Other Governmental Funds.
• General Fund revenues of $126.3 million represented an increase of $14.2 million from fiscal 2022 revenues of $112.1 million caused primarily by one-time increase in Hotel/Motel taxes, Sales and Use taxes, and Property taxes and positive return in Use of Money and Property. • Net other financing uses of the General Fund were $(2.1) million in fiscal 2023 while fiscal 2022 had a total of other financing uses in $3.9 million. One-time variance was primarily due to transfer out to the General Government CIP fund. General Fund balance of $73.5 million at the fiscal 2023 was $6.7 million more than the fund balance at fiscal 2022.

Bicycle/Pedestrian Project Financial Statement - The Bicycle/Pedestrian Projects Financial Statements includes Projects that were developed using Transportation Development Act (TDA) grant. The auditor issued an unqualified opinion on these statements.

Memorandum on Internal Control (MOIC) - Under generally accepted auditing standards, the City’s auditors are encouraged to report certain matters regarding the City’s internal control structure. The City’s auditors have provided such a report in their Memorandum on Internal Control (“MOIC”) for the Year Ended June 30, 2023.

There are no items reported as significant deficiencies and material weakness by the auditors regarding the City’s internal control structure. 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. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is reasonable possibility that a material misstatement of the City’s financial statements will not be prevented or detected and correct on a timely basis.

Required Communications Report – Our auditors are required to communicate information related to the audit and financial statements under generally accepted auditing standards and Government Auditing

Standards. The City’s auditors have provided such a report in their Required Communications for the Year Ended June 30, 2023. Please note the following from the Required Communications Report:
1) The City’s auditors 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.
2) The City’s auditors encountered no significant difficulties in dealing with management in performing and completing their audit.
3) The City’s auditors discovered no material misstatements, either individually or in their aggregate, to each opinion unit’s financial statements taken as a whole.
4) The City’s auditors encountered no disagreements with management during the course of their audit.

Agreed Upon Procedures Report on Compliance with the Appropriations Limit Increment - This report shows that the auditor applied specific procedures to validate the City’s Appropriations Limit (“Gann Limit”) calculations. The appropriations limitation imposed by Propositions 4 (1979) and later amended by Proposition 111 (1990) creates a restriction on the amount of government revenue which may be appropriated in any fiscal year. The Appropriations Limit is based on actual appropriations during the base year (1986-87 or the first full year of operation), and increases each year using specified growth factors. The Appropriations Limit applies only to those revenues defined as “proceeds of taxes.” Certain expenditures of tax proceeds do not count as Appropriations Subject to Limit including those for voter approved debt, qualified capital outlay, and the costs of complying with court orders and federal mandates. Staff prepares an updated Appropriations Limit in May of each year and presents to Council for review and approval during the budget preparation process.

Policy Alternative(s):

Not applicable.

Fiscal Impact:

There is no fiscal impact from this report other than staff time to prepare the report.

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) Guidelines Section 15061 (b)(3).

Recommendations:

Accept the City’s Annual Comprehensive Financial Report and other Related Annual Audited Reports for the Fiscal Year ended June 30, 2023.

Attachments:

A. Annual Comprehensive Financial Report for FY 2022-23 B. Bicycle/Pedestrian Project Financial Statement for FY 2022-23 C. Memorandum on Internal Control for FY 2022-23
D. Required Communications for FY 2022-23
E. Agreed Upon Procedures report on Compliance with the Appropriations Limit Increment FY 2022-23

CITY OF MILPITAS, CALIFORNIA

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

THE FINANCE DEPARTMENT

INTRODUCTORY SECTION

CITY OF MILPITAS
Annual Comprehensive Financial Report
For the Year Ended June 30, 2023
Page
INTRODUCTORY SECTION:

Table of Contents ...................................................................................................................................................... i Letter of Transmittal ................................................................................................................................................. v Directory of City Officials ..................................................................................................................................... xii Map of City’s Location ......................................................................................................................................... xiii Organization Chart ................................................................................................................................................ xiv GFOA Certificate of Achievement ........................................................................................................................ xv FINANCIAL SECTION:

Independent Auditor’s Report ................................................................................................................................. 1 Management’s Discussion and Analysis ................................................................................................................ 5 Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position ..................................................................................................................... 25 Statement of Activities .......................................................................................................................... 26 Fund Financial Statements:

Governmental Funds:

Balance Sheet .................................................................................................................................... 32 Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................... 34 Reconciliation of the Net Change in Fund Balances – Total Governmental Funds with the Statement of Activities ........................................................................................ 36 Statements of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual (Non GAAP Legal Basis):

General Fund ................................................................................................................................. 37 Housing Authority ......................................................................................................................... 38 i

CITY OF MILPITAS
Annual Comprehensive Financial Report
For the Year Ended June 30, 2023
Page
FINANCIAL SECTION: (Continued)
Proprietary Funds:

Statement of Net Position ................................................................................................................. 41 Statement of Revenue, Expenses and Changes in Fund Net Position .............................................. 42 Statement of Cash Flows .................................................................................................................. 43 Fiduciary Funds:

Statement of Fiduciary Net Position ................................................................................................. 47 Statement of Changes in Fiduciary Net Position .............................................................................. 48 Notes to Basic Financial Statements ............................................................................................................ 51 Required Supplementary Information:

Retiree Medical Benefits (OPEB) Plan - Schedule of Changes in the Net OPEB Liability and Related Ratios ................................................................................................................................. 123 Retiree Medical Benefits (OPEB) Plan - Schedule of Contributions ........................................................ 124 Schedule of Changes in the Total OPEB Liability and Related Ratios – (Dependent Fund) (OPEB) Plan .......................................................................................................... 125 Schedule of Contributions (Dependent Fund) (OPEB) Plan ..................................................................... 126 Schedule of Changes in the Net Pension Liability and Related Ratios (Miscellaneous Plan) .................. 128 Schedule of Contributions (Miscellaneous Plan) ...................................................................................... 130 Schedule of Changes in the Net Pension Liability and Related Ratios (Safety Plan) ............................... 132 Schedule of Contributions (Safety Plan) ................................................................................................... 134 Supplemental Information:

Non-major Governmental Funds:

Combining Balance Sheets .................................................................................................................. 140 Combining Statements of Revenues, Expenditures and Changes in Fund Balances ............................................................................................................................ 142 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Non GAAP Legal Basis) ..................................................... 144

ii

CITY OF MILPITAS
Annual Comprehensive Financial Report
For the Year Ended June 30, 2023
Page
FINANCIAL SECTION: (Continued)
Internal Service Funds:

Combining Statements of Net Position ................................................................................................ 153 Combining Statements of Revenues, Expenditures and Changes in Fund Net Position ...................................................................................................................... 154 Combining Statements of Cash Flows ................................................................................................. 155 STATISTICAL SECTION:

Net Position – Last Ten Fiscal Years ................................................................................................... 159 Changes in Net Position – Last Ten Fiscal Years ................................................................................ 160 Fund Balances, Governmental Funds – Last Ten Fiscal Years ........................................................... 165 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years ........................................ 166 Assessed Value and Actual Value of Taxable Property – Last Ten Fiscal Years ............................... 168 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ................................................. 169 Principal Property Tax Payers – Fiscal Years 2022-2023 and 2013-2014 .......................................... 170 Property Tax Levies and Collections – Last Ten Fiscal Years ............................................................ 171 Taxable Sales by Category – Last Ten Calendar Years ....................................................................... 172 Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years ...................................................... 173 Principal Sales Tax Payers – Fiscal Years 2022-2023 and 2013-2014 ............................................... 174 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ............................................................ 175 Bonded Debt Pledged Revenue Coverage Redevelopment Agency Tax Allocation Bonds – Last Ten Fiscal Years .............................................................................. 176 Computation of Direct and Overlapping Debt ..................................................................................... 177 Legal Debt Margin Information – Last Ten Fiscal Years .................................................................... 178 Installment Payment Coverage, Sewer Certificates of Participation and Wastewater Revenue Refunding Bonds – Last Ten Fiscal Years .................................................. 179 Installment Payment Coverage,
Water Revenue Funds – Last Ten Fiscal Years .............................................................................. 180

iii

CITY OF MILPITAS
Annual Comprehensive Financial Report
For the Year Ended June 30, 2023
Page
STATISTICAL SECTION: (Continued)
Bimonthly Sewer Rates by Customer Class – Last Ten Fiscal Years ................................................. 181 Bimonthly Water Rates by Customer Class – Last Ten Fiscal Years ................................................. 182 Demographic and Economic Statistics – Last Ten Calendar Years .................................................... 183 Principal Employers – Fiscal Year 2022-2023 and 2012-2013 ........................................................... 184 Authorized Full-Time Equivalent Employees by Function/Program – Last Ten Fiscal Years ..................................................................................................................... 185 Operating Indicators by Function/Program – Last Ten Fiscal Years .................................................. 186 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years .............................................. 188 OTHER AUDIT REPORT:

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 ....................................................... 191 iv

455 EAST CALAVERAS BOULEVARD, MILPITAS, CALIFORNIA 95035-5479 PHONE: 408-586-3000, www.ci.milpitas.ca.gov
November 15, 2023
Honorable Mayor and Members of the City Council:

Submitted herewith is the Annual Comprehensive Financial Report (ACFR) of the City of Milpitas (the City) for the fiscal year ended June 30, 2023 as prepared by the City’s Finance Department with support from other City departments. This report is consistent with generally accepted accounting principles.

Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. The data, as presented, is accurate in all material aspects; and is presented in a manner designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds. All disclosures necessary to enable the reader to gain the maximum understanding of the City's financial affairs have been included.

The organization of the financial report follows the guidelines set forth by the Government Finance Officers' Association of the United States and Canada.

The Reporting Entity and its Services
This report combines the financial statements of the Milpitas Public Financing Authority (MPFA), Milpitas Housing Authority (Housing Authority), the Milpitas Municipal Financing Authority (MMFA) and the Terrace Gardens Inc. with those of the City to constitute a single reporting entity. The MPFA, Housing Authority, MMFA and Terrace Gardens are separate legal entities from the City and are controlled by the City. The MPFA, Housing Authority and MMFA have the same governing board as the City and the City also has control of the Terrace Gardens’ governing board. However, the Terrace Gardens Inc. issues its own component unit financial statements. The purpose and authority of the Milpitas Public Financing Authority (MPFA), Milpitas Housing Authority (Housing Authority), the Milpitas Municipal Financing Authority (MMFA) and the Terrace Gardens Inc. are described in Note 1 of this report.

Milpitas is a general law city of the State of California. The City was incorporated in 1954 and operates under a Council-Manager form of government. The City's political and legislative body is the City Council and is empowered by the general laws of the State of California to formulate citywide policy, including a fiscal program, City services, and appointment of the City Manager and City Attorney. There are four City Council members who are elected at-large for staggered four-year terms, and the Mayor is selected every two years in a separate citywide election.

The City provides a full range of municipal services to the community through its departments such as Building Safety and Housing, Planning, Engineering, Fire, Police, Public Works, and Recreation and Community Services. These departments are supported by the internal departments which include the City Manager’s Office, City Attorney’s office, Finance, Human Resources, and Information Technology.

Community members of the City desiring to assist the City Council in forming government policy may do so by serving on a City commission. The commissions act in an advisory capacity to the City Council.

They are: Arts Commission; Community Advisory Commission; Economic Development and Trade Commission; Energy and Environmental Sustainability Commission; Library and Education Advisory Commission; Parks, Recreation and Cultural Resources Commission; Planning Commission; Public Safety and Emergency Preparedness Commission; Science, Technology, and Innovation Commission; Senior Advisory Commission; Veterans Commission; Measure F Committee and Youth Advisory Commission.

C ITY OF M ILPITAS
v

Economic Condition, Outlook and Activity
Milpitas is situated within the Silicon Valley region, known throughout the world as the home of high technology, innovation and research. Milpitas is considered the “Crossroads of Silicon Valley,” with most of its 13.6 square miles of land situated between two major freeways, I-680 and I-880. Milpitas has experienced tremendous growth since its incorporation in 1954. Over the past 69 years, the population growth has increased from 26,561 in 1970 to nearly 81,067 based on the latest Department of Finance data.

The economy was largely unchanged at the state and federal levels with State of California’s unemployment at 4.6% and national unemployment rate at 3.8% compared to 4.1% and 3.5% in prior fiscal year, respectively. At the City level, unemployment rate increased by 2% compared to prior year’s 2.3% to 4.3%.

The increase was primarily due to technology sector and related layoffs in the Silicon Valley, which totaled more than 11,979 in FY22-23. During this period seven businesses issued 10 WARN notices resulting in permanent separations of 967 employees due to reduction in customer volume, facility closures or other changes in business needs. In comparison the California Employment Development Department (EDD) reported that manufacturing employment reductions in Santa Clara County totaled 2,000 jobs between August 2022 and August 2023 despite overall employment increasing by 22,000 jobs during this same period.

As the economy remains uncertain in the fourth year after the COVID-19 pandemic, we are optimistic about the future but remain tempered by possible near-term economic impacts that may stem from the continued war in Ukraine, recently intensified Israel-Hamas war in the Middle East, high interest rates, fluctuating inflation rates, continued supply chain challenges, and the banking concerns following the recent collapse of Silicon Valley Bank. While the inflation rate peaked and declined, it remains at about 3.7% nationally and the Federal Reserve maintains its plans to continue interest rate hikes to engineer inflation reductions.

The technology sector layoffs are relevant especially in the Silicon Valley and the collapse of the Silicon Valley Bank has put more strain on the Federal government and our economy. While the City funds are collateralized by our respective banks, the impact on the local economy and City revenues remains a concern. Another critical variable is how the pandemic may permanently impact society, such as cutting back in in-person commerce or services through online shopping, virtual work, a decrease in conferences and/or leisure services to name only a few. Recoveries in sales tax and hotel tax (transient occupancy tax) are encouraging; however, we are cognizant that full recovery of hotel tax revenue may be challenging and require multiple years.

The national GDP (Gross Domestic Product, the value of goods and services less the value of the goods and services used up in production and is the most popular indicator of the nation’s overall economic health.) growth increased at an annual rate of 2.1 percent in the second quarter of 2023 from the previous quarter (according to the BEA, or Bureau of Economic Analysis’ Advanced estimate). With inflation decreasing to around 3.7% as of September 2023 compared to 8.2% in September 2022, the Federal Reserve is likely to maintain high interest rates to suppress inflation. Consequently, there is volatility in the stock market and slow-down in economic growth. As of September 2023, the Federal Reserve Board’s projected change in median GDP growth is positive 1.5 percent for 2024 and positive 1.8 percent for 2025.

The CPI (Consumer Price Index) is used by the U.S. Bureau of Labor Statistics to measure inflation. The September 2023 CPI-U (Consumer Price index for all Urban Consumers) increased 3.7 percent over the last 12 months. Core CPI (CPI less food and energy) is 4.1 percent compared to 6.6 percent in September 2022. Core CPI represents a more accurate picture of underlying inflation trends since volatile food and energy products are excluded. While the global economic activity remains uncertain, the U.S. Bureau of Labor Statistics’ Employment Projections for 2022-2023 shows a projected growth from 164.5 million to 169.1 million over the 2022-32 decade.
vi

The housing market has remained strong in 2023. Single family residential construction starts increased

8.0% year-over-year while multi-family construction starts decreased 28% year-over-year. The median sale price of a single-family residential home in Milpitas was $1.4 million as of August 2023, down approximately 4.7 percent from last year. Year-over-year price increases have ramped up in Santa Clara County. Santa Clara County had an 8.3 percent increase in median sale price compared to 2.1 percent increase last year. The California Association of Realtors reported an increase in value of 1.6 percent statewide. The section below entitled “Major Development Activities in the City” will discuss some of the development activities that are occurring in Milpitas.

Consumer Confidence Level
The Conference Board Consumer Confidence Index decreased to 103 in September 2023 from 108.7 in August 2023. Consumer confidence is an indicator designed to measure the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. Since consumer spending accounts for more than two-thirds of the U.S. Gross Domestic Product, the index is a good indicator that when consumers’ confidence is high, consumers would likely make more purchases thus further boosting the economy. Employment drives consumer spending, which in turn impacts the economy greatly. Nonfarm payroll employment increased 336,000 in September 2023, and the unemployment rate was unchanged at 3.8 compared to August 2023.

Source: The Conference Board
Top Ten Sales Tax Generators by Economic Segment
Financial markets continue to remain volatile and inflationary trends in the economy remain high.

According to Urban-Brookings Tax Policy Center, total state tax revenue collections decreased 6.8 percent in nominal terms and 11.5 percent in real terms in the first quarter of 2023, compared to the year prior. The chart below provides a snapshot of the City’s sales tax revenue by major industry groups. Total amount of sales tax revenue for the major industry groups generated about $29.7 million. Total sales tax receipts increased by 10.8 percent from 2022. By and large, the sales tax revenue generated from major industry groups such as Fuel and Service Stations, Restaurants and Hotels, General Consumer Goods, Business and Industry, Food and Drugs, and Autos and Transportation did not change significantly compared to the composition over a year ago.
80 85
90 95
100
105
110
115
120
Index
Consumer Confidence
vii

City Sales Tax Revenue ($29.7 Million)
Major Industry Groups
Source: HDL FY23 Major Business Categories
Major Development Activities in the City
General Plan Update – Considered the blueprint for future development, the General Plan defines a longterm vision for future growth, traffic circulation, economic development, health, housing and resource conservation. The Milpitas 2040 General Plan was unanimously adopted by the City Council on March 9, 2021, and this policy document will guide City decision-making and priorities over the next 20 years. The Plan identifies opportunity sites where changes to land use and development patterns are likely to occur and prioritizes housing and economic growth in areas served by high-quality transit. The Plan also includes policies aimed at preserving the character of existing neighborhoods and protecting the City’s hillsides and other natural resources.

Milpitas Metro Specific Plan – The City adopted a Transit Area Specific Plan (TASP) in June 2008 to encourage medium to high density development surrounding the new Milpitas Transit Center. The Plan was last updated in 2011. The Milpitas Transit Center, which opened in 2020, provides high-quality bus and light rail connections via the Santa Clara Valley Transportation Authority (VTA) system as well as regional rapid transit services via BART. The City adopted the Milpitas Metro Specific Plan (and the associated Environmental Impact Report) in February 2023 with updated policies and programs to further enhance existing neighborhoods and provide new opportunities for future housing, retail, office, and hotel uses in the planning area. The new Metro Plan envisions a network of landscaped open space, parks, and trails that connect housing and jobs to high-quality transit and provide opportunities for active and passive recreation as well as social interaction. The new Plan also envisions development of an employmentoriented Innovation District near the Milpitas Transit Center to foster economic development based on the City’s excellent access to regional bus, light rail, and BART connections. The Office of Economic Development is currently partnering with a local public relations firm on the Innovation District Branding Initiative. he City is currently updating the Transit Area Development Impact Fee to fund the new public improvements identified in the new Plan.
viii

Residential Development – The City continues to leverage public and private resources to support planning and development of new affordable housing. The City is recognized for its award-winning online resources and interactive tools that help residents navigate the development review process and find ADU designs that fit their property and needs. For more information, visit www.milpitas.gov/adu/. The City also continues to host the popular “ADU Mondays” program, which brings staff from various departments together to provide direct assistance to residents who wish to pursue an ADU on their property. City staff has presented information about these programs in regional and statewide forums.

In FY 2022-23, the Planning Commission has approved permits for several new housing development, including a time extension to develop a 372-unit multifamily residential project at 600 Barber Lane, a 78- unit (15% affordable) multi-family townhome development with 12 attached ADU’s at 675 Tradezone Blvd., and an 57-unit (15% affordable) townhome project on 612 S. Main Street. The City is continuing to utilize $300,000 in state grant funding to develop a Housing Opportunity Overlay Zone aimed at streamlining the review process for affordable housing and create new by-right housing regulations. In addition, the City received a $500,000 Priority Development Area (PDA) grant from ABAG to help fund the preparation of the Gateway/Main Street Specific Plan. The City also received $142,700 from ABAG’s Regional Early Action Planning (REAP) grant program to help fund the preparation of the 2023-2031 Housing Element.

Non-residential Development – FY2022-23 was another busy year for commercial redevelopment and expansion. The Planning Commission approved the redevelopment of a 12,800 square foot industrial building into a new recreational vehicle rental center at 893 Ames Avenue. In addition, conditional use permits have been granted for two new restaurants at 500 Barber Lane and 1471 N Milpitas Blvd. Lastly, the City of Milpitas Zoning Administrator has approved over 7,600 square feet of site improvements for BD Biosciences at 155 N. McCarthy Blvd. and over 290,000 square feet of new industrial office/building space at 475-525 Sycamore Drive. BD Biosciences is a significant business attraction effort for Milpitas as they will occupy a total of 240,000 square feet and add approximately 800 new employees to the city.

Global electronics company TDK Corporation officially opened its new manufacturing facility. The new facility is operated by TDK’s Headway Technologies and occupies an existing 125,000 square foot building. Approximately 200 employees work at the new facility to manufacture wafers for hard disk drive heads used for large data storage by medical, military, government, and business customers, as well as the consumer cloud.

Accounting System and Budgetary Control
In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurances regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates and judgments by management.
ix

All internal control evaluations occur within the above framework. The Finance Department staff remains committed to improving the City's accounting system; to maintain the City's internal accounting controls to adequately safeguard assets; and to provide reasonable assurances of proper recording of financial transactions. Budgetary control is directed by the City Council by resolution when the budget is adopted each year. Expenditures may not legally exceed appropriations at the department level by fund. The City utilizes the encumbrance system as a management control technique to assist in controlling expenditures.

The City Manager has limited budget appropriation authority to transfer appropriations among departments and projects within any one fund, provided that the amount of the amended appropriation is $100,000 or less. Quarterly reports of revenue and expense are prepared and distributed to the City Council and City departments to monitor spending in relation to the budget. At fiscal year-end, open encumbrances are reported under the “Assigned” fund balance classification. The City's accounting records are organized and operated on a "fund" basis, which is the basic fiscal and accounting entity in governmental accounting.

Each fund is classified by category and fund type:

Category and Fund Type
Governmental Funds: General Fund, Special Revenue Funds, Debt Service Funds, and Capital Projects Funds
Proprietary Funds: Enterprise Funds and Internal Service Fund Fiduciary Funds: Private-Purpose Trust Fund and Agency Funds Governmental Funds: The basic financial statements necessary to fairly present the financial position and operating results from major governmental funds are the balance sheet, and the statement of revenues, expenditures and changes in fund balance. These funds are maintained using the modified accrual basis of accounting, which is more thoroughly explained in the Notes to the Financial Statements.

Proprietary Funds: Generally accepted accounting principles applicable to private commercial business are applicable to proprietary funds of a government agency. The basic financial statements required to present the financial position and operating results from major proprietary funds are the statement of net position, statement of revenues, expenses, and changes in fund net position, and the statement of cash flows. The accrual basis of accounting is utilized as explained in the Notes to the Financial Statements.

Fiduciary Funds: Fiduciary funds are used to account for assets held by a government agency acting as a trustee or agent for individuals, assessment districts, organizations, other governmental units or other funds of the same entity. These funds are also identified in this report as a Private-Purpose Trust Fund and Custodial Funds. The full accrual basis of accounting is used as explained in the Notes to the Financial Statements.

Financial Analysis
Generally Accepted Accounting Principles (GAAP) require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it.
x

Long Term Financial Planning
Each year the City adopts a balanced budget by June 30. The City has fiscal policies that include the use of one-time revenues for one-time expenditures only, including capital outlay and reserves. The City also adopted reserve policies that requires unassigned fund balance which is made up of the Contingency Reserve to be at least 16.67% of the annual operating expenditures and the Budget Stabilization Reserve with a reserve target of 16.67% of the annual operating expenditures in the General Fund. Additional reserves are included in Note 12.

The City developed a five-year Capital Improvement Plan detailing specific budgeted capital projects. Each of the projects is consistent with the budget priorities of the City. The fiscal year 22-23 Adopted Capital Improvement Project (CIP) Budget totaled $24 million. The CIP included improvements to the City’s infrastructure which includes community improvements, parks, streets, water, sewer and storm drain utilities.

In addition, the City produces an annual ten-year General Fund Forecast. The Forecast allows the City Council and the community to assess the financial sustainability of City services in the long term. The projection also identifies the type of commitments and resource demands in the next ten years as known and points out areas of both opportunity and risk as the City navigates through fiscal cycles. This longterm forecast provides an invaluable planning tool and is an indication of sound fiscal planning and strategy.

Independent Audit
Each year the City requires an independent annual audit of the City's financial records, the results of its operations, and cash flows. This report includes the opinion of the City's independent auditors, Maze & Associates, for the basic financial statements of the City. In addition, the document also contains the auditors' 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.

Awards
The Government Finance Officers' Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2022. The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. The City has received this award for the last twenty-seven years.

Acknowledgments
We extend our appreciation to the entire staff in the Finance Department and other departments who assisted in the process of compiling the information for this report. In addition, we extend a special "thank you" to our external auditors who contributed to make this document possible. Their efforts and continued dedication are greatly appreciated. We sincerely thank the Mayor and members of the City Council for their support, interest, and integrity in directing the financial affairs of the City in a responsible and prudent manner.

Respectfully submitted,
Ned Thomas Lauren Lai
City Manager Director of Finance/Risk Manager
xi

DIRECTORY OF OFFICIALS
June 30, 2023
City Council
Mayor Carmen Montano
Vice-Mayor Evelyn Chua
Councilmember Hon Lien
Councilmember Anthony Phan
Councilmember Garry Barbadillo

Building Safety & Housing
Bill Tott (Interim Building Safety)
Alex Andrade (Interim Housing)
City Clerk
Suzanne Guzzetta
Director of Recreation & Community Services
Renee Lorentzen
Economic Development Director
Alex Andrade
Engineering Director/City Engineering
Matt Cano
Finance Director
Lauren Lai
Fire Chief
Jason Schoonover
Human Resources Director
Vicky Lien (Interim)
Information Technology Director
Daniel Nam
Planning Director
Jay Lee
Public Information Officer
Charmaine Angelo
Police Chief
Jared Hernandez
Public Works Director
Christian Di Renzo
City Manager
Ned Thomas
Assistant City Manager
Vacant
Deputy City Manager
Matt Cano
City Attorney
Michael Mutalipassi
xii

The City of Milpitas is located near the southern tip of San Francisco Bay, forty-five miles south of San Francisco.

Milpitas is often called the “Crossroads of Silicon Valley” with most of its 13.6 square miles of land situated between two major freeways (I-880 and I-680), State Route 237, and a county expressway. The light rail line opened for service in 2004 and an extension of BART, with a major multi-modal station, is in the planning stages. xiii

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xiv

Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Milpitas
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
Executive Director/CEO
xv

FINANCIAL SECTION

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 governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Milpitas (City), California, as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the Table of Contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparisons listed in the Table of Contents as part of the basic financial statements for the year then ended in accordance with accounting principles generally accepted in the United States of America.

We did not audit the financial statements of the discretely presented component unit financial statements of Terrace Gardens, Inc. as of and for the year ended December 31, 2022, which represent 1.02%, 1.51%, and 1.12% of the assets, net position, and revenues, respectively, of the primary government. The financial statements of the Terrace Gardens, Inc. were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the City, is based solely on the report of the other auditors.

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.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
1

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 there is substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with 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 City’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 City’s ability to continue as a going concern for a reasonable period of time.

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

Change in Accounting Principles
Management adopted the provisions of Governmental Accounting Standards Board Statement No. 96, SubscriptionBased Information Technology Arrangements, which became effective during the year ended June 30, 2023 and required the City to record certain subscription-related balances and activity as discussed in Note 8 and Note 11 to the financial statements.

The emphasis of this matter does not constitute a modification to our opinions. 2

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

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying Supplementary Information, as listed in the Table of Contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section listed in the Table of Contents, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exits, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 25, 2023 on our consideration of the City’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 City’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 City’s internal control over financial reporting and compliance.

Pleasant Hill, California
September 25, 2023
3

5 MANAGEMENT’S DISCUSSION AND ANALYSIS
The following discussion provides readers of the City of Milpitas’ financial statements a narrative overview and analysis of the financial activities of the City of Milpitas for the fiscal year ended June 30, 2023. Please read this document in conjunction with the accompanying Transmittal Letter and Basic Financial Statements.

FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
The City’s revenues in Fiscal Year 2023 have been slowly recovering since the start of the Pandemic over three years ago. The unemployment rate for the San Jose-Sunnyvale-Santa Clara metropolitan area was

3.7%, an increase of 1.5% from 2.2 % when compared to Fiscal Year 2022. General Fund revenues were higher compared to Fiscal Year 2022, especially in property tax, sales tax, and hotel/motel tax. These increases were primarily due to one-time revenues such as sales tax payments in arrears, sales tax collected through audit and property tax ERAF (Educational Revenue Augmentation Funds) subject to audit and litigation. However, license, permits and fines revenues were significantly lower in fiscal year 2023 compared to fiscal year 2022.

The increase in Property taxes is due to ongoing increases in secured and supplemental property tax due to higher property valuation. Sales and use tax increased significantly due to higher consumption and historically high inflation. As people started to travel again post-pandemic, hotel/motel tax has recovered but not quite returning to pre-pandemic revenue level.

As the economy remains uncertain in the fourth year after the COVID-19 pandemic, we are optimistic about the future but remain tempered by possible near-term economic impacts that may stem from the continued war in Ukraine, recently intensified Israel-Hamas war in the Middle East, high interest rates, fluctuating inflation rates, high mortgage rates, local unemployment trend, continued supply chain challenges, and the banking concerns following the recent collapse of Silicon Valley Bank.

Fiscal 2023 financial highlights include the following:

City-wide:
• The City’s total net position was $663.3 million on June 30, 2023. Of this total, $ 430.3 million were Governmental and $232.9 million were Business-type, a net increase of total $16.9 million from the prior year’s total of $646.4 million primarily due to a net increase in assets over liabilities.

Net asset increases were primarily due to increases in cash and investments and capital assets and liability increases primarily due to a increase in pension liabilities. • City-wide revenues include program revenues of $ 106.0 million, general revenues and transfers of $109.4 million, totaling $ 215.4 million, an increase of $ 15.4 million from the prior year’s total of $200 million primarily due to increase in charges for services, capital grants and contributions and general revenues.
• Total City-wide expenses were $194.6 million, an increase of $27.5 million from the prior year’s $167.1 million primarily due to increases in primary government expenditure related to net pension liability increases in public safety, recreation and building safety and housing functions and sewer utility expenses.

Fund Level:
• Governmental Fund balances were $246.0 million, a net increase of $8 million from fiscal 2022 primarily due to revenues exceeding expenditures by $8 million in General Fund. • Governmental Fund revenues were $148.6 million in fiscal 2023, up $15.6 million from the prior year’s $133 million, primarily due to increases in General Fund revenues such as Property Tax, Sales and Use tax, Hotel/Motel taxes and positive return in Use of Money and Property.

6 • Governmental Fund expenditures were $144.3 million compared to $151.4 million in fiscal year 2022 primarily due to decrease in General government capital projects, capital outlay in Other Governmental Funds.
• General Fund revenues of $126.3 million represented an increase of $14.2 million from fiscal 2022 revenues of $112.1 million caused primarily by one-time increase in Hotel/Motel taxes, Sales and Use taxes, and Property taxes and positive return in Use of Money and Property. • Net other financing uses of the General Fund were $(2.1) million in fiscal 2023 while fiscal 2022 had a total of other financing uses in $3.9 million. One-time variance was primarily due to transfer out to the General Government CIP fund. General Fund balance of $73.5 million at the fiscal 2023 was $6.7 million more than the fund balance at fiscal 2022.

OVERVIEW OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT
This Annual Comprehensive Financial Report consists of eight parts:
1) Introductory section, which includes the Transmittal Letter and general information, 2) Management’s Discussion and Analysis (this part),
3) The Basic Financial Statements, which include the Government-wide and the Fund financial statements, along with the Notes to these financial statements, 4) Required Supplementary Information,
5) Supplementary Information,
6) Combining statements for Non-major Governmental Funds and Fiduciary Funds, 7) Statistical information,
8) Other report.

The Basic Financial Statements
The Basic Financial Statements comprise the City-wide Financial Statements and the Fund Financial Statements. These two sets of financial statements provide two different views of the City’s financial activities and financial position—long-term and short-term.

The City-wide Financial Statements provide a longer-term view of the City’s activities as a whole and comprise the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the City as a whole, including all its capital assets and long-term liabilities on a full accrual basis, similar to that used by corporations. The Statement of Activities provides information about all the City’s revenues and all its expenses, also on the full accrual basis, with the emphasis on measuring net revenues or expenses of each of the City’s programs. The Statement of Activities explains in detail the change in net position for the year.

The Fund Financial Statements report the City’s operations in more detail than the City-wide statements and focus primarily on the short-term activities of the City’s General Fund and other Major Funds. The Fund Financial Statements measure only current revenues and expenditures, current assets, liabilities, deferred inflows/outflows of resources and fund balances, but exclude capital assets, long-term debt and other long-term amounts.

Major Funds account for the major financial activities of the City and are presented individually, while the activities of Non-major funds are presented in summary, with subordinate schedules presenting the detail for each of these Non-major funds. Major Funds are explained below.

The City is the Successor Agency of the Milpitas Redevelopment Agency. It holds funds to make payments according to the enforceable obligations schedules and eventually dispose of other assets and properties of the former Redevelopment Agency for the benefits of the taxing agencies. The City is also the depository agent for Local Improvement Districts and certain other entities. The fiduciary statements provide information about the cash balances and activities of the Successor Agency, Local Improvement Districts and other entities. These statements are separate from the City’s financial statements and their balances are excluded from the City’s fund balances.

Together, all these statements are called the Basic Financial Statements.

7 The City-wide Financial Statements
All of the City’s basic services are considered to be governmental activities, including general government, building safety and inspection, public safety, public works maintenance, recreation, public improvements, planning and zoning, and general administration services. These services are supported by general City revenues such as taxes, and by specific program revenues such as fees. The City-wide financial statements can be found on pages 25-26 of this report.

All of the City’s business-type activities include water and sewer, which are also reported in the basic financial statements. Unlike governmental services, these activities are supported by charges paid by users based on the amount of their service consumption.

The City’s financial statements include the activities of four other separate legal entities, the Milpitas Public Financing Authority (MPFA), the Milpitas Housing Authority (Housing Authority), the Milpitas Municipal Financing Authority (MMFA) and Terrace Gardens, Inc., because the City is either financially accountable for these entities or has control of these entities’ governing boards.

Citywide financial statements are prepared on an accrual basis, which means they measure the flow of all economic resources of the City as a whole.

Fund Financial Statements
Governmental Fund financial statements are prepared on a modified accrual basis, which means they measure only current financial resources and uses. Capital assets and other long-lived assets, along with long-term liabilities, are presented only in the citywide financial statements.

Enterprise and internal service fund financial statements are prepared on a full accrual basis and include all these funds’ assets and liabilities, both current and long-term.

The Fund financial statements provide detailed information about each of the City’s most significant funds, called Major Funds. Each Major Fund is presented individually, with all Non-major Funds summarized and presented only in a single column. Subordinate schedules present the detail of these Non-major funds.

Major Funds present the major activities of the City for the year. The General Fund is always a Major Fund, but other funds may change from year to year as a result of changes in the pattern of the City’s activities.

The City has four other Major Governmental Funds in fiscal 2023 in addition to the General Fund. These are the Housing Authority Fund, the Street Improvement Fund, the Transit Area Impact Fee Fund, and the General Government Capital Projects Fund, each of which is discussed in detail below.

Both of the City’s Enterprise Funds are reported as Major Funds.

Comparisons of Budget and Actual financial information are presented only for the General Fund and other major governmental funds that are Special Revenue Funds. The City has one major Special Revenue Fund, the Housing Authority Fund.

Fiduciary Statements
The City is the Successor Agency of the former Redevelopment Agency and the agent for certain local improvement districts (“Districts”). The City holds property tax revenue distributed from the Redevelopment Property Tax Trust Fund (“RPTTF”) to pay outstanding recognized obligations for the Successor Agency. The City also holds amounts collected from property owners which await transfer to the Districts’ bond trustees. These activities are excluded from the City’s other financial statements because the City cannot use these assets to finance its own operations. The City’s fiduciary activities are reported in the separate Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position and the custodial Funds Statement of Changes in Assets and Liabilities.

8 CITYWIDE FINANCIAL ANALYSIS
This analysis focuses on the net position and changes in net position of the City as a whole. Comparisons of the current year’s net position and activities with fiscal 2022 are presented in table form. Any significant changes are analyzed and discussed.

Governmental Activities
Table 1
Governmental Net Position at June 30
(in Millions)
Governmental Activities
2023 2022

Cash and investments $259.8 $250.6
Restricted cash and investments 0.6 2.3
Other assets 74.8 74.2
Capital assets 386.3 384.2

Total assets $721.5 $711.3
Deferred Outflows of Resources
–Related to pensions and OPEB

80.3 38.3

Net Pension liabilities 241.5 148.1
Net OPEB liability 10.5 0.0
Total OPEB liability 26.0 31.8
Long-term debt outstanding 20.8 21.5
Other liabilities1

43.7 45.0

Total liabilities 342.5 246.4

Deferred Inflows of Resources
_Related to leases
–Related to pensions and
OPEB2

12.9 16.1

13.1 67.3

Net position:

Net investment in capital assets 365.5 365.0
Restricted 179.0 176.5
Unrestricted (114.2) (118.6)

Total net position $ 430.3 $422.9

1 Other liabilities include Accounts Payable, Unearned Revenues and Compensated Absences incurred as of June 30, 2023 2 Deferred Inflows of Resources – Related to pensions and OPEB refers to unrecognized liability changes due to plan experience which differs from what was assumed in the prior measurement period.

9 The City’s governmental net position was $ 430.3 million on June 30, 2023, an increase of $ 7.4 million from 2022. This increase is reflected as Change in Net Position in the Governmental Activities column of the Statement of Activities and is also shown in Table 2 of this analysis:
• Cash and investments increased $9.2 million principally due to the positive net operating result and net market gains from the City’s investment portfolio.
• Restricted cash and investment decreased by $1.7 million is primarily due to capital project activities and disbursement in bond funds.
• Other assets increased $0.6 million from last year due to the net activity between receivables and increase in prepaids, materials, supplies and deposits
• Capital assets increased $2.1 million from last year, resulting from $ 15.0 million of depreciation, offset by $ 17.1 million in asset additions, net of retirements in fiscal 2023. The most significant increases were from street improvement projects.
• Deferred outflows of resources related to pension and OPEB increased $42 million from last year due to changes in actuarial results.

Fiscal Year 2023
Governmental Activities
As the Sources of Revenue Chart above shows, $47.1 million or 32% came from property taxes, while $37.3 million or 25% came from sales and use taxes. The remainder came from a variety of sources, including charges for services, grants and contributions, franchise fees, transient occupancy taxes, and building fees.

10 The Functional Expenses Chart above includes only current year expenses, which are discussed in detail below. It does not include capital outlays, which are added to the City’s capital assets. The composition of Fiscal 2023’s capital assets is shown in detail at Table 8.

The Statement of Activities presents program revenues and expenses and general revenues in detail. All these are elements in the Changes in Governmental Net Position as summarized below.

11 Table 2
Changes in Governmental Net Position
(in Millions)

Governmental Activities
2023 2022
Expenses
General Government $25.7 $25.2
Building, Safety and Housing 7.9 4.9
Recreation and Community Services 8.4 6.1
Public Works 23.7 22.1
Engineering 6.0 5.0
Planning 2.6 1.9
Police 39.6 29.5
Fire 31.8 29.0
Interest on long term debt 0.6 0.8
Total expenses 146.3 124.5

Revenues
Program revenues:

Charges for services 20.2 18.7
Operating contributions and grants 16.2 15.3
Capital Grants 7.9 19.9
Total Program Revenues 44.3 53.9
General revenues:

Taxes:

Property taxes 47.1 42.6
Sales and use taxes 37.3 33.2
Transient Occupancy taxes 11.2 8.0
Other taxes 0.7 1.1
Franchise fees 5.7 5.2
Investment earnings 1.9 (7.5)
Miscellaneous 0.9 1.8
Total General Revenues 104.8 84.4
Total Revenues 149.1 138.3
Surplus (Deficit) before transfers 2.8 13.8

Transfers in/(out), net 4.6 4.3
Changes in net position 7.4 18.1

Beginning net position 422.9 404.8

Ending net position $430.3 $422.9

12 Table 2 compares fiscal 2023 expenses and revenues with those of fiscal 2022. Expenses increased by $22 million in fiscal 2023 due primarily to significant increase in net pension liabilities, which was caused by increase in deferred outflows of resources from changes of assumptions and difference between projected and actual earnings on investments.

Table 2 shows that total governmental revenues increased $10.8 million in fiscal 2023 primarily due to onetime sources. Program revenues decreased $ 9.6 million, and general revenues increased $20.4 million. The deceased in program revenues was primarily due to lower capital grants received and increased general revenues were primarily due to economic recovery from the pandemic and positive investment returns.

The general revenue increased $20.4 million from fiscal 2022, the net activity was primarily due to onetime increase of $3.2 million in hotel/motel taxes, $0.5 million in Franchise Fee, $4.5 million in Property taxes and $4.1 million in sales and uses taxes. The investment earnings increased by $9.4 million due primarily to $1.9 million in unrealized market gain compared to prior year’s net unrealized negative investment returns of $(2.9) million.

Table 3 presents the net cost of each of the City’s largest programs—general government, building safety and housing, recreation and community services, public works, engineering, planning, police, and fire. Net cost is defined as total program cost less the revenues generated by those specific activities. The net cost of providing such programs in fiscal year was $102 million.

Table 3
Governmental Activities
(in Millions)

Net (Expenses) Revenue
From Services
2023 2022

General Government $(20.0) $(20.1)
Building, Safety and Housing 2.4 11.4
Recreation and Community
Services
(3.9) (1.9)
Public Works (22.2) (22.1)
Engineering 5.1 11.1
Planning (0.8) (0.6)
Police (33.1) (23.4)
Fire (28.9) (24.1)
Interest on long term debt (0.6) (0.8)

Totals $(102.0) $(70.5)

13 Business-type Activities
Table 4
Business-Type Net Position at June 30
(in Millions)

Business-Type Activities
2023 2022

Cash and investments $111.5 $108.4
Other assets 5.1 4.6
Capital assets 184.6 178.5

Total assets 301.2 291.5

Deferred Outflows of
Resources – Related to
Pensions and OPEB

2.3 1.5

Other liabilities 6.4 4.5
Net pension liabilities 4.5 2.7
Net OPEB liability 3.7 3.3
Long-term Debt 54.6 56.3

Total liabilities 69.2 66.8

Deferred Inflows of Resources
– Related to Pensions and
OPEB

1.3 2.7

Net position:

Net investment in capital assets 131.0 127.2
Restricted 89.1 75.1
Unrestricted 12.8 21.2

Total net position $232.9 $223.5
The net position of business-type activities was $232.9 million in fiscal 2023, an increase of $9.4 million from fiscal 2022. The increase in net position was due to increase in total assets of $9.7 million. The increase in total assets is primarily comprised of an increase of $6.1 million in capital assets and 3.1 million in cash & investment.

14 Table 5
Changes in Business-Type Net Position
(in Millions)

Business-Type Activities
2023 2022
Expenses
Water Utility $28.1 $26.9

Sewer Utility 20.2 15.6
Total expenses 48.3 42.5
Revenues
Program revenues:

Charges for services 59.2 55.9
Operating grants 0.1 0.3
Capital grants 2.5 1.0
Total program revenues 61.8 57.2
General revenues:

Investment earnings 0.6 (3.2)
Total general revenues 0.6 (3.2)
Total Revenues 62.4 54.0
Excess before transfers 14.1 11.6
Net Transfers (4.6) (4.4)
Changes in net position 9.4 7.2
Beginning net position 223.5 216.3

Ending net position $232.9 $223.5
Table 5 compares fiscal 2023 expenses and revenues with those of fiscal year 2022. Total expenses increased by $5.8 million in fiscal 2023 due to an increase in personnel services and an increase in water purchase and contractual services. Total program revenues increased by $4.5 million primarily due to an increase in charges for services related to a rate increase, higher level of utility consumption by nonresidential accounts post COVID-19 pandemic and an increase in capital grants and contributions. Total general revenue increased $3.8 million from interest earnings primarily due to positive market returns on investment as of June 30, 2023. The net transfers represent reimbursements of administration costs to the General Fund.

15 FINANCIAL ANALYSIS OF THE CITY’S FUNDS
Table 6 below summarizes activities and balances of the governmental funds at the fund level:

Table 6
Financial Highlights of Governmental Funds at Fund Level at June 30 (in Millions)

2023 2022
Total assets $287.7 $281.7
Total liabilities 28.7 30.3
Total deferred inflow of resources 12.9 13.1
Total fund balances 246.1 238.3
Total revenues 148.6 133.0
Total expenditures 144.3 151.4
Total other financing sources 3.5 3.8

At June 30, 2023, the City’s governmental funds reported combined fund balances of $246.1 million, an increase of $7.8 million from last year. The fund balances of Housing Authority, General Government, and Other Governmental Funds increased $0.4 million, $0.6 million, and $3.5 million respectively while the Street improvement and Transit Area Impact Fee Funds decreased $3.3 million and $0.1 million respectively. The General Fund increased $6.7 million due to net operating surplus.

Revenues at the fund level totaled $148.6 million, a net increase of $15.6 million. Revenues received in General Fund, Housing Authority, General Government Capital Projects, and Other Government Funds increased $14.2 million, $0.3 million, $2.3 million and $1.2 million respectively while the Street Improvement and Transit Area Impact Fee Funds has a decrease of the fund balance in fiscal year 2023.

Expenditures net decreased $7.1 million this year to $144.3 million from last year’s $151.4 million. The expenditures of the General Government Capital Improvement Fund, Other Government Funds, Street Improvement Fund and Transit Area Impact Fee Fund decreased $6 million, $2.5 million, $2.9 million, and $1.2 million respectively while General Fund increased $5.6 million.

Analyses of Major Governmental Funds
General Fund
General Fund revenues (excluding transfers) increased to $126.3 million this fiscal year, up $14.2 million from the prior fiscal year. Hotel/Motel taxes were increased by $3.2 million from $8.0 million in fiscal year 2022 to $11.2 million in fiscal year 2023.

There were primarily one-time revenue increases in Property tax revenue of $4.5 million and Sales and Use taxes of $4.1 million compared to the prior year.

General Fund expenditures (excluding transfers) increased to $117.5 million without encumbrance this fiscal year, up $5.6 million from the prior fiscal year. The increase is due primarily to personnel cost and contractual services.

Total Other Financing Sources is ($2.1) million net in fiscal 2023. Net Other Financing Sources decreased by $6 million compared to fiscal year 2022 Net Other Financing Sources of 3.9 million. Transfers out were approximately $9.3 million in fiscal year 2023, as compared to Transfers out of $3 million in fiscal 2022.

The reason for the increase of transfer out was due to $3.8 million transferred to General Government CIP fund and other transfers as part of year-end fund balance allocation per Council direction, consistent with our fiscal policy.

16 For the City’s General Fund, actual revenues of $126.3 million were $5.3 million more than the final budgeted revenues of $121 million. Property taxes and Sales taxes exceeded budget by $3.2 million and $2.2 million respectively primarily due to one-time transactions.

At the end of the year, actual General Fund expenditures were $121 million including encumbrance, $5 million less than the final budget of $126 million. As a result of general recruitment and/or competitive labor markets, employment vacancies primarily contributed to the expenditures savings. Consequently, it is prudent to deem this as a one-time expenditure variance that provides additional fund balance resources, instead of on-going reductions of General Fund operating budget.

Housing Authority
This Fund accounts for the housing activities assumed from the former Redevelopment Agency designed to increase the amount of low and moderate-income housing available in the City. Total revenues were $0.8 million in fiscal 2023, comprised of interest, rental income and repayment of housing loans. Total expenditures were $0.5 million for administration.

Street Improvement Capital Project
This Street Improvement Capital Project Fund accounts for the majority of the street capital projects activity in the City. The Fund’s revenues were $2.8 million in fiscal 2023, a decrease of $0.1 million from fiscal 2022. Fund expenditures were $6.1 million in fiscal 2023, a decrease of $2.9 million from fiscal 2022, due to decrease in capital outlay. Net transfers were $0.1 million in fiscal 2023, a decrease of $5.5 million from fiscal 2022 due to decrease funding in street projects from the General Government Fund, Gas Tax Special Revenue Fund, and Transit Area Impact Fee Fund.

Transit Area Impact Fee
The Transit Area Impact Fee Fund was established in fiscal 2009 to account for impact fees revenue collected from developers and related capital expenditures in the Transit Area. In fiscal 2023, fund revenues were $1.5 million, primarily from fees collected from developers. Expenditures were $1.3 million, primarily consisting of capital improvement projects. The fund also transferred $0.3 million in fiscal year 2023 to the general government fund for CIP projects.

General Government Capital Projects
The General Government Capital Projects Fund accounts for construction and maintenance of general government projects and assets in the City. In fiscal 2023, expenditures of $9.4 million consisted of $9.4 million of capital improvement project expenditures. The transfers in of $7.8 million were primarily from General Fund, Gas Tax Fund and Park Improvement Fund. General Government Capital Projects funds also received funding from Public Art Fund, Transit Area Fund, and Park Improvement Fund in an amount of approximately $0.8 million. The transfers out of $0.4 million were to the Storm Drain Capital Project Fund and Community Planning Fund.

Other Governmental Funds
These funds are not presented separately in the Basic Financial Statements, but are individually presented as Supplemental Information.

17 Fund Balance Classifications
Fund balances are classified in five categories: non-spendable, restricted, committed, assigned and unassigned based on a hierarchy of constraints. Further details on fund balance classifications can be found in Note 12.

Table 7 shows the classification of the fund balances of the major governmental funds.

Table 7
Fund Balances at June 30 – Major Governmental Funds
(in Millions)

2023

2022
General Fund
Non-spendable $4.9 $4.9
Committed 17.0 15.8
Assigned 6.9 6.1
Unassigned 44.7 40.0
Total $73.5 $66.9

Housing Authority Fund
Restricted $40.1 $39.7
Street Improvement Fund
Restricted $5.0 $8.3
Transit Area Impact Fee Fund
Restricted $60.8 $60.9
General Government Project
Fund

Assigned
Non-spendable
$25.5

0.1 $23.4
Restricted $0.6 $2.2
$26.2 $25.6
On June 30, 2023, the fund balance of the General Fund was $73.5 million. $4.9 million was classified as non-spendable, comprised of $0.7 million for prepaid materials and supplies, and $4.2 million of property held for resale. $17 million was classified as committed, comprised of $6.1 million for PERS Rate Stabilization, $1.9 million for Artificial turf replacement, $2 million for Technology replacement and $7 million for Facilities replacement. $6.9 million was classified as Assigned, comprised of $2.8 million for uninsured claims, $0.5 million for other assigned and $3.6 million for encumbrances. $44.7 million was classified as unassigned, comprised of $19.8 million of contingency reserve, $19.8 million of budget stabilization reserve, $1.4 million of future deficit reserve, $2.3 million in ERAF reserve, $0.7 million in Strategic Property Acquisition Revenue and $0.7 million of unassigned.

The fund balances of the Housing Authority Fund, Street Improvement Fund and the Transit Area Impact Fee Fund were also classified as restricted because the amounts were restricted for specific purposes.

The fund balance of the General Government Capital Project Fund was $26.2 million: $25.5 million classified as assigned due to Council’s reserve policy.

18 Analyses of Major Proprietary Funds
Total operating revenues of major proprietary funds increased $3.3 million from last year, while operating expenses increased $5.6 million. Total operating revenues and total operating expenses were $59.2 million and $45.9 million, respectively. Total non-operating expenses were $1.8 million in fiscal 2023, a decrease of $3.3 million from the prior year. Capital contributions increased by $1.5 million and net transfers out increased by $0.3 million.

Water Utility
Water fund revenues were $34.2 million in fiscal 2023, a decrease of $0.2 million from prior year. The decrease in revenues was primarily due to County mandated water conservation because of the historic drought. Expenses were $27.3 million in fiscal 2023, increase $1.1 million from prior year, primarily due to increase in wholesale water purchase expenditure. Net position of the Water Utility Fund increased $5.4 million in the current year to a total of $99.6 million. The increase comprised of $34.2 million of operating revenues for the current year, $27.3 million of operating expenses, which result in 7.0 million operating income before accounting for unrealized market loss and transfer out expenses. The water fund also received $0.1 million of grants, $1.8 million of capital contributions and net of interest expense of ($0.5) million and transfers of ($2.9) million, and this resulted in increase of net position of $5.4 million. Net increase has been allocated per policy to infrastructure funding, rate stabilization, pension reserve and emergency reserve.

The Water Fund’s Net Position includes $48.0 million invested in capital assets, $43.4 million in restricted net position, and $8.3 million in unrestricted net position allocated per Council policy.

Sewer Utility
Sewer fund revenues were $25 million in fiscal 2023, up $3.4 million from the prior year due to an increase in usage as businesses re-opened post-pandemic. Expenses were $18.6 million in fiscal 2023, an increase of $4.4 million from the prior year. Non-operating revenues and expenses in fiscal year 2023 consisted of $1.3 million interest expense. There was 25 million of operating revenues for the current year, $18.6 million of operating expenses, which result in $6.4 million operating income before accounting for unrealized market loss and transfer out expenses. The sewer fund also received $0.3 million in interest income, net of interest expense of $1.6 million, $0.8 million of capital contributions and net of transfers of ($1.7) million.

In fiscal year 2023, sewer fund also received a credit of $1 million. This is a true-up of actual expenditure from previous fiscal year budget for both operation and capital improvement program for the San Jose Santa Clara Regional Waste Facility.

The Sewer Fund’s Net Position includes $83 million invested in capital assets, $45.7 million in restricted net position, and $4.6 million in unrestricted net position, totaling $133.3 million in fiscal year 2023, allocated per Council policy.

19 CAPITAL ASSETS
The City records the cost of all its infrastructure assets such as roads, bridges, signals and similar assets used by the general population and computes the amount of accumulated depreciation for these assets based on their original acquisition dates. At the end of fiscal 2023, the cost of infrastructure and other capital assets recorded on the City’s financial statements was as shown in Table 8 below:

Table 8
Capital Assets at Year-end
(in Millions)

2023 2022
Governmental Activities:

Land $97.4 $84.8
Construction in progress 75.4 94.4
Buildings and improvements 173.4 173.4
Other improvements 39.7 34.0
Machinery and equipment 49.1 49.1
Landscape system 30.2 30.1
Storm system 75.6 74.5
Street system 328.3 313.8
Traffic system 21.2 20.3
Intangible Right-to-use
subscription asset
Less accumulated depreciation

0.8 (504.6)

0 (490.2)

Totals $386.3 $384.2

Business-type Activities:

Land $1.1 $1.1
Construction in progress 33.7 28.5
Distribution facilities 81.2 81.2
Water Service lines 18.4 17.1
Sewer lines 88.0 87.5
Capacity rights 120.9 115.2
Less accumulated depreciation (158.7) (152.0)

Totals $184.6 $178.6
The primary additions in fiscal 2023 were due to the land and street improvement projects and other major projects such as fire station #2, park improvement and water supervisory control & data acquisition project.

The City depreciates all its capital assets over their estimated useful lives. The purpose of depreciation is to spread the cost of a capital asset over the years of its useful life so that an allocable portion of the cost of the asset is borne by all users. Additional information on depreciable lives and current year activities may be found in Note 8.

20 CASH AND INVESTMENTS
The City outsourced the management of the City’s investments to Chandler Asset Management effective June 1, 2020 and held in a custodial account with The Bank of New York. The City also established a Section 115 trust managed by PFM Asset Management. The managed portfolio consists of securities invested in accordance with City’s investment policy and the California Government Code.

Total cash and investments increased $16.3 million from $354.1 million to $370.4 million. This increase was due to positive investment returns compared to the prior year’s unrealized market loss. As the Federal Reserve continues to raise interest rates, the valuation of current City fixed income portfolio may decrease because they were purchased and locked in at a lower interest rate. However, this decrease in value is an unrealized market loss unless the City liquidates its investment holdings.

Total investment earnings for fiscal year 2023 was $3.5 million. The change in fair value for the portfolio for the fiscal year ending June 30, 2023 was an unrealized loss on investments of $1.9 million.

The following graphs depict the investment portfolio of $335.7 million cash and investments at June 30, 2023.

DEBT ADMINISTRATION
The City’s debt was issued to finance a few City’s projects include Sewer infrastructure, Water infrastructure, energy improvement projects and replacement for Fire Station.

In fiscal 2018, the City refunded the 2006 Sewer Bonds with the 2017 Wastewater Revenue Refunding Bonds to reduce interest rate cost over the life of the bond issuance. The 2017 Bonds are pledges by net revenue from the City’s sewer system. In fiscal 2020, Milpitas Municipal Financing Authority issued Wastewater Revenue Bonds, Series 2019 in an amount of $29.8 million to fund for certain improvement to the City’s wastewater system. The City also issued Water Revenue Bonds, Series 2019 in an amount of $17.1 million fund for Water system improvement projects.

21 In fiscal 2021, Milpitas Municipal Financing Authority issued a Lease Revenue Bonds in an amount of $18.4 million to provide funds to finance a portion of Fire Station No. 2 Replacement project and variety of energy improvement projects. Each of the City’s debt issues are discussed in detail in Note 9 to the financial statements. At June 30, 2023 the City’s debt is comprised of:

Table 9
Outstanding Debt
(in Millions)

Balance Balance
June 30, 2023 June 30, 2022

Governmental Activity Debt:
2020 General Fund Lease Revenue Bond

4.0% due June 1, 2041 17.7 $18.2
Plus: Unamortized bond premium 3.1 3.3
Total Governmental-type Activity Debt $20.8 $21.5

Business-type Activity Debt:

Wastewater Revenue Refunding Bonds, 2017
Series

2.0% - 5.0%, due November 1, 2026 2.3 2.8
Plus: Unamortized bond premium 0.3 0.4

Wastewater Revenue Bonds, 2019 Series

4.0% - 5.0%, due November 1, 2049 28.4 28.9
Plus: Unamortized bond premium 4.8 4.9

Water Revenue, 2019 Series

4.0% - 5.0%, due June 1, 2049 16.2 16.4
Plus: Unamortized bond premium 2.7 2.8
Total Business-type Activity Debt $54.6 $56.2

ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The economy of the City and its major initiatives for the coming year are discussed in detail in the accompanying Transmittal Letter.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This Comprehensive Annual Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances. Questions about this Report should be directed to the Finance Department, at 455 East Calaveras Boulevard, Milpitas, CA 95035-5479 or to the City’s website at www.ci.milpitas.ca.gov.

STATEMENT OF NET POSITION AND

STATEMENT OF ACTIVITIES
The Statement of Net Position reports the difference between the City’s total assets and deferred outflows of resources and the City’s total liabilities and deferred inflows of resources, including all the City’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the City’s net position by subtracting total liabilities and deferred inflows of resources from total assets and deferred outflows of resources.

The Statement of Net Position summarizes the financial position of the City’s Governmental Activities in a single column, and the financial position of all the City’s Business-type Activities in a single column; these columns are followed by a Total column that presents the financial position of the primary government. This column is followed by a column that displays the discretely presented component unit.

The City’s Governmental Activities include the activities of its General Fund, along with all its Special Revenue, Capital Projects and Debt Service Funds. Since the City’s Internal Service Funds service these Funds, their activities are consolidated with Governmental Activities, after eliminating inter-fund transactions and balances.

The City’s Business-type Activities include all its Enterprise Fund activities.

The Statement of Activities reports increases and decreases in the City’s net position. It is prepared on the full accrual basis, which means it includes all the City’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis used in the Fund financial statements, which reflect only current assets, current liabilities, deferred inflows/outflows of resources, available revenues and measurable expenditures.

The Statement of Activities presents the City’s expenses first, listed by the program, and follows these with the expenses of its Business-type Activities. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net expense of each governmental and business-type program. The City’s general revenues are then listed in the Governmental Activities, Business-type Activities or discretely presented component unit column, as appropriate, and the Change in Net Position is computed and reconciled with the Statement of Net Position.

Both of these Statements include the financial activities of the City and the blended component units: the Milpitas Public Financing Authority (MPFA), the Milpitas Economic Development Corporation (EDC), the City of Milpitas Housing Authority (Housing Authority) and the Milpitas Municipal Financing Authority (MMFA). The Financing Authorities and Housing Authority are legally separate component units of the City, because they are controlled by the City and the City is financially accountable for their activities. The EDC is a California nonprofit public benefit Corporation that is also a legally separate component unit of the City because it is governed by a board consisting of the members of the City Council. The EDC became inactive as of June 30, 2015. The balances and the activities of the discretely presented component unit of Terrace Gardens, Inc. are included in these statements as separate columns.

These financial statements along with the fund financial statements and footnotes are called Basic Financial Statements.

CITY OF MILPITAS

STATEMENT OF NET POSITION
JUNE 30, 2023
Component
Primary Government Unit
Terrace
Gardens Inc.

Governmental Business-Type (As of
Activities Activities Total December 31, 2022)
ASSETS
Cash and investments available for operations (Note 3) $259,849,351 $110,562,501 $370,411,852 $39,338 Restricted cash and investments (Note 3) 592,509 961,171 1,553,680 3,582,989 Receivables:

Accounts 2,267,362 4,243,479 6,510,841 25,353
Due from other governments 11,642,293 108,127 11,750,420 Interest 1,166,178 476,208 1,642,386
Loans receivable (Note 5) 38,758,235 38,758,235
Prepaids, materials, supplies and deposits (Note 1E) 1,465,605 235,060 1,700,665 64,802 Property held for resale (Note 6) 6,000,000 6,000,000
Leases receivable (Note 10) 13,461,720 13,461,720
Capital assets and capacity rights (Note 8):

Land and construction in progress 172,832,251 34,843,879 207,676,130 1,607,192 Depreciable capital assets, net 213,474,549 149,727,513 363,202,062 5,117,586 Total assets 721,510,053 301,157,938 1,022,667,991 10,437,260

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions (Note 13D) 66,605,255 1,285,365 67,890,620 Related to OPEB (Note 14E) 13,737,309 1,059,472 14,796,781 Total deferred outflows of resources 80,342,564 2,344,837 82,687,401

LIABILITIES
Accounts payable 4,958,364 4,923,546 9,881,910 284,074
Accrued payroll 4,862,217 241,381 5,103,598 13,974
Accrued expenses 41,915
Interest payable 59,000 591,383 650,383
Uninsured claims payable (Note 15):

Due within one year 1,647,769 1,647,769
Due in more than one year 4,704,976 4,704,976
Refundable deposits 3,786,347 131,367 3,917,714 72,400
Unearned revenue 15,258,160 6,922 15,265,082 1,143
Accrued vacation (Note 14F):

Due within one year 2,625,756 304,140 2,929,896 16,913
Due in more than one year 3,887,538 133,202 4,020,740
Sick leave payable (Note 14F):

Due within one year 661,071 90,494 751,565
Due in more than one year 588,448 50,163 638,611
Subscription liability (Note 11):

Due within one year 136,679 136,679
Due in more than one year 427,499 427,499
Net pension liabilities (Note 13C):

Due in more than one year 241,528,287 4,515,731 246,044,018 Net OPEB liability (Note 14C):

Due in more than one year 10,523,266 1,374,317 11,897,583 Total OPEB liability (Note 14D)
Due in more than one year 26,006,613 2,321,167 28,327,780 Long term debt (Note 9):

Due within one year 520,000 1,395,000 1,915,000
Due in more than one year 20,306,165 53,160,006 73,466,171 Total liabilities 342,488,155 69,238,819 411,726,974 430,419

DEFERRED INFLOWS OF RESOURCES
Related to leases (Note 10) 12,886,652 12,886,652
Related to OPEB (Note 14E) 16,151,157 1,338,072 17,489,229 Total deferred inflows of resources 29,037,809 1,338,072 30,375,881 NET POSITION (Note 12)
Net investment in capital assets and capacity rights 365,508,966 130,977,557 496,486,523 6,724,778 Restricted for:

Capital projects 91,878,462 89,090,985 180,969,447
Redevelopment and community development activities 52,908,825 52,908,825 Pension expenses 32,663,060 32,663,060
Other programs 1,585,744 1,585,744
Total restricted net position 179,036,091 89,090,985 268,127,076 Unrestricted (114,218,404) 12,857,342 (101,361,062) 3,282,063 Total net position $430,326,653 $232,925,884 $663,252,537 $10,006,841 See accompanying notes to financial statements
25

CITY OF MILPITAS

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2023
Net (Expense) Revenue and
Changes in Net Position
Program Revenues Primary Government
Operating Capital
Charges for Grants and Grants and Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Primary Government:

Governmental Activities:

General Government $25,711,166 $1,400,034 $4,309,415 ($20,001,717) Building, Safety and Housing 7,939,810 7,814,990 2,426,617 $51,555 2,353,352 Recreation and Community Services 8,410,448 3,327,820 1,168,324 3,937 (3,910,367) Public Works 23,656,662 81,084 71,841 1,277,948 (22,225,789) Engineering 6,006,066 2,960,232 2,556,270 5,600,583 5,111,019 Planning 2,638,231 505,089 493,244 848,440 (791,458)
Police 39,544,697 1,565,471 4,812,378 118,429 (33,048,419) Fire 31,799,146 2,498,481 391,446 (28,909,219)
Interest on long term debt 564,911 (564,911)
Total Governmental Activities 146,271,136 20,153,201 16,229,535 7,900,892 (101,987,508) Business-type Activities:

Water Utility 28,069,779 34,241,975 59,084 1,753,060 $7,984,340 Sewer Utility 20,225,674 24,953,067 755,632 5,483,025
Total Business-type Activities 48,295,453 59,195,042 59,084 2,508,692 13,467,365 Total Primary Government $194,566,589 $79,348,243 $16,288,619 $10,409,584 (101,987,508) 13,467,365 Component Unit:

Terrace Gardens Inc. $2,414,946 $2,304,169 $26,901
General revenues:

Taxes:

Property taxes 47,099,953
Sales and use taxes 37,344,284
Hotel/Motel taxes 11,189,758
Other taxes 736,770
Franchise fees, unrestricted 5,689,722
Motor vehicle in-lieu, unrestricted 84,066
Investment earnings 1,863,732 580,164
Gain (Loss) from sale of property 33,747
Miscellaneous 765,307
Transfers (Note 4) 4,616,307 (4,616,307)
109,423,646 (4,036,143)
Change in Net Position 7,436,138 9,431,222
422,890,515 223,494,662
Net position-Ending $430,326,653 $232,925,884
See accompanying notes to financial statements
Total general revenues and transfers
Net position-Beginning
26

Net (Expense) Revenue and
Changes in Net Position
Primary Government Component Unit
Terrace
Gardens Inc.
(year ended
Total December 31, 2022)
($20,001,717)
2,353,352
(3,910,367)
(22,225,789)
5,111,019
(791,458)
(33,048,419)
(28,909,219)
(564,911)
(101,987,508)
7,984,340
5,483,025
13,467,365
(88,520,143)
($83,876)
47,099,953
37,344,284
11,189,758
736,770
5,689,722
84,066
2,443,896 9,333
33,747
765,307
105,387,503 9,333
16,867,360 (74,543)
646,385,177 10,081,384
$663,252,537 $10,006,841
27

FUND FINANCIAL STATEMENTS
The Fund Financial Statements present individual major funds, while non-major funds are combined in a single column. Major funds are defined generally as having significant activities or balances in the current year. No distinction is made between Fund types.

MAJOR GOVERNMENTAL FUNDS
The funds described below were determined to be Major Funds by the City. Individual non-major funds may be found in the Supplemental section.

GENERAL FUND
The General Fund is used for all the general revenues of the City not specifically levied or collected for other City funds and the related expenditures. The general fund accounts for all financial resources of a governmental unit, which are not accounted for in another fund.

HOUSING AUTHORITY FUND
Established to plan and address the housing needs of the City and to act as the Housing Successor Agency for the former Redevelopment Agency. The main source of the revenue for this fund is the repayment of loans restricted for housing activities.

STREET IMPROVEMENT FUND
Established to account for the construction and maintenance of the street system in Milpitas. Financing may be provided through state and federal grants.

TRANSIT AREA IMPACT FEE FUND
Established to account for capital projects in the transit area. A special transit area impact fee is imposed on developments to provide financing.

GENERAL GOVERNMENT CAPITAL PROJECT FUND
Established to account for the construction and maintenance of general government projects. Financing provided by the General Fund.

Housing Street Transit Area
General Authority Improvement Impact Fee
ASSETS
Cash and investments available for operations (Note 3) $83,674,807 $2,751,774 $3,491,375 $60,140,299 Restricted cash and investments (Note 3) 22,234
Receivables:

Accounts 1,609,593 440,100
Due from other governments 7,509,396 1,554,672
Interest 473,296 11,143 34,862 311,285
Loans receivable, net (Note 5) 35,523,352
Prepaids, materials, supplies and deposits (Note 1E) 724,275 2,000 Property held for resale (Note 6) 4,200,000 1,800,000
Leases receivable (Note 10) 13,461,720
Total Assets $111,675,321 $40,088,269 $5,080,909 $60,891,684

LIABILITIES
Accounts payable $2,293,312 $701 $72,748 $63,645
Accrued payroll 4,672,030 7,405 8,962
Refundable deposits 3,756,376 11,100
Unearned revenue 14,563,938
Total Liabilities 25,285,656 11,801 80,153 72,607

DEFERRED INFLOWS OF RESOURCES
Leases related (Note 10) 12,886,652
Total Deferred Inflows of Resources 12,886,652

FUND BALANCES
Fund balances (Note 12):

Nonspendable 4,924,275 2,000
Restricted 40,074,468 5,000,756 60,819,077
Committed 16,972,492
Assigned 6,921,443
Unassigned 44,684,803
TOTAL FUND BALANCES 73,503,013 40,076,468 5,000,756 60,819,077 Total Liabilities, Deferred Inflows of Resources and Fund Balances $111,675,321 $40,088,269 $5,080,909 $60,891,684 Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds above because of the following:

CAPITAL ASSETS

ALLOCATION OF INTERNAL SERVICE FUND NET POSITION
Internal service funds are not governmental funds. However, they are used by management to charge the costs of certain activities, such as insurance and central services and maintenance, to individual governmental funds. The net current assets of the Internal Service Funds are therefore included in Governmental Activities in the Statement of Net Position.

LONG-TERM ASSETS AND LIABILITIES
Long-term debt
Subscription liability
OPEB liability and related deferred outflows/inflows of resources

NET POSITION OF GOVERNMENTAL ACTIVITIES
See accompanying notes to financial statements

CITY OF MILPITAS

GOVERNMENTAL FUNDS

BALANCE SHEET
JUNE 30, 2023
Non-current portion of uninsured claims payable
The assets and liabilities below are not due and payable in the current period and therefore are not reported in the Funds:

Net pension liability and pension-related deferred outflows/inflows of resources Non-current portion of accrued vacation and sick leave
Capital assets used in Governmental Activities are not current assets or financial resources and therefore are not reported in the Governmental Funds. 32

General
Government Other Total
Capital Governmental Governmental
Projects Funds Funds
$26,042,044 $36,810,212 $212,910,511
570,275 592,509
217,669 2,267,362
1,016,289 1,561,936 11,642,293
115,982 159,185 1,105,753
3,234,883 38,758,235
118,429 29,784 874,488
6,000,000
13,461,720
$27,863,019 $42,013,669 $287,612,871
$1,694,183 $713,303 $4,837,892
13,465 110,555 4,812,417
18,859 3,786,335
694,222 15,258,160
1,707,648 1,536,939 28,694,804
12,886,652
12,886,652
118,429 29,784 5,074,488
570,275 39,429,275 145,893,851
16,972,492
25,466,667 1,017,671 33,405,781
44,684,803
26,155,371 40,476,730 246,031,415
$27,863,019 $42,013,669
377,132,708
55,719,879
(20,885,165)
129,327
(174,923,032)
(38,943,727)
(7,582,007)
(6,352,745)
$430,326,653
33

Housing Street Transit Area
General Authority Improvement Impact Fee

REVENUES
Property taxes $47,210,421
Sales taxes 38,475,708
Hotel /Motel taxes 11,189,211
Franchise fees 5,689,722
Other taxes 1,044,903
Licenses and fines 8,296,633
Use of money and property 718,143 $837,423 $231,422 $751,493 Intergovernmental 6,228,491 2,528,403
Charges for services 6,582,797
Developer contributions 3,407 728,766
Other 854,529
Total Revenues 126,290,558 837,423 2,763,232 1,480,259

EXPENDITURES
Current:

General Government 21,013,239 523,148 5,346
Building, Safety and Housing 6,841,709
Recreation and Community Services 6,633,802
Public Works 9,306,507 32,314
Engineering 3,448,648
Planning 2,117,991
Police 37,434,308
Fire 29,187,955
Capital outlay 6,144,359 1,278,711
Debt service:

Principal 747,935
Interest and fees 740,154
Total Expenditures 117,472,248 523,148 6,144,359 1,316,371

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 8,818,310 314,275 (3,381,127) 163,888

OTHER FINANCING SOURCES (USES)
Proceeds from sale of property 4,201 60,283
Transfers in (Note 4A) 7,168,628 2,801,961 16,168
Transfers (out) (Note 4A) (9,272,426) (2,711,393) (294,000) Total Other Financing Sources (Uses) (2,099,597) 60,283 90,568 (277,832) NET CHANGE IN FUND BALANCES 6,718,713 374,558 (3,290,559) (113,944) Fund balances at beginning of year 66,784,300 39,701,910 8,291,315 60,933,021 FUND BALANCES AT END OF YEAR $73,503,013 $40,076,468 $5,000,756 $60,819,077 See accompanying notes to financial statements

CITY OF MILPITAS

GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2023
34

General
Government Other Total
Capital Governmental Governmental
Projects Funds Funds
$47,210,421
38,475,708
11,189,211
5,689,722
$5,109,313 6,154,216
1,850,693 10,147,326
$300,337 592,788 3,431,606
1,892,114 5,413,240 16,062,248
2,076 322,884 6,907,757
1,666,883 2,399,056
80,576 935,105
2,194,527 15,036,377 148,602,376
848,239 22,389,972
792,844 7,634,553
6,068 6,639,870
2,714,026 12,052,847
90,538 3,539,186
366,475 2,484,466
222,548 37,656,856
38,887 29,226,842
9,402,737 4,369,956 21,195,763
747,935
740,154
9,402,737 9,449,581 144,308,444
(7,208,210) 5,586,796 4,293,932
64,484
8,225,207 5,319,489 23,531,453
(435,485) (7,417,215) (20,130,519)
7,789,722 (2,097,726) 3,465,418
581,512 3,489,070 7,759,350
25,573,859 36,987,660 238,272,065
$26,155,371 $40,476,730 $246,031,415
35

CITY OF MILPITAS
Reconciliation of the

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2023
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Position of Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis.

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $7,759,350 Amounts reported for governmental activities in the Statement of Activities are different because of the following:

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

The capital expenditures are therefore added back to fund balance (Internal service fund additions of $2,363,427 have already been added to capital assets) 15,913,151 Retirements of capital assets are deducted from fund balance (Internal service fund retirements of $12,656 have already been deducted from capital assets) (43,063)
Depreciation expense is deducted from the fund balance
(Depreciation expense is net of internal service fund depreciation of $1,190,932 which has already been allocated to serviced funds.)" (13,613,472)

LONG-TERM DEBT PROCEED AND PAYMENTS
Lease proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of lease principal is an expenditure in the governmental funds, but in the Statement of Net Position the repayment reduces long-term liabilities.

Capital contributions and repayment of debt principal are added back to fund balance 643,676

ACCRUAL OF NON-CURRENT ITEMS
The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and therefore are not reported as revenue or expenditures in governmental funds (net change):

Interest payable 1,567
Non-current portion of accrued vacation and sick leave 584,393 Non-current portion of uninsured claims payable (153,526) Subscription liability 129,327
Net pension liabilities and pension-related deferred outflows/inflows of resources (7,866,031) Net OPEB liabilities and OPEB-related deferred outflows/inflows of resources 1,383,874 Unavailable revenue

ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal Service Funds are used by management to charge the costs of certain activities, such as equipment acquisition, maintenance, and insurance to individual funds.

The portion of the net revenue (expense) of these Internal Service Funds arising out of their transactions with governmental funds is reported with governmental activities, because they service those activities.

Change in Net Position - All Internal Service Funds 2,696,892 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $7,436,138 See accompanying notes to financial statements
36

CITY OF MILPITAS

GENERAL FUND

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)
FOR THE YEAR ENDED JUNE 30, 2023
Variance with
Budgeted Amounts Budget
Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues
Property taxes $42,636,192 $44,041,044 $47,210,421 $3,169,377 Sales taxes 33,827,435 36,218,446 38,475,708 2,257,262
Hotel /Motel taxes 8,329,238 10,475,622 11,189,211 713,589 Franchise fees 5,448,428 5,538,665 5,689,722 151,057
Other taxes 1,067,452 1,067,452 1,044,903 (22,549)
Licenses and fines 11,484,759 9,984,759 8,296,633 (1,688,126) Use of money and property 264,000 264,000 718,143 454,143 Intergovernmental 1,081,728 6,395,310 6,228,491 (166,819) Charges for services 5,969,453 6,674,294 6,582,797 (91,497) Other 349,657 349,657 854,529 504,872
Total Revenues 110,458,342 121,009,249 126,290,558 5,281,309 Expenditures
Current:

General Government:

City Manager 4,240,601 4,773,354 4,371,224 402,130
City Attorney 1,198,946 950,947 741,681 209,266
Finance 4,384,363 4,502,204 4,424,026 78,178
Human Resources 1,937,584 1,949,809 1,829,885 119,924
Information Services 4,091,944 4,300,750 3,413,373 887,377 Non-departmental 6,374,021 9,480,814 8,230,361 1,250,453 Building, Safety and Housing 6,175,463 7,515,468 7,274,640 240,828 Recreation and Community Services 5,969,982 7,434,699 6,837,371 597,328 Public Works 9,692,164 10,170,094 9,565,671 604,423
Engineering 3,971,356 3,704,170 3,468,728 235,442
Planning 1,927,813 2,221,273 2,236,262 (14,989)
Police 37,935,204 37,884,455 37,620,197 264,258
Fire 28,188,869 29,728,055 29,472,685 255,370
Debt service:

Principal 470,000 747,935 747,935
Interest 726,800 726,800 740,154 (13,354)
Total Expenditures 117,285,110 126,090,827 120,974,193 5,116,634

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (6,826,768) (5,081,578) 5,316,365 10,397,943

OTHER FINANCING SOURCES (USES)
Proceeds from sale of property 4,201 4,201
Proceeds from issuance of long term debt
Transfers in 7,168,627 7,168,627 7,168,628 1
Transfers (out) (341,866) (3,741,866) (9,272,426) (5,530,560) Total Other Financing Sources (Uses) 6,826,761 3,426,761 (2,099,597) (5,526,358) NET CHANGE IN FUND BALANCE ($7) ($1,654,817) 3,216,768 $4,871,585 Adjustments to budgetary basis:

Encumbrance expenditures 3,501,945
Fund balance at beginning of year 66,784,300
FUND BALANCE AT END OF YEAR $73,503,013
See accompanying notes to financial statements
37

CITY OF MILPITAS

HOUSING AUTHORITY

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)
FOR THE YEAR ENDED JUNE 30, 2023
Variance with
Budgeted Amounts Budget
Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues
Use of money and property $271,000 $314,605 $837,423 $522,818 Total Revenues 271,000 314,605 837,423 522,818
Expenditures
Current:

General Government:

City Attorney 6,429 6,429 6,429
Non-departmental 946,544 7,711,267 523,148 7,188,119
Total Expenditures 952,973 7,717,696 523,148 7,194,548

OTHER FINANCING SOURCES (USES)
Proceeds from sale of property 314,973 314,973 60,283 (254,690) NET CHANGE IN FUND BALANCE ($367,000) ($7,088,118) 374,558 $7,462,676 Fund balances at beginning of year 39,701,910
FUND BALANCE AT END OF YEAR $40,076,468
See accompanying notes to financial statements
38

MAJOR PROPRIETARY FUNDS
Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges.

The concept of major funds extends to Proprietary Funds. The City has identified the funds below as major proprietary funds.

Financial reporting standards do not provide for the disclosure of budget vs. actual comparisons regarding proprietary funds that are major funds.

WATER UTILITY FUND
Accounts for the provision of water services to residents and businesses of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, capital improvements, maintenance, billing and collection.

SEWER UTILITY FUND
Accounts for the provision of sewer services to residents and businesses of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, capital improvements, maintenance, financing, billing and collection.

CITY OF MILPITAS

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
JUNE 30, 2023
Business-type Activities-Enterprise Funds Governmental
ActivitiesSewer Internal Service
Water Utility Utility Totals Funds
ASSETS
Current Assets
Cash and investments
available for operations (Note 3) $56,391,880 $54,170,621 $110,562,501 $46,938,840 Restricted cash and investments (Note 3) 904,267 56,904 961,171 Receivables:

Accounts 2,368,449 1,875,030 4,243,479
Due from other governments 63,604 44,523 108,127
Interest 243,119 233,089 476,208 60,425
Prepaids, materials, supplies and deposits (Note 1E) 212,017 23,043 235,060 591,117 Total current assets 60,183,336 56,403,210 116,586,546 47,590,382 Noncurrent assets:

Capital assets and capacity rights (Note 8):

Land and construction in progress 32,089,411 2,754,468 34,843,879 Depreciable capital assets, net 33,808,500 115,919,013 149,727,513 8,480,587 Total noncurrent assets 65,897,911 118,673,481 184,571,392 8,480,587 Total assets 126,081,247 175,076,691 301,157,938 56,070,969

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions (Note 13D) 765,883 519,482 1,285,365 Related to OPEB (Note 14E) 591,351 468,121 1,059,472
Total deferred outflows of resources 1,357,234 987,603 2,344,837

LIABILITIES
Current liabilities:

Accounts payable 2,921,226 2,002,320 4,923,546 120,472
Accrued payroll 152,760 88,621 241,381 49,800
Interest payable 120,958 470,425 591,383
Refundable deposits 131,367 131,367 12
Unearned revenue 3,461 3,461 6,922
Accrued vacation (Note 14F) 152,070 152,070 304,140 121,268 Sick leave payable (Note 14F) 90,494 90,494 13,820
Revenue Bonds (Note 9) 325,000 1,070,000 1,395,000
Total current liabilities 3,897,336 3,786,897 7,684,233 305,372 Non-current liabilities:

Accrued vacation (Note 14F) 107,992 25,210 133,202 40,772 Sick leave payable (Note 13F) 2,055 48,108 50,163 4,946 Net pension liabilities (Note 13C) 2,690,693 1,825,038 4,515,731 Net OPEB liability (Note 14C) 672,730 701,587 1,374,317 Total OPEB liability (Note 14D) 1,238,993 1,082,174 2,321,167 Revenue Bonds (Note 9) 18,478,848 34,681,158 53,160,006 Total non-current liabilities 23,191,311 38,363,275 61,554,586 45,718 Total liabilities 27,088,647 42,150,172 69,238,819 351,090

DEFERRED INFLOWS OF RESOURCES
Related to OPEB (Note 14E) 729,709 608,363 1,338,072
Total deferred inflows of resources 729,709 608,363 1,338,072 NET POSITION (Note 12)
Net investment in capital assets and capacity rights 47,998,330 82,979,227 130,977,557 8,480,587 Restricted for capital projects 43,362,392 45,728,593 89,090,985 Restricted for pension expenses 32,663,060
Unrestricted 8,259,403 4,597,939 12,857,342 14,576,232
Total net position $99,620,125 $133,305,759 $232,925,884 $55,719,879 See accompanying notes to financial statements
41

CITY OF MILPITAS

PROPRIETARY FUNDS

STATEMENT OF REVENUE, EXPENSES

AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2023
Business-type Activities-Enterprise Funds Governmental
ActivitiesSewer Internal Service
Water Utility Utility Totals Funds

OPERATING REVENUES
Charges for services $34,070,766 $24,699,029 $58,769,795 $3,552,091 Other operating revenue 171,209 254,038 425,247 1,210,374 Total Operating Revenues 34,241,975 24,953,067 59,195,042 4,762,465

OPERATING EXPENSES
Purchased water 18,924,303 18,924,303
Sewer treatment services 5,761,505 5,761,505
Personnel services 4,065,458 2,324,510 6,389,968 1,538,014 Services and supplies 2,671,201 5,408,739 8,079,940 1,363,462 Depreciation 1,565,385 5,088,194 6,653,579 1,213,482
Repairs and maintenance 51,428 1 51,429 618,463
Total Operating Expenses 27,277,775 18,582,949 45,860,724 4,733,421 Operating Income (Loss) 6,964,200 6,370,118 13,334,318 29,044

NONOPERATING REVENUES (EXPENSES)
Gain on sale of capital assets 12,326
Interest income(loss) 312,208 267,956 580,164 1,162,581 Interest expense (792,004) (1,642,725) (2,434,729)
Subventions and grants 59,084 59,084
Total Nonoperating Revenues (Expenses) (420,712) (1,374,769) (1,795,481) 1,174,907 Income (Loss) Before Contributions and Transfers 6,543,488 4,995,349 11,538,837 1,203,951 Capital contributions 1,315,113 217,597 1,532,710 277,568 Capital contributions - connection fees 437,947 538,035 975,982 Transfers in (Note 4A) 39,282 39,282 1,365,373
Transfers (out) (Note 4A) (2,949,393) (1,706,196) (4,655,589) (150,000) Change in net position 5,347,155 4,084,067 9,431,222 2,696,892 Net position-beginning 94,272,970 129,221,692 223,494,662 53,022,987 Net position-ending $99,620,125 $133,305,759 $232,925,884 $55,719,879 See accompanying notes to financial statements
42

CITY OF MILPITAS

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2023
Business-type Activities-Enterprise Funds Governmental
ActivitiesSewer Internal Service
Water Utility Utility Totals Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $34,444,025 $24,519,322 $58,963,347 $4,762,704 Payments to suppliers (21,497,093) (9,597,498) (31,094,591) (1,935,634) Payments to employees for salaries and benefits (4,156,925) (2,347,170) (6,504,095) (1,505,594) Net cash provided by operating activities 8,790,007 12,574,654 21,364,661 1,321,476

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Subventions and grants 59,084 59,084
Transfers in 39,282 39,282 1,365,373
Transfers (out) (2,949,393) (1,706,196) (4,655,589) (150,000) Cash Flows from Noncapital Financing Activities (2,890,309) (1,666,914) (4,557,223) 1,215,373

CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES
Principal paid on long-term debt (315,000) (1,020,000) (1,335,000) Interest paid (834,121) (1,665,313) (2,499,434)
Proceeds from sale of capital assets 12,326
Acquisition of capital assets (4,842,814) (6,309,230) (11,152,044) (75,135) Capital contributions - connection fees 437,947 538,035 975,982 Cash Flows from Capital and Related
Financing Activities (5,553,988) (8,456,508) (14,010,496) (62,809)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 173,275 134,754 308,029 1,128,051
Cash Flows from Investing Activities 173,275 134,754 308,029 1,128,051 Net increase (decrease) in cash and cash equivalents 518,985 2,585,986 3,104,971 3,602,091 Cash and investments at beginning of period 56,777,162 51,641,539 108,418,701 43,336,749 Cash and investments at end of period $57,296,147 $54,227,525 $111,523,672 $46,938,840 Reconciliation of operating income to net cash provided by operating activities:

Operating income (loss) $6,964,200 $6,370,118 $13,334,318 $29,044 Adjustments to reconcile operating income (loss) to net cash provided by operating activities:

Depreciation 1,565,385 5,088,194 6,653,579 1,213,482
Change in assets and liabilities:

Receivables, net 255,549 (433,745) (178,196) 239
Materials, supplies and deposits (47,775) (6,184) (53,959) 9,542 Accrued payroll 36,926 30,599 67,525
Accounts and other payables 45,634 1,582,678 1,628,312 69,169 Due to retirement system 22,675 (21,388) 1,287
Due to OPEB (52,587) (35,618) (88,205)
Net cash provided by operating activities $8,790,007 $12,574,654 $21,364,661 $1,321,476 NONCASH TRANSACTIONS:

Contributions and transfers of capital assets $1,315,113 $217,597 $1,532,710 $277,568 See accompanying notes to financial statements
43

FIDUCIARY FUNDS

FIDUCIARY FUNDS
These funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. The financial activities of these funds are excluded from the Government-wide financial statements, but are presented in separate Fiduciary Fund financial statements.

SUCCESSOR AGENCY TO THE MILPITAS REDEVELOPMENT AGENCY PRIVATE-PURPOSE

TRUST FUND
The Successor Agency to the Milpitas Redevelopment Agency Private-Purpose Trust Fund accounts for the accumulation of resources to be used to make payments that are on the Recognized Obligation Payment Schedule and to dispose of assets and property of the former Redevelopment Agency for the benefit of the taxing agencies.

CITY OF MILPITAS

FIDUCIARY FUNDS

STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2023
Successor Agency
to the Milpitas
Redevelopment Agency
Private-purpose
Trust Fund
ASSETS
Cash and investments (Note 3) $13,840,372
Restricted cash and investments (Note 3) 5,476
Total Assets 13,845,848

LIABILITIES
Accounts payable 14,128
Interest payable 2,551,333
Long-term obligations (Note 15C):

Due in one year 8,185,000
Due in more than one year 75,967,632
Total Liabilities 86,718,093

NET POSITION (DEFICIT)
Held in trust for other governments ($72,872,245)
See accompanying notes to financial statements
47

CITY OF MILPITAS

FIDUCIARY FUND

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED JUNE 30, 2023
Successor Agency
to the Milpitas
Redevelopment Agency
Private-purpose
Trust Fund
Additions:

Property taxes $17,654,569
Use of money and property 336,605
Total additions 17,991,174
Deductions:

General and administrative 21,555
Debt service:

Interest and fees 7,353,581
Total deductions 7,375,136
Net change in net position 10,616,038
Net position (deficit) - beginning (83,488,283)
Net position (deficit) - ending ($72,872,245)
See accompanying notes to financial statements
48

NOTES TO FINANCIAL STATEMENTS

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Milpitas was incorporated as a general law city on January 26, 1954. The City operates under the Council-Manager form of government and provides the following services: public safety; fire and building inspection; engineering; public works; water; sewer; sanitation; recreation services; building and safety; planning and zoning; general administration services and economic development.

The financial statements and accounting policies of the City conform with generally accepted accounting principles applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting principles. Significant accounting policies are summarized below:

A. Reporting Entity
The accompanying basic financial statements present the financial activity of the City, which is the primary government presented, along with the financial activities of its component units, which are entities for which the City is financially accountable. Although they are separate legal entities, blended component units are in substance part of the City’s operations and are reported as an integral part of the City’s financial statements.

Each discretely presented component unit, on the other hand, is reported in a separate column in the basic financial statements to emphasize it is legally separate from the government.

PRIMARY GOVERNMENT
The financial statements of the primary government of the City of Milpitas include the activities of the City as well as the Milpitas Public Financing Authority, the Milpitas Economic Development Corporation, the City of Milpitas Housing Authority and the Milpitas Municipal Financing Authority, all of which are controlled by and dependent on the City. While these are separate legal entities, their financial activities are integral to those of the City. Their financial activities have been aggregated and merged (termed “blended”) with those of the primary government of the City in the accompanying financial statements.

Blended Component Units
The Milpitas Public Financing Authority is a separate government entity whose purpose is to assist with the financing or refinancing of certain public capital improvements within the City. The Authority has the power to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. The Authority is controlled by the City and has the same governing body as the City, which also performs all accounting and administrative functions for the Authority.

The financial activities of the Authority are included in the Sewer Utility Enterprise Fund. 51

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Milpitas Economic Development Corporation, formed in February 2011, is a California nonprofit public benefit Corporation formed by the City and the former Milpitas Redevelopment Agency under the laws of the State of California. As discussed in Note 17, the Redevelopment Agency was dissolved effective January 31, 2012. The Corporation was organized for the purpose of encouraging and facilitating the City’s economic development, affordable housing and other community programs. The Corporation is governed by a board of directors consisting of the members of the City Council. Under an operating agreement with the Redevelopment Agency, the Corporation received funding from the Agency and will use the funds for redevelopment purposes consistent with the California Community Redevelopment Law, Health and Safety Code Section 33000 and to implement and carry out the Redevelopment Plans. The Corporation also entered into a Service Agreement with the City under which the City will perform the necessary services on an independent contractor basis to eliminate blight, provide affordable housing, improve the public realm, facilitate public and private developments, stimulate economic development, and create jobs. The Corporation is controlled by the City and has the same governing body as the City, which also performs all accounting and administrative functions for the Corporation. The Corporation became inactive as of June 30, 2015.

The City of Milpitas Housing Authority, formed in February 2011, is a separate government entity whose purpose is to assist with the housing for the City’s low and moderate income residents. The Housing Authority is controlled by the City and has the same governing body as the City, which also performs all accounting and administrative functions for the Housing Authority. The Financial activities of the Housing Authority are included in the Housing Authority Special Revenue Fund.

The Milpitas Municipal Financing Authority, formed in March 2016, is a separate government entity whose purpose is to assist with the financing and refinancing of public programs, projects and capital improvements for the benefit of the City and the Housing Authority. The Municipal Financing Authority has the power to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. The Municipal Financing Authority is controlled by the City and the Housing Authority and has the same governing body as the City, which also performs all accounting and administrative functions for the Municipal Financing Authority. The Financial activities of the Municipal Financing Authority are included in the General Government Capital Projects Fund.

Separate financial statements are not issued for the Milpitas Public Financing Authority, Milpitas Economic Development Corporation, City of Milpitas Housing Authority or Milpitas Municipal Financing Authority.

Discretely Presented Component Unit
Terrace Gardens, Inc. is a non-profit public benefit corporation organized in September 1986 for the purpose of developing and managing the operations of a residential complex known as Terrace Gardens, which is located in the City of Milpitas and is dedicated to the needs of elderly persons. The former Milpitas Redevelopment Agency funded the construction of Terrace Gardens. City Council can appoint a voting majority of the governing board and approves the annual budget. The City Council exercises control over the Board of Terrace Gardens. Therefore, the financial activities of Terrace Gardens, Inc. as of and for the year ended December 31, 2022 are discretely presented in the Terrace Gardens Inc. Component Unit column of the Statement of Net Position and the Statement of Activities.

Financial statements for Terrace Gardens, Inc. may be obtained from Terrace Gardens, Inc., 186 Beresford Court, Milpitas, CA 95035.

52

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basis of Presentation
The City’s Basic Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.

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

Government-wide Statements: The Statement of Net Position and the Statement of Activities display information about the primary government, the City and its blended and discretely presented component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities, except for interfund services provided and used, which are not eliminated in the process of consolidation. These statements distinguish between the governmental and business-type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities.

Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and (c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including franchise fees that are based on gross receipts and all taxes, are presented as general revenues.

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

Proprietary fund operating revenues and expenses, such as charges for services and the related costs, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues and expenses, such as subsidies, investment earnings and any related costs, result from nonexchange transactions or ancillary activities.
53

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Major Funds
Major funds are defined as funds that have either assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds.

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

General Fund - The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The major revenue sources for this Fund are sales taxes, property taxes, hotel taxes, unrestricted revenues from the State, fines and forfeitures and interest income. Expenditures are incurred for public safety, public works, recreation services and the other governmental services described above.

Housing Authority Fund – Established to plan and address the housing needs of the City and to act as the Housing Successor of the former Redevelopment Agency. The main source of the revenue for this fund is the repayment of loans restricted for housing activities.

Street Improvement Fund – Established to account for the construction and maintenance of the street system in Milpitas. Financing is provided through State and Federal grants.

Transit Area Impact Fee Fund – Established to account for the capital projects in the transit area. A special transit area impact fee is imposed on developments to provide financing.

General Government Capital Projects Fund – Established to account for the construction and maintenance of general government projects. Financing is provided by the General Fund.

The City reported all its enterprise funds as major funds in the accompanying financial statements:

Water Utility Fund – Accounts for the provision of water services to residents and businesses of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, capital improvements, maintenance, billing and collection.

Sewer Utility Fund – Accounts for the provision of sewer services to residents and businesses of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, capital improvements, maintenance, financing, and billing and collection. 54

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The City also reports the following fund types:

Internal Service Funds – 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 the online permit development system on a cost reimbursement basis. The Pension Section 115 Internal Service Fund is used to accumulate funds to pay down the City’s CalPERS Unfunded Accrued Liability.

Fiduciary Funds – Trust funds account for assets held by the City as an agent for various functions. The Successor Agency to the Milpitas Redevelopment Agency Private-Purpose Trust Fund accounts for the accumulation of resources to be used for payments at appropriate amounts and times in the future. This fund accounts for winding down the affairs of the former Milpitas Redevelopment Agency and makes payments on the Enforceable Obligation Schedule and disposes of assets and property of the former Redevelopment Agency for the benefit of taxing agencies. The financial activities of this fund is excluded from the City-wide financial statements, but is presented in separate Fiduciary Fund financial statements.

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

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

The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, including lease liabilities, claims and judgments, and accumulated unpaid vacation, sick pay and other employee benefit amounts, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions, including entering into contracts giving the City the right to use leased assets, are reported as expenditures in governmental funds. Proceeds of general long-term debt, financing through leases and acquisitions under leases are reported as other financing sources.

Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Other revenues susceptible to accrual are sales taxes, significant building permit fees, and interest revenue.

Forfeitures, licenses, other permits and miscellaneous revenue are not susceptible to accrual because they are not measurable until received in cash. Grant funding received in advance of the related expenditure is accounted for as unearned revenue.

Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by unrestricted resources if necessary. 55

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) E. Prepaids, Materials, Supplies and Deposits
Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed, rather than when purchased.

Materials and supplies are valued at cost on a first-in first-out basis. Supplies in the enterprise and internal funds consist principally of materials and supplies for utility and internal operations. Materials and supplies of the governmental funds consist of expendable supplies and materials held for consumption. The cost is recorded as an expense or expenditure in the funds at the time individual inventory items are consumed.

Prepaids, materials, supplies and deposits in governmental funds are equally offset by nonspendable fund balance which indicates that they do not constitute available spendable resources even though they are a component of net current assets.

F. Deferred Inflows and Deferred Outflows of Resources
In addition to assets, the statement of net position or balance sheet reports a separate section for deferred outflows of resources. This separate net statement element, deferred outflows of resources, represents a consumption of net assets or fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has pension-related deferred outflows of resources arising from certain changes in the collective net pension liability.

In addition to liabilities, the statement of net position or balance sheet reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has deferred inflows of resources arising from certain changes in the collective net pension liability. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. In the government‐wide financial statements the City reports deferred amounts related to leases and deferred amounts related to pension and OPEB.

G. Property Tax
Santa Clara County assesses properties and bills, collects, and distributes property taxes to the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties.

Secured and unsecured property taxes are levied on January 1.

Secured property tax is due in two installments, on November 1 and March 1, and becomes a lien on those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property tax is due on July 1, and becomes delinquent on August 31. Collection of delinquent accounts is the responsibility of the County, which retains all penalties.

The term “unsecured” refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the property being taxed. Property tax revenues are recognized by the City in the fiscal year they are assessed, provided they become available as defined above. 56

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) H. Revenue Recognition for Water Utility and Sewer Utility Revenues are recognized based on cycle billings rendered to customers. Revenues for services provided but not billed at the end of a fiscal period are not material and are not accrued.

I. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs – other than quoted prices included within level 1 – that are observable for an asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for an asset or liability.

If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement.

J. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

K. Subscription-Based Information Technology Arrangements (SBITAs) Accounting A Subscription-Based Information Technology Arrangement (SBITA) is a contract that conveys control of the right to use another party’s (a SBITA vendor’s) 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 exchangelike transaction.

At the commencement of a SBITA, the City initially measures the subscription liability at the present value of payments expected to be made during the contract term. Subsequently, the subscription liability is reduced by the principal portion of payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for payments made at or before the SBITA commencement date, plus certain initial direct costs. Subsequently, the subscription asset is amortized on a straight‐line basis over shorter of the subscription term or the useful life of the underlying IT assets. The City recognizes SBITA liabilities with an initial, individual value of $500,000 or more for all funds, except for Capital Project Funds which the threshold is set lower at $300,000, based on the future SBITA payments remaining at the start of the contract.
57

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Key estimates and judgments related to SBITAs include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments as follows:
• The City uses the interest rate charged by the IT vendor as the discount rate. When the interest rate charged by the IT vendor is not provided, the City uses its estimated incremental borrowing rate as the discount rate for subscription liabilities.
• The subscription term includes the noncancellable period of the subscription. • Subscription payments included in the measurement of the subscription liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

The City monitors changes in circumstances that would require a remeasurement of its subscription and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability.

Subscription assets are reported with other capital assets and subscription liabilities are reported with liabilities on the statement of net position.

NOTE 2 – BUDGETS AND BUDGETARY ACCOUNTING
A. Budgets and Budgetary Accounting
The City adopts an annual operating budget on or before June 30 of the previous fiscal year, except for the Park Improvement and Storm Drain Capital Projects Funds which are budgeted on a project basis. The operating budget takes the form of a one year financial plan which is adopted in its entirety by the City Council by resolution. Because Milpitas is a general law city, it is not subject to a budgetary process prescribed by statute or charter.

The operating budget is subject to supplemental appropriations throughout its term in order to provide flexibility to meet changing needs and conditions. The City Manager’s budget control remains at the level of department and/or project within any one fund. The City Manager may approve supplemental appropriations in the General Fund providing the total increase does not exceed 1% of the original total General Fund expenditure budget subject to the following. All additional appropriations that require the use of reserves must be approved by City Council. Expenditures cannot exceed the appropriated budget at the department level within each fund without City Council approval.

The City Manager is authorized to amend appropriations within the various departments and projects within a fund, provided that the amount of the amended appropriation is $100,000 or less. Interfund transfers or transfers of an appropriation amount within a fund in which any single instance exceeds $100,000 require prior approval of the City Council.

Budgeted amounts are as originally adopted, or as amended by the City Council. Individual amendments were not material in relation to the original appropriations which were amended.

58

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 2 – BUDGETS AND BUDGETARY ACCOUNTING (Continued)
B. Adjustments to GAAP Basis from Budgetary Basis
The City Manager’s budget control remains at the level of department and/or project within any one fund.

The City Manager has discretion over the unanticipated reserve (~1% of the General Fund operating budget), adopted by Council during the budget process. All additional appropriations that require the use of reserves must be approved by City Council. Expenditures cannot exceed the appropriated budget at the department level within each fund without City Council approval.

The City Manager is authorized to amend appropriations within the various departments and projects within a fund, provided that the amount of the amended appropriation is $100,000 or less and does not impact the overall appropriations of a fund. Interfund transfers or transfers of an appropriation amount within a fund in which any single instance exceeds $100,000 require prior approval of the City Council.

NOTE 3 – CASH AND INVESTMENTS
The City pools cash from all sources and all funds except Cash and Investments held by Trustees, so that it can be invested at the maximum yield consistent with safety and liquidity, while individual funds can make expenditures at any time.

A. Policies
The City invests in individual investments, money market mutual funds, and in investment pools. Individual investments are evidenced by specific identifiable securities instruments, or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system. In order to increase security, the City employs the Trust and Custody Department of a bank as the custodian of certain City managed investments, regardless of their form.

California Law requires banks and savings and loan institutions to pledge government securities with a fair value of 110% of the City’s cash on deposit, or first trust deed mortgage notes with a fair value of 150% of the deposit, as collateral for these deposits. Under California Law this collateral is held in a separate investment pool by another institution in the City’s name and places the City ahead of general creditors of the institution.

The City’s investments are carried at fair value, as required by generally accepted accounting principles.

The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year.

59

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 3 – CASH AND INVESTMENTS (Continued)
B. Classification
Cash and investments are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of City debt instruments or other agreements.

Cash and investments available for operations $370,411,852 Restricted Cash and Investments 1,553,680
Total Primary Government cash and investments 371,965,532 Cash and investments available for operations 39,338
Restricted Cash 3,582,989
Total Component Unit cash and investments 3,622,327
Cash and investments in Fiduciary Funds (separate statement) 13,840,372 Restricted Cash and Investments in Fiduciary Funds (separate account) 5,476 Total Fiduciary cash and investments 13,845,848
Total cash and investments $389,433,707
Cash and Investments Available for Operations is used in preparing proprietary fund statements of cash flows because these assets are highly liquid and are expended to liquidate liabilities arising during the year. 60

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 3 – CASH AND INVESTMENTS (Continued)
C. Investments Authorized by the California Government Code and the City’s Investment Policy The City’s Investment Policy, updated or adopted on an annual basis, and the California Government Code allow the City to invest in the following, provided the credit ratings of the issuers are acceptable to the City; and approved percentages and maturities are not exceeded. The table below also identifies certain provisions of the California Government Code or the City’s Investment Policy where it is more restrictive:

Authorized Investment Type

Maximum
Maturity
Minimum
Credit
Quality*
Maximum
Percentage
of Portfolio
Maximum
Investment
In One Issuer
U. S. Treasury Bonds, Notes and Bills 5 Years 100% No Limit Federal Agency Obligations 5 Years 100% 30%
Bankers Acceptances 180 Days 40% 5%
Commercial Paper – Pooled Funds
Commercial Paper – Non-Pooled Funds
270 Days
270 Days
A
A
40%
25%
(A)
(A)
Negotiable Certificates of Deposit 5 Years 30% 5%
Repurchase Agreements 1 Year 100% No Limit
Time Certificates of Deposit – Banks
or Savings and Loans (Non- negotiable) 5 Years 100% No Limit Medium-Term Corporate Notes 5 Years A 30% 5%
State of California Local Agency
Investment Fund (LAIF Pool)
Upon
Demand
100% No Limit
Money Market Funds of
Government Securities
Upon
Demand
Top
Rating
Category

20%

10%
Municipal Securities and Municipal
Treasury Notes or Bonds
Mortgage Pass-Through and Asset
Backed Securities
Collateralized Bank Deposits
5 Years
5 Years
Upon
Demand
A
AA
30%
20%
100%
5%
5%
No Limit
(A) Eligible Commercial Paper may not represent more than 5% of outstanding paper of an issuing corporation.
*At time of purchase
61

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 3 – CASH AND INVESTMENTS (Continued)
D. Investments Authorized by Debt Agreements and Trust Agreements The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged reserves to be used if the City fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with City resolutions, bond indentures or State statutes. The table below identifies the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements:

Authorized Investment Type
Maximum
Maturity
Minimum
Credit
Quality*
Maximum
Percentage
of Portfolio
Maximum
Investment
In One Issuer
U. S. Treasury Bonds, Notes and Bills 5 Years 100% No Limit Federal Agency Obligations 5 Years 100% 30%
Time Certificates of Deposit – Banks
or Savings and Loans
5 Years 100% No Limit
Bankers Acceptances 180 Days A 20% 5%
Commercial Paper – Pooled Funds
Commercial Paper – Non-Pooled
Funds
270 Days
270 Days
A
A
40%
25%
(A)
(A)
Negotiable Certificates of Deposit 5 Years 30% No Limit Repurchase Agreements 1 Year 100% No Limit
Medium-Term Corporate Notes 5 Years AA 30% 5%
State of California Local Agency
Investment Fund (LAIF Pool)
Upon
Demand
No Limit No Limit
Money Market and Mutual Funds Upon
Demand
Aaa/AAm 20% 10%
California Asset Management
Program (CAMP)
Upon
Demand
No Limit No Limit
(A) The combined total of commercial paper may not represent more than 10% of the outstanding paper and notes of an issuing corporation.
*At time of purchase
During the fiscal year ended June 30, 2022, the City also implemented investment guidelines for its Section 115 Pension Trust, which authorize investments in a diversified portfolio, including equities and mutual funds, in order to achieve a 3% to 6% investment earnings goal during the next 5 to 10 years.

E. Investments Authorized for Terrace Gardens Inc.

Terrace Gardens, Inc. investments conform with the California Government Code. 62

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 3 – CASH AND INVESTMENTS (Continued)
F. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City generally manages its interest rate risk by holding investments to maturity.

Information about the sensitivity of the fair values of the City’s investments (including investments held by trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity or earliest call date:
12 Months 13 to 36 36 to 60 Percentage
or less Months Months Total of Portfolio
City and Successor Agency:

Federal Agency Obligations $6,991,010 $30,760,270 $3,028,905 $40,780,185 10.47% Medium-Term Corporate Notes 35,938,071 24,673,041 60,611,112 15.56% U.S. Treasury Notes 47,501,367 49,908,680 97,410,047 25.02% California Local Agency Investment Fund 92,027,283 92,027,283 23.63% Mutual Funds (U.S. Securities) 15,669,041 15,669,041 4.02% Asset Backed Securities 375,485 14,358,851 12,351,906 27,086,242 6.96% Municipal Securities and Municipal Treasury Notes or Bonds 2,144,889 2,144,889 0.55% Terrace Gardens, Inc.:

Nonnegotiable Certificates of Deposit 2,241,342 2,241,342 0.58% Total Investments $117,304,161 $128,558,559 $92,107,421 337,970,141 Demand Deposits - City of Milpitas 50,082,581 12.86%
Demand Deposits - Terrace Gardens 1,380,985 0.35%
Total Cash and Investments $389,433,707 100.00%
Investment Type
The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City reports its investment in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Each regular LAIF account is permitted to have up to 15 transactions per month, with a minimum transaction amount of $5,000, no maximum transaction amount, and at least 24 hours advance notice for withdrawals of $10 million or more. Bond proceeds accounts are subject to a one‐time deposit with no cap and are set up with a monthly draw down schedule. Included in LAIF’s investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations. At June 30, 2023 these investments matured in an average of 260 days.

Mutual funds are available for withdrawal on demand and at June 30, 2023 matured in an average of 25 days. 63

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 3 – CASH AND INVESTMENTS (Continued)
G. Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of June 30, 2023 for each of the Primary Government’s investment types as provided by Standard and Poor’s investment rating system:

AAA AA+/AA/AA- A+/A/A- BBB+/BBB Total
Federal Agency Obligations $40,780,185 $40,780,185
Medium-Term Corporate Notes $12,476,648 $47,176,936 $957,528 60,611,112 Asset Backed Securities 18,600,844 18,600,844
Mutual Funds (U.S. Securities) 15,669,041 15,669,041
Municipal Securities and Municipal Treasury Notes or Bonds 2,144,889 2,144,889 Totals $77,194,959 $12,476,648 $47,176,936 $957,528 $137,806,071 Not rated:
$92,027,283 $92,027,283
Asset Backed Securities 8,485,398 8,485,398
Terrace Gardens, Inc.:

Nonnegotiable Certificates of Deposit 2,241,342
Exempt from credit rate disclosure:

U.S. Treasury Notes 97,410,047 97,410,047
Total Investments $197,922,728 $337,970,141
California Local Agency Investment Fund
Investment Type
Terrace Gardens, Inc. invests only in Nonnegotiable Certificates of Deposit. At December 31, 2022, all of Terrace Gardens’ Nonnegotiable Certificates of Deposit totaling $2,241,342 were fully insured by Federal Deposit Insurance.
64

CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 3 – CASH AND INVESTMENTS (Continued)
H. Fair Value Hierarchy
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

The following is a summary of the fair value hierarchy of the City’s investments as of June 30, 2023:

Level 2 Total
Investments by Fair Value Level:

Federal Agency Obligations $40,780,185 $40,780,185
Medium-Term Corporate Notes 60,611,112 60,611,112
U.S. Treasury Notes 97,410,047 97,410,047
Asset Backed Securites 27,086,242 27,086,242
Municipal Securities and Municipal Treasury Notes or Bonds 2,144,889 2,144,889 Subtotal $225,887,586 228,032,475
Investments Measured at Amortized Cost:

Mutual Funds (U.S. Securities) 15,669,041
Investments Measured at Cost:

Terrace Gardens, Inc.

Nonnegotiable Certificates of Deposit 2,241,342
Investments Exempt from Fair Value Hierarchy:

California Local Agency Investment Fund 92,027,283
Total Investments $337,970,141
Federal Agency Obligations totaling $42.9 million, Medium Term Corporate Notes of $60.6 million, U.S.

Treasury Notes totaling $97.4 million, and Asset Backed Securities of $27.1 million, classified in Level 2 of the fair value hierarchy, are valued using pricing techniques of matrix pricing or market corroborated pricing, with inputs such as yield curves or indices. These prices are obtained from various pricing sources by our custodian bank.
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CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 3 – CASH AND INVESTMENTS (Continued)
I. Significant Investments
Investments in the securities of any individual issuers, other than U. S. Treasury securities, mutual funds and the California Local Agency Investment Fund, that represent 5% or more of total entity-wide investments are as follows at June 30, 2023:

Issuer Investment Type Amount
Federal National Mortgage Association Federal Agency Obligations $18,106,942 Federal Home Loan Mortgage Corporation Federal Agency Obligations 11,527,012 Federal Home Loan Bank Federal Agency Obligations 9,166,654 NOTE 4 – INTERFUND TRANSACTIONS
A. Transfers Between Funds
With Council approval, resources may be transferred from one City fund to another. The purpose of the majority of transfers is to is to move resources from one fund to another. Less often, a transfer may be made to open or close a fund.

Transfers between funds during the fiscal year ended June 30, 2023 were as follows:

Fund Receiving Transfers Fund Making Transfers
Amount
Transferred
Governmental Funds:

General Fund Community Facility District Special Revenue Fund $2,879,042 (A) General Fund Solid Waste Reduction and Services Special Revenue Fund 157,997 (A) General Fund Water Utility Enterprise Fund 2,687,393 (A) General Fund Sewer Utility Enterprise Fund 1,444,196 (A) Street Improvement Capital Projects Fund Gas Tax Special Revenue Fund 2,091,713 (B) Street Improvement Capital Projects Fund General Fund 710,248 Transit Area Impact Fee Capital Projects Fund Park Improvement Capital Projects Fund 16,168 (C) General Government Capital Projects Fund General Fund 5,022,408 (B) General Government Capital Projects Fund Transit Area Impact Fee Fund 294,000 (B) General Government Capital Projects Fund Water Utility Enterprise Fund 262,000 (B) General Government Capital Projects Fund Sewer Utility Enterprise Fund 262,000 (B), (C) General Government Capital Projects Fund Gas Tax Special Revenue Fund 595,000 (B) General Government Capital Projects Fund Lighting & Landscape Maintenance District Special Revenue Fund 11,000 (B) General Government Capital Projects Fund Community Facilities District Special Revenue Fund 50,000 (B) General Government Capital Projects Fund Community Planning Special Revenue Fund (B) 200,000 General Government Capital Projects Fund Public Art Capital Projects Fund 142,500 (B) General Government Capital Projects Fund Park Improvement Capital Projects Fund 1,230,669 (B), (C) General Government Capital Projects Fund Storm Drain Development Capital Projects Fund 3,844 (C) General Government Capital Projects Fund Equipment Management Internal Service Fund 150,000 (B) General Government Capital Projects Fund General Fund 1,786 (B) Gas Tax Special Revenue Fund Street Improvement Capital Projects Fund 2,711,393 (C) Lighting & Landscape Maintenance District Special Revenue Fund General Fund 41,866 (A) Community Planning Special Revenue Fund General Government Capital Projects Fund 235,485 (C) Affordable Housing Special Revenue Fund General Fund 710,248 (C) Storm Drain Development Capital Projects Fund General Fund 1,420,497 (B) General Government Capital Projects Fund 200,000 (B)
Governmental Funds Subtotal 23,531,453
Proprietary Funds:

Sewer Utility Enterprise Fund Park Improvement Capital Projects Fund 39,282 (C) Proprietary Funds Subtotal 39,282
Internal Service Funds:

Equipment Management Internal Service Fund General Fund 1,365,373 (A) Internal Service Funds Subtotal 1,365,373
Total Interfund Transfers $24,936,108
(A) To Transfer for Operating Cost
(B) To Fund Capital Project
(C) To Return Unexpended Project Funds
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CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 5 – LOANS RECEIVABLE
The City and former Redevelopment Agency entered into the loan programs below to improve the quality of housing and to increase the availability of affordable housing, and for other purposes. With the dissolution of the Redevelopment Agency as discussed in Note 16, the City agreed to become the successor to the Redevelopment Agency’s housing activities and as a result the City of Milpitas Housing Authority assumed the loans receivable of the Redevelopment Agency’s Housing Reserve Special Revenue Fund as of February 1, 2012.

These loans were comprised of the following at June 30, 2023:

Housing and Community Development Loans:

Rehabilitation Loans $3,234,883
Housing Authority Loans:

Milpitas Housing Associates 3,143,641
Parc Metropolitan Housing Development 49,990
Parc North Associates LLC 512,268
Mid-Peninsula Milpitas Affordable Housing Associates 17,964,622 KB Home South Bay Inc. 1,222,900
Western Pacific Housing Inc. 1,781,440
Shapell Industries 750,000
MIL Aspen Associates, Ltd. 3,323,888
Sango Court, L.P. 6,774,603
Total Housing Authority Loans Receivable 35,523,352
Total Loans Receivable $38,758,235
A. Rehabilitation Loans
The City administers a housing rehabilitation program using Housing and Community Development Act funds. Under the Program, individuals with incomes below a certain level are eligible to receive low or no interest loans, secured by deeds of trust, for construction work on their homes. At June 30, 2023, the City had outstanding rehabilitation loans of $3,234,883 in its Housing and Community Development Special Revenue Fund. During the year ended June 30, 2023, the City did not receive a principal payment from all participants and accrued interest of $8,973.
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CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 5 – LOANS RECEIVABLE (Continued)
B. Milpitas Housing Associates Loan
In fiscal 1997, the former Redevelopment Agency loaned the Milpitas Housing Associates, a partnership of Bridge Housing and a developer, $3,000,000 to assist in the financing of the construction of a 306 unit apartment complex. Fifty percent of the units were made available to very low and low income tenants. The Loan bore interest at the rate of 5.45% per year, compounded annually and is repayable in 2040, subject to certain conditions. The loan is secured by a subordinated deed of trust in the third position on the property.

In January 2020, the City Council and the Housing Authority Commission approved a restructuring of the loan, which, 1) lowered the interest rate from 5.45% to a simple interest of 3.05% effective July 1, 2017, 2) forgave accrued interest of $1,541,074 through fiscal year 2017, and 3) approved the foregoing of residual receipts totaling $200,000 annually. As a result, fiscal year 2018 interest was recalculated to be $91,500 and accrued and the prior fiscal year 2018 accrued interest of $247,489 was written off. During fiscal year 2023, interest of $143,641 was accrued, and as of June 30, 2023, principal and accrued interest outstanding totaled $3,143,641.

C. Parc Metropolitan Housing Development Loans
The Housing Authority provides loans to eligible low-income families for the purchase of townhome units at the Parc Metropolitan Housing Development. During the year ended June 30, 2023, the Housing Authority received principal payments of $2,919 and as of June 30, 2023, there were $49,990 in loans outstanding.

D. Parc North Associates LLC Loan
In September 2003, the former Redevelopment Agency entered into an Owner Participation Agreement with Parc North Associates LLC for the development of 285 town homes and condominiums. Eighteen of the units were made available to very low income households, six of the units were made available to low income households, and thirty-four units were made available to moderate income households. In exchange, the Agency provided a grant of $1,823,480 to the Developer for permits, fees, and infrastructure, along with silent-second loans to eligible low-income families for the purchase of these town homes and condominium.

Interest of 5% begins on the 61st month after the recordation of the deeds of trust and continues until the loans are paid in full. During fiscal year 2023, principal of $21,603 was paid and as of June 30, 2023, there were $512,268 of such loans outstanding.

E. Mid-Peninsula Milpitas Affordable Housing Associates In December 2005, the former Redevelopment Agency entered into a Disposition and Development Agreement with Mid-Peninsula Milpitas Affordable Housing Associates for the development of a 103-unit senior housing project with long-term affordability to extremely low and very low income seniors. Under the terms of the Agreement, the Agency provided a grant of $1 million to the Developer and will provide a development loan up to $14.6 million to the Developer. No interest is accrued on the first $5 million of loan proceeds. The remaining $9.6 million bears simple interest of 3.00% annually. Repayment of interest and principal is payable from surplus operating cash subject to certain conditions as defined in the Agreement, and unpaid principal and accrued interest is due in December 2062. The loan is secured by a second deed of trust on the property. Construction began in fiscal year 2006 and was completed in December 2008.

During fiscal year 2023, $288,000 was paid and accrued, respectively, and as of June 30, 2023, principal and accrued interest outstanding totaled $17,964,622.
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CITY OF MILPITAS
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
NOTE 5 – LOANS RECEIVABLE (Continued)
F. KB Home South Bay Inc. Loans
In January 2005, the former Redevelopment Agency entered into a Disposition and Development Agreement with KB Home South Bay Inc. for the development of a public park and approximately 700 housing units on the two parcels (Parcels C and D). In addition, the former Redevelopment Agency would provide a total of $4,250,000 of silent-second mortgages to eighty-five moderate income households on Parcel C, approximately $5,000,000 of subsidies to twenty-five moderate income households on Parcel D. The silent-second mortgages are not due for 45 years or upon the sale, renting or leasing of the property. Interest begins on the 37th month after the recordation of the Deed of Trust and continues until the loans are paid in full.

Due to changes in the housing market and stricter lending requirements which had created unforeseen challenges in finding qualified buyers for the affordable units, the former Redevelopment Agency amended the Agreement in February 2009 to establish an in-lieu housing payment of $1,702,000 to remove the affordable restrictions on 46 of the 67 remaining unsold affordable units ($37,000 for each unit). This amount was paid in equal parts to the Agency and to the County. In addition, the commitment for silentsecond mortgages was reduced $2,300,000 to $1,950,000, and the total number of affordable units was reduced from 110 to 64.

As of June 30, 2023, there were $954,900 of loans to Parcel C households outstanding. As of June 30, 2023 subsidies totaling $1,222,900 had been provided.

G. Western Pacific Housing Inc., Loans
In August 2005, the former Redevelopment Agency entered into an Owner Participation Agreement with Fairfield Development, LLC for the development of a 464- unit residential apartment project called Centria, of which 93 units will be deed-restricted for very low- to moderate- income households. In November 2005, the project was purchased by Western Pacific Housing Inc. and obligations of the Owner Participation Agreement were assigned to Western Pacific Housing Inc. The former Redevelopment Agency will provide a grant of $379,480 for permits, fees, and infrastructure. The former Redevelopment Agency also will provide a total of $770,000 for silent-second down payment assistance loans for the 22 very-low income units. The loans are not due for 25 years or upon the sale, renting or leasing of the property. Interest will begin on the 61st month after the recordation of the Deed of Trust and continues until the loans are paid in full. Principal of $1,341 was repaid in fiscal year 2023 and as of June 30, 2023 there were $584,440 such loans outstanding.

In August 2008 the Owner Participation Agreement was amended to reduce the number of units to be constructed by Western Pacific Housing Inc. to 137 and provide for the conversion of 7 of the moderate income units to low income units. In addition, in August 2008 the 327 unconstructed units of the project were sold to Lyon Milpitas LLC and the Agency entered into a new Owner Participation Agreement with Lyon Milpitas LLC to complete the construction of the affordable housing units.

In September 2006, the former Redevelopment Agency entered into an Owner Participation Agreement with Western Pacific Housing, Inc. for the development of a 147-unit townhome project called Paragon that includes nine units deed-restricted to very low income residents and twenty units deed-restricted to moderate income residents. The Agency will provide silent-second loans of $133,333 to each of the very low income households. Interest will begin on the date of the promissory note but will be forgiven on the fourth anniversary of the date the Deed of Trust recorded at a rate of 20% per year, and principal is due 45 years from the date the Deed of Trust was recorded. As of June 30, 2023, there were $1,197,000 of silent second loans outstanding.
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