Monte Sereno City Council
June 20, 2023

90 California Department of Housing and Community Development Affirmatively Furthering Fair Housing
The Geography of Inequality: How Land Use Regulation Produces Segregation (PDF) J. Trounstine. American Political Science Review 114(2): 443-455. 2020.

From the abstract: “I provide evidence that more stringent land use regulations are supported by whiter communities and that they preserve racial homogeneity.” Home Equity: A Vision of Housing Security, Health and Opportunity (PDF) Colorado Health Institute. 2019. 56 pp.

This paper explores the interdependence of health outcomes; healthful, quality housing; and access to better schools, jobs, and other opportunities. It offers multiple strategies for change.

HUD’s Affirmatively Furthering Fair Housing Rule: A Contribution and Challenge to Equity Planning for Mixed Income Communities (PDF)
K.M. O’Regan & K. Zimmerman. Case Western Reserve University. 2020. 23 pp.

From the abstract: “This essay explains the framework and theory behind the rule, and how a rule aimed at overcoming racial segregation can support the creation and preservation of mixed-income communities. …We conclude with a discussion of implications for action (or at least attention) with respect to the rule, particularly with respect to mixed-income strategies.” Making Every Neighborhood a Place of Opportunity: 2018 Fair Housing Trends Report (PDF) Shanti Abdein et al. National Fair Housing Alliance. 2018. 100 pp.

From the abstract: “If everyone had access to affordable housing, fair credit, a good school, healthy food, a decent job, green space, and quality health care, how would our nation and our economy look then? How do we ensure that future generations of all backgrounds live in neighborhoods rich with opportunity? Fair housing.”
Neighborhoods for All: Expanding Housing Opportunity in Seattle’s Single-Family Zones (PDF)
City of Seattle, Planning Commission. 2018. 52 pp.

This white paper presents Seattle’s strategies for increasing access to affordable housing, transportation, and jobs for those living outside of the urban core.

A Place-Conscious Approach Can Strengthen Integrated Strategies in Poor Neighborhoods M.A. Turner. Brookings. 2015. 7 pp.

This short article is the forerunner of Turner’s Housing Policy Debate piece, above.

Place and Opportunity: Using Federal Fair Housing Data to Examine Opportunity across US Regions and Populations (PDF)
R. Gourevitch, S. Greene, and R. Pendall. Urban Institute. 2018. 24 pp.

This research brief highlights new connections between place and access to opportunity across regions and populations. The authors analyze data on neighborhood-level exposure to opportunity that the U.S. Department of Housing and Urban Development originally released in 2015 to help local communities reduce segregation and comply with the Fair Housing Act.

Pricing Roads, Advancing Equity (PDF)
TransForm. 2019. 64 pp.

Fair housing and access to opportunity are advanced when efficient, affordable transportation is available.

California Department of Housing and Community Development 91 Affirmatively Furthering Fair Housing
Promoting Opportunity through Equitable Transit-Oriented Development (eTOD): Navigating Federal Transportation Policy (PDF)
A. Abu-Khalaf. Enterprise Community Partners. 2018. 28 pp.

This report provides stakeholders involved in achieving eTOD guidance on understanding and benefitting from federal transportation policies and programs.

Promoting Opportunity through Equitable Transit-Oriented Development (eTOD): Barriers to Success and Best Practices for Implementation
(Links to page where full-text article is available via the Open Resource button.) M. Spotts. Enterprise Community Partners. 2015. 74 pp.

This report demonstrates that numerous barriers inhibit low- and moderate-income families’ ability to find housing in communities with access to robust, multi-modal transportation options. The report also makes recommendations for overcoming those barriers and highlights numerous best practices from regions across the U.S.

Promoting Opportunity through Equitable Transit-Oriented Development (eTOD): Making the Case
(Links to page where full-text article is available via the Open Resource button.) J. Hersey & M. Spotts. Enterprise Community Partners. 2015. 21 pp.

Equitable transit-oriented development (eTOD) is one tool to ensure that high-opportunity neighborhoods are inclusive despite the property value increases that often result from such investments.

Racial Disparities in Home Appreciation: Implications of the Racially Segmented Housing Market for African Americans’ Equity Building and the Enforcement of Fair Housing Policies M. Zonta. Center for American Progress. 2019. 39 pp.
“Segregation and racial disparities in home appreciation put African Americans at a disadvantage in their ability to build equity and accumulate wealth.”
Removing Barriers to Accessing High-Productivity Places (PDF) D. Shoag. The Hamilton Project: Policy Proposal 2019-02. 2019. 30 pp.

Workers without a college education are moving away from the places that offer them the highest wages and their children the best later-life outcomes. The author offers strategies that policymakers at various levels of government can use to combat this relatively new problem, including case studies of cities that have successfully expanded access at the local level.

Segregation and Neighborhood Health
J. Richardson et al. NCRC. 2020. 50 pp.
“This report examined [historically] redlined areas and how they are associated with adverse public health outcomes for a range of diseases and conditions that make people particularly susceptible to the worst effects of COVID-19.”

92 California Department of Housing and Community Development Affirmatively Furthering Fair Housing
Supply Skepticism: Housing Supply and Affordability
Been, V., Ingrid, E., & K. O’Regan. Housing Policy Debate 29(1), 25-40. 2019.

From the abstract: “Growing numbers of affordable housing advocates and community members are questioning the premise that increasing the supply of market-rate housing will result in housing that is more affordable. This article is meant to bridge the divide, addressing each of the key arguments supply skeptics make and reviewing what research has shown about housing supply and its effect on affordability.”
“Survival of the Fairest: Examining HUD Reviews of Assessments of Fair Housing” J.P. Steil & N. Kelly. Housing Policy Debate 29(5), 736-751. 2019.

From the abstract: “Our analysis shows that HUD engaged in detailed reviews of municipalities’ Assessments of Fair Housing and provided constructive feedback. The most common issues with which municipalities struggled were setting realistic goals that would actually advance fair housing and creating measurable metrics and milestones to gauge progress.” What Would It Take to Ensure Quality, Affordable Housing for All in Communities of Opportunity? (PDF) M.A. Turner, S. Greene, C. P. Scally, K. Reynolds & J. Choi. Urban Institute. 2019. 40 pp.

If everyone could afford quality housing, and every neighborhood offered a diversity of housing options, people up and down the income ladder could enjoy housing security and build wealth through homeownership. Achieving this calls for bold action at all levels of government and in the private and nonprofit sectors.

Housing & Community Development
2020 W. El Camino Avenue | Sacramento, CA 95833
Phone: 916-743-2244
State Housing and Community Development Department | Housing Policy Division

STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY GAVIN NEWSOM, Governor

DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT

DIVISION OF HOUSING POLICY DEVELOPMENT
2020 W. El Camino Avenue, Suite 500
Sacramento, CA 95833
(916) 263-2911 / FAX (916) 263-7453
www.hcd.ca.gov
March 31, 2023
Steve Leonardis, City Manager
City of Monte Sereno
18041 Saratoga-Los Gatos Road
Monte Sereno, CA, 95030
Dear Steve Leonardis:

RE: City of Monte Sereno’s 6th Cycle (2023-2031) Adopted Housing Element Thank you for submitting the City of Monte Sereno’s (City) housing element that was adopted January 31, 2023 and received for review on February 1, 2023. Pursuant to Government Code section 65585, subdivision (h), the California Department of Housing and Community Development (HCD) is reporting the results of its review. In addition, HCD considered comments from South Bay YIMBY pursuant to Government Code section 65585, subdivision (c).

The adopted housing element addresses some statutory requirements described in HCD’s January 9, 2022 review; however, additional revisions are necessary to substantially comply with State Housing Element Law (Article 10.6 of the Gov. Code).

The enclosed Appendix describes the revisions needed to comply with State Housing Element Law.

Public participation in the development, adoption and implementation of the housing element is essential to effective housing planning. During the housing element revision process, the City must continue to engage the community, including organizations that represent lower-income and special needs households, by making information regularly available while considering and incorporating comments where appropriate. Please be aware, any revisions to the element must be posted on the local government’s website and to email a link to all individuals and organizations that have previously requested notices relating to the local government’s housing element at least seven days before submitting to HCD.

For your information, pursuant to Assembly Bill 1398 (Chapter 358, Statutes of 2021), if a local government fails to adopt a compliant housing element within 120 days of the statutory deadline (February 15, 2023), then any rezoning to make prior identified sites available or accommodate the regional housing needs allocation shall be completed no later than one year from the statutory deadline pursuant to Government Code sections 65583, subdivision (c) and 65583.2, subdivision (c). Otherwise, the local government’s

housing element will no longer comply with State Housing Element Law, and HCD may revoke its finding of substantial compliance pursuant to Government Code section 65585, subdivision (i). Please be aware, if the City fails to adopt a compliant housing element within one year from the statutory deadline, the element cannot be found in substantial compliance until these rezones are completed.

For your information, some general plan element updates are triggered by housing element adoption. HCD reminds the Cityo consider timing provisions and welcomes the opportunity to provide assistance. For information, please see the Technical Advisories issued by the Governor’s Office of Planning and Research at:
https://www.opr.ca.gov/planning/general-plan/guidelines.html.

HCD appreciates the commitment and cooperation provided throughout the housing element update and review. We are committed to assist the City in addressing all statutory requirements of State Housing Element Law. If you have any questions or need additional technical assistance, please contact Brandon Yung, of our staff, at [email protected].

Sincerely,
Paul McDougall
Senior Program Manager
Enclosure

City of Monte Sereno’s 6th Cycle Adopted Housing Element Page 1 March 31, 2023

APPENDIX

CITY OF MONTE SERENO
The following changes are necessary to bring the City’s housing element into compliance with Article 10.6 of the Government Code. Accompanying each recommended change, we cite the supporting section of the Government Code.

Housing element technical assistance information is available on HCD’s website at https://www.hcd.ca.gov/planning-and-community-development/hcd-memos. Among other resources, the housing element section contains HCD’s latest technical assistance tool, Building Blocks for Effective Housing Elements (Building Blocks), available at https://www.hcd.ca.gov/planning-and-community-development/housing-elements/buildingblocks and includes the Government Code addressing State Housing Element Law and other resources.

A. Review and Revision
Review the previous element to evaluate the appropriateness, effectiveness, and progress in implementation, and reflect the results of this review in the revised element. (Gov. Code, § 65588 (a) and (b).)
As noted in the prior review, the element should evaluate programs geared toward promoting housing variety and affordability, housing mobility and inclusion into and throughout Monte Sereno. Most notably, the element should acknowledge the depth and importance of facilitating multifamily housing within City boundaries and should evaluate the effectiveness of multifamily zoning and programs geared toward promoting housing variety, mobility, and affordability. In response, the element continues to report on permitted accessory dwelling units and notes an alternative project was approved instead of multifamily zoning. However, the element should clearly evaluate whether zoning was successful in promoting multifamily development, including affordability and if not, examine the lack of effectiveness to formulate an appropriate programmatic response. In addition, the element should analyze the progress and effectiveness of programs geared toward promoting housing variety (e.g., multifamily), mobility and affordability, as follows:
• Program HE-2.2 (Shared Housing): The element must still discuss whether the City proactively contacted agencies and if not, incorporate the lack of outreach into new programs.
• Program HE-2.3 (ADU Monitoring): This Program had a specific trigger to revise multifamily zoning and densities if ADUs for all income were not constructed in specified time intervals. In response, the element indicates ADUs were constructed but should also discuss whether ADUs were permitted for all income groups and if not, discuss why multifamily zoning, including appropriate densities were not established. Then, the element should incorporate lessons learned in new programs. • Program HE-2.5 (Multifamily Zoning): As noted above, the element should evaluate the lack of effectiveness in establishing multifamily, including promoting affordability through outreach to developers of housing affordable to lower income and special need households.

City of Monte Sereno’s 6th Cycle Adopted Housing Element Page 2 March 31, 2023
• Program HE-4.1 (Special Needs): The element still must discuss attempts, success or effectiveness of outreach with non-profit developers and revise new programs as appropriate.
• Program HE-4.2 (Senior Housing): The element should evaluate the program’s appropriateness and determine whether it should be modified or continued into the current planning period.

In addition, the element still must provide an evaluation of the cumulative effectiveness of past goals, policies, and related actions in meeting the housing needs of special needs populations (e.g., elderly, persons with disabilities, large households, female-headed households, farmworkers, and persons experiencing homelessness) and revise programs as appropriate.

B. Housing Needs, Resources, and Constraints

1. Affirmatively further[ing] fair housing in accordance with Chapter 15 (commencing with Section 8899.50) of Division 1 of Title 2…shall include an assessment of fair housing in the jurisdiction. (Gov. Code, § 65583, subd. (c)(10)(A).) Local Data and Knowledge and Other Relevant Factors: The element now discusses past redlining in the broader Santa Clara County but should incorporate local data and knowledge and other relevant factors unique to the City. For example, the element could incorporate planning documents such as locally adopted ordinances, other elements of the general plan, infrastructure assessments, and mobility assessments to fully describe the impacts on fair housing patterns and trends. In addition, the element must discuss other relevant factors such as historical land use (zoning, initiatives, growth control that impacted socio-economic patterns.

Contributing Factors: Based upon a complete analysis, the element must re-assess and prioritize contributing factors to fair housing issues and add or modify programs as appropriate.

2. Include an analysis of population and employment trends and documentation of projections and a quantification of the locality's existing and projected needs for all income levels, including extremely low-income households. (Gov. Code, § 65583, subd. (a)(1).)
Analyze any special housing needs such as elderly; persons with disabilities, including a developmental disability; large families; farmworkers; families with female heads of households; and families and persons in need of emergency shelter. (Gov. Code, § 65583, subd. (a)(7).)
Extremely Low-income (ELI) Households: The element now identifies the projected housing need for ELI households but must still analyze the existing needs of these households. Please see HCD’s prior review for additional information.

City of Monte Sereno’s 6th Cycle Adopted Housing Element Page 3 March 31, 2023
Special Needs: While the element now includes some brief discussion of potential solutions to address special housing needs, it should still discuss trends and characteristics of housing needs to better formulate strategies and modify programs as appropriate.

3. An inventory of land suitable and available for residential development, including vacant sites and sites having realistic and demonstrated potential for redevelopment during the planning period to meet the locality’s housing need for a designated income level, and an analysis of the relationship of zoning and public facilities and services to these sites. (Gov. Code, § 65583, subd. (a)(3).)4
Adequate Sites and Accessory Dwelling Units (ADU): As noted in the prior review, the element may demonstrate adequate sites to accommodate the regional housing need allocation (RHNA) entirely with ADUs, however, given the reliance on one strategy, it must include robust and commensurate analysis or utilize alternative strategies. The element still proposes to accommodate essentially the entire RHNA for all income groups with ADUs and as a result, still must include robust and commensurate analysis, as follows:
• Calculation of Past Trends: As noted in the prior review, given the reliance on ADUs, the element should utilize averages based on all years since 2018. In response, the element continues to assume 225 ADUs over the planning period.

These assumptions far exceed trends since 2018 and even exceed more recent trends since 2020 (approximately 12 to 15 ADUs per year). The element must rescale ADU assumptions in line with recent trends. Please see HCD’s prior review for additional information.
• Affordability: The element generally was not revised to address this finding. In addition, the element should address to comments submitted on this and prior review. Please see HCD’s prior review for additional information. • Other Relevant Factors: The element now includes information on the availability of ADUs for rent; stating that 93 percent of past ADUs were made available for rent. As a result, the element should incorporate this information into ADU assumptions for the planning period.

If the above analyses necessitate identifying sites to accommodate the RHNA, including by income group, the identification of sites and analysis must meet all requirements pursuant to Government Code section 65583.2, including but not limited to parcel listing, map of identified sites, identified sites and AFFH, environmental and other constraints, infrastructure, size of sites, nonvacant sites, calculation of realistic residential capacity and appropriate zoning to accommodate housing for lower-income households. For more information, please see the Building Blocks at https://www.hcd.ca.gov/planning-and-community-development/housingelements/building-blocks.

Electronic Sites Inventory: Although the City has submitted electronic sites inventory as described in the prior review, if any changes occur, the City should submit revisions as part of any future re-adoption or submittal. Please see HCD’s housing element

City of Monte Sereno’s 6th Cycle Adopted Housing Element Page 4 March 31, 2023
webpage at https://www.hcd.ca.gov/planning-and-community-development/housingelements for additional information.

Zoning for a Variety of Housing Types:
• Multifamily: While the element was updated to include a program to “analyze” opportunities for multifamily zoning, it still must identify and analyze significant and realistic opportunities for multifamily development in the planning period as part of this update. The identification and analysis should address sites, any known constraints or impediments, parcel size, appropriateness of densities and methodology for calculating residential capacity. Based on the outcomes of this analysis, the element must include programs to make sites available with appropriate zoning, allowable densities (e.g., 20 units per acre) and development standards to encourage and facilitate multifamily development at maximum allowable densities.
• Emergency Shelters: HCD’s prior review found the element should clarify that byright is without discretionary action and add a discussion of acreage, parcel sizes. reuse and redevelopment opportunities and proximity to transportation and services as well as evaluate development standards. In response, the element now states only one site is available; a school site. The element must still clarify whether emergency shelters are permitted without discretionary action and should demonstrate how the one school site could accommodate at least one emergency shelter or identify other zones and capacity. In addition, the element must still analyze development standards, including parking requirements and add or modify programs to address any constraints.

Please be aware Chapter 654, Statues of 2022 (AB 2339), adds specificity on how cities and counties plan for emergency shelters and ensure sufficient and suitable capacity. Future submittals of the housing element may need to address these statutory requirements. For additional information and timing requirements, please see HCD’s memo at
https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/ab2339- notice.pdf.
• By-right Permanent Supportive Housing: The element now includes a Program S (Allow Single Room Occupancy) to permit supportive housing by-right in the Public zoning district. However, by-right permanent supportive housing shall be a use by-right in zones where multifamily and mixed uses are permitted, including nonresidential zones permitting multifamily uses pursuant to Government Code section 65651. Future efforts to establish multifamily zoning should comply with these requirements.
• Accessory Dwelling Units: Based on a cursory review, the City’s ADU ordinance does not comply with ADU law. The element must include a program to amend the ADU ordinance and comply with ADU law. HCD will send additional information upon a complete review of the ordinance under separate cover.

City of Monte Sereno’s 6th Cycle Adopted Housing Element Page 5 March 31, 2023
• Manufactured Housing: The element now clarifies that manufactured homes are permitted in the same manner as conventional homes and a specific standard will be added to confirm manufactured homes will be reviewed consistent with state law when the City updates its objective design standards. The element should modify programs to reflect this confirmation in the update of objective design standards.

4. An analysis of potential and actual governmental constraints upon the maintenance, improvement, or development of housing for all income levels, including the types of housing identified in paragraph (1) of subdivision (c), and for persons with disabilities as identified in the analysis pursuant to paragraph (7), including land use controls, building codes and their enforcement, site improvements, fees and other exactions required of developers, and local processing and permit procedures... (Gov. Code, § 65583, subd. (a)(5).)
Land Use Controls: HCD’s prior review generally found the element must evaluate all development standards and land use controls, impacts of a predominant large lot land use patter and compliance with Government Code sections 65852.21 and 66411.7 (SB 9). However, the element must still be revised, as follows:
• Development Standards and Land Use Controls: The element was not revised to address this requirement. Please see HCD’s prior review for additional information.
• Lack of a Variety of Lot Sizes: The element now notes that a majority of the City is large lots over two acres and as a result, should include programs to provide a variety of lot sizes – beyond complying with State law. Programs should be specific and not limited to reviewing options.
• Government Code sections 65852.21 and 66411.7 (SB 9): The element now includes Program E (SB 9 Regulations) to review regulations. However, the Program should specifically commit to amend zoning and comply with state law.

Processing and Permit Procedures: The element generally was not revised to address HCD’s prior finding. Please see HCD’s prior review for additional information.

Streamlining Provisions: HCD’s prior review found the element should clarify whether the City has procedures consistent with streamlining procedures pursuant to Government Code section 65913.4 (SB 35) and include programs as appropriate. In response, the element now concludes the City is in compliance with RHNA and is not subject to SB 35. However, these conditions may change and the element should add a program with specific commitment to establish a written procedure to comply with Government Code section 65913.4 by a specified date.

Constraints on Housing for Persons with Disabilities: The element must still include an analysis of potential constraints on housing for persons with disabilities, as follows:

City of Monte Sereno’s 6th Cycle Adopted Housing Element Page 6 March 31, 2023
• Reasonable Accommodation: The element indicates the City has a reasonable accommodation procedure that involves a “hearing” (p. C-10). The element should clarify if this is a public hearing and if so, evaluate the impacts as a potential constraint on housing for persons with disabilities. In addition, the element now lists several decision-making criteria but should also evaluate some of those criteria as constraints on housing for persons with disabilities. For example, decision-making criteria such as demonstrating a special need, benefit, compatibility with surrounding uses, alternative accommodations and that a household with a disability is truly a household appear to be a constraint. The element should evaluate these decision-making criteria and add or modify programs as appropriate.
• Group Homes for Seven or More Persons: The element now explains group homes for seven or more persons are allowed in all residential zones, however, also mentions these uses are limited to licensed homes. As a result, the element should include a program to amend zoning and remove the licensing requirement.

C. Housing Programs

1. Include a program which sets forth a schedule of actions during the planning period, each with a timeline for implementation, which may recognize that certain programs are ongoing, such that there will be beneficial impacts of the programs within the planning period, that the local government is undertaking or intends to undertake to implement the policies and achieve the goals and objectives of the Housing Element... (Gov. Code, § 65583, subd. (c).)
To have a beneficial impact in the planning period and achieve the goals and objectives of the housing element, programs must have discrete timing early in the planning period (e.g., at least annually or by 2025) and specific commitment to housing outcomes (e.g., refrain from language such as “explore”, “develop”, “consider”). Examples of programs to be revised include:
• Program E (Review SB9 Regulations): As noted in the prior review, the Program should go beyond reviewing and amending as needed. The Program should at least clearly commit to comply with law and could consider additional modification that further enhance the state law.
• Program G (Develop Incentives): The updated Program does not respond to the previous finding. Especially given the lack of progress in the previous planning periods, this Program must specifically, annually reach out to affordable developers and apply for funding in addition to “at the request of the developer”.

Additionally, the Program should include quantified objectives and should be further modified based on the outcomes of complete analyses as noted in Findings A and B. Please see HCD’s prior review for additional information.

City of Monte Sereno’s 6th Cycle Adopted Housing Element Page 7 March 31, 2023
• Program I (Accessory Dwelling Units): The updated Program does not respond to the previous finding. The Program should clearly commit to removing restrictive requirements and specifically revise the ADU ordinance in compliance with ADU law. In addition, the Program now only commits to survey affordability and use but should survey affordability, use and production. Further, the Program only commits to take alternative action at a mid-cycle review of the housing element if construction goals or affordability are not met. Alternative action should be taken annually within six months of an annual review and should be triggered by production, affordability and availability or use.

2. Identify actions that will be taken to make sites available during the planning period with appropriate zoning and development standards and with services and facilities to accommodate that portion of the city’s or county’s share of the regional housing need for each income level that could not be accommodated on sites identified in the inventory completed pursuant to paragraph (3) of subdivision (a) without rezoning, and to comply with the requirements of Government Code section 65584.09. Sites shall be identified as needed to facilitate and encourage the development of a variety of types of housing for all income levels, including multifamily rental housing, factory-built housing, mobilehomes, housing for agricultural employees, supportive housing, single-room occupancy units, emergency shelters, and transitional housing. (Gov. Code, § 65583, subd. (c)(1).)
As noted in Finding B3, the element does not include a complete site analysis, therefore, the adequacy of sites and zoning were not established. Based on the results of a complete sites inventory and analysis, the City may need to add or revise programs to address a shortfall of sites or zoning available to encourage a variety of housing types.

In addition, the element now includes Program Q (Analyze Multifamily Housing) to analyze sites and analyze the potential application of SB 10. However, this Program generally does not commit to any meaningful outcomes in the planning period, especially when considering the past lack of effectiveness in promoting multifamily and affordability. As noted in the prior review, this Program should be modified based on the outcomes of a complete analysis as described throughout this review. The Program must at least commit to make sites and appropriate zoning (e.g., 20 units per acre) available with development standards to encourage and facilitate multifamily development at maximum densities and may need to address specific requirements related to a shortfall of adequate sites, including rezoning sizes to meet by-right requirements.

3. The Housing Element shall contain programs which assist in the development of adequate housing to meet the needs of extremely low-, very low-, low- and moderateincome households. (Gov. Code, § 65583, subd. (c)(2).) The element was not revised to address this finding. In addition, programs must be revised based on the outcomes of a complete analysis as described in Findings A and B.

City of Monte Sereno’s 6th Cycle Adopted Housing Element Page 8 March 31, 2023

4. Address and, where appropriate and legally possible, remove governmental and nongovernmental constraints to the maintenance, improvement, and development of housing, including housing for all income levels and housing for persons with disabilities. The program shall remove constraints to, and provide reasonable accommodations for housing designed for, intended for occupancy by, or with supportive services for, persons with disabilities. (Gov. Code, § 65583, subd. (c)(3).) As noted in Findings B4, the element requires a complete analysis of potential governmental and nongovernmental constraints. Depending upon the results of that analysis, the City may need to revise or add programs and address and remove or mitigate any identified constraints.

In addition, as noted in Finding B4, the City lacks a variety of minimum lot sizes and densities and the element should add programs to create a variety of lot sizes, increased densities, and modified development standards to facilitate maximum densities.

6. Promote and affirmatively further fair housing opportunities and promote housing throughout the community or communities for all persons regardless of race, religion, sex, marital status, ancestry, national origin, color, familial status, or disability, and other characteristics... (Gov. Code, § 65583, subd. (c)(5).)
As noted in Finding B1, the element requires revision to complete an assessment of fair housing. Depending upon the results of a complete analysis, the City must add or modify goals and actions. Goals and actions must specifically respond to the analysis and to the identified and prioritized contributing factors to fair housing issues and must be significant and meaningful enough to overcome identified patterns and trends.

Actions must have specific commitment, milestones, geographic targeting and metrics or numerical targets and, as appropriate, address housing mobility enhancement, new housing choices and affordability in higher opportunity or higher income areas, placebased strategies for community revitalization and displacement protection.

In addition, promoting housing mobility removes barriers to higher opportunity areas and strategically enhances access to housing choices and affordability. Among other factors, the City is entirely the highest resource category in access opportunity, wholly a concentrated area of affluence and predominantly consists of households with the highest median income, a stark contrast to the rest of the region. As a result, the element should include a significant and robust suite of actions (not limited to the RHNA) to promote housing mobility and increasing housing choices and affordability throughout the City.

D. Quantified Objectives
Establish the number of housing units, by income level, that can be constructed, rehabilitated, and conserved over a five-year time frame. (Gov. Code, § 65583, subd. (b)(1 & 2).)

City of Monte Sereno’s 6th Cycle Adopted Housing Element Page 9 March 31, 2023
The element does not respond to the previous finding. While the element includes quantified objectives for new construction by income level, it currently targets no objectives for rehabilitation and conservation and should be revised accordingly. For example, quantified objectives could incorporate numerical targets for ADU amnesty or anticipated outcomes from Programs U (Infrastructure Capital Improvements), V (Energy Conservation), W (Water Conservation) and X (Fair Housing Enforcement).

E. Public Participation
Local governments shall make a diligent effort to achieve public participation of all economic segments of the community in the development of the Housing Element, and the element shall describe this effort. (Gov. Code, § 65583, subd.(c)(9).) HCD’s prior review found the City must employ additional methods for public outreach efforts, particularly including lower-income and special needs households. In response, the element now describes how the City partnered with the West Valley Community Services (WVSC) but should also provide discussion about the comments and input and how that input was incorporated into the housing element. In addition, the City should continue to employ a variety of methods and target outreach to additional organizations that represent lower-income and special needs households. Finally, HCD received comments with many meaningful suggestions related to ADU production assumptions, ADU surveys, segregation and integration, and other issues related to zoning and affirmatively furthering fair housing.

HCD encourages the City to consider these comments.

STAFF REPORT
Meeting: City Council - Jun 20 2023
Agenda Heading: NEW BUSINESS
Staff Contact: Reynold Samoranos,
Department: Finance Manager
Title: Consider and Accept the Fiscal Year 2021-2022 Audit Report Recommendation(s):

Staff recommends that the City Council consider and accept the Fiscal Year 2021-2022 Audit Report.

Fiscal Impact:

There are no unbudgeted fiscal impacts with this agenda item.

Public Noticing:

The City Council's agenda was posted at City Hall and the agenda and this report apear on the City's website.

Attachments:

City of Monte Sereno 2022 FS (Final)
Management Representation Letter - 06-07-2023 (Signed)

Financial Statements
For the Fiscal Year
Ended June 30, 2022
City of Monte Sereno

This Page Left Intentionally Blank

City of Monte Sereno
Table of Contents
June 30, 2022
Independent Auditors’ Report ..................................................................................................................... 1 Management’s Discussion and Analysis ..................................................................................................... 4 Basic Financial Statements
Statement of Net Position ............................................................................................................................... 11 Statement of Activities .................................................................................................................................... 12 Governmental Funds – Balance Sheet ............................................................................................................ 13 Reconciliation of the Governmental Funds Balance Sheet
with the Statement of Net Position ................................................................................................................. 14 Statement of Revenues, Expenditures and Changes in Fund Balances........................................................... 15 Reconciliation of the Net Changes in Fund Balances –
Total Governmental Funds with the Statement of Activities .......................................................................... 16 Notes to Financial Statements ......................................................................................................................... 17 Required Supplementary Information
Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund ................................................................................................................. 38 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Law Enforcement Fund ................................................................................................. 39 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Gas Tax Fund ................................................................................................................ 40 Miscellaneous Plan – Cost-Sharing Multiple-Employer Defined Pension Plan – Schedule of the Proportionate Share of the Net Pension Liability/(Asset) ..................................................... 41 Miscellaneous Plan – Cost-Sharing Multiple-Employer Defined Pension Plan – Schedule of Pension Contributions ................................................................................................................. 42 Schedule of Changes in Total Other Post-Employment Benefits Liability and Related Ratios ............................................................................................................................ 43 Note to Budgetary Information ....................................................................................................................... 43 Supplementary Information
Non-Major Governmental Funds – Combining Balance Sheet ...................................................................... 46 Non-Major Governmental Funds – Combining Statement of Revenues, Expenditures and Changes in Fund Balances ................................................................................................. 47 Independent Auditors’ Report on Internal Controls over Financial Reporting and on Compliance and other Matters based on the Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards .......................................................................................................................................... 49

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3 INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and City Council
City of Monte Sereno, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Monte Sereno (City), California, as of and for the year ended June 30, 2022, 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, each major fund, and the aggregate remaining fund information of the City as of June 30, 2022, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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, individually or in the aggregate, they could reasonably be expected to influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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.

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.
2

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 Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 7, 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
June 7, 2023
3

City of Monte Sereno
Management’s Discussion and Analysis
For the Year Ended June 30, 2022
The following provides a narrative overview and analysis of the fiscal operations during the fiscal year ended June 30, 2022 for the City of Monte Sereno. The Management Discussion and Analysis is to be read in conjunction with the Basic Financial Statements.

FISCAL YEAR 2021‐2022 FINANCIALHIGHLIGHTS
 The City’s total net position was $5,616,493, which increased by $224,258 from the prior year’s net position of $5,392,235.
 Total City total revenues were $5,176,569, while total expenses were $4,930,131. Total revenues in the prior year were $4,822,894 and total expenses were $4,581,585. The increase in revenues was due to increase in property taxes.  The City’s Unrestricted Net Position is $4,812,674, which is available for ongoing operations as well as other capital needs.

OVERVIEW OF THE ANNUAL FINANCIAL REPORT
This Annual Financial Report is in four parts:

1. Management’s Discussion and Analysis.

2. The Basic Financial Statements, which include the government‐wide and fund financial statements, along with the notes to the financial statements.

3. Required supplementary information.

4. Combining statements for non‐major governmental funds.

The Basic Financial Statements
The Basic Financial Statements are comprised of Government‐Wide Financial Statements and Fund Financial Statements. These two sets of financial statements provide the reader two different viewpoints of the City’s financial activities and financial position.

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

All of the City’s activities are required to be grouped into government activities and business‐type activities. The entire amount in the Statement of Net Position and Statement of Activities is also required to be separated into governmental activities or business‐type activities in order to provide a summary of these two activities as a whole. In the case of the City of Monte Sereno, there are no business‐type activities as of June 30, 2022.
4

City of Monte Sereno
Management’s Discussion and Analysis
For the Year Ended June 30, 2022
The Fund Financial Statements report the City’s operations in more detail than the government‐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 and fund balance; they exclude capital assets, long‐term debt, and other long‐term amounts from the balance sheets. 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 supplementary schedules (i.e. combining statements) presenting the detail for each of these funds. Major funds are explained later in Management’s Discussion and Analysis.

The Government‐Wide Financial Statements
The Statement of Net Position and the Statement of Activities present information about the following:

Governmental activities – All of the City’s basic services are considered to be governmental activities, including general government, community development, public safety, transportation, and cultural and leisure. These services are supported by general City revenues such as taxes, and by specific program revenues such as developer fees.

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

Fund Financial Statements
Fund financial statements provide detailed information about each of the City’s most significant funds, called major funds. The concept of major funds, and the determination of which are major funds, is established by generally accepted accounting principles. Each major fund is presented individually, with all non‐major funds summarized and presented 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 fiscal year, and may change from year to year as a result of changes in the pattern of the City’s activities.

Governmental fund financial statements are prepared on the 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 not presented in the governmental fund financial statements balance sheets.

Unlike the government‐wide financial statements, governmental fund financial statements focus on near‐term inflows and outflows of spendable resources, and on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near‐term financing requirements.

Notes to the Financial Statement
Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government‐wide and fund financial statements. The notes can be found immediately following the fund financial statements.
5

City of Monte Sereno
Management’s Discussion and Analysis
For the Year Ended June 30, 2022
Required Supplementary Information
The Required Supplementary Information (RSI) follows the basic financial statements and includes a budgetary comparison schedule that includes reconciliation between the statutory fund balance for budgetary purposes and the fund balance for the General Fund and all major special revenue funds, as presented in the governmental fund financial statements, where applicable. RSI also includes the pension schedules and retiree health benefits schedules benefits.

Combining and Individual Fund Statements and Schedules
Combining and individual fund statements and schedules provide information for non‐major governmental funds.

Government‐Wide Analysis
Net position may serve over time as a useful indicator of a government’s financial position. The City’s largest assets include investments and capital assets.

Cash and investments decreased by $403,038 from $5,165,026 in the prior year to $5,791,988 in the current year.

Receivables increased by $55,852 to $160,701. The change was mainly due to the SB‐2 Planning Grants Program received.

The City’s pension liabilities decreased by $666,025 to $0 balance.  The current year change is due to the pension plan net balance and a change in the actuarial assumptions.

Total OPEB liabilities decreased by $58,940 to $705,897.    Prior year was $764,837 due to changes in the actuarial assumptions.
$291,048 or 5.2% of the City’s net investment in capital assets is invested in capital assets compared to $291,274 or 5.4% in the prior year (e.g., land, buildings, general government infrastructure, equipment, etc.). There were no major capital asset additions in the current year and the decrease was related to depreciation.
$4,812,674 or 85.7% of the City’s net position is unrestricted compared to $4,773,642 or 88.5% in the prior year. The unrestricted net position may be used to fulfill ongoing obligations to the City residents and creditors.
$512,771 or 9.1% of the City’s net position is subject to external restriction on how they may be used compared to $327,319 or 6.1% in the prior year. These restricted assets will be used primarily for capital projects and public safety improvements.
6

City of Monte Sereno
Management’s Discussion and Analysis
For the Year Ended June 30, 2022
The following table shows a condensed statement of net position for the City for the current and the prior year.

The City's charges for services decreased by $10,379 to $1,014,803.  Prior year was $1,025,382.  The current year decreased due mainly to a softening of planning fee and license and permit fee activities.

Property taxes increased by $132,386 to $2,519,082.  Prior year was $2,386,696.  The current year increase was due to an increase in the assessed valuation for properties within the City.

Total expenditures in FY 2022 was $4,930,131, $348,904 lower versus prior year. General government expenses decreased by $730,670 to $1,910,742; Public Safety increased by $1,241,755 to $2,462,611, Public Works decreased $156,383 to $519,289 and Community Development decreased by $5,798 to $37,489.
7

City of Monte Sereno
Management’s Discussion and Analysis
For the Year Ended June 30, 2022
Major Funds General Fund
General Fund Revenues ‐ Revenues for the year ended June 30, 2022, increased by $141,950 or 4.1% to $3,582,342 from the prior fiscal year $3,440,392.
 Property taxes increased $132,386 or 5.5% from the previous fiscal year to $2,519,082.  Other Taxes increased $165,306 or 31.5% from the previous fiscal to $689,375.  Other decreased $155,742 or ‐29.4% from the previous fiscal to $373,885.

General Fund Expenditures – General governmental expenditures including transfers out for the year ended June 30, 2022 increased $348,904 or 7.6% compared to the prior fiscal year to $4,930,131.

Law Enforcement Fund
Law Enforcement Fund Revenues, including transfers in for the year ended June 30, 2022, were higher $241,389 compared to the prior year.  The transfer of $241k Law Enforcement Funds will be made in FY 2023.
8

City of Monte Sereno
Management’s Discussion and Analysis
For the Year Ended June 30, 2022
Law Enforcement Fund Expenditures, for the year ended June 30, 2022, were comparable to the prior year and in line with the annual budget figures as expected.

Gas Tax Fund
Gas Tax Fund Revenues, including transfers in for the year ended June 30, 2022, were higher by $11,483 compared to the prior year primarily related to higher SB‐1 Gas Tax.

Gas Tax Fund Expenditures for the year ended June 30, 2022 has decreased by $635,812 compared to the prior fiscal year due to the expansion in the street maintenance projects.

General Fund Budgetary Highlights
A comparison of the final budget to actual revenues and expenditures for the General Fund is presented in the required supplementary information section of this report.

Actual revenues were above the budgeted amounts by $322,044. The large variance was mainly in the property taxes ($244,982 surplus over the estimate) and the licenses and permits ($290,046 surplus over the estimate) offset by not using a secured Grants for Annex Building Project ($198,600).

Capital Assets
The City’s investment in capital assets, net of accumulated depreciation, as of June 30, 2022, amounts to $291,274. This figure does not include City infrastructure such as roads and bridges. These figures may be included in future year’s financial statements. There were no significant additions to capital assets in the current fiscal year.

Additional information on capital assets can be found in footnote #5 to these financial statements.

Long ‐ Term Liabilities
The City’s long‐term liabilities consist solely of compensated absences and employee benefits liabilities.

The compensated absences in the amount of $34,294 remained flat to prior year. The other postemployment benefits liabilities and net pension liabilities in the amount of $1,430,862 have decreased by $724,965 or 50.7% compared to the prior year. The decrease is mainly attributed to the decrease in pension liabilities.

Economic Factors
The past few years the City has experienced limited but stable growth to property taxes. The City continues to be cautiously optimistic that the limited growth trend will continue over the next few years.

The City Council of Monte Sereno hosted their annual goal setting session on June 1, 2021. Council adopted five goals to develop a work plan for FY 2021 ‐2022. Those five adopted goals were captured by artist Melinda Walker in this artistic rendition of the meeting minutes. 9

City of Monte Sereno
Management’s Discussion and Analysis
For the Year Ended June 30, 2022
 Quality Public Service
 Community Character
 Enhanced Mobility
 Community Safety
 Environmental Sustainability

REQUEST FOR FINANCIAL INFORMATION
This financial report is designed to provide a general overview of the City of Monte Sereno’s finances for all of Monte Sereno’s residents, taxpayers, and customers. This financial report seeks to demonstrate the City’s accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the City of Monte Sereno, 18041 Saratoga‐Los Gatos Road, Monte Sereno, California 95030. 10

CITY OF MONTE SERENO

STATEMENT OF NET POSITION
JUNE 30, 2022
Primary Government
Governmental
Activities
ASSETS
Cash and investments $5,791,988
Receivables
Taxes 196
Other 160,505
Net pension asset 867,343
Capital assets
Land 119,888
Depreciable capital assets, net 171,160
Total assets 7,111,080

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to OPEB 139,227
Deferred outflows of resources related to pensions 528,200 Total deferred outflows of resources 667,427

LIABILITIES
Accounts payable and accrued liabilities 1,240,250
Compensated absences payable - current 34,294
Total other postemployment benefits liability 705,897
Total liabilities 1,980,441

DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources related to OPEB 550,783
Deferred inflows of resources related to pensions (369,210) Total deferred inflows of resources 181,573
NET POSITION (Note 8)
Net investment in capital assets 291,048
Restricted for:

Capital projects 422,247
Road and streetlight projects 90,524
Total restricted net position 512,771
Unrestricted net position 4,812,674
Total net position $5,616,493
See accompanying notes to financial statements
11

CITY OF MONTE SERENO

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2022
Net (Expense)
Revenue and
Changes in
in Net Position
Program Revenues Primary Government
Operating
Charges for Grants and Governmental
Functions/Programs Expenses Services Contributions Activities Primary Government:

Governmental Activities:

General Government $1,910,742 $1,003,513 ($907,229)
Public safety 2,462,611 11,290 (2,451,321)
Public works 541,469 $579,424 37,955
Community development 37,489 (37,489)
Total Governmental Activities $4,952,311 $1,014,803 $579,424 (3,358,084) General revenues:

Taxes:

Property tax 2,519,082
Sales tax 12,936
Gas tax 154,815
Franchise tax 323,549
Real property transfer tax 198,075
Unrestricted investment earnings
Other revenue 373,885
Total general revenues 3,582,342
Change in Net Position 224,258
Net Position - Beginning 5,392,235
Net Position - Ending $5,616,493
See accompanying notes to financial statements
12

GOVERNMENTAL FUNDS

BALANCE SHEET
JUNE 30, 2022
Law Gas Other Total
Enforcement Tax Governmental Governmental
General Fund Fund Funds Funds
ASSETS
Cash and investments $5,076,698 $241,391 $373,780 $100,119 $5,791,988 Receivables
Taxes 196 196
Other 160,000 500 5 160,505
Total Assets $5,236,894 $241,391 $374,280 $100,124 $5,952,689

LIABILITIES
Accounts payable and accrued liabilities $287,144 $202,847 $177 $490,168 Total Liabilities 287,144 202,847 177 490,168

FUND BALANCES
Fund balance (Note 9):

Restricted 38,544 $374,280 99,947 512,771
Unassigned 4,949,750 4,949,750
TOTAL FUND BALANCES 4,949,750 38,544 374,280 99,947 5,462,521 Total Liabilities, Deferred Inflows of Resources
and Fund Balances $5,236,894 $241,391 $374,280 $100,124 $5,952,689 See accompanying notes to financial statements

CITY OF MONTE SERENO
13

CITY OF MONTE SERENO
Reconciliation of the

GOVERNMENTAL FUNDS BALANCE SHEET
with the

STATEMENT OF NET POSITION
JUNE 30, 2022
Fund Balance - Total Governmental Funds $5,462,521
Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds because of the following:

CAPITAL ASSETS TRANSACTIONS
Capital assets used in Governmental Activities are not current assets or financial resources and therefore are not reported in the Governmental funds. 291,048

LONG TERM ASSETS, LIABILITIES AND DEFERRED OUTFLOWS/INFLOWS OF RESOURCES The assets, deferred outflows of resources, liabilities and deferred inflows of resources below are not due and payable in the current period and therefore are not reported in the Funds:

Compensated absences (34,294)
Accounts payable and accrued liabilities (750,082)
Net pension liability (asset) 867,343
Total other post employment liability (705,897)
Deferred outflows of resources related to pensions 528,200 Deferred outflows of resources related to OPEB 139,227
Deferred inflows of resources related to pensions 369,210 Deferred inflows of resources related to OPEB (550,783) NET POSITION OF GOVERNMENTAL ACTIVITIES $5,616,493
See accompanying notes to financial statements
14

CITY OF MONTE SERENO

GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2022
Law Gas Other Total
Enforcement Tax Governmental Governmental
General Fund Fund Funds Funds

REVENUES
Property tax $2,325,200 $191,390 $2,492 $2,519,082
Sales tax 12,936 12,936
Gas Tax $154,815 154,815
Franchise fee 323,549 323,549
Real property transfer tax 198,075 198,075
Licenses and permits 1,001,062 1,001,062
Fines and penalities 2,451 2,451
Investment earnings 9,809 1,481 11,290
Intergovernmental/ other agencies 418,139 161,285 579,424 Other revenue 353,711 20,174 373,885
Total Revenues 4,644,932 352,675 156,296 22,666 5,176,569

EXPENDITURES
Current:

General government 2,741,162 2,576 2,743,738
Public safety 1,293,220 1,169,391 2,462,611
Public works 367,386 138,779 35,304 541,469
Community development 37,489 37,489
Capital outlay 565 565
Total Expenditures 4,439,257 1,169,391 141,355 35,869 5,785,872

EXCESS OF REVENUES
OVER (UNDER) EXPENDITURES 205,675 (816,716) 14,941 (13,203) (609,303)

OTHER FINANCING SOURCES (USES)
Transfers in 855,260 133,380 11,790 1,000,430
Transfers out (1,000,430) (1,000,430)
Total Other Financing Sources (Uses) (1,000,430) 855,260 133,380 11,790 NET CHANGE IN FUND BALANCES (794,755) 38,544 148,321 (1,413) (609,303) FUND BALANCES AT BEGINNING OF PERIOD 5,744,505 225,959 101,360 6,071,824 FUND BALANCES AT END OF PERIOD $4,949,750 $38,544 $374,280 $99,947 $5,462,521 See accompanying notes to financial statements
15

CITY OF MONTE SERENO
Reconciliation of the

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2022
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 ($587,123) 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.

Capital outlay and improvement expenditures are added back to fund balance 565 Depreciation expense is deducted from fund balance (10,015) Retirements are deducted from the fund balance 9,224

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):

Compensated absences
Accounts payable and accrued liabilities (750,082)
Net pension liability and deferred outflows/inflows of resources related to pensions 1,610,320 Net OPEB liability and deferred outflows/inflows of resources related to OPEB (26,451) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $246,438 See accompanying notes to financial statements
16

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 1 – GENERAL
The City of Monte Sereno (the City) was incorporated in 1957, under the provisions of the State of California. The City operates under a Council-Manager form of government and provides the following services: streets, public improvement, planning and zoning, and general administration.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting and financial reporting principles.

Reporting Entity
A reporting entity is comprised of the primary government, component units, and other organizations that are included to ensure the financial statements are not misleading. The primary government of the City consists of all funds, departments, boards, and agencies that are not legally separate from the City.

Basis of Presentation
Government Wide Financial Statements
While separate government-wide and fund financial statements are presented, they are interrelated. The governmental activities column incorporates data from governmental funds. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.

Fund Financial Statements
The fund financial statements provide information about the City’s funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor funds. Major individual governmental funds are reported as separate columns in the fund financial statements.

The City reports the following major governmental funds:

The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those accounted for in another fund.

The Law Enforcement Special Revenue Fund accounts for all financial activity related to the City’s Law Enforcement Services. The fund’s major source of revenue is a special assessment tax.

The Gas Tax Special Revenue Fund accounts for tax rate per gallon levied by the State of California on all gasoline purchases are allocated to cities throughout the State. These funds are restricted to expenditure for transit and street-related purposes.
17

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued During the course of operations, the City has activity between funds for various purposes. Any residual balances outstanding at year end are reported as due from/to other funds and advances to/from other funds. While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in governmental activities (i.e., the governmental funds) are eliminated so that only the net amount is included as internal balances in the governmental activities column.

Further, certain activity occurs during the year involving transfers of resources between funds. In fund financial statements these amounts are reported at gross amounts as transfers in/out. While reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column.

Measurement Focus and Basis of Accounting
The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements.

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available generally if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, expenditures related to compensated absences, and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long- term debt and acquisitions under capital leases are reported as other financing sources.

Property taxes, sales taxes, transient occupancy taxes, utility user taxes, property transfer taxes, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Fines, licenses, use of property, and permit revenues are not susceptible to accrual because they generally are not measurable until received in cash. Entitlements are recorded as revenues when all eligibility requirements are met, including any time requirements, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year-end). Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year-end). All other revenue items are considered to be measurable and available only when cash is received by the City.
18

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Capital Assets
Capital assets, which include property, plant and equipment, are stated at cost. Donated assets are recorded at their estimated acquisition value at the date of donation. The City defines capital assets as assets with an initial cost of more than $1,000 and an estimated useful life greater than one year.

Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred.

Depreciation on all assets is provided on the straight-line basis over the following estimated useful lives:

Buildings 50 Years
Vehicles 4-10 Years
Furniture, fixtures, and equipment 5-50 Years
Deferred Inflows/Outflows of Resources
In addition to assets, the statement of net position will report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then. In addition to liabilities, the statement of net position or balance sheet will report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position 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.

Interfund Transactions
With City Manager approval, resources may be transferred from one City fund to another. Transfers (1) are used to move revenues from the fund that statute or budget requires collecting them to the fund that statute or budget requires to expend them, and (2) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations.

Property Taxes
The County of Santa Clara assesses all properties; and it bills, collects, and distributes property taxes and special assessments as follows:

Secured/Unsecured
Lien dates January 1
Levy dates July 1
Due dates 50% on November 1 and February 1
Delinquent as of December 10 and April 10
19

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued 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 revenue is recognized in accordance with applicable GASB pronouncements, that is in the fiscal year for which the taxes have been levied, provided they become available. Available means (a) due, or (b) past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter (not to exceed 60 days) to be used to pay liabilities in the current period. The County of Santa Clara remits the entire amount of the tax levy to the City (net of County administrative fees), and handles all delinquencies, retaining any interest and penalties.

Compensated Absences
Compensated absences include vacation pay. The City recognizes the liability for its compensated absences at year-end.

Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Cash and Cash Equivalents
For financial statement reporting purposes, the City considers cash and cash equivalents as short-term highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.

Because the only investment held by the funds is the Local Agency Investment Fund (LAIF), which meets the definition of a cash equivalent, the entire pooled balance is reported as “cash and investments.” Fund Balance Classification
The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:

Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. The City did not have any nonspendable resources as of June 30, 2022.
20

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. The City has classified traffic safety fines and grants as being restricted because their use is restricted by the terms of the grant and state statute for traffic safety expenditures. Gas taxes are restricted by state statute for use on road and street repair and maintenance projects. Loma Serena Street Lighting District and Rose Andrews Street Lighting District funds are classified as restricted because the use of these funds are restricted for operations and maintenance of the respective light districts, as imposed by the municipal code. Finally, storm drainage has been classified as restricted because these funds are collected from developers and set aside for capacity purposes, as mandated by state statute.

Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the City Council. These amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action (ordinance or resolution) that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. The City did not have any committed resources as of June 30, 2022.

Assigned: This classification includes amounts that are constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the City Council or the City manager, to whom this authority has been formally delegated by the City council.

This classification also includes the remaining positive fund balance for all governmental funds except for the General Fund.

Unassigned: This classification includes the residual fund balance for the General Fund. The Unassigned classification may also include negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting of Assigned fund balance amounts. However, the City did not have any negative residual fund balances in any other governmental funds.

Use of Restricted Resources
The City would typically use restricted fund balances first, followed by committed resources, and then assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend unassigned resources first to defer the use of these other classified funds.

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 GAAP. 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. 21

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued  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.

NOTE 3 – CASH AND INVESTMENTS
The City’s dependence on property tax receipts requires it to maintain significant cash reserves to finance operations during certain portions of the year. The City pools cash from all sources so that it can safely invest at maximum yields, while individual funds can make expenditures at any time. All investments are carried at fair value.

Summary of Deposits and Investments
Cash and Cash equivalents as of June 30, 2022, consist of the following at fair value:

Cash on hand $121
Cash with financial institutions 757,897
State Investment Pool 5,033,970
Total deposits and investments $5,791,988
Policies and Practices
The City is authorized under California Government Code and the City’s investment policy to make direct investments in U.S. Treasury instruments and securities of the U.S. Government, the Local Agency Investment Fund (LAIF), and federally insured deposits in commercial banks and savings and loan associations in the local area.

The City’s investments were in compliance with the above provisions as of and for the year ended June 30, 2022.

General Authorizations
The table below identifies the investment types that are authorized for the City by the California Government Code. Limitations as they relate to interest rate risk and concentration of credit risk are indicated in the schedules below:
22

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 3 – CASH AND INVESTMENTS - Continued
Authorized Investment Type
Maximum
Remaining
Maturity
Maximum
Percentage of
Portfolio
Maximum
Investment in
One Issuer
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Local Agency Investment Fund (LAIF) N/A None $65 Million Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City manages its exposure to interest rate risk by purchasing only short- term investments as necessary to provide the cash flow and liquidity needed for operations.

As of June 30, 2022, the City had the following investments. All investments are in the State’s investment pool.

Fair Average
Value Maturity
State Investment Pool $5,033,970 311
Concentration of Credit Risk
The City’s investment policy contains no limitations on the amount that can be invested in any one issuer beyond the amount stipulated by the California Government Code.

Custodial Credit Risk - Deposits
This is the risk that, in the event of a bank failure, the City's deposits may not be returned. The City’s policy, as well as the California Government Code, requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105% of the secured deposits.

As of June 30, 2022, the City's bank balance of $757,897 is either insured or collateralized with securities held by the pledging financial institution's trust department or agent, but not in the City’s name.

Custodial Credit Risk - Investments
This is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. Neither the California Government Code nor the City’s investment policy contains legal or policy requirements that would limit the exposure to custodial risk.
23

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 3 – CASH AND INVESTMENTS - Continued
Investment in the State Investment Pool
The City is a voluntary participant in the LAIF that is regulated by California government code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City's investment in the pool is reported in the accompanying financial statement at amounts based upon the City's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, and is recorded on the amortized cost basis. The pool is not registered with the Securities and Exchange Commission (SEC) and is not rated.

The City recognizes the fair value measurement of its investments on a recurring basis, based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Investments in the Local Agency Investment Funds/State Investment Pool are not measured using the input levels above because the City's transactions are based on a stable net asset value per share. All contributions and redemptions are transacted at $1.00 net asset value per share.

NOTE 4 – INTERFUND TRANSFERS
With Council approval, resources may be transferred from one City fund to another. Transfers (1) are used to move revenues from the fund that statute or budget requires to be collected to the fund that statute or budget requires to expend them, and (2) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations.

Transfers In Transfers Out
General Fund $1,000,430
Special Revenue Funds:

Law Enforcement Fund $855,260
Gas Tax Fund 133,380
Nonmajor Fund 11,790
Total $1,000,430 $1,000,430
24

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 5 – CAPITAL ASSETS
The City reports all capital assets, in the Government-Wide Statement of Net Position. The City reports infrastructure using the basic approach.

The following table presents the capital assets activity for the year ended June 30, 2022.

Balance at Balance at
June 30, 2021 Additions Adjustments June 30, 2022
Capital assets, not being depreciated:

Land $119,888 $119,888
Total capital assets not being depreciated 119,888 119,888 Capital assets being depreciated:

Buildings Improvements 409,663 409,663
Computer Equipment 46,395 46,395
Office Equipment 34,622 $4,941 39,563
Total capital assets being depreciated 490,680 4,941 495,621 Less accumulated depreciation for:

Buildings Improvements 239,037 $8,125 247,162
Computer Equipment 46,669 994 $2,262 45,401
Office Equipment 33,588 896 2,586 31,898
Total accumulated depreciation 319,294 10,015 4,848 324,461 Net capital assets being depreciated 171,386 14,956 4,848 171,160 Total capital assets, net $291,274 $14,956 $4,848 $291,048 Depreciation expense was charged to the general government function. 25

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 6 – PENSION PLAN
General Information about the Pension Plans
Plan Description – All qualified permanent employees are eligible to participate in the City’s Miscellaneous Employee Pension Plan, cost-sharing multiple employer defined benefit pension plan administered by the California Public Employees Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and may be amended by City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. www.calpers.ca.gov.

Benefits Provided – CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 to 52 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the California Public Employees’ Retirement Law.

The Plans’ provisions and benefits in effect at June 30, 2022, are summarized as follows:

Hire date Prior to January 1, 2013 Starting January 1, 2013 Formula 2.0% @ 55 2.0% @ 62
Benefit vesting schedule 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life
Minimum retirement age 50 52
Required employee contribution rates 7.00% 6.75%
Required employer contribution rates 10.340% 7.590%
Miscellaneous
Contributions – Section 20814(c) of the California Public Employees’ Retirement law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in rate. Funding contributions for both Plans are determined annual on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rates of employees.

For the year ended June 30, 2022, the contributions to the Plan were $82,134. 26

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 6 – PENSION PLAN - Continued
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2022, the City’s reported net pension asset for its proportionate share of the pension liability of the Plan is as follows:

Miscellaneous
Proportionate Share of Net Pension Asset $867,343
The City’s net pension asset for the Plan is measured as the proportionate share of the collective net pension asset. The net pension asset of the Plan is measured as of June 30, 2021, and the total pension liability for the Plan used to calculated the net pension asset was determined by an actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard actuarial update procedures. The City’s proportion of the collective net pension asset was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined.

The City’s proportionate share of the net pension asset for each Miscellaneous Plans as of June 30, 2021 is as follows:

Miscellaneous Plans
Proportion - June 30, 2020 0.01578%
Proportion - June 30, 2021 0.04568%
Change - Increase (Decrease) 0.02990%
In the current fiscal year, the City recognized pension revenue of $1,356,475. At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred
Outflows Inflows
of Resources of Resources
Pension contributions subsequent to measurement date $82,134 Differences between actual and expected experience (97,263) Changes in assumptions -
Difference between proportional and actual contributions 397,897 ($107,676) Adjustment due to differences in proportions 145,432 (280,259) Net differences between projected and actual earnings on plan investments $757,145
Total $528,200 $369,210
27

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 6 – PENSION PLAN - Continued
The amount of $82,134 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Years Ending June 30
2023 $218,081
2024 190,287
2025 197,672
2026 209,236
$815,276
Actuarial Assumptions – The total pension liabilities in the June 30, 2020, actuarial valuations were determined using the following actuarial assumptions.

Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Projected Salary Increase
Investment Rate of Return (1)
Mortality (2)
(1) Net of pension plan investment expenses; includes inflation. (2) The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre- retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

2.50%
Varies by Entry Age and Service

7.15%
Derived using CalPERS Membership Data for all Fund
June 30, 2020
June 30, 2021
Entry-Age Normal Cost Method

7.15%
Discount Rate – The discount rate used to measure the total pension liability was 7.15%. The projection of cash flows used to determine the discount rate for each Plan assumed contributions from all plan members in the Public Employees Retirement Fund (PERF) will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. 28

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 6 – PENSION PLAN - Continued
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund (Public Employees’ Retirement Fund) cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach.

Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates are net of administrative expenses:

Asset Class (1)
Assumed Asset
Allocation
Real Return
Years 1-10 (2)
Real Return
Years 11+ (3)
Public Equity 50.0% 4.80% 5.98%
Fixed Income 28.0% 1.00% 2.62%
Inflation Assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Assets 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% -0.92%
Total 100.0%
(1) In the System's ACFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities. (2) An expected inflation of 2.00% used for this period. (3) An expected inflation of 2.92% used for this period.

Sensitivity of the Net Pension Asset to Changes in the Discount Rate – The following presents the net pension asset of the City Miscellaneous Plan, calculated using the current discount rate for the Plan, as well as what the City’s net pension asset would be if it were calculated using a discount rate that is 1- percentage point lower or 1-percentage point higher than the current rate:
1% Decrease 6.15%
Net Pension Asset ($82,623)
Current Discount Rate 7.15%
Net Pension Asset ($867,343)
1% Increase 8.15%
Net Pension Asset ($1,516,060)
Pension Plan Fiduciary Net Position – Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. 29

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 7 – OTHER POSTEMPLOYMENT BENEFITS
Postemployment Healthcare Plan (OPEB)
Plan Description – The City’s defined benefit postemployment healthcare plan is a single-employer defined benefit plan provides medical benefits to employees and their spouses who satisfy the requirements for retirement under CalPERS (attained age 50 with five years of service or satisfaction of the requirements for a disability retirement.) No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.

Benefits Provided – The City provides medical insurance benefits to eligible retirees and their spouses.

Benefits are provided through CalPERS Health Insurance, and the cost of benefits is limited to the PERS Choice Single Health Plan Premium. The City's governing board has the authority to establish and amend the benefit terms as needed.

Employees Covered – At the June 30, 2021, valuation date, the following employees were covered by the benefit terms for the OPEB Plan:

Count
Inactive employees or beneficiaries currently receiving benefits 4 Inactive employees entitled to but not yet receiving benefits 3 Active employees 7
Total 14
Total OPEB Liability – The City’s Total OPEB liability was measured as of June 30, 2021, was determined by an actuarial valuation as of June 30, 2021 that was based on the following actuarial methods and assumptions:

Actuarial Assumptions:

Contribution Policy No pre-funding
Discount Rate 3.54% at June 30, 2022
Inflation 2.50% annually
Mortality, Retirement, Disability, Termination CalPERS 1997-2015 Experience Study Mortality Improvement Mortality projected fully generational with Scale MP-2021 Healthcare Trend Cost Rate Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076 Medicare (Non-Kaiser) - 5.65% for 2023, decreasing to an ultimate rate of 3.75% in Medicare (Kaiser) - 4.60% for 2023, decreasing to an ultimate rate of 3.75% in 2076 30

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 7 – OTHER POSTEMPLOYMENT BENEFITS - Continued
Change in Total OPEB Liability – The changes in the total OPEB liability for the City are as follows:

Total OPEB
Liability
Balance at June 30, 2021 $764,837
Changes for the year:

Service Cost 112,123
Interest on the Total OPEB Liability 18,555
Differences between Expected and Actual Experience
Benefit payments (35,827)
Administrative Expense
Changes of assumptions (153,791)
Net changes (58,940)
Balance at June 30, 2022 $705,897
Sensitivity of the Total OPEB liability to Changes in the Discount Rate – The following presents the total OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower (2.54%) or one percentage point higher (4.54%) than the current rate, for year ended June 30, 2022:

Discount Rate
-1.0% Discount Rate Current Rate +1.0% Discount Rate

2.54% 3.54% 4.54%
$812,567 $705,897 $619,666
Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates – The following presents the total OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage higher than the current rate, for year ended June 30, 2022:

Healthcare Trend Rate
-1.0% Decrease Current Trend +1.0% Increase
$598,367 $705,897 $842,691
31

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 7 – OTHER POSTEMPLOYMENT BENEFITS - Continued
Expense and Deferred Outflows/Inflows of Resources Related to OPEB Under GASB Statement No. 75 – For the fiscal year ended June 30, 2022, the City recognized OPEB expense of $62,350. As of fiscal year ended June 30, 2022, the City reported deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Changes of assumptions $139,227 $214,650
Differences between expected and
actual experience 336,133
Total $139,227 $550,783
The amounts reported as deferred inflows of resources related to OPEB will be recognized as expense as follows:

Fiscal Year Ended Annual
June 30 Amortization
2023 ($68,400)
2024 (67,410)
2025 (64,905)
2026 (76,982)
2027 (102,003)
Thereafter (31,856)
Total ($411,556)
NOTE 8 – COMMITMENTS AND CONTINGENCIES
The City is involved as a defendant in various legal proceedings. While it is not feasible to predict or determine the outcome in these cases, it is the opinion of the City that the outcome will have no materially adverse effect on the financial position of the City.

The City may receive State and Federal funds for specific purposes that are subject to audit by the grantor agencies. Such audits could generate expenditure disallowances under the terms of the grants. It is believed that any required reimbursements would not be material.

The City participates in a Public Entity Risk Pool. See Note 10 for details. 32

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 9 – NATURE AND PURPOSE OF REPORTED FUND BALANCE CLASSIFICATIONS In the fund financial statements, governmental funds report the following classifications of fund balance:

Non-Major Governmental Funds
Law Loma Serena Rose Andrews Storm
General Enforcement Gas Tax Street Lighting Street Lighting Drainage Fund Balance Classifications Fund Fund Fund Fund Fund Fund Total Restricted for:

Capital projects $374,280 $90,524 $464,804
Law enforcement $38,544 38,544
Road impact fees $9,384 $39 $9,423
Total Restricted Fund Balances 38,544 374,280 9,384 39 90,524 512,771 Unassigned:

General fund $4,949,750 4,949,750
Total Unassigned Fund Balances 4,949,750 4,949,750
Total Fund Balances $4,949,750 $38,544 $374,280 $9,384 $39 $90,524 $5,462,521 NOTE 10 – RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and injuries to employees. The City has joined Bay Cities Joint Powers Insurance Authority (BCJPIA). BCJPIA is a public entity risk pool that is currently operating a common risk management agency with nineteen members. Annual premiums are paid by members and are adjusted retrospectively to cover costs. Excess premiums, if any, are returned to the members based on an equity allocation five years after the close of the program year. Member deductibles range from $5,000 to $350,000 with a self-insured retention of $1,000,000 by BCJPIA. The City’s self-insured retention is $5,000. BCJPIA has purchased excess insurance up to $38,000,000 from a private company to provide coverage for losses and claims in excess of the stated limits.

NOTE 11 – PARTICIPATION IN JOINT POWERS AUTHORITIES
The City is a member of the West Valley Solid Waste Management Authority (WVSWMA) for solid waste management and Silicon Valley Animal Control Authority (SVACA) for animal control services.

The City pays an annual premium to each entity for the services. The relationships between the City and the JPA’s are such that they are not component units of the City for financial reporting purposes. Each entity is summarized below.

Description of WVSWMA
This program is a joint venture with the cities of Los Gatos, Campbell, Monte Sereno, and Saratoga to provide a coordinated Solid Waste Management Authority to their respective cities in order to meet State and Federal requirements, as well as local objectives regarding solid waste. Each city has a representative on the Rate Review Committee of the Program, which makes recommendations regarding budgets, policies, and procedures to the city managers of the member cities. WVSWMA is administered by a Board of Directors consisting of four Directors, one each appointed by the Legislative Body of the cities of Campbell, Los Gatos, Monte Sereno and Saratoga. Costs of the programs are allocated based on population with Monte Sereno’s portion of the budget equaling 3.5 percent for the year. 33

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 11 – PARTICIPATION IN JOINT POWERS AUTHORITIES - Continued Description of SVACA
This program is a joint venture with the cities of Campbell, Santa Clara, Mountain View, and Monte Sereno to own, manage, operate and maintain the Animal Control Services in the area in order to provide the residents with more efficient and economical animal control services. SVACA is administered by a Board of Directors consisting of four Directors, one each appointed by the Legislative Body of the cities of Santa Clara, Campbell, Mountain View, and Monte Sereno. Costs of the program are allocated in proportions to the population of the member agency, the amount of licensed animals owned or kept by residents of the member agency, and the total number of days that an animal from each member agency is held at the current animal shelter facility. During the current year Monte Sereno’s proportional share of those costs was 1.5% and is expected to be 1.64% for the fiscal year 2022-2023.

Audited financial statements are available from these entities.

NOTE 12 – NEW GASB PRONOUNCEMENTS
The following Governmental Accounting Standards Board (GASB) pronouncements were effective in fiscal year 2021-2022:

In June 2017, GASB issued Statement No. 87, Leases. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities.

The provisions of this Statement were implemented during fiscal year 2022.

In June 2018, GASB issued Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. The objectives of this Statement are to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and to simplify accounting for certain interest costs. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in the financial statements. The provisions of this Statement were implemented during fiscal year 2022.

The implementation had no effect on the financial statements. 34

City of Monte Sereno
Notes to Financial Statements
June 30, 2022
NOTE 12 – NEW GASB PRONOUNCEMENTS - Continued
In March 2020, GASB issued Statement No. 93, Replacement of Interbank Offered Rates. The primary objective of this Statement is to address accounting and financial reporting implications that result from the replacement of an interbank offered rate. The provisions of this Statement were implemented during fiscal year 2022. The implementation had no effect on the financial statements.

In June 2020, GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The primary objectives of this Statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans that meet the definition of a pension plan and for benefits provided through those plans. The provisions of this Statement were implemented during fiscal year 2022. This Statement had no material effect on the financial statements. 35

This Page Left Intentionally Blank

Required Supplementary Information
June 30, 2022
City of Monte Sereno

CITY OF MONTE SERENO

GENERAL FUND

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual (Negative)

REVENUES
Property taxes $2,168,100 $2,177,826 $2,325,200 $147,374 Sales taxes 7,825 15,740 12,936 (2,804)
Franchise fee 310,700 310,567 323,549 12,982
Real property transfer tax 205,245 279,647 198,075 (81,572) License and permits 666,525 850,859 1,001,062 150,203
Fines and penalities 3,500 2,655 2,451 (204)
Investment earnings 24,150 8,211 9,809 1,598
Intergovernmental / Other agencies 700,750 539,567 418,139 (121,428) Other revenue 385,600 486,616 353,711 (132,905)
Total Revenues 4,472,395 4,671,688 4,644,932 (26,756)

EXPENDITURES
Current:

General Government 3,358,814 3,167,540 2,741,162 426,378 Public safety 2,685,000 2,685,000 1,293,220 1,391,780
Public works 339,800 347,411 367,386 (19,975)
Community development 42,035 33,114 37,489 (4,375)
Capital outlay
Total Expenditures 6,425,649 6,233,065 4,439,257 1,793,808

EXCESS OF REVENUES
OVER EXPENDITURES (1,953,254) (1,561,377) 205,675 1,767,052

OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (out) (1,000,430) (1,000,430)
Total Other Financing Sources (Uses) (1,000,430) (1,000,430) NET CHANGE IN FUND BALANCE ($1,953,254) ($1,561,377) (794,755) $766,622 Fund balance at beginning of year 5,744,505
FUND BALANCE AT END OF YEAR $4,949,750
38

CITY OF MONTE SERENO

LAW ENFORCEMENT FUND

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual (Negative)

REVENUES
Property taxes $106,000 $111,515 $191,390 $79,875
Intergovernmental/ other agencies 100,000 111,285 161,285 50,000 Total Revenues 206,000 222,800 352,675 129,875

EXPENDITURES
Current:

Public safety 1,067,085 1,078,370 1,169,391 (91,021)
Total Expenditures 1,067,085 1,078,370 1,169,391 (91,021)

EXCESS OF REVENUES
OVER EXPENDITURES (861,085) (855,570) (816,716) 38,854

OTHER FINANCING SOURCES (USES)
Transfers in 855,260 855,260
Transfers (out)
Total Other Financing Sources (Uses) 855,260 855,260
NET CHANGE IN FUND BALANCE ($861,085) ($855,570) 38,544 $894,114 Fund balance at beginning of year
FUND BALANCE AT END OF YEAR $38,544
39

CITY OF MONTE SERENO

GAS TAX FUND

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual (Negative)

REVENUES
Gas tax $176,000 $153,505 $154,815 $1,310
Investment earnings 650 1,030 1,481 451
Total Revenues 176,650 154,535 156,296 1,761

EXPENDITURES
Current:

General Government 3,500 2,576 2,576
Public works 21,400 12,403 138,779 (126,376)
Total Expenditures 24,900 14,979 141,355 (126,376)

EXCESS OF REVENUES
OVER EXPENDITURES 151,750 139,556 14,941 (124,615)

OTHER FINANCING SOURCES (USES)
Transfers in 133,380 133,380
Transfers (out)
Total Other Financing Sources (Uses) 133,380 133,380
NET CHANGE IN FUND BALANCE $151,750 $139,556 148,321 $8,765 Fund balance at beginning of year 225,959
FUND BALANCE AT END OF YEAR $374,280
40

CITY OF MONTE SERENO
MISCELLANEOUS PLAN – COST-SHARING MULTIPLE-EMPLOYER DEFINED PENSION PLAN

SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY/ (ASSET) AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS **
Measurement Date 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 Plan's Proportion of the Net Pension Liability
(Asset) 0.01204% 0.01091% 0.01124% 0.00518% 0.00424% 0.01321% 0.01579% -0.04568% Plan's Proportionate Share of the Net Pension Liability (Asset) $749,395 $748,563 $972,944 $513,753 $408,507 $528,780 $666,025 ($867,343) Plan's Covered Payroll $713,447 $723,056 $673,336 $672,548 $774,294 $903,345 $841,740 $806,851Plan's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of it's Covered Payroll 105.04% 103.53% 144.50% 76.39% 52.76% 58.54% 79.12% -107.50% Plan’s Fiduciary Net Position as a Percentage of
the Total Pension Liability 79.82% 78.40% 74.06% 73.31% 75.26% 75.26% 75.10% 114.59%* Fiscal year 2015 was the 1st year of implementation.

Miscellaneous Plan
41

Miscellaneous Plan
Fiscal Year 2015 2016 2017 2018 2019
Actuarially determined contribution $111,286 $121,561 $667,968 $59,622 $79,188 Contributions in relation to the actuarially
determined contributions (111,286) (121,561) (667,968) (59,622) (79,188) Contribution deficiency (excess)
Covered payroll $723,056 $673,336 $672,548 $774,294 $903,345 Contributions as a percentage of covered
payroll 15.39% 18.05% 99.32% 7.70% 8.77%
Valuation date: 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Fiscal Year 2020 2021 2022
Actuarially determined contribution $93,864 $125,384 $ 82,134 Contributions in relation to the actuarially
determined contributions (93,864) (813,146) (82,134)
Contribution deficiency (excess) ($687,762) $ -
Covered payroll $841,740 $806,851 $953,625
Contributions as a percentage of covered
payroll 11.15% 15.54% 8.61%
Valuation date: 6/30/2018 6/30/2019 6/30/2020
Notes to Schedule
Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age normal
Amortization method Level percentage of payroll, closed Remaining amortization period 30 years
Asset valuation method 5-year smoothed market
Inflation 2.50%
Salary increases Varies by Entry Age and Service
Investment rate of return 7.15%, net of pension plan investment and administrative expenses, including inflation * Fiscal year 2015 was the 1st year of implementation, therefore only four years are shown.

Cost-Sharing Multiple-Employer Defined Pension Plan
Last 10 Years*

SCHEDULE OF CONTRIBUTIONS
Miscellaneous Plan
42

CITY OF MONTE SERENO

SCHEDULE OF CHANGES IN TOTAL OTHER POST-EMPLOYMENT BENEFITS

LIABILITY AND RELATED RATIOS
AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS **
Measurement Date 2017 2018 2019 2020 2021
Total OPEB Liability (TOL)Service Cost $97,527 $94,841 $105,142 $139,568 $112,123Interest on the total OPEB Liability 25,244 30,267 33,454 29,175 18,555 Changes in benefit termsDifferences between expected and actual experience (467,951)Changes of assumptions (33,667) 49,469 212,695 (102,474) (153,791)Benefit Payments (11,211) (7,732) (14,591) (28,152) (35,827)Net change in total OPEB liability 77,893 166,845 336,700 (429,834) (58,940)Total OPEB liability - beginning 613,233 691,126 857,971 1,194,671 764,837Total OPEB liability - ending (a) $691,126 $857,971 $1,194,671 $764,837 $705,897Covered payroll $774,294 $903,345 $841,740 $806,851 $957,255TOL as a percentage of covered employee payroll 89.26% 94.98% 141.93% 94.79% 73.74%Notes to Schedule:
* Fiscal year 2018 was the first year of implementation.Historical information is required only for measurement periods for which GASB 75 is applicable. Future year's information will be displayed up to 10 years as information becomes available. 43

City of Monte Sereno
Note to Budgetary Information
For the Year Ended June 30, 2022
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. An annual budget is adopted by the City Council no later than the first regular meeting in July for the fiscal year beginning July first. As part of the budget process, all City departments submit budget requests for the next fiscal year. These requests are reviewed, and a final City Manager recommended budget showing estimated revenues and expenditures of the City is prepared. This proposed budget is transmitted to the City Council and made available to the public for review. Any new appropriation or appropriation transfer between funds or department requires approval by the City Council. Several supplemental appropriations were necessary during the year and are reflected in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at the fund level. The Budgetary Comparison Schedules present both the original adopted and the final budget with all amendments. Budgets are adopted each year for all general and law enforcement funds.

The City had the following funds with expenditures in excess of appropriations for the year ended June 30, 2022:

Negative
Budgeted Amount Actual Variance with
Expenditure Final Amount Final Budget
General Fund
Public Works $347,411 $367,386 ($19,975)
Community development 33,114 37,489 (4,375)
Law Enforcement Fund
Public Safety 1,078,370 1,169,391 (91,021)
44

Supplementary Information
June 30, 2022
City of Monte Sereno

CITY OF MONTE SERENO

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETS
JUNE 30, 2022
Total
Loma Serena Rose Andrews Storm Nonmajor
Street Lighting Street Lighting Drainage Governmental
Fund Fund Fund Funds
ASSETS
Cash and investments available for operations $9,556 $39 $90,524 $100,119 Accounts receivable 5 5
Total Assets $9,561 $39 $90,524 $100,124

LIABILITIES
Accounts payable and accrued liabilities $177 $177
Total Liabilities 177 177

FUND BALANCES
Restricted $9,384 $39 $90,524 99,947
Total Fund Balance 9,384 39 90,524 99,947
Total Liabilities and Fund Balances $9,561 $39 $90,524 $100,124 46

CITY OF MONTE SERENO

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENTS OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2022
Total
Loma Serena Rose Andrews Storm Nonmajor
Street Lighting Street Lighting Drainage Governmental
Fund Fund Fund Funds

REVENUES
Property taxes $2,492 $2,492
Other revenue $20,174 20,174
Total Revenues 2,492 20,174 22,666

EXPENDITURES
Current:

Public Works & Engineering 3,037 $649 9,438 13,124
Capital outlay 565 565
Total Expenditures 3,037 649 10,003 13,689

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (545) (649) 10,171 8,977

OTHER FINANCING SOURCES (USES)
Transfers in 1,383 649 9,758 11,790
Transfers (out)
Total Other Financing Sources (Uses) 1,383 649 9,758 11,790 NET CHANGE IN FUND BALANCES 838 19,929 20,767
Fund balances (deficits) at beginning of year 8,546 39 70,595 79,180 FUND BALANCES AT END OF YEAR $9,384 $39 $90,524 $99,947 47

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INDEPENDENT AUDITOR’S REPORT ON

INTERNAL CONTROL OVER FINANCIAL REPORTING

AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE

WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Members of the City Council
City of Monte Sereno, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the basic financial statements of the City of Monte Sereno, California, as of and for the year ended June 30, 2022, and have issued our report thereon dated June 7, 2023.

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

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

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We identified certain deficiencies in internal control that we consider to be material weaknesses as listed on the Schedule of Material Weaknesses included as part of our separately issued Memorandum on Internal Control dated June 7, 2023, which is an integral part of our audit and should be read in conjunction with this report.
49

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

The results of our test disclosed no instance of noncompliance that are required to be reported under Government Auditing Standards.

We have also issued a separate Memorandum on Internal Control dated June 7, 2023 which is an integral part of our audit and should be read in conjunction with this report.

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

Pleasant Hill, California
June 7, 2023
50

STAFF REPORT
Meeting: City Council - Jun 20 2023
Agenda Heading: NEW BUSINESS
Staff Contact: Gloisy Gonzalez-Langarica, City Clerk
Department: City Clerk
Title: Consider and Award West Valley Community Services a One Time Grant in the Amount Not to Exceed $5,000 for the Back-to-School Program Recommendation(s):

Staff recommends the City Council consider and award West Valley Community Services a one time grant in the Amount not to exceed $5,000 for the Back-to-School Program. Staff recommends the following funding be allocated from the Fiscal Year 2023-2024.

Background Information:

On May 11, 2023 Ms. Sujatha Venkatraman reached out to the City of Monte Sereno City Manager and City Clerk. In her email she explained she was seeking funding for the West Valley Community Services Back to School Program. She explained former employee Josh Selo was in charge of submitting an application for the Community Based Organization Grants (CBO) to the City for the continuation of the Back to School Program but he left the organization before submitting the application. Unfortunately, at the time of this email, the CBO Grant deadline had already passed. West Valley Community Services would like the City Council to consider a special one time grant to assist the Back to School Program.

Public Noticing:

The City of Monte Sereno’s council meeting agenda was posted on the bulletin board outside of Monte Sereno City Hall and the agenda with this staff report can be accessed on The City of Monte Sereno’s website located at www.montesereno.org.

Attachments:
2023 Agency Presentation Back to School Program

West Valley Community Services

Our mission is to unite the community to fight hunger and homelessness.

Our vision is a community where every person has food on the table and a roof over their head.

About WVCS
“When I first came into WVCS for help, I had a three-day notice for evictions. I had to move out if I did not have any help. WVCS prevented me and my child from
becoming homeless.” - Millisa (Client)

WVCS Client Data (2021-2022)
By the Numbers
People came to
WVCS for the first
time
Men, women, and
children assisted
Meals made
possible by our
food pantries
Emergency rental
assistance
provided
1530 4,450 1,027,05 $2,376,726

Our Clients
● West valley residents
● Multicultural
● Multilingual
● Single adults
● Couples
● Families
● Seniors
● At-risk youth
● Domestic abuse survivors
● Disabled
● Homeless and/or unstably housed
Income eligibility
● $46,000 individual
income
● $96,00 family income
(four person
household)

Our Services
We provide a variety of critical safety-net services:
● Food - shopping
● Food - delivery
● Rental assistance
● Housing referrals &
support
● Affordable housing
● Family support
● Homeless services
● Financial coaching
● Case management &
system navigation
● Information and
referrals
● Education and
advocacy
● Employment
coaching

Our Intervention
● Choice - Pantry to Market
● Food access is looked at with the len of
nutritional meals
● One stop shop approach
● Mobile operations ( 7 locations)
● Lived experience conversation
● Service learning opportunities
● Hunger and Housing advocacy for
systems change

Park-it Market
Park-It Market Page 202 of 478
Our Approach
● Prevent imminent evictions and/or utility shut-off
● Reduce food costs, preserving household assets for other essential expenses (rent, childcare, utilities, transportation) ● Provide assistance in navigating benefits available through the social services system in the County
● Help clients remain housed/house un-housed clients
● Develop a plan to reduce long-term debt and save money ● Explore new income and employment opportunities
● Support long-term stability and health for children and other household members
● Work with clients to develop and implement a plan that supports long term stability

Back to School Program
Thank you so much for your kind consideration of sponsorship in support of West Valley Community Services’ Back to School with Dignity Program. Since 2017, the program has grown by 265%, serving almost 385 low-income and homeless children in prekindergarten through 12th grade last year. Your support would help us address the growing need in our community.

Despite the high level of wealth in our region, a growing number of individuals and families are experiencing the horrors of poverty, hunger, and homelessness. Recent data published by Joint Venture Silicon Valley in the 2022 Silicon Valley Index paints a grim tale:
● The combination of housing scarcity and income disparity has made it incredibly difficult for low-income families to survive in Silicon Valley.
● $54 in hourly wages that renters need to afford the average monthly rent in San Jose for a 2-bedroom apartment (approximately $111,680 a year).
● 46 Percent of children in Silicon Valley who live in households that do not earn enough income to cover the family’s basic needs and require government or nonprofit assistance to meet them. ● 3,165 Median monthly rent in dollars in the San Jose-Sunnyvale-Santa Clara metro area in December 2021, making it the most expensive metro area to rent in the U.S.; studio median rent: $2,463, 1-bedroom median rent: $2,771, 2-bedroom median rent: $3,410.
● 24% of Silicon Valley households are rent-burdened, spending more than 70% of their gross annual income on housing costs
● 10,028 Number of people who are homeless in Santa Clara County on any given night, up 3 percent from 2019 Page 204 of 478 Back to School Program
Held annually on the first Saturday of August, the Back to School with Dignity Program provides clothing, shoes, backpacks, and school supplies to families facing a food or housing crisis who cannot purchase back-to-school supplies for their children. This program also allows families living in poverty to preserve household assets that would have been spent on back-to-school items so that they can be spent on critical household needs such as rent, utilities, and food.

Over the past four years, this program has grown from 105 children in 2015 to 385 children in 2022.

Given the significant challenges facing low-income and homeless families in our community, we anticipate increased demand in 2023. As a result, our goal this year is to serve more than 400 children in preschool through 12th grade.

A sponsorship from the City of Monte Sereno would help make it possible to meet this growing need and help our community's young people start the school year ready to learn. Page 205 of 478 Pictures
OLD NAVY 2022 Back to School program Page 206 of 478
Pictures
OLD NAVY 2022 Back to School program Page 207 of 478

STAFF REPORT
Meeting: City Council - Jun 20 2023
Agenda Heading: NEW BUSINESS
Staff Contact: Steve Leonardis,
Department: City Manager
Title: Consider the Partial Allocation or Investment of Local Area Investment Funds (LAIF) to Treasury Bills (T- Bills) in the Amount of $4.5 million and Approve a Resolution Adopting the City's Investment Policy Recommendation(s):

Staff recommends the City Council of Monte Sereno consider the Partial Allocation or Investment of Local Area Investment Funds (LAIF) to Treasury Bills (T- Bills) in the amount of $4.5 million and approve a resolution adopting the City's Investment Policy Fiscal Impact:

The City could potentially earn higher interest revenue from the interest rate spread between LAIF rates (2.642% February 2023) versus 30-Day T-Bill (4.067% 30-day to 4.724% 90-Day March 28, 2023 quoted pricing).

Public Noticing:

The City Council’s agenda was posted at City Hall and the agenda and this report appear on the City’s website.

Attachments:

T-Bill vs LAIF Investment Strategy
California Government Code Section 53601
3700 - Investment Policy FY 2018-19
Drafted Investment Policy Resolution

1 | P a g e
Local Agency Investment Fund (LAIF)

2 | P a g e
Local Agency Investment Fund (LAIF) – Average Monthly Yields

3 | P a g e

4 | P a g e
What Is a Treasury Bill (T-Bill)?
A Treasury Bill (T-Bill) is a short-term U.S. government debt obligation backed by the Treasury Department with a maturity of one year or less. Treasury bills are usually sold in denominations of $1,000. However, some can reach a maximum denomination of $5 million in non-competitive bids. These securities are widely regarded as low-risk and secure investments.

The Treasury Department sells T-Bills during auctions using a competitive and noncompetitive bidding process. Noncompetitive bids—also known as non-competitive tenders—have a price based on the average of all the competitive bids received. T-Bills tend to have a high tangible net worth.

KEY TAKEAWAYS
• A Treasury Bill (T-Bill) is a short-term debt obligation backed by the U.S.

Treasury Department with a maturity of one year or less. • Treasury bills are usually sold in denominations of $1,000 while some can reach a maximum denomination of $5 million.
• The longer the maturity date, the higher the interest rate that the T-Bill will pay to the investor.

Understanding Treasury Bills (T-Bills)
• The U.S. government issues T-bills to fund various public projects, such as the construction of schools and highways. When an investor purchases a T-Bill, the U.S. government is effectively writing an IOU to the investor. T-bills are considered a safe and conservative investment since the U.S. government backs them.
• T-Bills are normally held until the maturity date. However, some holders may wish to cash out before maturity and realize the short-term interest gains by reselling the investment in the secondary market.
• T-bills can have maturities of just a few days or up to a maximum of 52 weeks, but common maturities are four, eight, 13, 26, and 52 weeks.1 On average, the longer the maturity date, the higher the interest rate that the T-Bill will pay to the investor.
• T-bills are issued at a discount from the par value (also known as the face value) of the bill, meaning the purchase price is less than the face value of the bill. For example, a $1,000 bill might cost the investor $950 to buy the product. • When the bill matures, the investor is paid the face value—par value—of the bill they bought. If the face value amount is greater than the purchase price, the difference is the interest earned for the investor.
• T-bills do not pay regular interest payments as with a coupon bond, but a T-Bill does include interest, reflected in the amount it pays when it matures. • T-Bill Tax Considerations

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• The interest income from T-bills is exempt from state and local income taxes.

However, the interest income is subject to federal income tax. Investors can access the research division of the TreasuryDirect website for more tax information.
• Purchasing T-Bills
• There are two ways to buy T-bills. You can buy them directly from the government, or on the secondary market through a broker. • Buying T-Bills from TreasuryDirect
• New issues of T-Bills can be purchased at auctions held by the government on the TreasuryDirect site. These are priced through a bidding process, with bidders ranging from individual investors to hedge funds, banks, and primary dealers. These purchasers may then sell the bills to other customers in the secondary market.
• A competitive bid sets a price at a discount from the T-bill's par value, letting you specify the yield you wish to get from the T-Bill. Noncompetitive bids auctions allow investors to submit a bid to purchase a set dollar amount of bills. The yield investors receive is based upon the average auction price from all bidders. • Buying T-Bills on the Secondary Market
• You can also buy Treasury bills through a bank or a licensed broker. Once completed, the purchase of the T-Bill serves as a statement from the government that says you are owed the money you invested, according to the terms of the bid.

Advantages and Disadvantages of T-Bills
Treasury Bills are one of the safest investments available to the investor. But this safety can come at a cost. T-bills pay a fixed rate of interest, which can provide a stable income. However, if interest rates are rising, existing T-bills fall out of favor since their rates are less attractive compared to the overall market. As a result, T-bills have interest rate risk meaning there is a risk that existing bondholders might lose out on higher rates in the future.

Although T-bills have zero default risk, their returns are typically lower than corporate bonds and some certificates of deposit. Since Treasury bills don't pay periodic interest payments, they're sold at a discounted price to the face value of the bond. The gain is realized when the bond matures, which is the difference between the purchase price and the face value.4
However, if they're sold early, there could be a gain or loss depending on where bond prices are trading at the time of the sale. In other words, if sold early, the sale price of the T-bill could be lower than the original purchase price.1 Pros and Cons of T-Bills
Pros
• Zero default risk since T-bills have a U.S. government guarantee.

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• T-bills offer a low minimum investment requirement of $100. • Interest income is exempt from state and local income taxes but subject to federal income taxes.
• Investors can buy and sell T-bills with ease in the secondary bond market.

Cons
• T-Bills offer low returns compared with other debt instruments as well as when compared to certificates of deposits (CDs).
• The T-Bill pays no coupon—interest payments—leading up to its maturity. • T-bills can inhibit cash flow for investors who require steady income. • T-bills have interest rate risk, so, their rate could become less attractive in a rising-rate environment.

What Influences T-Bill Prices?
T-Bill prices fluctuate similarly to other debt securities. Many factors can influence T-Bill prices, including macroeconomic conditions, monetary policy, and the overall supply and demand for Treasuries.2
Maturity Dates
T-Bills with longer maturity dates tend to have higher returns than those with shorter maturities. In other words, short-term T-bills are discounted less than longer-dated Tbills. Longer-dated maturities pay higher returns than short-dated bills because there's more risk priced into the instruments meaning there's a greater chance that interest rates could rise. Rising market interest rates make the fixed-rate T-bills less attractive.

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T-Bill Offerings as of March 28, 2023

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Recommended Allocation Strategy with LAIF Funds:

LAIF Balances as of March 28, 2023
Wells Fargo Bank Balances as of March 28, 2023

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Allocation or Rebalance Strategy for LAIF Funds:

Account Name
Current
Balance 03-28-
2023
Proposed
Allocation (T-Bills)
Proposed
Allocation
(LAIF)
Proposed
Allocation
(Wells Fargo)
New Brokerage
Account $0 $4,500,000
LAIF $4,585,685 $85,685
WFB Checking $393,051 $393,051
WFB Savings $1,030,544 $1,030,544
Total $6,009,280 $4,500,000 $85,685 $1,423,595
The $4.5 million funds from LAIF would be invested in T-Bills with duration of 30, 45, 60, 75, and 90-day at approximately $900,000 each. Below is a hypothetical scenario of staff’s recommendation.

If the interest rate spread (difference) between LAIF interest rates and T-Bill yields are estimated at around 2%, then the potential incremental annual interest could be $90,000 ($4.5 million times 2.0% interest rate spread) for Monte Sereno.

CALIFORNIA GOVERNMENT CODE – SECTION 53601
1 Search Phrase:

Highlight

GOVERNMENT CODE - GOV
TITLE 5. LOCAL AGENCIES [50001 - 57607]
( Title 5 added by Stats. 1949, Ch. 81. )

DIVISION 2. CITIES, COUNTIES, AND OTHER AGENCIES [53000 - 55821] ( Division 2 added by Stats. 1949, Ch. 81. )

PART 1. POWERS AND DUTIES COMMON TO CITIES, COUNTIES, AND OTHER AGENCIES [53000 - 54999.7]
( Part 1 added by Stats. 1949, Ch. 81. )

CHAPTER 4. Financial Affairs [53600 - 53997]
( Chapter 4 added by Stats. 1949, Ch. 81. )

ARTICLE 1. Investment of Surplus [53600 - 53610]
( Article 1 added by Stats. 1949, Ch. 81. )

53601.

This section shall apply to a local agency that is a city, a district, or other local agency that does not pool money in deposits or investments with other local agencies, other than local agencies that have the same governing body. However, Section 53635 shall apply to all local agencies that pool money in deposits or investments with other local agencies that have separate governing bodies. The legislative body of a local agency having moneys in a sinking fund or moneys in its treasury not required for the immediate needs of the local agency may invest any portion of the moneys that it deems wise or expedient in those investments set forth below. A local agency purchasing or obtaining any securities prescribed in this section, in a negotiable, bearer, registered, or nonregistered format, shall require delivery of the securities to the local agency, including those purchased for the agency by financial advisers, consultants, or managers using the agency’s funds, by book entry, physical delivery, or by third-party custodial agreement. The transfer of securities to the counterparty bank’s customer book entry account may be used for book entry delivery.

For purposes of this section, “counterparty” means the other party to the transaction. A counterparty bank’s trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency. Where this section specifies a percentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase. For purposes of compliance with this section, an investment’s term or remaining maturity shall be measured from the settlement date to final maturity. A security purchased in accordance with this section shall not have a forward settlement date exceeding 45 days from the time of investment.

Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase or reverse repurchase agreement or

CALIFORNIA GOVERNMENT CODE – SECTION 53601
2 securities lending agreement authorized by this section, that at the time of the investment has a term remaining to maturity in excess of five years, unless the legislative body has granted express authority to make that investment either specifically or as a part of an investment program approved by the legislative body no less than three months prior to the investment:
(a) Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency. (b) United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest.
(c) Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state.
(d) Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenueproducing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California. (e) Bonds, notes, warrants, or other evidences of indebtedness of a local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. (f) Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States governmentsponsored enterprises. (g) Bankers’ acceptances otherwise known as bills of exchange or time drafts that are drawn on and accepted by a commercial bank. Purchases of bankers’ acceptances shall not exceed 180 days’ maturity or 40 percent of the agency’s moneys that may be invested pursuant to this section. However, no more than 30 percent of the agency’s moneys may be invested in the bankers’ acceptances of any one commercial bank pursuant to this section.

This subdivision does not preclude a municipal utility district from investing moneys in its treasury in a manner authorized by the Municipal Utility District Act (Division 6 (commencing with Section 11501) of the Public Utilities Code). (h) Commercial paper of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical rating organization (NRSRO). The entity that issues the commercial paper shall meet all of the following conditions in either paragraph (1) or (2):
(1) The entity meets the following criteria:
(A) Is organized and operating in the United States as a general corporation.

CALIFORNIA GOVERNMENT CODE – SECTION 53601
3 (B) Has total assets in excess of five hundred million dollars ($500,000,000).
(C) Has debt other than commercial paper, if any, that is rated in a rating category of “A” or its equivalent or higher by an NRSRO. (2) The entity meets the following criteria:
(A) Is organized within the United States as a special purpose corporation, trust, or limited liability company.
(B) Has programwide credit enhancements including, but not limited to, overcollateralization, letters of credit, or a surety bond. (C) Has commercial paper that is rated “A-1” or higher, or the equivalent, by an NRSRO.

Eligible commercial paper shall have a maximum maturity of 270 days or less. Local agencies, other than counties or a city and county, that have less than one hundred million dollars ($100,000,000) of investment assets under management, may invest no more than 25 percent of their moneys in eligible commercial paper. Local agencies, other than counties or a city and county, that have one hundred million dollars ($100,000,000) or more of investment assets under management may invest no more than 40 percent of their moneys in eligible commercial paper. A local agency, other than a county or a city and a county, may invest no more than 10 percent of its total investment assets in the commercial paper and the mediumterm notes of any single issuer. Counties or a city and county may invest in commercial paper pursuant to the concentration limits in subdivision (a) of Section 53635.
(i) Negotiable certificates of deposit issued by a nationally or state-chartered bank, a savings association or a federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a federally licensed or statelicensed branch of a foreign bank. Purchases of negotiable certificates of deposit shall not exceed 30 percent of the agency’s moneys that may be invested pursuant to this section. For purposes of this section, negotiable certificates of deposit do not come within Article 2 (commencing with Section 53630), except that the amount so invested shall be subject to the limitations of Section 53638. The legislative body of a local agency and the treasurer or other official of the local agency having legal custody of the moneys are prohibited from investing local agency funds, or funds in the custody of the local agency, in negotiable certificates of deposit issued by a state or federal credit union if a member of the legislative body of the local agency, or a person with investment decisionmaking authority in the administrative office manager’s office, budget office, auditor-controller’s office, or treasurer’s office of the local agency also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or the supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit. (j) (1) Investments in repurchase agreements or reverse repurchase agreements or securities lending agreements of securities authorized by this section, as long as

CALIFORNIA GOVERNMENT CODE – SECTION 53601
4 the agreements are subject to this subdivision, including the delivery requirements specified in this section.
(2) Investments in repurchase agreements may be made, on an investment authorized in this section, when the term of the agreement does not exceed one year. The market value of securities that underlie a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. Since the market value of the underlying securities is subject to daily market fluctuations, the investments in repurchase agreements shall be in compliance if the value of the underlying securities is brought back up to 102 percent no later than the next business day.
(3) Reverse repurchase agreements or securities lending agreements may be utilized only when all of the following conditions are met:
(A) The security to be sold using a reverse repurchase agreement or securities lending agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale.
(B) The total of all reverse repurchase agreements and securities lending agreements on investments owned by the local agency does not exceed 20 percent of the base value of the portfolio.
(C) The agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security.
(D) Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty using a reverse repurchase agreement or securities lending agreement shall not be used to purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse repurchase agreement or securities lending agreement, unless the reverse repurchase agreement or securities lending agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security.
(4) (A) Investments in reverse repurchase agreements, securities lending agreements, or similar investments in which the local agency sells securities prior to purchase with a simultaneous agreement to repurchase the security may be made only upon prior approval of the governing body of the local agency and shall be made only with primary dealers of the Federal Reserve Bank of New York or with a nationally or state-chartered bank that has or has had a significant banking relationship with a local agency.

CALIFORNIA GOVERNMENT CODE – SECTION 53601
5 (B) For purposes of this chapter, “significant banking relationship” means any of the following activities of a bank:
(i) Involvement in the creation, sale, purchase, or retirement of a local agency’s bonds, warrants, notes, or other evidence of indebtedness. (ii) Financing of a local agency’s activities.
(iii) Acceptance of a local agency’s securities or funds as deposits. (5) (A) “Repurchase agreement” means a purchase of securities by the local agency pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical delivery, or by third-party custodial agreement.

The transfer of underlying securities to the counterparty bank’s customer book-entry account may be used for book-entry delivery. (B) “Securities,” for purposes of repurchase under this subdivision, means securities of the same issuer, description, issue date, and maturity. (C) “Reverse repurchase agreement” means a sale of securities by the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date and includes other comparable agreements.
(D) “Securities lending agreement” means an agreement under which a local agency agrees to transfer securities to a borrower who, in turn, agrees to provide collateral to the local agency. During the term of the agreement, both the securities and the collateral are held by a third party. At the conclusion of the agreement, the securities are transferred back to the local agency in return for the collateral.
(E) For purposes of this section, the base value of the local agency’s pool portfolio shall be that dollar amount obtained by totaling all cash balances placed in the pool by all pool participants, excluding any amounts obtained through selling securities by way of reverse repurchase agreements, securities lending agreements, or other similar borrowing methods. (F) For purposes of this section, the spread is the difference between the cost of funds obtained using the reverse repurchase agreement and the earnings obtained on the reinvestment of the funds.
(k) Medium-term notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subdivision shall be rated in a rating category of “A” or its equivalent or better by an NRSRO. Purchases of

CALIFORNIA GOVERNMENT CODE – SECTION 53601
6 medium-term notes shall not include other instruments authorized by this section and shall not exceed 30 percent of the agency’s moneys that may be invested pursuant to this section. A local agency, other than a county or a city and a county, may invest no more than 10 percent of its total investment assets in the commercial paper and the medium-term notes of any single issuer. (l) (1) Shares of beneficial interest issued by diversified management companies that invest in the securities and obligations as authorized by subdivisions (a) to (k), inclusive, and subdivisions (m) to (q), inclusive, and that comply with the investment restrictions of this article and Article 2 (commencing with Section 53630). However, notwithstanding these restrictions, a counterparty to a reverse repurchase agreement or securities lending agreement is not required to be a primary dealer of the Federal Reserve Bank of New York if the company’s board of directors finds that the counterparty presents a minimal risk of default, and the value of the securities underlying a repurchase agreement or securities lending agreement may be 100 percent of the sales price if the securities are marked to market daily.
(2) Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a1 et seq.). (3) If investment is in shares issued pursuant to paragraph (1), the company shall have met either of the following criteria:
(A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs.
(B) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience investing in the securities and obligations authorized by subdivisions (a) to (k), inclusive, and subdivisions (m) to (q), inclusive, and with assets under management in excess of five hundred million dollars ($500,000,000).
(4) If investment is in shares issued pursuant to paragraph (2), the company shall have met either of the following criteria:
(A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs.
(B) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). (5) The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include commission that the companies may charge and shall not exceed 20 percent of the agency’s moneys that may be invested

CALIFORNIA GOVERNMENT CODE – SECTION 53601
7 pursuant to this section. However, no more than 10 percent of the agency’s funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph (1).
(m) Moneys held by a trustee or fiscal agent and pledged to the payment or security of bonds or other indebtedness, or obligations under a lease, installment sale, or other agreement of a local agency, or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements, may be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness, or lease installment sale, or other agreement, or to the extent not inconsistent therewith or if there are no specific statutory provisions, in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance.
(n) Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank that is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted.
(o) A mortgage passthrough security, collateralized mortgage obligation, mortgagebacked or other pay-through bond, equipment lease-backed certificate, consumer receivable passthrough certificate, or consumer receivable-backed bond. Securities eligible for investment under this subdivision shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO and have a maximum remaining maturity of five years or less. Purchase of securities authorized by this subdivision shall not exceed 20 percent of the agency’s surplus moneys that may be invested pursuant to this section.
(p) Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in subdivisions (a) to (r), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment adviser that meets all of the following criteria:
(1) The adviser is registered or exempt from registration with the Securities and Exchange Commission.
(2) The adviser has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (q), inclusive. (3) The adviser has assets under management in excess of five hundred million dollars ($500,000,000).

CALIFORNIA GOVERNMENT CODE – SECTION 53601
8 (q) United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO and shall not exceed 30 percent of the agency’s moneys that may be invested pursuant to this section.
(r) Commercial paper, debt securities, or other obligations of a public bank, as defined in Section 57600.

This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
(Amended (as amended by Stats. 2020, Ch. 235, Sec. 2) by Stats. 2022, Ch. 427, Sec. 8. (SB 1489) Effective January 1, 2023. Repealed as of January 1, 2026, by its own provisions. See later operative version, as amended by Sec. 9 of Stats. 2022, Ch. 427.)

RESOLUTION NO. _____23-****

A RESOLUTION ADOPTING AN INVESTMENT POLICY STATEMENT

GOVERNING THE INVESTMENT OF FUNDS OF THE CITY OF

MONTE SERENO, CALIFORNIA
FISCAL YEAR 2023-24
BE IT RESOLVED by the City Council of the City of Monte Sereno, County of Santa Clara, State of California, that the following rules be adopted to govern the investment of funds of the City of Monte Sereno:

SECTION 1. CRITERIA:

All cash assets of the City of Monte Sereno (herein referred to as the "CITY") shall be invested under the "Prudent Investor Rule" in accordance with the following criteria in order of priority:
(a) Safety of Principal: Safety of principal shall be the primary and overriding consideration.
(b) The liquidity of Investments shall be such as to provide for the timely payment of all the City's obligations and for protection from losses due to market action. Fixed maturities shall not exceed one year unless specifically and individually approved.
(c) Rate of Return: The rate of return on investments shall be maximized subject to adherence to the first two criteria.

SECTION 2. INVESTMENT VEHICLES:

Permissible investments are set forth in the State of California Government Code, Section 53601.

SECTION 3. INVESTMENT RESPONSIBILITY:

It shall be the responsibility of the City Manager to investigate and advise the City Council of the opportunities for investment based on policy criteria.

The City Manager shall have primary responsibility for the administration of this policy.

Secondary responsibility shall be that of the Finance Officer.

A monthly report shall be submitted to the City Council detailing where the idle funds are invested, and the average interest rate being earned on each investment.

REGULARLY passed and adopted the 20th day of June 2023, by the following roll call vote:

AYES:

NOES:

ABSENT:

BY: ________________________
Bryan Mekechuk, Mayor
ATTEST: _________________________
Gloisy Gonzalez-Langarica, City Clerk

STAFF REPORT
Meeting: City Council - Jun 20 2023
Agenda Heading: NEW BUSINESS
Staff Contact: Diana Perkins, City Planner
Department: City Planner
Title: Consideration of the Approval of an Updated Fee Schedule for User and Regulatory Fees
Recommendation(s):

Staff recommends that City Council adopt the draft resolution to update the fee schedule for user and regulatory fees and recommends that the fee schedule be reviewed and updated each year as part of the budget setting process.

Background Information:

Overview
Most of the City’s costs are related to services provided for construction and renovation activities in the City (e.g., planning and permitting). While the City maintains its public works infrastructure (e.g., city streets, signage and trees) and public safety (e.g., police), most of the services provided to residents are for construction and renovation.

The City has 9 full time equivalent personnel, of which 4 are involved in services related to construction and renovation activities.

Importantly, in setting fees for services provided by the City, those fees may only recover the cost of those services – there cannot be any “profit” from providing those services.

The City prides itself on providing high service levels to its residents at a cost less than or equal to our adjacent and peer jurisdictions.

Fee increase amounts may occur each year in small amounts remain constant for several years and then increase in a step function. Since our adjacent and peer jurisdictions do not increase fees at the same time, fee comparisons across jurisdictions have less variability if fees are reviewed and changed each year.

Building permits serve a number of important objectives, one of which is building safety.

Issuing a building permit requires submitting a plan for that work, structural calculations, site protection plans, and building efficiency calculations. Those plans are reviewed and compliance with building codes and other regulations are checked prior to issuing a building

permit. Progress during construction is verified by inspections, the cost of which is included in the building permit. Final inspections are required prior to issuing a certificate of occupancy.

Construction and renovation activities that are completed under building permits issued by the City conform to minimum requirements for fire safety, health safety and seismic safety.

Construction and renovation activities that require a building permit but where the owners have not received a permit may not meet the fire, health and seismic safety requirements and, accordingly, are not in the public interest.

Background Information
On May 1, 2018, City Council adopted Resolution 3682 (Attachment 2), which included an updated schedule of fees for building, engineering, and planning permitting. The adjustments followed a comprehensive user and regulatory fee analysis completed by ClearSource Financial Consulting that evaluated the City’s cost of providing fee-related services for the Building Department, Engineering Department, and Planning Department costs to provide plan review, permit approval, and inspection services for construction permitting applications (the 2018 Fee Study). The adjusted fees approved that time were designed to cover 77% of the City’s total cost of providing the permitting services. California Government Code section 66014(a) requires that these types of user fees shall not exceed the cost of providing the service.

The fee study completed by ClearSource Financial Consulting (Attachment 1) also recommended that such a study be completed every three to five years with annual fee adjustment based on the Consumer Price Index, San Francisco Bay Area (CPI), which was formerly titled the Consumer Price Index for San Francisco-Oakland-Hayward Area.

The City Council adopted Resolution No. 22-3863 on September 6, 2022 to increase user and regulatory fees by inflation for the years 2019, 2020, and 2021 as inflationary fee adjustment has not be made since the 2018 adoption of the ClearSource Financial Consulting fee study.

At that time, the City Council also directed staff to provide an updated fee schedule, based on inflationary increases, for consideration with the annual budget.

Analysis:

Inflationary Increase
The CPI increased by 4.9% in 2022. This information is available on the U.S. Bureau of Labor Statistics web page at:
https://www.bls.gov/regions/west/news-release/consumerpriceindex_sanfrancisco.htm Attachment 2 includes the draft resolution with the revised fees schedule that shows the proposed fees based on the 4.9% increase in CPI for 2022.

Most of the proposed fees remain below the maximum fees that were justified by the 2018 Fee Study. For example, the 2018 Fee Study would have authorized a maximum fee of $291 for planning review of a building permit; the fee currently proposed would increase from $160 to $168. There are some fee items that were set at the maximum fee authorized in 2018 (which is

full cost recovery); however, staff recommends that these fees be increased to match the current rate of inflation.

Staff is not recommending that City Council increase fees for Planning Appeals, Significant Tree Removal permits, or Use Permit Review for Animals, based on prior direction from City Council that directed these fees not be altered in 2018.

The proposed fee increase is only applied to land use permitting fees that may be set by City Council and will not be applied to the Construction Tax, which is a voter approved tax that cannot be increased without voter approval, or to other fees that are collected as paid to the State of California, such as the Strong Motion Fee and the SB 1473 fee, as these are based on State legislation that sets a specific fee amount. Additionally, the Administrative Fees (business license fees, printed materials, returned checks, etc.) are not proposed to be increased as part of the inflationary increase.

The 50% building permit and plan check fee reduction that has been approved by City Council for building permits that create a new Accessory Dwelling Unit (ADU) will remain unchanged.

The first 225 properties to complete a written intention to create an ADU will still receive the fee reduction on their building permit if issued by December 31, 2029.

Increased Cost of City Services
It is important for the public and City Council to understand that while the proposed fee increase would not exceed the City’s costs of providing services based on the 2018 Fee Study, the City’s costs of providing services have increased since the 2018 Fee Study was completed.

Staff estimates that the fiscal year 2023-2024 budget will include an increase of approximately

4.5% or $67,000 in staffing costs. This includes the increased cost of salaries and benefits from the last fiscal year budget.

Using the last fiscal year permitting activity, the proposed inflationary fee adjustment would result in approximately $35,500 additional revenue annually. Additionally, the 2018 Fee Study may be under-inclusive of the City’s actual costs of providing service as it does not appear to include costs that staff incur for consultation with the City Attorney for land use projects, which is typical for more complex site development permits, subdivisions, and use permits.

Fiscal Impact:

The fiscal impact of the proposed fee changes will be determined based on the volume of construction permitting applications received. Using the last fiscal year permitting activity, the proposed inflationary fee adjustment would result in approximately $35,500 of additional revenue annually.

If approved, the updated fee schedule will be effective 60 days after this hearing as required by the California Government Code section 66017(a).

Public Noticing:

In accordance with Government Code sections 66016(a) and 66019(c), notice of this meeting and potential fee increases was provided to one interest party who filed a written request to be notified of new or increased fees or services charges. Additionally, the staff report was published on June 9, 2023, at least ten days prior to the meeting.

The City Council’s agenda was posted at City Hall and the agenda and this report appears on the City’s website.

Attachments:

1. ClearSource Financial Consulting User and Regulatory Fee Study, April 2018

2. Draft Resolution - Adoption of Updated Fee Schedule

User and Regulatory Fee Study
- April 2018 -
[Updated to reflect City Council direction received during the May 1, 2018 Public Hearing to consider fee updates]

Table of Contents
Executive Summary ....................................................................................................................................... 1 Legislative Guidance ..................................................................................................................................... 6 Study Methodology and Data Sources.......................................................................................................... 8 Overview of Findings and Recommendations ............................................................................................ 10 Planning Fees .......................................................................................................................................... 10 Public Works/Engineering Fees .............................................................................................................. 11 Building Fees ........................................................................................................................................... 12 Community Planning Fee ........................................................................................................................ 13 Adoption of Fees and Ongoing Fee Management ...................................................................................... 14 Appendices .................................................................................................................................................. 15 Appendix A Proposed Fee Schedule
Appendix B Illustration of Current Fees, Maximum Fees, and Proposed Fees Appendix C New Fees Proposed
Appendix D Fees Proposed to Be Removed from Schedule
Appendix E Cost of Service Analysis and Audit for Reasonableness of Outcomes

1 Executive Summary
[On May 1, 2018 the City Council held a Public Hearing to consider adoption of an updated schedule of The proposed fee for appeals was $1,000, the City Council elected to leave the fee unchanged from the current amount of $360. This report and the adopted fee schedule have been updated to reflect a proposed fee of $360. No other changes have been made].

User and Regulatory Fees
The City derives its annual revenue from a number of sources. These include, but are not limited to, property taxes, and user and regulatory fees. User and regulatory fees are intended to cover all, or a portion of, the costs incurred by the City for providing fee-related services and activities that are not otherwise provided to those not paying the fee. California law provides guidance regarding the amounts the City may charge for fee-related services and activities. Specifically, in order to avoid being considered taxes, the fees charged shall not exceed the estimated reasonable cost of providing the services, activities, or materials for which fees are charged.

Recovering the Costs of Providing FeeThe services for which the City imposes a user or regulatory fee typically derive from an individual nt in the individual action, a fee for
service ensures that the individual bears most, if not all, of the cost incurred by the City to provide that cost. When a fee targets less than full cost recovery, another City revenue source in most cases, the General Fund subsidizes the individualized activity.

Fairly allocating costs to the services provided and recovering some, or all, of these costs from service recipients creates value and predictability for City customers and reimburses the City for services provided to a single party, as compared to the public at large.

Scope of Work and Purpose for Conducting the Fee Study
The scope of work for the study can be summarized as follows:

Calculate the costs of providing fee-related services
Remodel current fee schedules to correlate to prevailing services and practices Assist with cost recovery policy development and planning for ongoing maintenance of fees Estimate revenue impacts of fee modifications where possible with available data Prepare an updated schedule of fees for City review

2 The City initiated the fee study in 2017. This effort is intended to provide multiple benefits, including:

Increase the availability of General Fund revenues to be used for services and activities available to all residents and businesses, such as public works and public safety services.

Help meet the service level expectations of the community by collecting revenues to fund the services provided by each department.

Fee Categories that Were Examined in this Study
Planning Fees, such as entitlement review and review for compliance with the zoning code Public Works Fees, such as engineering, encroachment, and excavation review and inspection Building Fees, such as construction permit processing, plan check, and inspection Summary of Findings and Recommendations
Table 1 Current Estimated Cost Recovery for Fee Services General
Fee Category Revenue Fee-Related Expenses
Cost Recovery
for Fee Services
General
Fund Subsidy
Planning $65,000 $167,000 39% $102,000
Public Works $55,000 $169,000 33% $114,000
Building $313,000 $378,000 83% $65,000
Community Planning $0 $66,000 0% $66,000
Total $433,000 $780,000 56% $347,000
Options for Ongoing Fee Management - related services. Moving forward, the City has several options:

Limited changes to current practices
o For services where the City recovers up to, or less than full cost recovery, fees may remain unchanged and the City can continue its current practice. Any fees that currently recover more than the cost of service should be adjusted downward. o This would result in the continued aggregate under-recovery of fees.

Move to full cost recovery, where practical and implement annual adjustments tied to cost inflation index
o The City could immediately recalibrate fees to target full cost recovery, except in those instances where fees are limited by another agency, or full cost recovery is impractical.

Use a phase-in approach to increase cost recovery levels and implement a pattern of ongoing annual adjustments. The pattern may be pre-determined or tied to a cost inflation index o This approach would avoid attempting to recover the entire amount of under-collection in a single year. Instead it would recognize the subsidy being provided for services and

3 consider increases over a multi-year period to reach targeted cost recovery levels which, in some cases, may be less than 100%.
o This approach also allows the City to easily identify service areas targeted for long-term subsidy and set specific cost recovery levels for individual services rather than an acrossthe-board targeting of full cost recovery.

Any Additional Revenue from Fees is Intended to Offset the Cost of Existing Services It is important to note that while adjusting fees will provide a fiscal impact in the form of additional revenue, the revenue is not intended to be used to fund new services, rather the revenue is intended to offset the costs of providing existing services that are recoverable from fees. Consequently, while fees may rise annually, typically labor costs (the primary driver of fee-related costs) also rise annually.

Recalibration of these fees simply provides an offset of existing expenditures/needs rather than a source of funding for expanded service levels.

Implementing a Policy of Pro-Active Fee Management
Continued evaluation of these fees would provide benefits, including:

Avoid fee spikes that are more likely to occur when fees are left unchanged for several years.

Provide fee payers, City staff, and City policymakers with a pattern of consistency that provides information for forecasting and decision-making purposes.

Encourage generational equity among fee payers by avoiding long-term stagnation of fees followed by significant fee increases.

Fiscal Impact of Proposed Fee Changes
The fiscal impact of proposed fee changes will be determined based on the level of cost recovery targeted from fees. This will be determined by the City Council at the conclusion of a public hearing to consider any modifications to fees. For illustrative purposes only, the revenue impact of a potential cost recovery scenario is presented in the following table. A summary of the proposed cost recovery scenario is also provided.

Table 2 Fiscal Impact of Recalibrating Fees to the Proposed Cost Recovery Scenario General
Fee Category Current Revenue
Revenue After Fee
Changes Total Fiscal Impact
Planning $65,000 $93,000 $28,000
Public Works $55,000 $113,000 $58,000
Building $313,000 $358,000 $45,000
Community Planning $0 $33,000 $33,000
Total $433,000 $597,000 $164,000

4 Table 3 Cost Recovery Impact of Proposed Fee Changes
General
Fee Category
Revenue Before
Fee Adjustments
Revenue After
Adjustments
Fee-Related
Expenses
Cost Recovery
before Adjustment
Cost Recovery
after Adjustment
Planning $65,000 $93,000 $167,000 39% 56%
Public Works $55,000 $113,000 $169,000 33% 67%
Building $313,000 $358,000 $378,000 83% 95%
Community Planning $0 $33,000 $66,000 0% 50%
Total $433,000 $597,000 $780,000 56% 77%
Summary of Cost Recovery Strategy and/or Significant Changes Included in the Proposed Fee Schedule Planning Fees
permits. Less than full cost recovery is targeted for both of these services. o Planning review of building permits target cost recovery = 50% o Tree removal permit target cost recovery = 10%
cost of service.

Establish a community
maintaining and updating the plans, documents, and guidelines required to approve development/construction within the City.
o Target cost recovery = 50%
Public Works Engineering / Private Land Development Fees established final map review fee.

Restructure NPDES fees for ease of fee calculation and administration.

Proposed cost recovery ranges between 50% and 100% depending on fee category.

Building Fees
o The proposed minimum permit fee represents roughly 45 minutes of total staff time associated with permit processing, plan review, and inspection.

Increase electrical, plumbing, and mechanical permit fees from $62 to $159 per permit.

Leave building permit and plan review fees unchanged.
o The City currently recovers the full cost of building permit and plan review, no downward or upward adjustment is required

5 Begin collecting fees for solar permits
o The City currently waives fees for solar permits. The proposed fee is $159. The proposed fee is less than solar contractors will expect to pay in most jurisdictions.

Additionally the proposed fee is set to match the City's minimum permit fee and is well under maximum amounts established by the State.

6 Legislative Guidance
The objectives of the study, the methodologies used to complete the study, and the proposed schedule of fees were significantly influenced by Article 13C of the California Constitution and Section 66014 of the California Government Code.

Article 13C states that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor's burdens on, or benefits received from, the governmental activity. Additionally, Article 13C identifies the following as items that are not defined as taxes:
1) A charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege. 2) A charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product. 3) A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof. 4) A charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property.
5) A fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law.
6) A charge imposed as a condition of property development. 7) Assessments and property-related fees imposed in accordance with the provisions of Article XIII D.

Section Notwithstanding any other
provision of law, when a local agency charges fees for zoning variances; zoning changes; use permits; building inspections; building permits; the processing of maps under the provisions of the Subdivision Map Act ; or planning services ; those fees may not exceed the estimated reasonable cost of providing the service for which the fee is charged, unless a question regarding the amount of the fee charged in excess of the estimated reasonable cost of providing the services or materials is submitted to, and approved by, a popular vote of two-thirds of those electors voting on the issue.

7 The outcomes and recommendations of the study are intended to comply with applicable federal, state, and local laws including providing confirmation that the propose result of this study are not taxes as defined in Article 13C of the California Constitution and that the services addressed in the fees. Additionally, this report is intended to show that the manner in which the costs are allocated to a payor
benefits received from the activities and services provided by the City.

8 Study Methodology and Data Sources
This study calculated the estimated reasonable cost of providing various fee-related services across the City organization. Generally, the estimated reasonable cost of providing the fee-related services and activities examined in this study can be calculated as the product of the composite fully-burdened hourly labor rate of the division responsible for providing services and the estimated labor time required to process a typical request for service (see illustration below).

The composite fully-burdened hourly rates calculated in this study are based on the estimated annual hours spent providing fee related services, and estimated labor, services and supplies, and citywide overhead expenditures:

Estimated annual hours spent providing fee related services were developed based on responses received from multiple interviews and targeted questionnaires.

Labor expenditures for in-house personnel were based on forecasts of Fiscal Year 2017/18 salary and benefits expenditures.

All other services and supplies expenditures were based on Fiscal Year 2017/18 budgeted expenditures.

Estimated citywide overhead expenditures were based on ost allocation plan.

Estimated labor times were developed based on responses received from multiple interviews and targeted questionnaires of the staff primarily responsible for the provision of services examined in the study. Commonly used industry data also aided in the development of time estimates and proposed fee structures.

Once cost of service levels are identified, the City may use this information to inform targeted cost recovery from fees. Fees set at the cost of service target full cost recovery. Fees set at any amount less than the cost of service targets less than full cost recovery.

Hourly rate * Labor hours = Cost of service
Proposed fee ÷ Cost of service = Targeted Cost Recovery

9 Summary of methodology used to calculate estimated costs of service and cost recovery levels Step One Identify annual hours spent providing
fee services for each division
This information is developed and tested using a
combination of interviews, questionnaires, historical
project information, and historical revenue information.

Step Two
Identify annual cost of providing fee
services for each division
This information is developed and tested using a
budget, expenditure history, and the overhead cost plan.

Step Three
Calculate the estimated hourly rate
using information from Steps 1 and 2
Annual cost ÷ Annual hours = Hourly rate
Step Four
Estimate labor time required to
process individual request for service
This information is developed and tested using a
combination of interviews, questionnaires, commonlyused measures, and information developed in Step 1.

Step Five
Calculate estimated cost of service
using information from Steps 3 and 4
Hourly rate * Labor hours = Cost of service
Step Six Calculate current cost recovery level
for a specific service
Current fee ÷ Cost of service = Current
Cost recovery
Step Seven Use laws, industry standards, goals
and policies, and historical trends to
determine targeted cost recovery
Proposed fee ÷ Cost of service = Targeted
Cost Recovery
Step Eight Test to confirm forecast revenue from
fees will not exceed program costs
Use historical permit volume and proposed fees to
forecast anticipated revenue from fees. Forecast
revenues should not exceed program costs.

10 Overview of Findings and Recommendations
Planning Fees
The Planning Division maintains and implements the and prepares other specialized planning documents. The department reviews development requests for conformance with the City's planning policies and standards. Department advance planning efforts. The costs of providing fee-related services are proposed to be recovered in part, or in full, from fees. Costs associated with non-fee related services are proposed to be pai General Fund revenues.

Planning Fees: Study Outcomes and Recommendations
# Finding / Recommendation Description
1 Current fees recover less than the
full cost of providing services
The Division collects only a fraction ( 39%) of fee-related costs of service.
2 Begin collecting fee for planning
review of building permits
The planning division reviews more than 100 building
permits per year to ensure compliance with City zoning
requirements (e.g. setbacks). The City does not currently recover a fee for this service. The proposed fee would
3 Consider enhanced cost recovery
for more complex review projects
The proposed fees for complex reviews such as review of site development plans involving new structures or significant additions have been recalibrated to target between 80% and 100% cost recovery.
4 Target less than full cost recovery
for minor permits or permits with
high community benefits
Less than full cost recovery is proposed for planning review of building permits; issuance of tree removal permits; site development permits for minor items such as fences,
reasonable accommodation reviews, animal-related use
permits, and appeals.
5 Adopt community planning fee Over time the City incurs significant costs associated with maintaining and updating the plans, guidelines, and Codes that are used to inform and approve development and
construction within the City. The proposed fee will allow the City to recover a portion of these costs.

11 Public Works/Engineering Fees
The Public Works Department regulates activities impacting public facilities, infrastructure, and the right of way. The department reviews development, construction, and other requests for conformance with the City's policies and standards. It also works closely with other departments to review applications and activities. The costs of providing services generated by individualized action, such as encroachments and grading, are proposed to be recovered in full, or in part, from fees. Costs associated with non-fee related services will be paid from other sources, typically General Fund revenues.

Public Works Fees: Study Outcomes and Recommendations
# Finding / Recommendation Description
1 Adjust fees to improve cost
recovery
least 50% cost recovery and in some cases 100% cost
recovery.
2 Formally establish a final map
review fee
The department is required to review and approve final
maps. A fee for this service has been added to the proposed fee schedule.
3 Restructure NPDES fees for ease of
fee estimation and administration
The number of fee categories has been significantly reduced.

12 Building Fees
The Building Department provides permitting, plan check, and inspection services for all new construction, alterations, and additions throughout the City, enforcing the provisions of the California Building Standards Code. Additionally the department serves as a primary building code resource to contractors, architects, engineers, developers, and property owners. Only the costs of providing feerelated services are proposed to be recovered from fees. Costs associated with non-fee related services Building Fees: Study Outcomes and Recommendations
# Finding / Recommendation Description
1 Current fees recover roughly 83% of
the cost of service
Communities throughout the State typically target full cost recovery (100%) for building fee-related services.
2 Recalibrate minimum permit fee
and mechanical, electrical, and
plumbing permit fees to correct
under-recovery - recovery.
3 Leave building permit and plan
review fees unchanged
xisting building permit and plan review fees
recover the costs of service. No downward or upward
adjustment is required.
4 Begin collecting minimum permit
fee for solar permits
The City currently waives permit fees for solar installations.

The proposed fee is $159. The proposed fee is less
than solar contractors will expect to pay in most
jurisdictions. Additionally the proposed fee is set to
match the City's minimum permit fee and is well under
maximum amounts established by the State.

13 Community Planning Fee
may include the
costs reasonably necessary to prepare and revise the plans and policies that a local agency is required to adopt before it can make any necessary findings and determinations.

California often attempt to recover portions of the costs of updating and maintaining these plans and policies through fees collected on various development projects.

Community Planning Fee: Study Outcomes and Recommendations # Finding / Recommendation Description
1 Adopting a community planning fee
will allow for segregation of
revenues and reduce reliance on
General Fund reserves for funding
of periodic projects
Clearly identifying this fee will provide enhanced revenue tracking information to allow for efficient identification of amounts collected for specific purposes.

The City may use these revenues to offset all or portions of the cost of in-house planning or contract planning services for preparation and revision of the plans and policies that a local agency is required to adopt before it can make any necessary findings and determinations. These include, but are not limited to, General Plan, Zoning Ordinance, and Housing Element updates.

The proposed fee revenues would recover $30,000 per year.

For administrative efficiency the fee will be collected as part of the building permit fee. The vast majority of planning feerelated services, and engineering fee-related services are associated with active building permit applications or will ultimately lead to building permit applications. Permit valuation is a readily available metric that provides a reasonable correlation to cost on a repeatable basis (i.e. more complex projects have higher valuations, and typically rely more heavily on community planning documents for
approval.

The Appendix contains a detailed listing of current fees, maximum fees, and proposed fees.

14 Adoption of Fees and Ongoing Fee Management
The fees included as part of this study are set at the direction of the City Council. Consequently, the City Council may adopt fees and modify them at a future date as costs of service change, city policies or goals change, project volumes change, service recipient feedback is received, and annual revenue impact of fees is confirmed.

If the City decides to adopt modified fees it should:

Include the fee revisions as part of all official fee schedules.

Ensure that City staff begin fee collections using updated fee schedules once the adopted fees are effective.

Periodically Review and Adjust Fees and Calculation Methodologies If fees for services are unintentionally omitted from the adopted fee schedule, they should be added to the fee schedule as part of a future update. In between updates, the City may bill hourly for fee-related services inadvertently excluded from the schedule.

Monitor feedback and permit statistics - Monitor permit and application volume and applicant feedback to determine if fee modifications are resulting in any unanticipated changes in project frequency and to increase the level of detail available for revenue forecasting.

Adjust fees on an annual basis using a predetermined pattern or inflationary index - In order to generally maintain pace with regional cost inflation , the City should adjust its fees on an annual basis.

Conduct future fee studies on regular basis The City should conduct future fee studies periodically to confirm that fee levels remain at, or below, legal limits.

15 Appendices
The appendices provides detailed analytical findings from the study, including the amount of cost, or estimated cost, required to provide the services for which the fee or service charge is levied and the revenue sources anticipated to provide the service, including General Fund revenues. For any fees targeted to recover less than 100% of the estimated reasonable cost of service, it is anticipated that General Fund revenues of the City will fund the difference between the targeted recovery level and 100% recovery of the estimated cost of service. These amounts are identified in the schedule of feebased activities included in the appendices.

Appendix A Proposed Fee Schedule
Appendix B Illustration of Current Fees, Maximum Fees, and Proposed Fees Appendix C New Fees Proposed
Appendix D Fees Proposed to Be Removed from Schedule
Appendix E Cost of Service Analysis and Audit for Reasonableness of Outcomes

Appendix A Proposed Fee Schedule

Services / Activities / Subject Matter Effective Date Page Planning Fees July 1, 2018 1 - 2
Public Works Fees July 1, 2018 3 - 4
Building Fees July 1, 2018 5 - 6
Administrative Services July 1, 2018 7
City of Monte Sereno

MASTER FEE SCHEDULE
App A - TOC Page 254 of 478
City of Monte Sereno

MASTER FEE SCHEDULE - PLANNING FEES
Note Fee
1 Planning Review of Building Permit $150
2 Community Planning Fee (per $1 of valuation) [a] $0.0018 3 Significant Tree Removal (referred to Site and Architecture Commission) $100 4 Site Development/Planned Development Permit:
a) New Houses/Demo Rebuild/Remodel/Addition 50% or more of existing SF $2,800 b) Remodel/Addition less than 50% of existing SF $1,900 c) Accessory Building/Fence Height $500
e) Hillside Development (avg. slope of 10% of greater) $3,100 f) Site Development Permit Amendment $1,300
5 Administrative Building Site Approval $2,800
6 Address/Street Name Change $350
7 Environmental Review
a) Exemption $350
b) Environmental Clearance
i) Reuse of Previous Environmental Clearance $350
ii) Initial Study and Negative Declaration / Mitigated Negative Declaration $3,400 iii) Initial Study and Negative Declaration / Mitigated Negative Declaration (prepared by consultant)
pass-through of actual cost plus 10%
administrative fee
iv) EIR (prepared by consultant) pass-through of actual cost plus 10% administrative fee
8 General Plan Amendment $2,800
9 Zoning Map Amendment $2,800
10 Planned Development Zoning Map Amendment $5,000
11 Annexation (excluding LAFCO Fees) $3,800
12 Reasonable Accommodation Application $360
13 Subdivision:
a) Lot Line Adjustment $1,500
b) Tentative Map Application:
i) 4 Lots or Fewer: (Tentative Parcel Map) $3,000
ii) 5 Lots or More: (Tentative Subdivision Map) $10,000 14 Use Permits:
a) General $2,800
b) Animals $500
c) Special Land Use Permit (Historic Resource) $2,800
15 Satellite Dish
a) Administrative Review $250
b) Public Hearing $500
16 Variance $2,800
17 Appeal $360
18 Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1 hour minimum) $194 19 Excess Plan Review Fee (per hour - 1 hour minimum) [b] $194 Activity Description
App A - 1 Page 255 of 478
City of Monte Sereno

MASTER FEE SCHEDULE - PLANNING FEES
Activity Description Note Fee
20 Excess Inspection/Re-inspection/Missed Inspection Fee (per hour - 1 hour minimum) [b] $194 21 Work Commenced without a Permit [c] 1x Base Permit Fee Notes:
[c] Amount in addition to base fee (i.e. double fees).
* The fees listed in this schedule do not include the costs of external reports required to be prepared and submitted by the applicant (e.g. arborist report, geotech report). Applicant is responsible for the preparation costs of any external reports required. Additionally, the fees in this schedule do not include any outside agency fees or costs that may apply to applicant project (e.g. County recording fees, Department of Fish and Wildlife fees, newspaper noticing fees, consulting services, attorney services). Applicant is responsible for payment of any outside agency/service provider fees that may apply to applicant project. [b] Base fees include up to three plan reviews and any typically required inspections and first re-inspections. Excess plan review fees apply beginning with the fourth plan review. Excess inspection fees apply beginning with second re-inspection. [a] Fee paid at time of building permit issuance.

App A - 2 Page 256 of 478
City of Monte Sereno

MASTER FEE SCHEDULE - PUBLIC WORKS FEES
Note Fee
1 Certificate of Compliance $1,050
2 Encroachment Permit (Administrative) $350
3 Construction Encroachment Permit Fee
a) First $50,000 of value, or any fraction thereof 5% of value b) Value Exceeding $50,000 3% of value
4 Storm Drain Fees
a) Per Lot Zoned: R-1-44 $2,450
b) Per Lot Zoned: R-1-20 $1,640
c) Per Lot Zoned: R-1-8 $810
5 Final Map
a) Parcel Map $3,000
b) Tract Map $9,000
6 Grading Plan Check Fees Bill hourly/T&M
7 Grading Permit Fees
a) Less than 50 cubic yards $265
b) 51 to 100 cubic yards $530
c) 101 to 1,000 cubic yards
i) For first 100 cubic yards or fraction thereof $530
ii) For each add'l 100 cubic yards or fraction thereof up to 1,000 cubic yards $29 d) 1,001 to 10,000 cubic yards
i) For first 1,000 cubic yards or fraction thereof $795 ii) For each add'l 1,000 cubic yards or fraction thereof up to 10,000 cubic yards $59 e) 10,001 to 100,000 cubic yards
i) For first 10,000 cubic yards or fraction thereof $1,988 ii) For each add'l 1,000 cubic yards or fraction thereof up to 100,000 cubic yards $31 f) 100,001 cubic yards or more
i) For first 100,000 cubic yards or fraction thereof $6,360 ii) For each add'l 1,000 cubic yards or fraction thereof $31 8 NPDES Compliance
a) Plan Check
i) Less than 1 Acre $350
ii) Greater than or Equal to 1 Acre $1,050
b) Site Inspection
i) Less than 1 Acre $530
ii) Greater than or Equal to 1 Acre Bill hourly/T&M with $1,000 initial deposit 9 Oversize Load Permit
a) One Day $16
b) Annual $90
10 Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1 hour minimum) $265 11 Excess Plan Review Fee (per hour - 1 hour minimum) [a] $265 Activity Description
App A - 3 Page 257 of 478
City of Monte Sereno

MASTER FEE SCHEDULE - PUBLIC WORKS FEES
Activity Description Note Fee
12 Excess Inspection/Re-inspection/Missed Inspection Fee (per hour - 1 hour minimum) [a] $265 13 Work Commenced without a Permit [b] 1x Base Permit Fee Notes:
[b] Amount in addition to base fee (i.e. double fees).
[a] Base fees include up to three plan reviews and any typically required inspections and first re-inspections. Excess plan review fees apply beginning with the fourth plan review. Excess inspection fees apply beginning with second re-inspection.

App A - 4 Page 258 of 478
City of Monte Sereno

MASTER FEE SCHEDULE - BUILDING FEES
Note Fee
1 Construction Tax $0.51
2 Electrical, Plumbing or Mechanical Permits:
a) Fee per Square Foot $0.11
b) Minimum fee $159
3 Solar $159
4 Demolition Permit $159
5 Building Permit: [a]
a) Valuation: $1 to $500 $23.50
b) Valuation: $501 to $2,000
i) Fee for first $500 $23.50
ii) Fee for each additional $100, or fraction thereof, to and including $2,000 $3.05 c) Valuation: $2,001 to $25,000
i) Fee for first $2,000 $69.25
ii) Fee for each additional $1,000, or fraction thereof, to and including $25,000 $14.00 d) Valuation: $25,001 to $50,000
i) Fee for first $25,000 $391.25
ii) Fee for each additional $1,000, or fraction thereof, to and including $50,000 $10.10 e) Valuation $50,001 to $100,000
i) Fee for first $50,000 $643.75
ii) Fee for each additional $1,000, or fraction thereof, to and including $100,000 $7.00 f) Valuation $100,001 to $500,000
i) Fee for first $100,000 $993.75
ii) Fee for each additional $1,000, or fraction thereof, to and including $500,000 $5.60 g) Valuation: $501,000 to $1,000,000
i) Fee for first $500,000 $3,233.75
ii) Fee for each additional $1,000, or fraction thereof, to and including $1,000,000 $4.75 h) Valuation: $1,000,001 and up
i) Fee for first $1,000,000 $5,608.75
ii) Fee for each additional $1,000, or fraction thereof $3.15 6 Plan Review Fees (In addition to building permit fees) a) Plan Review Fee (% of Building Permit Fee) 65%
b) Structural Plan Review Fee (% of Plan Review Fee) 65% c) Energy Conservation Plan Review Fee (% of Plan Review Fee) 5% d) Green Building Code Plan Review Fee (% of Plan Review Fee) 5% 7 Micro-filming / Imaging Fee (per page, in addition to building permit fees) $5 8 Strong Motion Fees:
a) Residential (per $1 of valuation) $0.00013
b) Commercial (per $1 of valuation) $0.00028
9 SB 1473 (per $25,000 of valuation) $1
10 Road Impact Fee (per $100 of valuation of permitted work) $0.49 Activity Description
App A - 5 Page 259 of 478
City of Monte Sereno

MASTER FEE SCHEDULE - BUILDING FEES
Activity Description Note Fee
11 Other Fees
a) Excess Inspection/Excess Re-inspection/Missed Inspection Fee (per inspection) $106 b) Work Commenced without a Permit [b] 1x Base Fees
c) Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1/2 hour min.) $213 d) Fee for Additional Services Required Due to Changes, Modifications, Additions, etc. [c] Actual Costs / T&M Notes:
[b] Amount in addition to base fee (i.e. double fees).
[c] In the event additional map checking, plan checking, or inspection services by the City are required by reason of changes, modifications, additions, errors, omissions, or discrepancies occasioned by the applicant or his agents or representatives, the applicant shall pay an additional fee equal to the actual cost to the City of performing the additional services.
[a] The Building Official shall establish the valuation of said improvements, and fees will be assessed according to the following fee schedule.

App A - 6 Page 260 of 478
City of Monte Sereno

MASTER FEE SCHEDULE - ADMINISTRATIVE FEES
Note Fee
1 Business License Fees
a) General Contractor $105
b) Solicitors (for profits) $105
c) Others (including subcontractors/specialty contractors) $55 2 Printed Materials and Maps
a) Photo copies/Scanned/Digital Images (per page) $0.25 b) Zoning Map $5
c) City History "Peaceful Mountain" $31
d) Design Guidelines $8
3 Alarm Soundings, within a 12-month period
a) First, Second, and Third Soundings No Charge
b) Fourth $200
c) Fifth $300
d) Subsequent Alarms $300
4 Returned Check Processing Fee
a) First Check [a] $25
b) Each Additional Check [a] $35
5 Preparation of Materials Requiring Formatting, Programming, Development, etc. 100% of Actual Cost (billed per hour; 15 minute increments)
6 City Administration Fee Added to Vendor Service Costs, if applicable (e.g. outside printing of materials)
15%
Notes:
[a] Fee set by State.

Activity Description
App A - 7 Page 261 of 478
Appendix B Illustration of Current Fees, Maximum Fees, and Proposed Fees

Services / Activities / Subject Matter Effective Date Planning Fees July 1, 2018 Public Works Fees July 1, 2018 Building Fees July 1, 2018 City of Monte Sereno ILLUSTRATION OF CURRENT FEES, MAXIMUM FEES, AND PROPOSED FEES App B - 1

City of Monte Sereno WORKING DRAFT MASTER FEE SCHEDULE - PLANNING FEES Note Current Fee Maximum Fee (2018 Fee Study) Proposed Fee 1 Planning Review of Building Permit $0 $291 $150 2 Community Planning Fee (per $1 of valuation) [a] $0.0000 $0.0036 $0.0018 3 Significant Tree Removal (referred to Site and Architecture Commission) $100 $970 $100 4 Site Development/Planned Development Permit: a) New Houses/Demo Rebuild/Remodel/Addition 50% or more of existing SF $2,450 $3,104 $2,800 b) Remodel/Addition less than 50% of existing SF $1,500 $2,328 $1,900 c) Accessory Building/Fence Height $360 $1,552 $500 e) Hillside Development (avg. slope of 10% of greater) $2,750 $3,492 $3,100 f) Site Development Permit Amendment $1,250 $1,552 $1,300 5 Administrative Building Site Approval $2,450 $3,104 $2,800 6 Address/Street Name Change $250 $388 $350 7 Environmental Review a) Exemption varies $388 $350 b) Environmental Clearance i) Reuse of Previous Environmental Clearance varies $388 $350 ii) Initial Study and Negative Declaration / Mitigated Negative Declaration varies $3,492 $3,400 iii) Initial Study and Negative Declaration / Mitigated Negative Declaration (prepared by consultant) varies varies pass-through of actual cost plus 10% administrative fee iv) EIR (prepared by consultant) varies varies pass-through of actual cost plus 10% administrative fee 8 General Plan Amendment $2,530 $3,104 $2,800 9 Zoning Map Amendment $2,530 $3,104 $2,800 10 Planned Development Zoning Map Amendment $2,530 $5,432 $5,000 11 Annexation (excluding LAFCO Fees) $2,530 $3,880 $3,800 12 Reasonable Accommodation Application $360 $1,164 $360 13 Subdivision: a) Lot Line Adjustment $1,500 $1,552 $1,500 b) Tentative Map Application: i) 4 Lots or Fewer: (Tentative Parcel Map) $2,550 + $1,360/lot $3,104 $3,000 ii) 5 Lots or More: (Tentative Subdivision Map) $3,060 + $1,360/lot $10,088 $10,000 14 Use Permits: a) General $2,450 $3,104 $2,800 b) Animals $360 $1,552 $500 Activity Description App B - 2

City of Monte Sereno WORKING DRAFT MASTER FEE SCHEDULE - PLANNING FEES Note Current Fee Maximum Fee (2018 Fee Study) Proposed Fee Activity Description c) Special Land Use Permit (Historic Resource) $2,450 $3,104 $2,800 15 Satellite Dish a) Administrative Review $55 $485 $250 b) Public Hearing $55 $970 $500 16 Variance $2,450 $3,104 $2,800 17 Appeal $360 $1,940 $360 18 Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1 hour minimum) $194 $194 19 Excess Plan Review Fee (per hour - 1 hour minimum) [b] $194 $194 20 Excess Inspection/Re-inspection/Missed Inspection Fee (per hour - 1 hour minimum) [b] $194 $194 21 Work Commenced without a Permit [c] 1x Base Permit Fee Notes: * The fees listed in this schedule do not include the costs of external reports required to be prepared and submitted by the applicant (e.g. arborist report, geotech report). Applicant is responsible for the preparation costs of any external reports required. Additionally, the fees in this schedule do not include any outside agency fees or costs that may apply to applicant project (e.g. County recording fees, Department of Fish and Wildlife fees, newspaper noticing fees, consulting services, attorney services). Applicant is responsible for payment of any outside agency/service provider fees that may apply to applicant project. [a] Fee paid at time of building permit issuance. [a] Base fees include up to three plan reviews and any typically required inspections and first re-inspections. Excess plan review fees apply beginning with the fourth plan review. Excess inspection fees apply beginning with second re-inspection. [b] Amount in addition to base fee (i.e. double fees). App B - 3

City of Monte Sereno WORKING DRAFT MASTER FEE SCHEDULE - PUBLIC WORKS FEES Note Current Fee Maximum Fee (2018 Fee Study) Proposed Fee 1 Certificate of Compliance $360 $2,120 $1,050 2 Encroachment Permit (Administrative) $175 $398 $350 3 Construction Encroachment Permit Fee a) First $50,000 of value, or any fraction thereof 5% of value 5% of value b) Value Exceeding $50,000 2% - 3% of value 3% of value 4 Storm Drain Fees * a) Per Lot Zoned: R-1-44 * $2,450 $2,450 b) Per Lot Zoned: R-1-20 * $1,640 $1,640 c) Per Lot Zoned: R-1-8 * $810 $810 5 Final Map a) Parcel Map n/a $3,180 $3,000 b) Tract Map n/a $9,540 $9,000 6 Grading Plan Check Fees Actual + admin varies Bill hourly/T&M 7 Grading Permit Fees a) Less than 50 cubic yards $105 $530 $265 b) 51 to 100 cubic yards $160 $1,060 $530 c) 101 to 1,000 cubic yards i) For first 100 cubic yards or fraction thereof $160 $1,060 $530 ii) For each add'l 100 cubic yards or fraction thereof up to 1,000 cubic yards $30 $59 $29 d) 1,001 to 10,000 cubic yards i) For first 1,000 cubic yards or fraction thereof $460 $1,590 $795 ii) For each add'l 1,000 cubic yards or fraction thereof up to 10,000 cubic yards $30 $118 $59 e) 10,001 to 100,000 cubic yards $0 i) For first 10,000 cubic yards or fraction thereof $760 $2,650 $1,988 ii) For each add'l 1,000 cubic yards or fraction thereof up to 100,000 cubic yards $30 $41 $31 f) 100,001 cubic yards or more i) For first 100,000 cubic yards or fraction thereof $3,460 $6,360 $6,360 ii) For each add'l 1,000 cubic yards or fraction thereof $30 $31 $31 8 NPDES Compliance a) Plan Check i) Less than 1 Acre $398 $350 ii) Greater than or Equal to 1 Acre $2,120 $1,050 Activity Description App B - 4

City of Monte Sereno WORKING DRAFT MASTER FEE SCHEDULE - PUBLIC WORKS FEES Note Current Fee Maximum Fee (2018 Fee Study) Proposed Fee Activity Description b) Site Inspection i) Less than 1 Acre $1,060 $530 ii) Greater than or Equal to 1 Acre varies Bill hourly/T&M with $1,000 initial deposit 9 Oversize Load Permit a) One Day $16 b) Annual $90 10 Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1 hour minimum) varies $265 $265 11 Excess Plan Review Fee (per hour - 1 hour minimum) n/a $265 $265 12 Excess Inspection/Re-inspection/Missed Inspection Fee (per hour - 1 hour minimum) n/a $265 $265 13 Work Commenced without a Permit [a] n/a 1x Base Permit Fee Notes: [a] Amount in addition to base fee (i.e. double fees). * Not included in this study. No changes proposed. Not intended to be part of the public hearing process. Only included to avoid inadvertently excluding from schedule. App B - 5

City of Monte Sereno WORKING DRAFT MASTER FEE SCHEDULE - BUILDING FEES Note Current Fee Maximum Fee (2018 Fee Study) Proposed Fee 1 Construction Tax * $0.51 n/a $0.51 2 Electrical, Plumbing or Mechanical Permits: a) Fee per Square Foot $0.06 $0.11 $0.11 b) Minimum fee $62 $160 $159 3 Solar $0 $320 $159 4 Demolition Permit $62 $160 $159 5 Building Permit: [a] a) Valuation: $1 to $500 $23.50 $23.50 $23.50 b) Valuation: $501 to $2,000 i) Fee for first $500 $23.50 $23.50 $23.50 ii) Fee for each additional $100, or fraction thereof, to and including $2,000 $3.05 $3.05 $3.05 c) Valuation: $2,001 to $25,000 i) Fee for first $2,000 $69.25 $69.25 $69.25 ii) Fee for each additional $1,000, or fraction thereof, to and including $25,000 $14.00 $14.00 $14.00 d) Valuation: $25,001 to $50,000 i) Fee for first $25,000 $391.25 $391.25 $391.25 ii) Fee for each additional $1,000, or fraction thereof, to and including $50,000 $10.10 $10.10 $10.10 e) Valuation $50,001 to $100,000 i) Fee for first $50,000 $643.75 $643.75 $643.75 ii) Fee for each additional $1,000, or fraction thereof, to and including $100,000 $7.00 $7.00 $7.00 f) Valuation $100,001 to $500,000 i) Fee for first $100,000 $993.75 $993.75 $993.75 ii) Fee for each additional $1,000, or fraction thereof, to and including $500,000 $5.60 $5.60 $5.60 g) Valuation: $501,000 to $1,000,000 i) Fee for first $500,000 $3,233.75 $3,233.75 $3,233.75 ii) Fee for each additional $1,000, or fraction thereof, to and including $1,000,000 $4.75 $4.75 $4.75 h) Valuation: $1,000,001 and up i) Fee for first $1,000,000 $5,608.75 $5,608.75 $5,608.75 ii) Fee for each additional $1,000, or fraction thereof $3.15 $3.15 $3.15 6 Plan Review Fees (In addition to building permit fees) a) Plan Review Fee (% of Building Permit Fee) 65% 65% 65% b) Structural Plan Review Fee (% of Plan Review Fee) 65% 65% 65% Activity Description App B - 6

City of Monte Sereno WORKING DRAFT MASTER FEE SCHEDULE - BUILDING FEES Note Current Fee Maximum Fee (2018 Fee Study) Proposed Fee Activity Description c) Energy Conservation Plan Review Fee (% of Plan Review Fee) 5% 5% 5% d) Green Building Code Plan Review Fee (% of Plan Review Fee) 5% 5% 5% 7 Micro-filming / Imaging Fee (per page, in addition to building permit fees) $5 $5 $5 8 Strong Motion Fees: a) Residential (per $1 of valuation) $0.00013 n/a $0.00013 b) Commercial (per $1 of valuation) $0.00028 n/a $0.00028 9 SB 1473 (per $25,000 of valuation) $1 n/a $1 10 Road Impact Fee (per $100 of valuation of permitted work) * $0.49 n/a $0.49 11 Other Fees a) Excess Inspection/Excess Re-inspection/Missed Inspection Fee (per inspection) n/a $107 $106 b) Work Commenced without a Permit [b] n/a 1x Base Fees c) Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1/2 hour min.) n/a $213 $213 d) Fee for Additional Services Required Due to Changes, Modifications, Additions, etc. [c] Actual Costs Actual Costs / T&M Actual Costs / T&M Notes: [a] The Building Official shall establish the valuation of said improvements, and fees will be assessed according to the following fee schedule. [b] Amount in addition to base fee (i.e. double fees). [c] In the event additional map checking, plan checking, or inspection services by the City are required by reason of changes, modifications, additions, errors, omissions, or discrepancies occasioned by the applicant or his agents or representatives, the applicant shall pay an additional fee equal to the actual cost to the City of performing the additional services. * Not included in this study. No changes proposed. Not intended to be part of the public hearing process. Only included to avoid inadvertently excluding from schedule. App B - 7

Appendix C New Fees Proposed

City of Monte Sereno FEES PROPOSED TO BE ADDED TO FEE SCHEDULEProposed Fee Reason for Addition 1 Planning Review of Building Permit $150 Planning staff review certain building permits for compliance with setback requirements, previously approved plans, etc. This fee would allow staff to recover a portion of the City's review cost. Proposed fee targets 50% cost recovery. 2 Solar Permits $159 The City does not currently charge for solar permits. As solar has become more common, most communities collect solar permit fees. The proposed fees are less than solar contractors will expect to pay in most jurisdictions. Additionally the proposed fees are set to match the City's minimum permit fee and are well under maximum amounts established by the State. 3 Final Map Review a) Parcel Map $3,000 Existing fee schedule does not include a final map review fee b) Tract Map $9,000 Existing fee schedule does not include a final map review fee 4 Community Planning Fee (per $1 of valuation) $0.0018 Fee will allow the City to recover a portion of the cost of updating the plans, guidelines, and zoning documents that are used to authorize and approve development and construction within the City. Activity Description App C - 1

Appendix D Fees Proposed to Be Removed from Schedule

City of Monte Sereno FEES CATEGORIES PROPOSED TO BE REMOVED FROM SCHEDULE Reason for Removal 1 Planning Review of Secondary Dwelling Units Review no longer required. Planning will continue to review building permits for compliance with setback requirements, etc. 2 Road Impact Deposit Deposit structure is no longer used. 3 Preliminary Map Fees Service not provided by the City. Fees are collected for tentative and final map review only. 4 Real Estate Consultation Fee Fee has not been collected in the past. Staff will continue to provide general information without charge. For services requiring significant research or pre-application assistance, the fee schedule includes an hourly rate for staff services, upon request. 5 Parking Fines See Los Gatos PD. Fines are not considered user and regulatory fees. They are typically identified via a schedule of fines/penalties/bail amounts. Any parking fine amounts will by recovered via Los Gatos PD and remitted to the City. 6 Animal Control Fees See Silicon Valley Animal Control Authority. 7 Fire Protection Fees See Santa Clara County Fire. Activity Description App D - 1

Appendix E Cost of Service Analysis and Audit for Reasonableness of Outcomes

User and Regulatory Fees Fee-Related Cost of Service Analysis App E - 1

Services / Activities / Subject Matter Page Planning Fees App E: 3 - 7 Public Works Fees App E: 8 - 12 Building Fees App E: 13 - 17 Community Planning Fee App E: 18 City of Monte Sereno COST OF SERVICE ANALYSIS App E - 2

City of Monte Sereno User and Regulatory Fee Study Allocation of Annual Labor Effort - Planning Position City Planner Note Assumptions Regarding Labor Hours Annual Paid Hours Per FTE 1,820 [a] Est. Annual Leave Hours Per FTE 224 [b] Est. Productive Hours Per FTE 1,596 [c] Specific Employee Information Total FTE (or FTE Equivalent/Contractor) 1.00 Annual Salary 100,449 $ Annual Benefits 31,103 $ Contract Svcs - $ Total Annual Labor Costs 131,552 $ Salary and Wage Rate Per Paid Hour 55 $ Benefit Rate Per Paid Hour 17 $ Contract Svcs Rate Per Paid Hour - $ Total Labor Hourly Rate Per Paid Hour 72 $ Divisional Assignment Share Assigned to this Division 100% [d] Est. FTE Assigned to this Division 1.00 Annual Salary Assigned to this Division 100,449 $ Annual Benefits Assigned to this Division 31,103 $ Annual Contract Svcs Assigned to this Division - $ Total Annual Labor Costs 131,552 $ Est. Annual Hours Assigned to this Division 1,820 Est. Annual Leave Assigned to this Division 224 Est. Productive Hours Assigned to this Division 1,596 Labor Rate Per Productive Hour 82 $ App E - 3

City of Monte Sereno User and Regulatory Fee Study Allocation of Annual Labor Effort - Planning Position City Planner Note Allocation of Productive Hrs to this Division (%) Indirect Activities and Services General Admin; Mgmt; Policies; Procedures 12% Certification and Training 2% Public Information and Assistance 21% [e] Total Indirect Activities and Svcs 35% Direct Activities and Services Code Enforcement/Compliance (Punitive) 1% Long Range Planning 5% Current Planning 39% [e] Bldg Permit Plan Review 15% Support to Other City Departments 5% Total Direct Activities and Services 65% Total 100% Allocation of Productive Hours (Hours) Indirect Activities and Services General Admin; Mgmt; Policies; Procedures 192 Certification and Training 32 Public Information and Assistance 335 [e] Total Indirect Activities and Svcs 559 Direct Activities and Services Code Enforcement/Compliance (Punitive) 16 Long Range Planning 80 Current Planning 622 [e] Bldg Permit Plan Review 239 Support to Other Departments 80 Total Direct Activities and Services 1,037 Total 1,596 [a] Assumes 35 hours per week, 52 weeks per year (35*52 = 2,080). [b] Conservative estimate for purposes of this analysis. Actual amounts will vary by employee. Assumes 12 holidays/personal holidays, 15 vacation days, 5 sick days. [c] Productive hours represent hours available for work after accounting for annual leave. [d] Based on interviews with City staff. [e] Based on feedback from City Planner, City policies result in significant time spent providing public information and assistance prior to application submittal in order to improve submittal completeness and allow for 3-week or less turnaround time from the date of formal submittal. This effort has been assigned to current planning and estimated service times include this level of support. This results in a more conservative hourly rate outcome (i.e. lower hourly rate) and a more accurate estimate of total direct service hours associated with application processing (i.e. pre and post submittal hours). App E - 4

City of Monte Sereno User and Regulatory Fee Study Fully-Burdened Hourly Rate Calculation and Cost Recovery Analysis - Planning Labor Expenditures Description Total Notes Salaries 100,449 $ [a] Benefits 31,103 $ [a] Contract Services - $ [a] Total - Labor Expenditures 131,552 $ Share of Recurring Services/Supplies and Citywide Overhead Expenditures Description % of Direct Costs Allocation Notes Share of Svcs & Supplies and Citywide Overhead 53% 69,723 $ [b] Total Allocable ExpendituresDescription Amount % of Total Notes Labor 131,552 $ 65% Share of Recurring Services/Supplies and C'wide Overhead Exp. 69,723 $ 35% Total 201,275 $ 100% Calculation of Fully-Burdened Hourly Rate Description Annual Allocation [a] Labor Svcs/Supplies & Citywide OH Total Targeted Recovery from Fees Amount Recoverable from Fees Targeted Hourly Rate Notes Indirect Activities and Services General Admin; Mgmt; Policies; Procedures 12% 15,786 $ 8,367 $ 24,153 $ 83% 20,066 $ 23 $ Certification and Training 2% 2,631 $ 1,394 $ 4,025 $ 83% 3,344 $ 4 $ Public Information and Assistance 21% 27,626 $ 14,642 $ 42,268 $ 83% 35,115 $ 41 $ Total Indirect Activities and Svcs 35% 46,043 $ 24,403 $ 70,446 $ 58,524 $ 68 $ Direct Activities and Services Code Enforcement/Compliance (Punitive) 1% 1,316 $ 697 $ 2,013 $ 0% - $ - $ Long Range Planning 5% 6,578 $ 3,486 $ 10,064 $ 0% - $ - $ Current Planning 39% 51,305 $ 27,192 $ 78,497 $ 100% 78,497 $ 91 $ Bldg Permit Plan Review 15% 19,733 $ 10,458 $ 30,191 $ 100% 30,191 $ 35 $ Support to Other City Departments 5% 6,578 $ 3,486 $ 10,064 $ 0% - $ - $ Total Direct Activities and Services 65% 85,509 $ 45,320 $ 130,828 $ 83% 108,688 $ 126 $ Total 100% 131,552 $ 69,723 $ 201,275 $ 83% 167,213 $ 194 $ < Hourly Rate Direct Hours 862 [a] Fee-Related Cost Recovery Analysis Direct Fee-Related Activity Hourly Rate Est. Annual Direct Hours Total Annual Costs Fee Revenue Aggregate Cost Recovery General Fund Support Req'd Notes Current Planning 194 $ 622 120,753 $ 65,282 $ 54% 55,471 $ [c] Planning Review of Building Permits 194 $ 239 46,448 $ - $ 0% 46,448 $ [c] Total 862 167,201 $ 65,282 $ 39% 101,919 $ [a] See worksheet labeled "Allocation of Annual Labor Effort - Planning". [b] Source: Indirect cost rate analysis developed as part of this study. [c] Source: Zoning Fees. App E - 5

City of Monte Sereno User and Regulatory Fee Study Planning Cost of Service Analysis and Reasonableness Audit Fee Description Est. Labor Time Hourly Rate Cost of Svc Current Fee Current Est. Cost Recovery Targeted Cost Recovery Proposed Fee Note 1 Planning Review of Building Permit 1.5 x $194 = 291 $ $0 0% 52% $150 2 Community Planning Fee (per $1 of valuation) Separate wrksht $0.0036 $0.0000 0% 50% $0.0018 3 Significant Tree Removal (referred to Site and Architecture Commission) 5.0 x $194 = 970 $ $100 10% 10% $100 4 Site Development/Planned Development Permit: a) New Houses/Demo Rebuild/Remodel/Addition 50% or more of existing SF 16.0 x $194 = 3,104 $ $2,450 79% 90% $2,800 b) Remodel/Addition less than 50% of existing SF 12.0 x $194 = 2,328 $ $1,500 64% 82% $1,900 c) Accessory Building/Fence Height 8.0 x $194 = 1,552 $ $360 23% 32% $500 e) Hillside Development (avg. slope of 10% of greater) 18.0 x $194 = 3,492 $ $2,750 79% 89% $3,100 f) Site Development Permit Amendment 8.0 x $194 = 1,552 $ $1,250 81% 84% $1,300 5 Administrative Building Site Approval 16.0 x $194 = 3,104 $ $2,450 79% 90% $2,800 6 Address/Street Name Change 2.0 x $194 = 388 $ $250 64% 90% $350 7 Environmental Review a) Exemption 2.0 x $194 = 388 $ varies varies 90% $350 b) Environmental Clearance i) Reuse of Previous Environmental Clearance 2.0 x $194 = 388 $ varies varies 90% $350 ii) Initial Study and Negative Declaration / Mitigated Negative Declaration 18.0 x $194 = 3,492 $ varies varies 97% $3,400 iii) Initial Study and Negative Declaration / Mitigated Negative Declaration (prepared by consultant) varies varies varies 100% pass-through of actual cost plus 10% administrative fee iv) EIR (prepared by consultant) varies varies varies 100% pass-through of actual cost plus 10% administrative fee 8 General Plan Amendment 16.0 x $194 = 3,104 $ $2,530 82% 90% $2,800 9 Zoning Map Amendment 16.0 x $194 = 3,104 $ $2,530 82% 90% $2,800 10 Planned Development Zoning Map Amendment 28.0 x $194 = 5,432 $ $2,530 47% 92% $5,000 11 Annexation (excluding LAFCO Fees) 20.0 x $194 = 3,880 $ $2,530 65% 98% $3,800 12 Reasonable Accommodation Application 6.0 x $194 = 1,164 $ $360 31% 31% $360 13 Subdivision: a) Lot Line Adjustment 8.0 x $194 = 1,552 $ $1,500 97% 97% $1,500 b) Tentative Map Application: i) 4 Lots or Fewer: (Tentative Parcel Map) 16.0 x $194 = 3,104 $ $2,550 + $1,360/lot varies 97% $3,000 ii) 5 Lots or More: (Tentative Subdivision Map) 52.0 x $194 = 10,088 $ $3,060 + $1,360/lot varies 99% $10,000 14 Use Permits: a) General 16.0 x $194 = 3,104 $ $2,450 79% 90% $2,800 b) Animals 8.0 x $194 = 1,552 $ $360 23% 32% $500 c) Special Land Use Permit (Historic Resource) 16.0 x $194 = 3,104 $ $2,450 79% 90% $2,800 15 Satellite Dish a) Administrative Review 2.5 x $194 = 485 $ $55 11% 52% $250 b) Public Hearing 5.0 x $194 = 970 $ $55 6% 52% $500 16 Variance 16.0 x $194 = 3,104 $ $2,450 79% 90% $2,800 17 Appeal 10.0 x $194 = 1,940 $ $360 19% 19% $360 18 Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1 hour minimum) 1.0 x $194 = 194 $ 100% $194 19 Excess Plan Review Fee (per hour - 1 hour minimum) 1.0 x $194 = 194 $ 100% $194 20 Excess Inspection/Re-inspection/Missed Inspection Fee (per hour - 1 hour minimum) 1.0 x $194 = 194 $ 100% $194 21 Work Commenced without a Permit 1x Base Permit Fee App E - 6

City of Monte Sereno User and Regulatory Fee Study Planning Cost of Service Analysis and Reasonableness Audit Fee Description 1 Planning Review of Building Permit 2 Community Planning Fee (per $1 of valuation) 3 Significant Tree Removal (referred to Site and Architecture Commission) 4 Site Development/Planned Development Permit: a) New Houses/Demo Rebuild/Remodel/Addition 50% or more of existing SF b) Remodel/Addition less than 50% of existing SF c) Accessory Building/Fence Height e) Hillside Development (avg. slope of 10% of greater) f) Site Development Permit Amendment 5 Administrative Building Site Approval 6 Address/Street Name Change 7 Environmental Review a) Exemption b) Environmental Clearance i) Reuse of Previous Environmental Clearance ii) Initial Study and Negative Declaration / Mitigated Negative Declaration iii) Initial Study and Negative Declaration / Mitigated Negative Declaration (prepared by consultant) iv) EIR (prepared by consultant) 8 General Plan Amendment 9 Zoning Map Amendment 10 Planned Development Zoning Map Amendment 11 Annexation (excluding LAFCO Fees) 12 Reasonable Accommodation Application 13 Subdivision: a) Lot Line Adjustment b) Tentative Map Application: i) 4 Lots or Fewer: (Tentative Parcel Map) ii) 5 Lots or More: (Tentative Subdivision Map) 14 Use Permits: a) General b) Animals c) Special Land Use Permit (Historic Resource) 15 Satellite Dish a) Administrative Review b) Public Hearing 16 Variance 17 Appeal 18 Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1 hour minimum) 19 Excess Plan Review Fee (per hour - 1 hour minimum) 20 Excess Inspection/Re-inspection/Missed Inspection Fee (per hour - 1 hour minimum) 21 Work Commenced without a Permit Target Annual Volume Est Annual Hours Revenue Analysis at Current Fees Revenue Analysis at Full Cost Recovery Revenue Analysis at Proposed Fees 125 188 - $ 36,375 $ 18,750 $ 33 165 3,300 $ 32,010 $ 3,300 $ 10 160 24,500 $ 31,040 $ 28,000 $ 6 72 9,000 $ 13,968 $ 11,400 $ 6 48 2,160 $ 9,312 $ 3,000 $ 3 54 8,250 $ 10,476 $ 9,300 $ 1 8 1,250 $ 1,552 $ 1,300 $ 0 - $ - $ - $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 1 18 2,530 $ 3,492 $ 3,400 $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 1 16 2,530 $ 3,104 $ 2,800 $ 1 16 2,530 $ 3,104 $ 2,800 $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 2 16 3,000 $ 3,104 $ 3,000 $ 1 16 2,550 $ 3,104 $ 3,000 $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 1 16 2,450 $ 3,104 $ 2,800 $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 793 64,050 $ 153,745 $ 92,850 $ Reasonable >>> Yes Yes Yes Yes Support Note >>> see hrly rate see actual rev see hrly rate < 100% target App E - 7

City of Monte Sereno User and Regulatory Fee Study Allocation of Annual Labor Effort - Public Works Engineering/Private Land Development/Encroachments Position Principal Engineer Note Assumptions Regarding Labor Hours Annual Paid Hours Per FTE 1,820 [a],[d] Est. Annual Leave Hours Per FTE 224 [b],[d] Est. Productive Hours Per FTE 1,596 [c],[d] Specific Employee Information Total FTE (or FTE Equivalent/Contractor) 1.00 Annual Salary 151,426 $ [e] Annual Benefits 69,834 $ [e] Contract Svcs - $ Total Annual Labor Costs 221,260 $ Salary and Wage Rate Per Paid Hour 83 $ Benefit Rate Per Paid Hour 38 $ Contract Svcs Rate Per Paid Hour - $ Total Labor Hourly Rate Per Paid Hour 122 $ Divisional Assignment Share Assigned to this Division 100% Est. FTE Assigned to this Division 1.00 Annual Salary Assigned to this Division 151,426 $ Annual Benefits Assigned to this Division 69,834 $ Annual Contract Svcs Assigned to this Division - $ Total Annual Labor Costs 221,260 $ Est. Annual Hours Assigned to this Division 1,820 Est. Annual Leave Assigned to this Division 224 Est. Productive Hours Assigned to this Division 1,596 Labor Rate Per Productive Hour 139 $ App E - 8

City of Monte Sereno User and Regulatory Fee Study Allocation of Annual Labor Effort - Public Works Engineering/Private Land Development/Encroachments Position Principal Engineer Note Allocation of Productive Hrs to this Division (%) Indirect Activities and Services General Admin; Mgmt; Policies; Procedures 12% Certification and Training 2% Public Information and Assistance 6% [f] Total Indirect Activities and Svcs 20% Direct Activities and Services Public Projects 40% [f] Private Land Development / Encroachments 40% [f] Total Direct Activities and Services 80% Total 100% Allocation of Productive Hours (Hours) Indirect Activities and Services General Admin; Mgmt; Policies; Procedures 192 Certification and Training 32 Public Information and Assistance 96 [e] Total Indirect Activities and Svcs 319 Direct Activities and Services Public Projects 638 Private Land Development / Encroachments 638 Total Direct Activities and Services 1,277 Total 1,596 [a] Assumes 35 hours per week, 52 weeks per year (35*52 = 2,080). [b] Conservative estimate for purposes of this analysis. Actual amounts will vary by employee. Assumes 12 holidays/personal holidays, 15 vacation days, 5 sick days. [c] Productive hours represent hours available for work after accounting for annual leave. [d] The City currently uses a contract service provider for Engineering services. Beginning FY 18/19 the City anticipates transitioning to in-house staff. This analysis assumes in-house staff. [e] Estimated labor costs are set to match the City's Building Official. [f] Based on feedback from City existing contract engineering service providers. App E - 9

City of Monte Sereno User and Regulatory Fee Study Fully-Burdened Hourly Rate Calculation and Cost Recovery Analysis - Public Works Engineering/Private Land Development/Encroachments Labor Expenditures Description Total Notes Salaries 151,426 $ [a] Benefits 69,834 $ [a] Contract Services - $ [a] Total - Labor Expenditures 221,260 $ Share of Recurring Services/Supplies and Citywide Overhead Expenditures Description % of Direct Costs Allocation Notes Share of Svcs & Supplies and Citywide Overhead 53% 117,268 $ [b] Total Allocable ExpendituresDescription Amount % of Total Notes Labor 221,260 $ 65% Share of Recurring Services/Supplies and C'wide Overhead Exp. 117,268 $ 35% Total 338,528 $ 100% Calculation of Fully-Burdened Hourly Rate Description Annual Allocation [a] Labor Svcs/Supplies & Citywide OH Total Targeted Recovery from Fees Amount Recoverable from Fees Targeted Hourly Rate Notes Indirect Activities and Services General Admin; Mgmt; Policies; Procedures 12% 26,551 $ 14,072 $ 40,623 $ 50% 20,312 $ 32 $ Certification and Training 2% 4,425 $ 2,345 $ 6,771 $ 50% 3,385 $ 5 $ Public Information and Assistance 6% 13,276 $ 7,036 $ 20,312 $ 50% 10,156 $ 16 $ Total Indirect Activities and Svcs 20% 44,252 $ 23,454 $ 67,706 $ 33,853 $ 53 $ Direct Activities and Services Public Projects 40% 88,504 $ 46,907 $ 135,411 $ 0% - $ - $ Private Land Development / Encroachments 40% 88,504 $ 46,907 $ 135,411 $ 100% 135,411 $ 212 $ Total Direct Activities and Services 80% 177,008 $ 93,814 $ 270,822 $ 50% 135,411 $ 212 $ Total 100% 221,260 $ 117,268 $ 338,528 $ 50% 169,264 $ 265 $ < Hourly Rate Direct Hours 638 [a] Fee-Related Cost Recovery Analysis Direct Fee-Related Activity Hourly Rate Est. Annual Direct Hours Total Annual Costs Fee Revenue Aggregate Cost Recovery General Fund Support Req'd Notes Private Land Development/Encroachments 265 $ 638 169,176 $ 55,297 $ 33% 113,879 $ [c] [a] See worksheet labeled "Allocation of Annual Labor Effort - Planning". [b] Source: Indirect cost rate analysis developed as part of this study. [c] Source: Grading permits; encroachments. App E - 10

City of Monte Sereno User and Regulatory Fee Study Private Land Development/Encroachments Cost of Service Analysis and Reasonableness Audit Fee Description Est. Labor Time Hourly Rate Cost of Svc Current Fee Current Est. Cost Recovery Targeted Cost Recovery Proposed Fee Note 1 Certificate of Compliance 8.0 $265 = 2,120 $ $360 17% 50% $1,050 2 Encroachment Permit (Administrative) 1.5 x $265 = 398 $ $175 44% 88% $350 3 Construction Encroachment Permit Fee a) First $50,000 of value, or any fraction thereof varies: x $265 = varies: 5% of value varies: 5% of value b) Value Exceeding $50,000 varies: x $265 = varies: 2% - 3% of value varies: 3% of value 4 Storm Drain Fees [a] a) Per Lot Zoned: R-1-44 $2,450 $2,450 [a] b) Per Lot Zoned: R-1-20 $1,640 $1,640 [a] c) Per Lot Zoned: R-1-8 $810 $810 [a] 5 Final Map a) Parcel Map 12.0 x $265 = 3,180 $ n/a 94% $3,000 b) Tract Map 36.0 x $265 = 9,540 $ n/a 94% $9,000 6 Grading Plan Check Fees varies x $265 = varies Actual + admin varies 100% Bill hourly/T&M 7 Grading Permit Fees a) Less than 50 cubic yards 2.0 x $265 = 530 $ $105 20% 50% $265 b) 51 to 100 cubic yards 4.0 x $265 = 1,060 $ $160 15% 50% $530 c) 101 to 1,000 cubic yards i) For first 100 cubic yards or fraction thereof 4.0 x $265 = 1,060 $ $160 15% 50% $530 ii) For each add'l 100 cubic yards or fraction 0.22 x $265 = 59 $ $30 51% 50% $29 d) 1,001 to 10,000 cubic yards i) For first 1,000 cubic yards or fraction thereof 6.0 x $265 = 1,590 $ $460 29% 50% $795 ii) For each add'l 1,000 cubic yards or fraction 0.4 x $265 = 118 $ $30 25% 50% $59 e) 10,001 to 100,000 cubic yards i) For first 10,000 cubic yards or fraction thereof 10.0 x $265 = 2,650 $ $760 29% 75% $1,988 ii) For each add'l 1,000 cubic yards or fraction 0.16 x $265 = 41 $ $30 73% 75% $31 f) 100,001 cubic yards or more i) For first 100,000 cubic yards or fraction thereof 24.0 x $265 = 6,360 $ $3,460 54% 100% $6,360 ii) For each add'l 1,000 cubic yards or fraction 0.12 x $265 = 31 $ $30 97% 100% $31 8 NPDES Compliance a) Plan Check i) Less than 1 Acre 1.5 x $265 = 398 $ varies 58% 88% $350 ii) Greater than or Equal to 1 Acre 8.0 x $265 = 2,120 $ varies 11% 50% $1,050 b) Site Inspection i) Less than 1 Acre 4.0 x $265 = 1,060 $ varies 37% 50% $530 ii) Greater than or Equal to 1 Acre varies x $265 = varies varies varies 100% Bill hourly/T&M with $1,000 initial deposit 9 Oversize Load Permit a) One Day $16 [b] b) Annual $90 [b] 10 Hourly Rate for Services Not Listed in this Fee Schedule (per 1.0 x $265 = 265 $ varies 100% $265 11 Excess Plan Review Fee (per hour - 1 hour minimum) 1.0 x $265 = 265 $ n/a 100% $265 12 Excess Inspection/Re-inspection/Missed Inspection Fee (per 1.0 x $265 = 265 $ n/a 100% $265 13 Work Commenced without a Permit n/a 100% 1x Base Permit Fee Notes: [a] Not included in this study. No changes proposed. [b] Fees set to match CalTrans. App E - 11

City of Monte Sereno User and Regulatory Fee Study Private Land Development/Encroachments Cost of Service Analysis and Reasonableness Audit Fee Description 1 Certificate of Compliance 2 Encroachment Permit (Administrative) 3 Construction Encroachment Permit Fee a) First $50,000 of value, or any fraction thereof b) Value Exceeding $50,000 4 Storm Drain Fees a) Per Lot Zoned: R-1-44 b) Per Lot Zoned: R-1-20 c) Per Lot Zoned: R-1-8 5 Final Map a) Parcel Map b) Tract Map 6 Grading Plan Check Fees 7 Grading Permit Fees a) Less than 50 cubic yards b) 51 to 100 cubic yards c) 101 to 1,000 cubic yards i) For first 100 cubic yards or fraction thereof ii) For each add'l 100 cubic yards or fraction d) 1,001 to 10,000 cubic yards i) For first 1,000 cubic yards or fraction thereof ii) For each add'l 1,000 cubic yards or fraction e) 10,001 to 100,000 cubic yards i) For first 10,000 cubic yards or fraction thereof ii) For each add'l 1,000 cubic yards or fraction f) 100,001 cubic yards or more i) For first 100,000 cubic yards or fraction thereof ii) For each add'l 1,000 cubic yards or fraction 8 NPDES Compliance a) Plan Check i) Less than 1 Acre ii) Greater than or Equal to 1 Acre b) Site Inspection i) Less than 1 Acre ii) Greater than or Equal to 1 Acre 9 Oversize Load Permit a) One Day b) Annual 10 Hourly Rate for Services Not Listed in this Fee Schedule (per 11 Excess Plan Review Fee (per hour - 1 hour minimum) 12 Excess Inspection/Re-inspection/Missed Inspection Fee (per 13 Work Commenced without a Permit Notes: [a] Not included in this study. No changes proposed. [b] Fees set to match CalTrans. Target Annual Volume Est Annual Hours Revenue Analysis at Current Fees Revenue Analysis at Full Cost Recovery Revenue Analysis at Proposed Fees 2 16 720 $ 4,240 $ 2,100 $ 26 39 4,550 $ 10,335 $ 9,100 $ 24 72 6,000 $ 19,080 $ 6,000 $ 2 16 3,000 $ 4,240 $ 3,000 $ 2 16 6,360 $ 4,240 $ - $ - $ 36 108 9,000 $ 28,620 $ 28,620 $ 0 0 - $ - $ - $ 11 43 1,728 $ 11,448 $ 5,724 $ 11 43 1,728 $ 11,448 $ 5,724 $ 11 2 324 $ 636 $ 318 $ 7 43 3,312 $ 11,448 $ 5,724 $ 7 3 216 $ 848 $ 424 $ 7 72 5,472 $ 19,080 $ 14,310 $ 7 1 216 $ 297 $ 223 $ 0 0 - $ - $ - $ 0 0 - $ - $ - $ 24 36 5,568 $ 9,540 $ 8,400 $ 2 16 464 $ 4,240 $ 2,100 $ 24 96 9,384 $ 25,440 $ 12,720 $ 2 16 782 $ 4,240 $ 4,240 $ 639 52,464 $ 171,540 $ 112,967 $ Reasonable >>> Yes Yes Yes Yes Support Note >>> see hrly rate see actual rev see hrly rate < 100% target App E - 12

City of Monte Sereno User and Regulatory Fee Study Allocation of Annual Labor Effort - Building Position Building Official Admin Clerk Contract PC Svcs Total Note Assumptions Regarding Labor Hours Annual Paid Hours Per FTE 1,820 1,820 311 3,951 [a] Est. Annual Leave Hours Per FTE 224 224 - 448 [b] Est. Productive Hours Per FTE 1,596 1,596 311 3,503 [c] Specific Employee Information Total FTE (or FTE Equivalent/Contractor) 1.00 1.00 1.00 Annual Salary 151,426 $ 69,834 $ - $ 221,260 $ Annual Benefits 69,834 $ 25,247 $ - $ 95,081 $ Contract Svcs - $ - $ 42,000 $ 42,000 $ Total Annual Labor Costs 221,260 $ 95,081 $ 42,000 $ 358,341 $ Salary and Wage Rate Per Paid Hour 83 $ 38 $ - $ Benefit Rate Per Paid Hour 38 $ 14 $ - $ Contract Svcs Rate Per Paid Hour - $ - $ 135 $ Total Labor Hourly Rate Per Paid Hour 122 $ 52 $ 135 $ Divisional Assignment Share Assigned to this Division 100% 33% 100% [d] Est. FTE Assigned to this Division 1.00 0.33 1.00 Annual Salary Assigned to this Division 151,426 $ 23,045 $ - $ 174,471 $ Annual Benefits Assigned to this Division 69,834 $ 8,332 $ - $ 78,166 $ Annual Contract Svcs Assigned to this Division - $ - $ 42,000 $ 42,000 $ Total Annual Labor Costs 221,260 $ 31,377 $ 42,000 $ 294,637 $ Est. Annual Hours Assigned to this Division 1,820 601 311 2,732 Est. Annual Leave Assigned to this Division 224 74 - 298 Est. Productive Hours Assigned to this Division 1,596 527 311 2,434 Labor Rate Per Productive Hour 139 $ 60 $ 135 $ 121 $ App E - 13

City of Monte Sereno User and Regulatory Fee Study Allocation of Annual Labor Effort - Building Position Building Official Admin Clerk Contract PC Svcs Total Note Allocation of Productive Hrs to this Division (%) Indirect Activities and Services General Admin; Mgmt; Policies; Procedures 8% 0% 0% 6% Certification and Training 1% 0% 0% 1% Public Information and Assistance 22% 25% 0% 19% Total Indirect Activities and Svcs 31% 25% 0% 26% Direct Activities and Services Code Enforcement/Compliance (Punitive) 2% 0% 0% 2% Bldg Permit Processing/Plan Check/Review 67% 75% 100% 73% Total Direct Activities and Services 69% 75% 100% 74% Total 100% 100% 100% 100% Allocation of Productive Hours (Hours) Indirect Activities and Services General Admin; Mgmt; Policies; Procedures 128 - - 128 Certification and Training 16 - - 16 Public Information and Assistance 351 132 - 483 Total Indirect Activities and Svcs 495 132 - 626 Direct Activities and Services Code Enforcement/Compliance (Punitive) 32 - - 32 Bldg Permit Processing/Plan Check/Review 1,069 395 311 1,775 Total Direct Activities and Services 1,101 395 311 1,807 Total 1,596 527 311 2,434 [a] Assumes 35 hours per week, 52 weeks per year (35*52 = 2,080). [b] Conservative estimate for purposes of this analysis. Actual amounts will vary by employee. Assumes 12 holidays/personal holidays, 15 vacation days, 5 sick days. [c] Productive hours represent hours available for work after accounting for annual leave. [d] Source: FY 17/18 budgeted payroll. App E - 14

City of Monte Sereno User and Regulatory Fee Study Fully-Burdened Hourly Rate Calculation and Cost Recovery Analysis - Building Labor Expenditures Description Total Notes Salaries 174,471 $ [a] Benefits 78,166 $ [a] Contract Services 42,000 $ [a] Total - Labor Expenditures 252,637 $ Share of Recurring Services/Supplies and Citywide Overhead Expenditures Description % of Direct Costs Allocation Notes Share of Svcs & Supplies and Citywide Overhead 53% 133,897 $ [b] Total Allocable ExpendituresDescription Amount % of Total Notes Labor 252,637 $ 65% Share of Recurring Services/Supplies and C'wide Overhead Exp. 133,897 $ 35% Total 386,534 $ 100% Calculation of Fully-Burdened Hourly Rate Description Annual Allocation [a] Labor Svcs/Supplies & Citywide OH Total Targeted Recovery from Fees Amount Recoverable from Fees Targeted Hourly Rate Notes Indirect Activities and Services General Admin; Mgmt; Policies; Procedures 6% 15,178 $ 8,044 $ 23,222 $ 98% 22,751 $ 13 $ Certification and Training 1% 1,897 $ 1,006 $ 2,903 $ 98% 2,844 $ 2 $ Public Information and Assistance 19% 48,464 $ 25,686 $ 74,150 $ 98% 72,647 $ 41 $ Total Indirect Activities and Svcs 26% 65,539 $ 34,736 $ 100,275 $ 98,241 $ 55 $ Direct Activities and Services Code Enforcement/Compliance (Punitive) 2% 3,794 $ 2,011 $ 5,805 $ 0% - $ - $ Bldg Permit Processing/Plan Check/Review 73% 183,303 $ 97,151 $ 280,454 $ 100% 280,454 $ 158 $ Total Direct Activities and Services 74% 187,098 $ 99,162 $ 286,259 $ 98% 280,454 $ 158 $ Total 100% 252,637 $ 133,897 $ 386,534 $ 98% 378,695 $ 213 $ < Hourly Rate Direct Hours 1,775 [a] Fee-Related Cost Recovery Analysis Direct Fee-Related Activity Hourly Rate Est. Annual Direct Hours Total Annual Costs Fee Revenue Aggregate Cost Recovery General Fund Support Req'd Notes Building Division Permitting, Plan Check, Inspection 213 $ 1,775 378,145 $ 312,555 $ 83% 65,590 $ [c] [a] See worksheet labeled "Allocation of Annual Labor Effort - Building". [b] Source: Indirect cost rate analysis developed as part of this study. [c] Source: Construction permits. App E - 15

City of Monte Sereno User and Regulatory Fee Study Building Cost of Service Analysis and Reasonableness Audit Fee Description Est. Labor Time Hourly Rate Cost of Svc Current Fee Current Est. Cost Recovery Targeted Cost Recovery Proposed Fee Note 1 Electrical Plumbing or Mechanical Permits a) Per Permit 0.75 x $213 = 160 $ $62 39% 100% $159 b) Per Square Foot 0.001 x $213 = 0.11 $ $0.06 56% 100% $0.11 2 Solar 1.50 x $213 = 320 $ $0 0% 100% $1593 Demolition Permit 0.75 x $213 = 160 $ $62 39% 100% $1594 Building Permits and Plan Check Fees [see table below for add'l details] 1,140 x $213 = 242,820 $ $243,366 100% 100% $242,8205 Microfilm = 5 $ $5 100% 100% $5 Fee Description Est. Labor Time (Bldg Permit and PC Only) Hourly Rate Cost of Svc 6 Sample Building Permit and Plan Review Categories a) Valuation Less than $5,000 0.50 x $213 = 107 $ b) Valuation $5,000 to $15,000 (e.g. repair and bathroom remodels) 1.5 - 2.5 hours x $213 = 426 $ c) Valuation $15,000 to $50,000 (e.g. remodel bathroom ; pool; kitchen) 2.5 - 5 hours x $213 = 852 $ d) Valuation $75,000 or greater (e.g. additions ; add/remod; new structures) 8+ hours x $213 = 3,408 $ Reasonable >>> Yes Support Note Reasonable >>> Notes: [a] Source: FY 16/17 actual permits issued. Current fees capture these costs; hours increase as complexity increases; consistent fees for similar projects; total hours do not exceed available annual hours. See building permit history sheet. App E - 16

City of Monte Sereno User and Regulatory Fee Study Building Cost of Service Analysis and Reasonableness Audit Fee Description 1 Electrical Plumbing or Mechanical Permits a) Per Permit b) Per Square Foot 2 Solar 3 Demolition Permit 4 Building Permits and Plan Check Fees [see table below for add'l details] 5 Microfilm Fee Description6 Sample Building Permit and Plan Review Categories a) Valuation Less than $5,000 b) Valuation $5,000 to $15,000 (e.g. repair and bathroom remodels) c) Valuation $15,000 to $50,000 (e.g. remodel bathroom ; pool; kitchen) d) Valuation $75,000 or greater (e.g. additions ; add/remod; new structures) Notes: [a] Source: FY 16/17 actual permits issued. Target Annual Volume Est Annual Hours Revenue Analysis at Current Fees Revenue Analysis at Full Cost Recovery Revenue Analysis at Proposed Fees Note 437 328 27,094 $ 69,811 $ 69,483 $ [a] 0 0 - $ - $ - $ [a] 20 30 - $ 6,390 $ 3,180 $ [a] 4 3 248 $ 639 $ 636 $ [a] 132 1,140 243,366 $ 242,820 $ 242,820 $ [a] 1,133 0 5,665 $ 5,665 $ 5,665 $ 1,501 276,373 $ 325,325 $ 321,784 $ Reasonable >>> Yes Yes Yes Yes Support Note >>> see hrly rate see actual rev see hrly rate 100% recovery target Support Clarification >>> Actual revenue = $312K, actual hours = 1,775. Pro-rating both amounts results in full cost recovery (i.e. adjust minimum permit fee and trade permit fees but leave building permit fees unchanged). App E - 17

City of Monte Sereno User and Regulatory Fee Study Community Planning Fee Cost of Service Analysis Description Total Amortization / Update Frequency Annual Cost Notes Estimated In-House Annual Labor Costs 10,064 $ 1 10,064 $ [a] Housing Update 50,000 $ 8 6,250 $ [b] General Plan Update 750,000 $ 15 50,000 $ [b] Total 66,314 $ Calculation of Fee at Full Cost Recovery Description Total Notes Annual Revenue Requirement 66,314 $ Est. Annual Construction Valuation 18,593,667 $ [c][d] Community Planning Fee as a % of Construction Valuation 0.36% Cost Recovery Analysis Description Current Fee Fee at Full Cost Recovery Current Cost Recovery Proposed Cost Recovery Proposed Fee Community Planning Fee 0.00% 0.36% 0% 50% 0.18% [a] See Planning Hourly Rate Calculation and Annual Allocation of Labor Time worksheets. [b] Conservative estimates of Housing Update and General Plan Update Costs. Actual amounts will likely be higher than amounts shown. [c] Source: FY 16/17 construction permit valuation. Amounts will vary annually. [d] For administrative efficiency the fee will be collected as part of the building permit fee. The vast majority of planning fee-related services, and engineering fee-related services are associated with active building permit applications or will ultimately lead to building permit applications. Permit valuation is a readily available metric that provides a reasonable correlation to cost on a repeatable basis (i.e. more complex projects have higher valuations, and typically rely more heavily on community planning documents for approval (e.g. drainage standards, zoning code, General Plan elements). App E - 18

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MONTE SERENO

ADOPTING AN UPDATED SCHEDULE OF USER AND REGULATORY FEES WHEREAS, the City Council established user and regulatory fees to offset costs of providing various services that are of benefit to applicants or service recipients, and WHEREAS, a comprehensive user and regulatory fee study and supporting documentation was prepared in 2018 which provides adequate evidence to conclude that City fees and charges, as adopted by Resolution 3682, do not exceed the cost to provide the services for which the fees are charged; and WHEREAS, since 2018, the City Council has only once raised such fees and charges to reflect increased costs of service based due to inflation, as adopted in September 2022 by Resolution No. 22-3863; and
WHEREAS, based on the recommendation of staff, City Council desires to increase such fees based on the Consumer Price Index, San Francisco Area rate of

4.9% for 2022, due to the increases to the City of providing the services set forth in the schedule of fees; and
WHEREAS, based on the analysis provided by staff, the City Council determines that the fees proposed will not exceed the estimated cost of providing service; and WHEREAS, this hearing to set fees was duly noticed pursuant to Government Code Section 66016.

NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF MONTE SERENO AS FOLLOWS:

Section 1. Each recital above is hereby adopted as a specific finding of this City Council.

Section 2. The City Council hereby adopts the schedule of fees as set forth in attached Exhibit "A" and incorporated by this reference.

REGULARLY APPROVED this 20th day of June 2023 by the following roll call vote:

Ayes:

Noes:

Abstain:

Absent:
______________________________
BY: Bryan Mekechuk, Mayor
ATTEST:

______________________________
Gloisy Gonzalez-Langarica, City Clerk

EXHIBIT A

Services / Activities / Subject Matter Effective Date Page Planning Fees August 21, 2023 1 - 2
Public Works Fees August 21, 2023 3 - 4
Building Fees August 21, 2023 5 - 6
Administrative Services August 21, 2023 7
City of Monte Sereno

MASTER FEE SCHEDULE

City of Monte Sereno

MASTER FEE SCHEDULE - PLANNING FEES
Note Current Fee Proposed Fee
1 Planning Review of Building Permit $160 $168
2 Community Planning Fee (per $1 of valuation) [a] $0.0019 $0.0020 3 Significant Tree Removal (referred to Site and Architecture Commission) $100 $100 4 Site Development/Planned Development Permit:
a) New Houses/Demo Rebuild/Remodel/Addition 50% or more of existing SF $3,040 $3,185 b) Remodel/Addition less than 50% of existing SF $2,060 $2,160 c) Accessory Building/Fence Height $540 $565
e) Hillside Development (avg. slope of 10% of greater) $3,370 $3,535 f) Site Development Permit Amendment $1,410 $1,475
5 Administrative Building Site Approval $3,040 $3,185
6 Address/Street Name Change $380 $395
7 Environmental Review
a) Exemption $380 $395
b) Environmental Clearance
i) Reuse of Previous Environmental Clearance $3,280 $3,440 ii) Initial Study and Negative Declaration / Mitigated Negative Declaration $3,690 $3,871 iii) Initial Study and Negative Declaration / Mitigated Negative Declaration (prepared by consultant)
pass-through of actual
cost plus 10%
pass-through of actual
cost plus 10%
iv) EIR (prepared by consultant) pass-through of actual cost plus 10%
pass-through of actual
cost plus 10%
8 General Plan Amendment $3,040 $3,185
9 Zoning Map Amendment $3,040 $3,185
10 Planned Development Zoning Map Amendment $5,430 $5,695 11 Annexation (excluding LAFCO Fees) $4,130 $4,330
12 Reasonable Accommodation Application $390 $405
13 Subdivision:
a) Lot Line Adjustment $1,630 $1,710
b) Tentative Map Application:
i) 4 Lots or Fewer: (Tentative Parcel Map) $3,260 $3,420 ii) 5 Lots or More: (Tentative Subdivision Map) $10,870 $11,400 14 Use Permits:
a) General $3,040 $3,285
b) Animals $500 $500
c) Special Land Use Permit (Historic Resource) $3,040 $3,185 15 Satellite Dish
a) Administrative Review $270 $280
b) Public Hearing $540 $565
16 Variance $3,040 $3,185
17 Appeal $360 $360
18 Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1 hour minimum) $211 $221 19 Excess Plan Review Fee (per hour - 1 hour minimum) [b] $211 $221 20 Excess Inspection/Re-inspection/Missed Inspection Fee (per hour - 1 hour minimum) [b] $211 $221 21 Work Commenced without a Permit [c] 1x Base Permit Fee 1x Base Permit Fee Activity Description

City of Monte Sereno

MASTER FEE SCHEDULE - PLANNING FEES
Activity Description Note Current Fee Proposed Fee
Notes:
[c] Amount in addition to base fee (i.e. double fees).
* The fees listed in this schedule do not include the costs of external reports required to be prepared and submitted by the applicant (e.g. arborist report, geotech report). Applicant is responsible for the preparation costs of any external reports required.

Additionally, the fees in this schedule do not include any outside agency fees or costs that may apply to applicant project (e.g. County recording fees, Department of Fish and Wildlife fees, newspaper noticing fees, consulting services, attorney services). Applicant is [b] Base fees include up to three plan reviews and any typically required inspections and first re-inspections. Excess plan review fees apply beginning with the fourth plan review. Excess inspection fees apply beginning with second re-inspection. [a] Fee paid at time of building permit issuance.

City of Monte Sereno

MASTER FEE SCHEDULE - PUBLIC WORKS FEES
Note Current Fee Proposed Fee
1 Certificate of Compliance $1,140 $1,195
2 Encroachment Permit (Administrative) $380 $395
3 Construction Encroachment Permit Fee
a) First $50,000 of value, or any fraction thereof 5% of value 5% of value b) Value Exceeding $50,000 3% of value 3% of value
4 Storm Drain Fees
a) Per Lot Zoned: R-1-44 $2,660 $2,790
b) Per Lot Zoned: R-1-20 $1,780 $1,865
c) Per Lot Zoned: R-1-8 $880 $920
5 Final Map
a) Parcel Map $3,260 $3,420
b) Tract Map $9,780 $10,255
6 Grading Plan Check Fees Bill hourly/T&M Bill hourly/T&M 7 Grading Permit Fees
a) Less than 50 cubic yards $288 $300
b) 51 to 100 cubic yards $576 $600
c) 101 to 1,000 cubic yards
i) For first 100 cubic yards or fraction thereof $576 $600 ii) For each add'l 100 cubic yards or fraction thereof up to 1,000 cubic yards $32 $34 d) 1,001 to 10,000 cubic yards
i) For first 1,000 cubic yards or fraction thereof $867 $906 ii) For each add'l 1,000 cubic yards or fraction thereof up to 10,000 cubic yards $64 $67 e) 10,001 to 100,000 cubic yards
i) For first 10,000 cubic yards or fraction thereof $2,160 $1,509 ii) For each add'l 1,000 cubic yards or fraction thereof up to 100,000 cubic yards $34 $36 f) 100,001 cubic yards or more
i) For first 100,000 cubic yards or fraction thereof $6,913 $4,749 ii) For each add'l 1,000 cubic yards or fraction thereof $34 $36 8 NPDES Compliance
a) Plan Check
i) Less than 1 Acre $380 $395
ii) Greater than or Equal to 1 Acre $1,140 $1,195
b) Site Inspection
i) Less than 1 Acre $570 $595
ii) Greater than or Equal to 1 Acre Bill hourly/T&M with $1,000 initial deposit
Bill hourly/T&M with
$1,000 initial deposit
9 Oversize Load Permit
a) One Day $16 $16
b) Annual $90 $90
10 Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1 hour minimum) $288 $302 11 Excess Plan Review Fee (per hour - 1 hour minimum) [a] $288 $302 12 Excess Inspection/Re-inspection/Missed Inspection Fee (per hour - 1 hour minimum) [a] $288 $302 Activity Description

City of Monte Sereno

MASTER FEE SCHEDULE - PUBLIC WORKS FEES
Activity Description Note Current Fee Proposed Fee
13 Work Commenced without a Permit [b] 1x Base Permit Fee 1x Base Permit Fee Notes:
[b] Amount in addition to base fee (i.e. double fees).
[a] Base fees include up to three plan reviews and any typically required inspections and first re-inspections. Excess plan review fees apply beginning with the fourth plan review. Excess inspection fees apply beginning with second re-inspection.

City of Monte Sereno

MASTER FEE SCHEDULE - BUILDING FEES
Note Current Fee Proposed Fee
1 Construction Tax $0.51 $0.51
2 Electrical, Plumbing or Mechanical Permits:
a) Fee per Square Foot $0.11 $0.11
b) Minimum fee $173 $180
3 Solar $173 $180
4 Demolition Permit $173 $180
5 Building Permit: [a]
a) Valuation: $1 to $500 $25.54 $26.79
b) Valuation: $501 to $2,000
i) Fee for first $500 $25.54 $26.79
ii) Fee for each additional $100, or fraction thereof, to and including $2,000 $3.32 $3.47 c) Valuation: $2,001 to $25,000
i) Fee for first $2,000 $75.27 $79.84
ii) Fee for each additional $1,000, or fraction thereof, to and including $25,000 $15.22 $15.93 d) Valuation: $25,001 to $50,000
i) Fee for first $25,000 $425.29 $446.23
ii) Fee for each additional $1,000, or fraction thereof, to and including $50,000 $10.98 $11.51 e) Valuation $50,001 to $100,000
i) Fee for first $50,000 $699.76 $733.98
ii) Fee for each additional $1,000, or fraction thereof, to and including $100,000 $7.61 $7.98 f) Valuation $100,001 to $500,000
i) Fee for first $100,000 $1,080.21 $1,132.98
ii) Fee for each additional $1,000, or fraction thereof, to and including $500,000 $6.09 $6.38 g) Valuation: $501,000 to $1,000,000
i) Fee for first $500,000 $3,515.09 $3,684.98
ii) Fee for each additional $1,000, or fraction thereof, to and including $1,000,000 $5.16 $5.42 h) Valuation: $1,000,001 and up
i) Fee for first $1,000,000 $6,096.71 $3,694.98
ii) Fee for each additional $1,000, or fraction thereof $3.42 $3.58 6 Plan Review Fees (In addition to building permit fees) a) Plan Review Fee (% of Building Permit Fee) 65% 65%
b) Structural Plan Review Fee (% of Plan Review Fee) 65% 65% c) Energy Conservation Plan Review Fee (% of Plan Review Fee) 5% 5% d) Green Building Code Plan Review Fee (% of Plan Review Fee) 5% 5% 7 Micro-filming / Imaging Fee (per page, in addition to building permit fees) $5 $5 8 Strong Motion Fees:
a) Residential (per $1 of valuation) $0.00013 $0.00013
b) Commercial (per $1 of valuation) $0.00028 $0.00028
9 SB 1473 (per $25,000 of valuation) $1 $1
10 Road Impact Fee (per $100 of valuation of permitted work) $0.49 $0.49 11 Other Fees
a) Excess Inspection/Excess Re-inspection/Missed Inspection Fee (per inspection) $115 $120 b) Work Commenced without a Permit [b] 1x Base Fees 1x Base Fees Activity Description

City of Monte Sereno

MASTER FEE SCHEDULE - BUILDING FEES
Activity Description Note Current Fee Proposed Fee
c) Hourly Rate for Services Not Listed in this Fee Schedule (per hour - 1/2 hour min.) $232 $243 d) Fee for Additional Services Required Due to Changes, Modifications, Additions, etc. [c] Actual Costs / T&M Actual Costs / T&M Notes:
[b] Amount in addition to base fee (i.e. double fees).
[c] In the event additional map checking, plan checking, or inspection services by the City are required by reason of changes, modifications, additions, errors, omissions, or discrepancies occasioned by the applicant or his agents or representatives, the applicant shall pay an additional fee equal to the actual cost to the City of performing the additional services. [a] The Building Official shall establish the valuation of said improvements, and fees will be assessed according to the following fee

City of Monte Sereno

MASTER FEE SCHEDULE - ADMINISTRATIVE FEES
Note Current Fee Proposed Fee (No
change)
1 Business License Fees
a) General Contractor $105 $105
b) Solicitors (for profits) $105 $105
c) Others (including subcontractors/specialty contractors) $55 $55 2 Printed Materials and Maps
a) Photo copies/Scanned/Digital Images (per page) $0.25 $0.25 b) Zoning Map $5 $5
c) City History "Peaceful Mountain" $31 $31
d) Design Guidelines $8 $8
3 Alarm Soundings, within a 12-month period
a) First, Second, and Third Soundings No Charge No Charge b) Fourth $200 $200
c) Fifth $300 $300
d) Subsequent Alarms $300 $300
4 Returned Check Processing Fee
a) First Check [a] $25 $25
b) Each Additional Check [a] $35 $35
5 Preparation of Materials Requiring Formatting, Programming, Development, etc. 100% of Actual Cost (billed per hour; 15
minute increments)
100% of Actual Cost
(billed per hour; 15
minute increments)
6 City Administration Fee Added to Vendor Service Costs, if applicable (e.g. outside printing of materials)
15% 15%
Notes:
[a] Fee set by State.

Activity Description

STAFF REPORT
Meeting: City Council - Jun 20 2023
Agenda Heading: NEW BUSINESS
Staff Contact: Steve Leonardis,
Department: City Manager
Title: Setting Fiscal Year 2023-24 Appropriations Limit Recommendation(s):

Staff recommends the City Council adopt a resolution setting the Appropriations Limit for Fiscal Year 2023-2024 based upon the Price Factor and Population data provided by the State of California Department of Finance.

Background Information:

Article XIII B of the California Constitution requires the City Council to annually set an “appropriations limit” by resolution. The appropriations limitation imposed by Propositions 4 and 111 creates a restriction on the amount of tax proceeds which can be appropriated in any fiscal year. This limit does not apply to the entire City budget. Certain expenditures of tax proceeds do not count toward this limit, including voter approved debt, regulatory and user fees, qualified capital outlays, and costs of complying with legal mandates. The limit is based on actual appropriations during the base year (FY 1986-87) and is increased each year using growth of population and inflation factors. Proposition 111, which was approved by the voters in June 1990, amended the factors used in the calculation of each year's limit. The factors to be used now are:
a. Price Factor - At the City's option, either the change in California per capita income or increase in non-residential assessed valuation due to new local nonresidential construction. b. Population Factor – At the City's option, either the annual change in City or County population.

Attached is the calculation for the FY 2023-2024 appropriations limit, which is $6,882,410. (Attachment 2). The proposed budget for Fiscal Year 2023-2024 is $6,045,477 and is below the appropriation limit set for the upcoming fiscal year.

Public Noticing:

The City Council’s agenda was posted at City Hall and the agenda, and this report appear on the City’s website. While the law does not require a public hearing, a Notice of Intent to Adopt

a Proposed Appropriations Limit for the FY2023-2024 has been posted in three locations of the City to provide ample public notice.

Attachments:

Draft Resolution
Proposed Appropriations Limit

RESOLUTION NO. 22-XXXX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MONTE SERENO STATE OF CALIFORNIA, ADOPTING AN APPROPRIATIONS LIMIT FOR THE 2023-2024 FISCAL YEAR
RESOLVED, by the City Council of the City of Monte Sereno, County of Santa Clara, State of California, that
WHEREAS, annually the City of Monte Sereno is required to establish its appropriations limit for each year pursuant to Article XIII B of the California Constitution; and WHEREAS, the City Council, did consider on Tuesday, June 20, 2023, at the hour of 7:00 P.M. in the Council Chambers in the City Hall, 18041 Saratoga-Los Gatos Road, Monte Sereno, California, the proposed appropriations limit for the Fiscal Year 2023-2024; and WHEREAS, the City Council has made available to the public the documentation used in determining the appropriations limit prior to the date of the meeting at which the appropriations limit is proposed to be adopted, and the City Council having heard all persons desiring to speak on the matter, and having fully considered the matter.

NOW, THEREFORE, IT IS HEREBY ORDERED as follows:

1. The City Council does hereby approve and selects the percentage change in California per capita personal income as the cost-of-living factor to be used in computing the appropriation limit for the City of Monte Sereno for the Fiscal Year 2023-2024.

2. The City Council does hereby establish as its appropriations limit for the Fiscal Year 2023- 2024, the following: $6,882,410

3. The City Council does hereby establish the appropriations subject to limit for the Fiscal Year 2023-2024 is $6,045,477 (as presented at 6-20-2023 City Council Meeting)

4. The City Council does hereby establish the appropriations under limit for the Fiscal Year 2023-2024 is $836,933, (as presented at 6-20-2023 City Council Meeting) REGULARLY passed and adopted this 20th day of June 2023.

AYES:

NOES:

ABSENT:

APPROVED:
_______________________________
Bryan Mekechuk, Mayor
ATTEST
___________________________
Gloisy Gonzalez-Langarica, City Clerk

ATTACHMENT 2

CITY OF MONTE SERENO
FY 2023-2024 APPROPRIATIONS LIMIT
Per Capita Change 1.0444
* Population Change 1.09
Calculation Factor FY 2023-2024 = 1.0444 x 1.09 1.1384
FY 23-24 Limit $6,045,477 x 1.1384 $6,882,410
Appropriations Subject to Limit $6,045,477
Appropriations under Limit $836,933
* On June 5, 1990, the California electorate passed Proposition 111 which modified the method of adjusting the annual appropriations limit. Beginning with the 1990-91 appropriations limit, the City may choose from the following indices when determining the adjustment factor:

The annual growth in the City’s population OR the annual growth in the County’s population as provided by the State Department of Finance.

AND
The annual growth in the California Per Capita Personal Income OR the growth in the nonresidential assessed valuation due to new construction within the City.

In computing the 2023-2024 appropriations limit, the population growth of the City of Monte Sereno and the California Per Capita Personal Income change were used.

STAFF REPORT
Meeting: City Council - Jun 20 2023
Agenda Heading: NEW BUSINESS
Staff Contact: Reynold Samoranos,
Department: Finance Manager
Title: Consider and Approve Fiscal Year 2023-2024 Operating and Capital Budget and Adopt a Resolution Adopting the Proposed Fiscal Year 2023- 2024 Operating and Capital Budget.

Recommendation(s):

Staff recommends that the City Council consider and approve the FY 2023-24 Operating and Capital Budget and adopt a resolution adopting the Proposed FY 2023-24 Operating and Capital Budget.

Public Noticing:

The City Council's agenda was posted at City Hall and the agenda and this report appear on the City's Website.

Attachments:

FY 2023-24 Proposed #3 Budget - Digital Budget Book (Final 6-15-2023 248pm) FY 2023-24 Proposed #3 Budget (Final 06-12-2023) - Resolution FY 2023-24 Proposed #3 Budget (Final 06-12-2023) CIP Version

City of Monte Sereno | Budget Book FY 2023-24 Page 309 of 478 Page 1

TABLE OF CONTENTS
Introduction 3
Transmittal Letter 4
Organization Chart 6
City Councilmembers 7
Monte Sereno at a Glance 12
History of City 13
Demographics 15
What is a Budget? 19
Basis of Budgeting 20
Fund Structure 21
Financial Policies 22
Budget Process 27
Budget Acknowledgments 28
Los Gatos Monte Sereno Police Department 28
Budget Overview 28
Priorities & Issues 29
Executive Overview 29
Strategic Plan 29
Short-term Factors 33
Fund Summary By Category 33
Fund Summaries 49
All Fund Accounts 50
Reserve Policy for the General Fund 53
Special Districts 54
Departments 54
Public Safety 55
Capital Improvement Projects 57
General and Capital Improvement Summary 58
General Projects 62
Permit Billing System 64
Capital Improvement Projects 64
Emergency Backup Generator 66
City Hall Parking Lot 66
City Hall and Annex Building ADA Project 67
Pavement Management Program 68
Winchester Boulevard Design 68
Capital Improvement Projects - Five Year Plan 68
Supplemental Information 70
Acknowledgements 71
Los Gatos Monte Sereno Police Department Memo 77
Appendix 77
Glossary
City of Monte Sereno | Budget Book FY 2023-24 Page 310 of 478 Page 2

INTRODUCTION
City of Monte Sereno | Budget Book FY 2023-24 Page 311 of 478 Page 3 Transmittal Letter
Steven Leonardis, City Manager
June 20, 2023
Dear, Honorable Mayor, City Council Members, and Residents of Monte Sereno, I am pleased to present to you the Monte Sereno FY 2023-2024 Budget.

In FY 2022-2023, the City of Monte Sereno received increased revenues from continued robust planning and building activities. In addition, Monte Sereno adopted increased building and planning fees and indexed those fee schedules for annual cost of living (COLA). Revenues for building and planning were largely driven by low interest rates and a strong local economy which in turn continues to fuel Santa Clara County’s real estate and development activities.

In addition, property tax revenue increased to yet another all-time high increasing 9.62%. This number represents one of the highest increases in all of Santa Clara County in the 2022-2023 tax calendar year.

Also, in FY 2022-2023, The City Council of Monte Sereno received detailed reports on Other Post-Employment Benefits (OPEB) and CalPERS Miscellaneous Pension Plan expenses. The City Council developed policy language to address these liabilities consistently on an annual basis which helped Monte Sereno realize significant savings in FY 2022-2023.

Monte Sereno was awarded a 500K grant from Silicon Valley Clean Energy (SVCE). Monte Sereno will utilize the SVCE grant monies to facilitate delivery of a new community center at the city center where the old post office building is located.

Monte Sereno, through its Better Streets Commission and Pavement Management Program (PMP), achieved 72% on its audited Pavement Condition Index (PCI). This figure represents a PCI on the highest end of the spectrum in all of Santa Clara County.

In 2020, Monte Sereno staff created and implemented a Community Based Grants (CBO) evaluation and acceptance policy and an online application process. An annual limit of $20K was established for Monte Sereno City Council to award to CBO organizations with a nexus to the Monte Sereno Community.

Monte Sereno City Council awarded 20K in CBO grants for FY 2023-2024. Monte Sereno continues to value its investment with partners such as KCAT, Los Gatos Education Foundation, Los Gatos Music in The Park, and Art Docents. These organizations return great value to the City of Monte Sereno and the surrounding community.

In FY 2022-2023 significant savings have been realized in operations. Staff continue efforts to reduce operating expenses, create efficiencies, and provide better services for residents.

Recommended investments in facilities, infrastructure, software, and office equipment are included in the FY 2023- 2024 Budget.

Monte Sereno was awarded a 40K grant in 2023. The 40K Grant was awarded to help Monte Sereno facilitate housing by developing electronic building and planning permitting systems in the City of Monte Sereno.

Monte Sereno staff and City Councilmembers have been diligently working with consultants and the community to develop a housing element due by December 31 , 2022. Monte Sereno City Council recognizes and values the importance of the 2023 Housing Element Document and has supported staff and the community both fiscally and with policymaking to assure a successful process.
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City of Monte Sereno | Budget Book FY 2023-24 Page 312 of 478 Page 4 On April 1 , of 2023, The City Council of Monte Sereno re-adopted five goals derived from the General Plan to develop a work plan for FY 2023-2024. These five goals are Quality Public Service, Community Character, Enhanced Mobility, Community Safety and Environmental Sustainability.

In this budget document, a comprehensive list of the annual goals and work items are provided. Monte Sereno City Council has earmarked funding for work items included in the Capital Improvement Project (CIP), software, environmental sustainability, and pension liabilities.

Major notable expense items in FY 2023-2024 are the Los Gatos Monte Sereno Police Department (LGMSPD) service costs increasing by 2%. Monte Sereno employee salaries and benefits are projected to be 4% higher compared to the adopted FY 2022-2023 Budget. These budget line items represent 70% of operating expenses.

In addition, the Monte Sereno Community Room remains a line item on the capital improvement budget. Monte Sereno City Council first allocated funds to this project in FY 2020-2021 of 600K. This sum remains a line item on the CIP budget as a carry-over from the previously adopted figure. In addition, there are three grants which continue to be carried over which can be used if the project moves forward in FY 2023-2024. The Proposition 68 and Silicon Valley Clean Energy (SVCE) grants total 678K.

For FY 2023-2024, property tax revenues are projected to remain stable after several years of increases. Franchise fees are tracking even with FY 2022-2023. Permit and licensing revenues are projected to trend slightly lower in FY 2023-2024, due to increasing interest rates and continued inflationary pressures.

Monte Sereno as part of the Joint Powers Authority (JPA) for West Valley Solid Waste Advisory Committee (WVSWAC), will be reviewing its contract in 2023. There may be potential for increased revenues to Monte Sereno through the contract negotiation process.

Monte Sereno does not rely on revenue sources other public agencies rely upon like sales taxes and transient occupancy taxes (TOT’s) which are impacted by the economic cycles. Monte Sereno continues to receive most of its revenue through residential property taxes and building and planning activities.

Monte Sereno has strong reserves and stable recurring expenses. However, economic uncertainty persists with the prospect of continued rising inflation and potential for an economic recession in 2023-2024. Monte Sereno must continue to follow the financial policies it adopted in 2020 to provide continued fiscal stability.

In conclusion, I am pleased to present this budget to the City Council of Monte Sereno for consideration and action.

I believe this budget will allow the City Council of Monte Sereno to execute its work plan for FY 2023-2024 and greatly benefit the City of Monte Sereno residents by providing quality services and maintaining Monte Sereno’s fiscal position in FY 2023-2024 and beyond.

Respectfully submitted,
Steven Leonardis
City Manager
st
City of Monte Sereno | Budget Book FY 2023-24 Page 313 of 478 Page 5 City of Monte Sereno Organization Chart
The City of Monte Sereno, like most cities in the State of California, operates under a "Council Manager" form of government. The residents of Monte Sereno are tasked with choosing City Councilmembers (https://city-montesereno-ca-budget-book.cleargov.com/budget-fy-2020_21-copy/2021/introduction/organization-chart) of Monte Sereno at election time. Councilmembers act as a "board of directors." Not unlike a corporation, the residents are "shareholders" or stakeholders of their "corporation" or community. The City Council of Monte Sereno selects a City Manager who acts as "CEO" or chairperson of the board. The City Manager, under direction of the City Council, admininsters day-to-day operations of the City of Monte Sereno.

City of Monte Sereno | Budget Book FY 2023-24 Page 314 of 478 Page 6 Monte Sereno City Councilmembers
The citizens of Monte Sereno elect five councilmembers at large. Elections are held in even calendar years corresponding with State of California and United States Presidential elections. Councilmembers serve four-year terms. The Mayor and Mayor Pro-Tempore serve at the pleasure of a majority of their respective council, and are chosen in December each year.

Bryan Mekechuk, Mayor
Bryan Mekechuk became a U.S. citizen in 2019, after
immigrating to California from Toronto, Canada in 1995.

Bryan and his wife, Jo-Anne Sinclair, moved to Monte
Sereno in 1997, where their son, Nik, was born (1999)
and their daughter, Kate, was born (2003).

Bryan was awarded a Bachelor of Commerce in Business
Administration from the University of Alberta (1983),
became a CPA/Chartered Accountant (1985) and earned
an MBA from the University of Western Ontario (1991).

Bryan worked for Ernst & Young Canada from 1983
through 1995, when he joined EY’s management
consulting practice in San Jose. Subsequently, he worked for several start-ups and boutique management
consulting firms in the Silicon Valley. Over his career, Bryan’s clients included Acer America, American Airlines, American Express, Apollo Group, Applied Materials, Bank of America, British Telecom, CSX Conrail, Electronic Arts, First Traders, Hewlett-Packard, LAM Research, MasseyFerguson, Nova Scotia Power, Silicon Graphics and Sun Microsystems; client engagements took him to Australia, Bermuda, Brazil, Costa Rica, Germany, India, Italy,
Mexico, the Netherlands, and the U.K.

His wife Jo-Anne is the Chief Legal Officer with an artificial intelligence start-up focused on improving customer
service; Nik graduated from Santa Clara University and
will be joining PwC’s San Jose office in September 2021; and Kate is a senior at Presentation High School and will be at Barnard College at Columbia University in
September 2021. Both Nik and Kate served on Monte
Sereno’s Youth Commission.

Prior to being elected to City Council, Bryan served on Silicon Valley Clean Energy’s Customer Program Advisory Group and on Monte Sereno’s Site & Architectural
Commission.

Currently, Bryan is the Chair of the Audit Committee and Vice Chair of the Finance and Administration Committee
for Silicon Valley Clean Energy. He is Vice Chair of both West Valley Clean Water Authority and West Valley Solid Waste Management Authority.

Bryan’s interests include family, environmental
sustainability, architecture, local history, mountain
biking, and wine. He looks forward to meeting and
hearing from Monte Sereno residents on a phone/Zoom
call, over a coffee, or on a mountain bike ride.

City of Monte Sereno | Budget Book FY 2023-24 Page 315 of 478 Page 7 Evert Wolsheimer, Vice Mayor Wolsheimer
Evert Wolsheimer moved to the Bay Area in 1982 from The Netherlands, and became a US citizen in 2000. He and his family have lived in Monte Sereno since 2002.

Evert had a career spanning more than 25 years in the
semiconductor industry, and held executive positions at Philips, LSI Logic, Xilinx and Summit Microelectronics, both in the US and in Europe. He holds a Ph.D. in Electrical Engineering and Computer Science from Delft University in The Netherlands.

He has served on the Board of Directors of several non-profit and industry organizations, such as the GSA (Global
Semiconductor Association) and the YWCA of Silicon Valley. He served on the Monte Sereno Site and Architecture Commission from 2010 until 2015 and on the City Council from 2015 until 2018. He was re-elected to the City Council in November 2022.

Evert's interests include photography, art and travel.

I'm honored to be back on the Council. I will work hard to maintain the character of our beautiful City, and I look forward to hearing the input and feedback from Monte Sereno
residents.

Rowena Turner, Councilmember
Rowena Turner immigrated from the Philippines in the
70s. She has lived in Monte Sereno since 1986. She holds a BA Degree in Mathematics from San Francisco State
University. She received her Master’s Degree in
Education and her California Teaching Credential from
San Jose State University. She worked for several Silicon Valley companies, including Intel Corporation, Sun
Microsystems, Tandem Computers and Hewlett-Packard,
managing corporate marketing and creating worldwide
certification programs. She left the computer industry
and taught high school Computer Science and Math at a
facility for incarcerated youth.

Rowena is married; she and her husband have one son,
who is an Engineering Director for a start-up company in San Francisco.

Rowena is excited about making an impact on the City
Council. She strives to conduct business with
uncompromising integrity and professionalism. She
believes that it is absolutely crucial that the council listens and responds to its citizens and stakeholders.

Maintaining respect and trust is critical to providing a community that is safe and comfortable for the
residents of Monte Sereno.

City of Monte Sereno | Budget Book FY 2023-24 Page 316 of 478 Page 8 Javed Ellahie, Councilmember
Javed Ellahie has had the privilege and pleasure to live in Monte Sereno since 1987 with his wife Naveeda and has
raised four children in this town. Monte Sereno – with its streets and homes laced with majestic redwood and
pine trees, and deer roaming through it - offers a great environment to raise a healthy family.

This is Javed’s first time on the Monte Sereno City
Council. He previously served on the West ValleyMission Community College Board. He has also served on the Board of Trustees and on the Executive Board of
the Santa Clara County Bar Association.

Javed enjoys participating in marathons (as a walker)
with Team in Training that raises funds for the
Lymphoma and Leukemia Foundation (Go Team) and
has participated in the Turkey Trot, the Great Race and other local marathons.

Javed received his B.S.E.E. from California State
University - Fresno; his J.D. from Santa Clara University Law School and his L.L.M. (Tax) from Golden Gate
University. He worked as an electronic engineer for
Fairchild and National Semiconductors and as a
consultant for Rockwell International. He started his law practice in Santa Clara County in 1977. He was
appointed as a Bankruptcy Dispute Resolution Advocate
by the United States Bankruptcy Judges and serves as an arbitrator and mediator to resolve disputes. He is
admitted to practice before the U.S. Supreme Court.

Monte Sereno has been well served by the City Councils
that have gone before. It is among one of the only cities that has fully funded its pension liability and whose
councilpersons serve in the spirit of volunteerism and
strive to do what is best for its residents.

This City is inhabited by outstanding and experienced
individuals, who are actively involved with City matters.

In the November 2018 mid-terms, 81% of the registered
voters turned out to vote, putting Monte Sereno near
the top of the voter turnout in the Bay Area. Every
resident of this city, regardless of class, language,
national origin, immigration status, or voter
registration status, is a valuable member of our
community, has invaluable insights to offer this City
Council and is encouraged to share the same with the
City Council.

I thank you for your support and look forward to your
inspiration and guidance. Our combined efforts will
ensure that Monte Sereno continues to be the best city
in the Bay Area.

City of Monte Sereno | Budget Book FY 2023-24 Page 317 of 478 Page 9 Burton Craig, Councilmember
City of Monte Sereno | Budget Book FY 2023-24 Page 318 of 478 Page 10 Welcome to City Hall
Monte Sereno hosts city council meetings the first and third Tuesdays of each month except in the month of July. Monte Sereno City Council meetings begin at 7pm at Monte Sereno City Hall located at 18041 Saratoga-Los Gatos Road, Monte Sereno California, 95030. Monte Sereno City Council meetings are open to the public.

City of Monte Sereno | Budget Book FY 2023-24 Page 319 of 478 Page 11 Welcome to Monte Sereno
Incorporated May 14, 1957
Popluation 3,501
Elevation 502

1.6 square miles
1,291 parcels
City of Monte Sereno | Budget Book FY 2023-24 Page 320 of 478 Page 12 History & Governance of Monte Sereno
The geographical location known as the City of Monte Sereno was established in the early 1900’s as a rural agricultural community. Originally part of the El Rancho Rinconada de Los Gatos Mexican land grant, the area was dotted with ranch houses, orchards, dairies, and livestock. The slopes of the southern portion of El Sereno Mountain hosted summer homes, recreational properties, and a few large estates.

The beauty and tranquility of the area attracted artists and writers looking for a peaceful and inspirational place to pursue their craft. City of Monte Sereno points of interest are the home in which American author, John Steinbeck, wrote the “Grapes of Wrath” and “Of Mice and Men” and the original site of the Billy Jones Wildcat Railroad.

Unlike other cities in Santa Clara County, Monte Sereno did not form a historic shopping village. Consequently, no commercial district or business core were ever developed in the City of Monte Sereno.

Monte Sereno incorporated in 1957 under the leadership of retired United States Navy Admiral, Thomas B. Inglis Senior, in response to the ever-increasing pressure of annexation from neighboring jurisdictions. Residents ultimately decided incorporation, rather than annexation, was the best way to preserve their quality of life. Today, Monte Sereno exists as a peaceful residential community, approximately 1.6 square miles in size with a population of 3,501 residents.

Monte Sereno is a General Law City, comprised of a Council Manager form of government. Voters elect five councilmembers to serve four-year terms on city council. The City Council of Monte Sereno appoints a professional City Manager to serve as the Chief Administrative Officer. Under direction of city council, the City Manager is responsible for day-to-day operations of the city and administration of city services. The Monte Sereno City Council meets on the first and third Tuesday of each month at 7:00 pm in the Monte Sereno City Council Chambers located at 18041 Saratoga-Los Gatos Road, Monte Sereno, California.

Monte Sereno provides services to residents directly or by working with partner agencies. It is through these partnerships Monte Sereno can provide high quality services which are economically efficient.

The City of Monte Sereno directly provides administrative services, building permits/inspections, planning/design review, engineering/public works, City Clerk/election services, and financial administration. Partnering agencies provide Monte Sereno residents services including collection and recycling, library, fire, police, sanitation, water, power, and animal control.

City of Monte Sereno | Budget Book FY 2023-24 Page 321 of 478 Page 13 Fascinating Facts
In 1983, City Founder Admiral Thomas Inglis published a book entitled, “City of Monte Sereno Battle of Peaceful Mountain.” This book covered in thorough detail the creation and history of Monte Sereno through its first 25 years.

Monte Sereno residents may not know this fascinating fact. Before founding Monte Sereno, Admiral Thomas Inglis was Chairman of the Lexington Dam Committee (August 1952 - November 1953). Inglis and his fellow committee members dealt with a myriad of controversial issues/concerns from the public during and after construction, including concerns about mosquito control, earthquake damage, county road re-routing, and recreational use of the dam, to name a few.

To stay grounded and enjoy a bit of levity about his dealings while serving on the Lexington Dam Committee, Inglis would recite a “ditty” to his friends at the barber shop. It read like this:
“I went to the dam to fetch some dam water; I asked the dam-keeper if I might have some dam water; The dam-keeper said, ‘No, you can’t have any dam water;’ So I said to the *-ed Keeper, ‘then keep your *-ed water.’” By the time the committee disbanded, Thomas Inglis had amassed a large collection of news clippings about his committee’s activities. Inglis credits his participation on the Lexington Dam Committee as part of the reason he was selected by the public as a “Founding Father” of Monte Sereno.

Included is a photograph of the 25 th anniversary celebration of Monte Sereno’s incorporation (May 16, 1982). In the center of the photograph is Admiral Inglis himself (front row, seated 7th from the right). The original photo proof was delivered to Monte Sereno City Hall in 2021 by Keith Kelson, who was the photographer for the Los Gatos Times Observer and covered the event.

City of Monte Sereno | Budget Book FY 2023-24 Page 322 of 478 Page 14 Population Overview

TOTAL POPULATION
3,479

DAYTIME POPULATION
2,697
Daytime population represents the effect of persons coming into or leaving a community for work, entertainment, shopping, etc. during the typical workday. An increased daytime population puts greater demand on host community services which directly impacts operational costs. * Data Source: American Community Survey 5-year estimates

POPULATION BY AGE GROUP
Aging affects the needs and lifestyle choices of residents. Municipalities must adjust and plan services accordingly. * Data Source: American Community Survey 5-year estimates * Data Source: U.S. Census Bureau American Community Survey 5-year Data and the 2020, 2010, 2000, and 1990 Decennial Censuses 1990
1991
19921993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
20122013
2014
2015
2016
2017
2018
2019
2020
3200
3300
3400
3500
3600
3700
<5 5-9 10-14 15-19 20-24 25-34 35-44 45-54 55-59 60-64 65-74 75-84 >85 City of Monte Sereno | Budget Book FY 2023-24 Page 323 of 478 Page 15 Household Analysis

TOTAL HOUSEHOLDS
1,211
Municipalities must consider the dynamics of household types to plan for and provide services effectively. Household type also has a general correlation to income levels which affect the municipal tax base.
* Data Source: American Community Survey 5-year estimates 53%
higher than state average
Family Households
76%
63%
higher than state average
Married Couples
81%
48%
lower than state average
Singles
12%
55%
lower than state average
Senior Living Alone
6%
City of Monte Sereno | Budget Book FY 2023-24 Page 324 of 478 Page 16 Economic Analysis
Household income is a key data point in evaluating a community’s wealth and spending power. Pay levels and earnings typically vary by geographic regions and should be looked at in context of the overall cost of living.

HOUSEHOLD INCOME
Above $200,000
60%
349%
higher than state average
Median Income
$250,001
218%
higher than state average
Below $25,000
10%
33%
lower than state average
* Data Source: American Community Survey 5-year estimates Over $200,000
$150,000 to $200,000
$125,000 to $150,000
$100,000 to $125,000
$50,000 to $75,000
$25,000 to $50,000
Below $25,000
City of Monte Sereno | Budget Book FY 2023-24 Page 325 of 478 Page 17 Housing Overview
2020 MEDIAN HOME VALUE
$2,000,001
* Data Source: 2020 US Census Bureau (http://www.census.gov/data/developers/datasets.html), American Community Survey. Home value data includes all types of owneroccupied housing.

HOME VALUE DISTRIBUTION
* Data Source: 2020 US Census Bureau (http://www.census.gov/data/developers/datasets.html), American Community Survey. Home value data includes all types of owneroccupied housing.

HOME OWNERS VS RENTERS
Monte Sereno
5%
Rent
95%
Own
State Avg.
45%
Rent
55%
Own
* Data Source: 2020 US Census Bureau
(http://www.census.gov/data/developers/data-sets.html), American Community Survey. Home value data includes all types of owner-occupied housing.
2009
2010
2011
20122013
2014
201520162017
2018
2019
2020
750k
1,000k
1,250k
1,500k
1,750k
2,000k
2,250k
> $1,000,000
$750,000 to $999,999
$500,000 to $749,999
$400,000 to $499,999
$300,000 to $399,999
$250,000 to $299,999
$200,000 to $249,999
$150,000 to $199,999
$100,000 to $149,999
$50,000 to $99,999
< $49,999
City of Monte Sereno | Budget Book FY 2023-24 Page 326 of 478 Page 18 What is a Budget?
Policy Document that:
> Serves as a Financial Plan and Guide
> Reflects City Council and Community Priorities and Goals > Establishes Funding Levels for City Services
City of Monte Sereno | Budget Book FY 2023-24 Page 327 of 478 Page 19 Budgetary Basis
This budget is prepared in accordance with Generally Accepted Accounting Principles. The budget for governmental funds has been prepared on a modified accrual basis. The modified accrual basis recognizes expenditures when the related fund liability is incurred. Revenues are recognized when they become both measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period.

City of Monte Sereno | Budget Book FY 2023-24 Page 328 of 478 Page 20 Fund Structure
The accounts of the City of Monte Sereno are made up of funds that help organize and account for restricted resources. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts (comprised of assets, liabilities, fund equity, revenues, and expenditures), which are segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with regulatory requirements. The City of Monte Sereno has the following fund type categories:

Governmental Fund Types
The Governmental funds include the General, Special Revenue, and Capital Project Funds. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. The General Fund is the City of Monte Sereno's primary operating fund. It accounts for all financial resources of the general government, except those accounted for in another fund.

Fiduciary Fund Types
The Fiduciary funds track assets held by the City of Monte Sereno in trust or as an agent for various assessment. These funds are used to account for assets held by the city in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. The City of Monte Sereno maintains one such agency type fund: Performance Surety Agency Fund – Acts as a trustee for funds deposited by homeowners to assure any repairs and improvements needed to city streets as a result of construction.

Law Enforcement Special Revenue Fund Types
The Law Enforcement Special Revenue Fund accounts for all financial activity related to the City of Monte Sereno's Law Enforcement Services. The fund’s major source of revenue is a special assessment tax.

City of Monte Sereno | Budget Book FY 2023-24 Page 329 of 478 Page 21 Core Values of Financial Sustainability
The City Council of Monte Sereno adopted a comprehensive list of financial policies to guide current and future Monte Sereno policy makers to achieve fiscal stewardship.

Core Values of Financial Sustainability
Financial Stability—The City of Monte Sereno will create financial stability to provide the community with a consistent and adequate level of public service. The City of Monte Sereno will take a long-term approach to its finances by developing and maintaining long-term plans, carefully weighing the cost and benefits of opportunities and adhering to sound debt, reserve and investment policies.

Quality of Life and Local Economic Vitality—The City of Monte Sereno will provide effective and efficient services to ensure a safe and healthy atmosphere for its residents and visitors while preserving and enhancing its unique cultural and environmental attributes.

Accountability and Financial Planning—The City of Monte Sereno will institute financial planning which will ensure city services are provided at the best value, and that services are in alignment with the needs and wants of the community.

Environmental and Economic Sustainability — The City of Monte Sereno’s financial strategy will support continued investment in the renovation and maintenance of physical infrastructure/facilities and in policies and programs that support a clean and healthy natural environment.

Transparency and Engagement— The City of Monte Sereno will be accountable for producing value for the community by producing, planning, and reporting mechanisms which make it clear how the city plans to use resources to achieve community objectives. The City of Monte Sereno is committed to engaging the public as a partner in formulating plans and delivering services.

Website Presentation of Financial Documents — The City of Monte Sereno will use its website to present financial documents of the city and other financial documents which may be of interest to the public.

City of Monte Sereno | Budget Book FY 2023-24 Page 330 of 478 Page 22 City of Monte Sereno | Budget Book FY 2023-24 Page 331 of 478 Page 23 Financial Policies
I. BUDGETING PROCESS
The budget process begins each year in February with a Pre-Budget Policy meeting with the City Council goals, identifying upcoming issues that may affect the budget and a chance for the City Council to discuss policy issues that may impact budget preparation. Department Heads prepare estimates of revenues and departmental expenditures for submission to the Finance Director. The City Manager and Finance Director meet with each department to review the estimates and discuss requests. From these meetings, the preliminary budget is developed. The Capital Improvement Budget, which is part of the same document, follows the same process.

The City Manager is required to submit a preliminary budget to the City Council on or before May 15th of each year. One or two public workshops are held in May and June to review the budget and receive public input. One formal public hearing is held in June, prior to budget adoption. The City Council must adopt an annual budget, by resolution, on or before June 30 for the coming fiscal year (July 1 – June 30). If the budget is not adopted by that date, the current fiscal year budget, except for capital outlays, goes into effect until the budget is adopted.

A First Quarter and Mid-Year budget review will be conducted for the City Council to determine the status of projected revenues, expenditures, and other financial situations, along with consideration of needed budget amendments. A Third Quarter review will be included in the presentation of the upcoming fiscal year's proposed budget. An internal Fourth Quarter appropriation review is conducted, and budget amendments are presented to the City Council as needed.

II. BUDGETING POLICY
The City of Monte Sereno will adopt an annual budget for the fiscal year beginning July 1st no later than June 30th of the same calendar year.

The adopted budget will be balanced with current year operating expenditures fully funded by current year recurring revenues. In the event that a balanced budget is not adopted, a specific plan will be presented to the City Council for returning the budget to a balanced position.

Fund balance reserves for the General Fund will be used only for non-recurring expenditures such as capital projects, studies, etc. and not for on-going operations. If fund balance reserves are used for recurring (operational) expenditures, the City Council will be notified prior to adoption of the annual budget.

The budget may be amended during the year as necessary by resolution of the City Council.

The City Manager is authorized to implement programs as approved in the adopted budget.

III. CAPITAL IMPROVEMENT POLICY
The City of Monte Sereno will identify the estimated costs and potential funding sources for each capital project prior to its submittal to the City Council for approval.

Capital projects involve the purchase or construction of major capital assets such as land; equipment; infrastructure; building or permanent improvements including additions, replacements, and major alterations; having a long-life expectancy; and costing $5,000 or more.

Capital projects are funded by a variety of funding sources, which are often restricted for a specific purpose.

Prior to a capital project being included in the annual budget, a determination must be made that the project is an appropriate use of the funds and that there is enough funding available.

IV. REVENUE POLICY
The City of Monte Sereno shall use a conservative approach in projecting revenues.

Recurring expenditures will be funded by recurring revenue.

Recurring expenditure increases that exceed recurring revenue growth should not be approved. If recurring expenditure increases exceed recurring revenue growth, the City Council will be notified prior to adoption of the annual budget.

One-time revenues may be used for one-time expenditures or enhancement of reserves.

Any new or expanded programs should be required to identify new funding sources and/or offsetting reductions in expenditures.

The City of Monte Sereno shall update its user fees and charges periodically to recover costs of providing that service for which a fee is charged. Each annual budget will differentiate between those services and associated expenditures which are subject to cost recovery and those which are not.

City of Monte Sereno | Budget Book FY 2023-24 Page 332 of 478 Page 24 All potential grants shall be carefully reviewed for matching requirements, maintenance of effort requirements, and on-going future expenditure requirements.

Intergovernmental grants will be evaluated to determine the long term operating and maintenance costs associated with the grant.

V. RESERVE POLICY
Adequate reserve levels are a necessary component of the City of Monte Sereno’s overall financial management strategy. The specific purpose of the reserves is to provide funding to meet operational appropriation requirements if the City of Monte Sereno experiences shortfalls in the level of anticipated revenues or unanticipated expenses. It is the responsibility of the City Council to maintain a sufficient level of reserve funds to provide for the orderly provision of services to the citizens of the City of Monte Sereno. The City Council has the authority to decide the circumstances under which the reserves can be used. The City Manager makes recommendations as to the level of reserve funds necessary for prudent fiscal management.

Reserve levels shall be reviewed at least annually during the budget process to ensure that they are consistent with the conditions faced by the City of Monte Sereno. All uses of reserves require a resolution of the City Council or will be incorporated in the annual adopted budget.

The reserve policy for the General Fund requires that a minimum of one year of current fiscal year operating budget (expenditures) be reserved. If the General Fund reserve falls below the desired level, a specific plan will be presented to the City Council for returning the reserve to the desired level.

Part of the annual budget review shall include setting aside a prudent portion of each year’s annual budget appropriations to be contributed to the City’s reserve.

Whenever possible, if the city is aware of the need to budget for a large expenditure which may need appropriations for more than one fiscal year, it is the intent of the Council to try to reserve those funds incrementally over time, provided the appropriations for such a purpose comply with applicable laws.

The City has a reserve that consists of “restricted” and “unrestricted” funds. “Restricted funds” are those funds collected therein and can only be used for the specific purposes established by the applicable laws. “Unrestricted funds” are funds that have been appropriated to the City’s reserve fund for future needs but are subject to the discretion of the Council regarding the manner in which they will be expended.

Unrestricted funds shall be identified and designated by the Council for various purposes, which may be changed from time to time by the Council as deemed appropriate.

The reserve funds designated by the Council will be used only for the purposes designated.

VI. TRANSFER AUTHORITY
The following criteria establish the transfer authority for appropriations as set forth in the fiscal year budget.

Transfers between departments, within the same fund, will require the City Manager's approval.

Transfers between the capital expenditure classification and the operating expenditure classifications can only be made with an approved City Council resolution.

Transfers between different funds can only be made with an approved City Council resolution.

The Finance/Administrative Services Officer will review all budget transfers and make recommendations to the City Manager.

VII. FISCAL MANAGEMENT AND INTERNAL CONTROLS
The City of Monte Sereno’s independent auditor will perform an annual financial and compliance audit according to General Accepted Auditing Standards (GAAS) federal and state laws, and City of Monte Sereno rules and regulations.

A system of effective internal controls will be maintained which assures only properly authorized expenditures, recordings of financial transactions, and accounting entries are executed and provide for the physical security of City of Monte Sereno funds and assets.

The City of Monte Sereno’s cash handling practices are also reviewed in conjunction with the independent audit.

A competitive request for proposal, or RFP will be issued every five years to evaluate and select external auditing firm.

City of Monte Sereno | Budget Book FY 2023-24 Page 333 of 478 Page 25 VIII. INVESTMENTS
The City of Monte Sereno will continue to have a written investment policy statement, Resolution Number 3561, which may be changed when necessary by City Council resolution. The policy for investments in priority order is safety, liquidity, and yield.

The City Council will receive reports on the cash position and performance of City of Monte Sereno investments on a quarterly basis.

IX.CAPITAL ASSETS
Assets exceeding the value of $5,000 are considered capital assets.

All assets will be maintained at a level that protects capital investment and minimizes future maintenance costs.

X. DEBT MANAGEMENT
The City of Monte Sereno will not issue long-term debt to finance current operations. Debt financing should only be used for long-term capital improvement projects or purchases of capital assets, which have a useful life exceeding the term of the financing. In addition, revenue sources shall be identified to allow for the principal, interest, and other related payments (debt service) of the long-term debt.

The City of Monte Sereno will seek to maintain a high credit rating through sound financial practices as a basis for minimizing borrowing costs.

The City of Monte Sereno will monitor all forms of debt. Annually, the status of all long-term debt will be reported to the City Council in the annual budget.

The City of Monte Sereno will monitor its compliance with bond covenants and continuing disclosures if applicable.

XI. PENSION FUNDING
The City of Monte Sereno’s retirement plan for full-time employees is provided through the California Public Employees Retirement System (CalPERS). The City of Monte Sereno’s contributions to the plan fluctuate each year based on an annual actuarial valuation. This variable rate employer contribution includes the normal cost of providing contracted benefits plus or minus an amortization of plan changes and net actuarial gains and losses since the last evaluation period. The Plan’s Funded Ratio is an assessment of the need for future employer contributions based on the selected actuarial cost method used to fund the plan. The Unfunded Accrued Liability (UAL) is the present value of the future normal cost contributions for service that has already been earned and is in addition to future normal cost contributions for active members.

The City of Monte Sereno shall make contributions to the plan equating to 100% of the actuarially required contribution (ARC) for the current year.

The City of Monte Sereno shall seek to make annual adjustment contributions to the plan equating to a 100% Funded Ratio. Previous year to current year adjustment contributions shall be budgeted as a separate recurring personnel expense. Adjustment contributions prior to the previous year shall be budgeted as a separate onetime personnel expense. In the event that the Funded Ratio falls below 100%, a specific plan will be presented to the City Council for returning the Funded Ratio to the desired level.

XII. OTHER POST EMPLOYMENT BENEFIT (OPEB) FUNDING
Varying benefits are provided according to the City’s Memorandums of Understanding (MOU’s) with each employee group. The City of Monte Sereno does not accrue funds in advance for Other Post Employment Benefit (OPEB) expense obligations.

The City of Monte Sereno shall fund Other Post Employment Benefit (OPEB) expenses on a pay-as-you-go basis and shall budget Other Post Employment Benefit (OPEB) expenses as a separate recurring personnel expense.

City of Monte Sereno | Budget Book FY 2023-24 Page 334 of 478 Page 26 Budget Timeline

BUDGETING PROCESS
The budget process begins each year in February with a Pre-Budget Policy meeting with the Council goals, identifying upcoming issues that may affect the budget and a chance for the City Council to discuss policy issues that may impact budget preparation. Department Heads prepare estimates of revenues and departmental expenditures for submission to the Finance Director. The City Manager and Finance Director meet with each department to review the estimates and discuss requests. From these meetings, the preliminary budget is developed. The Capital Improvement Budget, which is part of the same document, follows the same process.

The City Manager is required to submit a preliminary budget to the City Council on or before May 15 of each year.

One or two public workshops are held in May and June to review the budget and receive public input. One formal public hearing is held in June, prior to budget adoption. The City Council must adopt an annual budget, by resolution, on or before June 30 for the coming fiscal year (July 1 — June 30). If the budget is not adopted by that date, the current fiscal year budget, except for capital outlays, goes into effect until the budget is adopted.

A First Quarter and Mid-year budget review will be conducted for the City Council to determine the status of projected revenues, expenditures, and other financial situations, along with consideration of needed budget amendments, A Third Quarter review will be included in the presentation of the upcoming fiscal year's proposed budget. An internal Fourth Quarter appropriation review is conducted, and budget amendments are presented to the City Council as needed.
th
City of Monte Sereno | Budget Book FY 2023-24 Page 335 of 478 Page 27

BUDGET OVERVIEW
City of Monte Sereno | Budget Book FY 2023-24 Page 336 of 478 Page 28 Mission Statement
The Mission of the City of Monte Sereno is to provide high-quality services to residents in an efficient, transparent and fiscally responsible manner that preserves and enhances the unique residential character of Monte Sereno, protects natural resources and minimizes resident impacts to the environment, and protects and enhances the health, safety, mobility, and welfare of residents.

City of Monte Sereno | Budget Book FY 2023-24 Page 337 of 478 Page 29 Goal Setting Session
The City Council of Monte Sereno hosted their annual goal-setting session on April 1, 2023. Council adopted five goals to develop a work plan for FY 2023-24. Those five adopted goals were captured by artist Melinda Walker in this artistic rendition of the meeting minutes.

Quality Public Service
Community Character
Enhanced Mobility
Community Safety
Environmental Sustainability
City of Monte Sereno | Budget Book FY 2023-24 Page 338 of 478 Page 30 Goal Setting Session
City of Monte Sereno | Budget Book FY 2023-24 Page 339 of 478 Page 31 City of Monte Sereno | Budget Book FY 2023-24 Page 340 of 478 Page 32 Proposed FY 2023-24 Budget - Flow of Funds - Top 80% Revenue and Expenditures
The Proposed FY 2023-24 Budget includes 80% recurring core revenues received from property taxes ($2844k), license and permit fees ($739k). Recurring core expenditures which account for 80% expenses include personnel ($1643k), police services ($1193k) and administration ($466k). The City of Monte Sereno is running on a net surplus (recurring operational revenues minus recurring operational expenditures) of $283k.

City of Monte Sereno | Budget Book FY 2023-24 Page 341 of 478 Page 33 Proposed FY 2023-24 Budget - Fund Balance Change Citywide ($000)
City of Monte Sereno | Budget Book FY 2023-24 Page 342 of 478 Page 34 Proposed FY 2023-24 Budget - Fund Balances
Total fund reserve balances at year-end June 30, 2023 are forecasted to be $5,788k. The Proposed FY 2023-24 Budget expects a total deficit or draw against fund reserves ($544k). Total fund reserves balances are expected to be $5,234k, at year-end June 30, 2024.

Operating unrestricted fund reserve balances $4,966k.

City of Monte Sereno | Budget Book FY 2023-24 Page 343 of 478 Page 35 Proposed FY 2023-24 Budget - Revenue Summary
Proposed FY 2023-24 Budget has a projected $5.5 million in revenues, $4.4 million recurring and $1.1 non-recurring to be used for FY 2024 CIP and PIP projects. The main sources of recurring $4.4M revenue include: Property Tax ($2.8M), License & Permit Fees ($0.7M), and Franchise Fees ($0.3M). The main sources of non-recurring $1.2 million include: Silicon Valley Clean Energy Decarbonization Grant Program ($500k); Prop 68 Per Capita Program ($180k), Road Impact Fees ($90k), Measure B Pavement Management Program ($87k), SB-1 and Gas Tax ($144k).

City of Monte Sereno | Budget Book FY 2023-24 Page 344 of 478 Page 36 Proposed FY 2023-24 Budget - Revenue Detail
City of Monte Sereno | Budget Book FY 2023-24 Page 345 of 478 Page 37 Proposed FY 2023-24 Budget - Revenue Detail
City of Monte Sereno | Budget Book FY 2023-24 Page 346 of 478 Page 38 Proposed FY 2023-24 Budget - Revenue Detail
City of Monte Sereno | Budget Book FY 2023-24 Page 347 of 478 Page 39 Proposed FY 2023-24 Budget - Revenue Detail
City of Monte Sereno | Budget Book FY 2023-24 Page 348 of 478 Page 40 Proposed FY 2023-24 Budget - Revenue Detail
City of Monte Sereno | Budget Book FY 2023-24 Page 349 of 478 Page 41 Proposed FY 2023-24 Budget - Expenditures Summary
Proposed FY 2023-24 Budget has a projected $6.0 million in expenditures, $4.1 million recurring and $1.9 million nonrecurring. The majority of recurring expenditures include: Personnel ($1.6M), Police Services ($1.2M) and Administration ($0.5M). Most of the non-recurring expenditures include: Community Center Building Project ($1.2M), the two Pavement Improvement Program (PIP) projects including Constitution Avenue ($200k) and Greenwood Road ($132k), Daves Avenue Safety Improvement CIP ($60k), Housing Element Project ($165k) and ePermit Tracking project ($40k).

City of Monte Sereno | Budget Book FY 2023-24 Page 350 of 478 Page 42 Proposed FY 2023-24 Budget - Expenditures Detail
City of Monte Sereno | Budget Book FY 2023-24 Page 351 of 478 Page 43 Proposed FY 2023-24 Budget - Expenditures Detail
City of Monte Sereno | Budget Book FY 2023-24 Page 352 of 478 Page 44 Proposed FY 2023-24 Budget - Expenditures Detail
City of Monte Sereno | Budget Book FY 2023-24 Page 353 of 478 Page 45 Proposed FY 2023-24 Budget - Expenditures Detail
City of Monte Sereno | Budget Book FY 2023-24 Page 354 of 478 Page 46 Proposed FY 2023-24 Budget - Expenditures Detail
City of Monte Sereno | Budget Book FY 2023-24 Page 355 of 478 Page 47 Proposed FY 2023-24 Budget - Fund Reserve Balances
City of Monte Sereno | Budget Book FY 2023-24 Page 356 of 478 Page 48

FUND SUMMARIES
City of Monte Sereno | Budget Book FY 2023-24 Page 357 of 478 Page 49 All Funds
City of Monte Sereno | Budget Book FY 2023-24 Page 358 of 478 Page 50 All Fund Balance Descriptions
GENERAL FUND RESERVES– Savings (01-015) and LAIF (01-025) The General Fund includes conservative proactive fiscal management across all funds including a $3.5 million Economic Fluctuation Reserve in the General Fund. The General Fund reserve also includes provisions for Capital Improvement Program $500,000, and Property Improvement Reserve $200,000.

For FY 2023-24, the City plans significant draws from the reserves to cover CIP, PIP, and other project expenses:
a. Pavement Improvement Program ($25k)
b. Housing Element Project ($165k)
c. ePermit Tracking System ($0)
d. Community Center Building ADA Improvement Project ($502k) e. Daves Avenue Safety Improvement Project ($21k)
f. Green Stormwater Infrastructure Project ($125k)
LAW ENFORECEMENT – Savings (03-015)
Provision for receipt of grant Law Enforcement funds which is a pass-through account to pay police services.

TRAFFIC SAFETY – Savings (05-015) and LAIF (05-025)
Reserve for road and traffic safety projects.

GAS TAX (2107) – Savings (12-015) and LAIF (12-025)
Reserves for future Pavement Improvement Program projects.

STORM DRAIN – Savings (25-015) and LAIF (25-025)
Reserves for an unexpected storm drain issues.

SURETY TRUST – Savings (30-015) and LAIF (30-025)
Surety Required. If the City Engineer determines that the nature of the proposed work is such that, if left incomplete, it will interfere with any natural or artificial drainage, or will endanger persons or public or private property, or will constitute a nuisance or if he determines that the proposed work involves the removal or deposition of more than fifty (50) cubic yards of material are moved, the applicant for the grading permit shall post with the City Engineer a surety executed by the applicant and secured, at the option of applicant, by (1) a corporate surety bond executed by a surety company authorized to do business in the State of California, or (2) by deposit with the City of cash money or its equivalent, or (3) by deposit with the City of an instrument of credit from a financial institution subject to regulation by the State of California or the Federal government pledging that the funds necessary to meet the performance are on deposit and guaranteed for payment upon demand and agreeing that the funds designated by the instrument shall be trust funds for the purposes set forth in the instrument. The form of the bond and the security shall be subject to approval by the City Engineer and the City Attorney. Current combined reserve balance $27,043 as of February 28, 2023.

LOMA SERENA LIGHTING DISTRICT – Savings (40-015) and LAIF (40-024) Reserve account to collect tax revenues from residents in the Loma Serena Lighting district to pay for utility and maintenance expenses for street lighting.

City of Monte Sereno | Budget Book FY 2023-24 Page 359 of 478 Page 51 City of Monte Sereno | Budget Book FY 2023-24 Page 360 of 478 Page 52 Reserve Policy for the General Fund
Reserve Policy for the General Fund
The reserve policy for the General Fund requires that a minimum of one year of current fiscal year operating budget (expenditures) be reserved. If the General Fund reserve falls below the desired level, a specific plan will be presented to the City Council for returning the reserve to the desired level. $4,124,148 - FY 2023-24 Operating Budget Expenditures
$4,966,473 - FY 2023-24 General Fund Reserve Balance LAIF Unrestricted ($4,847,671) Demand Accounts ($117,450 + $1,352) $ 842,325 - Over the General Fund reserve requirement.
or 14.5 months of General Fund Reserve balances to cover Operating Budget Expenditures.

The Adopted FY 2023-24 Operating Budget Expenditures is $4.1 million. Total Proposed FY 2022-23 ending fund balances after funding all General and CIP projects is $5.0 million, $0.8 million ahead of this reserve requirement, $0.2 million is restricted
City of Monte Sereno | Budget Book FY 2023-24 Page 361 of 478 Page 53

DEPARTMENTS
City of Monte Sereno | Budget Book FY 2023-24 Page 362 of 478 Page 54 Public Safety
Jamie Field
Police Chief
Jamie Field
New Los Gatos-Monte Sereno
Police Chief
After a competitive nationwide search, Jamie Field was appointed the next Los Gatos-Monte Sereno Police Chief.

Recruiting firm Bob Murray & Associates ran the hiring process under the guidance of retired Walnut Creek Police Chief Joel Bryden.

The process included opportunities for the public and Police Department staff to provide input on the qualities they would like to see in the next Chief. A community meeting held in November involved residents and elected officials from both Monte Sereno and Los Gatos. Several meetings were held with Police Department sworn and civilian staff. Mr. Bryden also made himself available for phone conversations and email comments. This input was critical in the evaluation of the candidates. The candidates underwent rigorous panel interviews, including one panel consisting of three current Bay Area Police Chiefs. The finalists participated in an additional panel review.

Chief Jamie Field has been a sworn law enforcement professional for over 20 years. Chief Field has worked with the Los Gatos-Monte Sereno Police Department (LGMSPD) since 2009, starting as an Officer and successfully rising through the ranks to Captain. At the time of her promotion to Police Chief, she was serving as Interim Police Chief for the Department.

Los Gatos Mayor Rob Rennie said, "I am excited about Chief Field and have confidence in her leadership to guide the Department in its community policing mission with specific attention to staffing, training, and succession planning."
City of Monte Sereno | Budget Book FY 2023-24 Page 363 of 478 Page 55 Police Services Budget FY 2023-24
City of Monte Sereno | Budget Book FY 2023-24 Page 364 of 478 Page 56

CAPITAL IMPROVEMENT PROJECTS
City of Monte Sereno | Budget Book FY 2023-24 Page 365 of 478 Page 57 Proposed FY 2023-24 Budget - Citywide Projects
During the General, Capital Improvement Projects (CIP), and Pavement Improvement Project (PIP) budget process, departments develop project requests for all their anticipated capital improvement needs, both funded and unfunded. The requests capture the total project costs and funding sources where possible. Additional operating costs related to completed capital projects are included in the respective operating budgets. Projects are prioritized and recommended for funding based on a review with City Manager, Department Heads and the Financial Officer.

In the Adopted FY 2023-24 Budget, projected costs for both General and CIP projects is $1.1 million. Projects include Housing Element Project ($164k), ePermit Tracking System ($40k), Community Center Building ($1.2M), Green Stormwater Infrastructure Project ($125k), Constitution Avenue Project ($200k), Greenwood Rd Project ($132k) and Daves Ave Safety Improvement Project ($60k). The City expects to receive $1.1 million from various funding sources for these projects and will require a draw of $0.8 million from fund reserves. Below is a list of all General, PIP and CIP projects in the FY 2023-24 Proposed Budget.

City of Monte Sereno | Budget Book FY 2023-24 Page 366 of 478 Page 58 Proposed FY 2023-24 Project Funding Source Detail - $1.1 Million City of Monte Sereno | Budget Book FY 2023-24 Page 367 of 478 Page 59 City of Monte Sereno | Budget Book FY 2023-24 Page 368 of 478 Page 60 City of Monte Sereno | Budget Book FY 2023-24 Page 369 of 478 Page 61 General Projects
ePermit Tracking System
The $40k funds will be used to develop online permitting for minor building permits (i.e. water heater replacement, furnace replacement) to allow customers to obtain building permits online without having to travel to City Hall during business hours.

Additionally, the funds will be used to develop an electronic tracking system for code enforcement cases. Currently, code enforcement cases are tracked manually, which is time consuming and does not allow for ease of reporting statistics on cases.

And maintenance on these systems as well as the existing building permit tracking and planning permit tracking.

City of Monte Sereno | Budget Book FY 2023-24 Page 370 of 478 Page 62 Housing Element Project
The Housing Element
The Housing Element is part of the City of Monte Sereno’s General Plan. It is a comprehensive policy document that identifies where, how, and how much housing Monte Sereno is mandated to plan to accommodate existing and projected future housing needs for people of all income groups. In accordance with State law, the City of Monte Sereno must update its Housing Element every 8 years. This is the sixth time the City will have updated its Housing Element and may also be referred to as the 6th Cycle Housing Element Update. This update will apply to the timespan of 2023-2031.

In this 6th Cycle Update, the City is required to plan for an additional 193 new housing units. With roughly 3,500 residents living in an area of 1.6 square miles with all residential zoning, the City expects that the 193 new housing units can mostly be accommodated through Accessory Dwelling Units (ADUs) and other secondary housing units.

With residents’ participation and input, the City will plan for this growth while minimizing impacts on Monte Sereno’s unique culture and character.

At Home in Monte Sereno (www.AtHomeinMonteSereno.com) is the City’s online community forum to engage in this project. This is a pivotal opportunity to shape the future of Monte Sereno. The website is the go-to place to learn about and be a part of the City’s work on housing and to help guide decision makers on the direction of future housing. This online platform will be open and updated throughout the Housing Element Update process, ending in December 2022.

This site will be updated regularly with information on upcoming meetings, summaries of input and feedback received from the community, and overall project status. Please register to participate or subscribe to stay informed and receive the latest information on the update process.

City of Monte Sereno | Budget Book FY 2023-24 Page 371 of 478 Page 63 Green Stormwater Infrastructure Project
Green Stormwater Infrastructure Project (FY 2023-24) Retrofit of the City Hall parking lot with green stormwater infrastructure to meet the requirements of the Municipal Regional Stormwater NPDES Permit consistent with the City’s GI Plans Green Stormwater Infrastructure Plan adopted in August 2019.

Daves Neighborhood Improvement Project
Neighborhood Improvement Project - Daves Neighborhood (FY23/24) This project will design and construct pavement rehabilitation and curb and gutter for improved drainage.

City of Monte Sereno | Budget Book FY 2023-24 Page 372 of 478 Page 64 Pavement Improvement Program
Pavement Improvement Program (Annual) - Annual street maintenance program to preserve and repair surface conditions on public streets, funded upon Council direction from the pavement management study conducted in 2021. Streets selected for Pavement Improvement Program are prioritized based on annual condition assessment and the timing of major projects by West Valley Sanitation District, San Jose Water Company, and PG&E. In FY 2023-24, PIP projects will include work on Constitution Ave ($200k) and Greenwood Rd ($132k)
City of Monte Sereno | Budget Book FY 2023-24 Page 373 of 478 Page 65 Green Stormwater Infrastructure Project
City Hall Green Stormwater Infrastructure Project
Retrofit of the City Hall parking lot with green stormwater infrastructure to meet the requirements of the Municipal Regional Stormwater NPDES Permit consistent with the City’s GI Plans Green Stormwater Infrastructure Plan adopted in August 2019.

City of Monte Sereno | Budget Book FY 2023-24 Page 374 of 478 Page 66 Monte Sereno Community Center
Community Center Building Project
Conversion of the existing Annex Building and addition of adjacent space to create a Community space inclusive of ADA accessibility improvements.

City of Monte Sereno | Budget Book FY 2023-24 Page 375 of 478 Page 67 Capital Improvement Projects - Five Year Plan
Capital Improvement Projects – Five Year Plan
Background and discussion
The Five-Year Capital Improvement Plan (CIP) is a planning tool designed to identify facilities and infrastructure improvements which will be considered for development over a five-year time frame beginning in FY 2022-23 through FY 2026-27. This item includes CIP tables showing improvements and their currently estimated expenses as well as identified revenues for funding those improvements. The CIP is a companion portion of the budget process for the fiscal year 2023-2024 budget.

A 5-Year CIP is useful in:

Identifying long-term capital improvement objectives with direction from Council Identifying possible funding opportunities
Enhancing coordination and communication between other entities involved in the development of capital projects Increasing alignment between infrastructure and facilities projects and the Council’s goals, objectives and annual budget process
Increasing the awareness of planned capital projects for the public and community partners The CIP is intended to be dynamic in nature and will change from year to year as priorities, needs and funding change. The CIP is a guide for the consideration, selection, and development of roads, drainage facilities, and other City facilities. There will be continual refinement of this information moving forward.

Staff is meeting with the City Council at the Budget Workshop to review the CIP improvements and priorities, estimated costs, and revenues. This CIP will be updated for the FY 2023-24 budget to incorporate Council comments and new information received.

The following tables are included:

Project Expenses show capital projects included in this year’s budget as well as the next four fiscal years for road resurfacing, drainage infrastructure, and other City facilities.

Funding Sources - Revenues show the projected revenue sources for the capital projects.

FISCAL, RESOURCE AND TIMELINE IMPACTS
This CIP shows rough estimated expenses and revenues to fund the City’s future capital projects through FY 2026-27. Many of the expense estimates are very preliminary and are anticipated to change as scopes and designs move forward on the respective projects. Figures will be updated as better information becomes known.

PROJECTS
Pavement Management Program (Annual) - Annual street maintenance program to preserve and repair surface conditions on public streets, funded upon Council direction from the pavement management study conducted in 2021. Streets selected for Pavement Management Program are prioritized based on annual condition assessment and the timing of major projects by West Valley Sanitation District, San Jose Water Company, and PG&E.

Neighborhood Improvement Project - Daves Neighborhood (FY23/24, FY24/25) This project will design and construct pavement rehabilitation and curb and gutter for improved drainage on Bruce and Vista Avenues. Work in FY22/23 includes the finalization of project plans initiated in FY21/22 (no increase in project budget).

Monte Sereno Community Center (FY23/24, carry over from FY21/22) Conversion of Annex Building to Community space inclusive of ADA accessibility improvements.

Green Stormwater Infrastructure Project (FY23/24) Retrofit of the City Hall parking lot with green stormwater infrastructure to meet the requirements of the Municipal Regional Stormwater NPDES Permit consistent with the City’s GI Plans Green Stormwater Infrastructure Plan adopted in August 2019.

Daves Avenue Safety Improvement (FY23/24) Design and construction of striping for traffic movement and bike and pedestrian safety on Daves Avenue, to be completed concurrent with pavement maintenance under the Pavement Management Program.

Daves Avenue Sidewalk Gap Closure (FY24/25, FY26/27) Design and construction of approximately 1,600 ft (0.3 miles) of sidewalk to close the gap between Equestrian Way and 170 ft west of Via Caballero, creating a continuous sidewalk on the south side of Daves Avenue.

Highway 9 Bicycle Safety Study (FY24/25) This study would recommend and develop improvements along SR 9 including infrastructure improvements that directly address pedestrian and bicycle safety, and design features that promote driverawareness of pedestrians and bicycles.

Winchester Boulevard Complete Streets Final Design (TBD) It envisioned that Winchester Boulevard can be improved with Complete Streets treatments, including enhanced bike lanes, pedestrian crossings, sidewalk improvements, pedestrian refuse islands, landscaped median, and intersection modifications for safer biking and walking. A Santa Clara County Measure B City of Monte Sereno | Budget Book FY 2023-24 Page 376 of 478 Page 68 program grant was awarded for the final design of the project, based on funding availability, final design will take place in 2022- 24 or 2024-26, with construction anticipated in 2028. City and Town staff are currently pursuing grant funding for the construction of this project.

Adopted FY 2023-24 Five Year Capital Improvement Plan Budget City of Monte Sereno | Budget Book FY 2023-24 Page 377 of 478 Page 69

SUPPLEMENTAL INFORMATION
City of Monte Sereno | Budget Book FY 2023-24 Page 378 of 478 Page 70 Fix it! Monte Sereno
Fix it! Monte Sereno
The City of Monte Sereno has launched a new online and mobile application for a request management system called “Fix it! Monte Sereno” to provide residents with an effortless way to participate in community-based reporting via their smartphones, other mobile devices, or from their desktop computers.

A resident may snap a picture of a problem and send it to the City via Fix it! Monte Sereno. Issues will automatically be entered into the database system and channeled to the appropriate department to be resolved.

Fix it! Monte Sereno also allows residents to track submissions and engage other members of the community. The City will provide updates as submissions are acknowledged and resolved.

To download this free app, please go to the iPhone and Android app stores City of Monte Sereno | Budget Book FY 2023-24 Page 379 of 478 Page 71 Glossary
Abatement: A reduction or elimination of a real or personal property tax, motor vehicle excise, a fee, charge, or special assessment imposed by a governmental unit. Granted only on application of the person seeking the abatement and only by the committing governmental unit.

Accounting System: The total structure of records and procedures that identify record, classify, and report information on the financial position and operations of a governmental unit or any of its funds, account groups, and organizational components.

Accrued Interest: The amount of interest that has accumulated on the debt since the date of the last interest payment, and on the sale of a bond, the amount accrued up to but not including the date of delivery (settlement date). (See Interest) Amortization: The gradual repayment of an obligation over time and in accordance with a predetermined payment schedule.

Appropriation: A legal authorization from the community's legislative body to expend money and incur obligations for specific public purposes. An appropriation is usually limited in amount and as to the time period within which it may be expended.

Arbitrage: As applied to municipal debt, the investment of tax-exempt bonds or note proceeds in higher yielding, taxable securities.

Section 103 of the Internal Revenue Service (IRS) Code restricts this practice and requires (beyond certain limits) that earnings be rebated (paid) to the IRS.

Assessed Valuation: A value assigned to real estate or other property by a government as the basis for levying taxes.

Audit: An examination of a community's financial systems, procedures, and data by a certified public accountant (independent auditor), and a report on the fairness of financial statements and on local compliance with statutes and regulations. The audit serves as a valuable management tool in evaluating the fiscal performance of a community.

Audit Report: Prepared by an independent auditor, an audit report includes: (a) a statement of the scope of the audit; (b) explanatory comments as to application of auditing procedures; (c) findings and opinions. It is almost always accompanied by a management letter which contains supplementary comments and recommendations.

Available Funds: Balances in the various fund types that represent non-recurring revenue sources. As a matter of sound practice, they are frequently appropriated to meet unforeseen expenses, for capital expenditures or other one-time costs.

Balance Sheet: A statement that discloses the assets, liabilities, reserves and equities of a fund or governmental unit at a specified date.

Betterments (Special Assessments): Whenever a specific area of a community receives benefit from a public improvement (e.g., water, sewer, sidewalk, etc.), special property taxes may be assessed to reimburse the governmental entity for all or part of the costs it incurred. Each parcel receiving benefit from the improvement is assessed for its proportionate share of the cost of such improvements. The proportionate share may be paid in full or the property owner may request that the assessors apportion the betterment over 20 years. Over the life of the betterment, one year’s apportionment along with one year’s committed interest computed from October 1 to October 1 is added to the tax bill until the betterment has been paid.

Bond: A means to raise money through the issuance of debt. A bond issuer/borrower promises in writing to repay a specified sum of money, alternately referred to as face value, par value or bond principal, to the buyer of the bond on a specified future date (maturity date), together with periodic interest at a specified rate. The term of a bond is always greater than one year. (See Note) Bond and Interest Record: (Bond Register) – The permanent and complete record maintained by a treasurer for each bond issue. It shows the amount of interest and principal coming due each date and all other pertinent information concerning the bond issue.

Bonds Authorized and Unissued: Balance of a bond authorization not yet sold. Upon completion or abandonment of a project, any remaining balance of authorized and unissued bonds may not be used for other purposes, but must be rescinded by the community's legislative body to be removed from community's books.

Bond Issue: Generally, the sale of a certain number of bonds at one time by a governmental unit.

Bond Rating (Municipal): A credit rating assigned to a municipality to help investors assess the future ability, legal obligation, and willingness of the municipality (bond issuer) to make timely debt service payments. Stated otherwise, a rating helps prospective investors determine the level of risk associated with a given fixed-income investment. Rating agencies, such as Moody's and City of Monte Sereno | Budget Book FY 2023-24 Page 380 of 478 Page 72 Standard and Poors, use rating systems, which designate a letter or a combination of letters and numerals where AAA is the highest rating and C1 is a very low rating.

Budget: A plan for allocating resources to support particular services, purposes and functions over a specified period of time. (See Performance Budget, Program Budget)
Capital Assets: All real and tangible property used in the operation of government, which is not easily converted into cash, and has an initial useful live extending beyond a single financial reporting period. Capital assets include land and land improvements; infrastructure such as roads, bridges, water and sewer lines; easements; buildings and building improvements; vehicles, machinery and equipment. Communities typically define capital assets in terms of a minimum useful life and a minimum initial cost. (See Fixed Assets)
Capital Budget: An appropriation or spending plan that uses borrowing or direct outlay for capital or fixed asset improvements.

Among other information, a capital budget should identify the method of financing each recommended expenditure, i.e., tax levy or rates, and identify those items that were not recommended. (See Capital Assets, Fixed Assets) Cash: Currency, coin, checks, postal and express money orders and bankers’ drafts on hand or on deposit with an official or agent designated as custodian of cash and bank deposits.

Cash Management: The process of monitoring the ebb and flow of money in an out of municipal accounts to ensure cash availability to pay bills and to facilitate decisions on the need for short- term borrowing and investment of idle cash.

Certificate of Deposit (CD): A bank deposit evidenced by a negotiable or non-negotiable instrument, which provides on its face that the amount of such deposit plus a specified interest payable to a bearer or to any specified person on a certain specified date, at the expiration of a certain specified time, or upon notice in writing.

Classification of Real Property: Assessors are required to classify all real property according to use into one of four classes:
residential, open space, commercial, and industrial. Having classified its real properties, local officials are permitted to determine locally, within limitations established by statute and the Commissioner of Revenue, what percentage of the tax burden is to be borne by each class of real property and by personal property owners.

Collective Bargaining: The process of negotiating workers' wages, hours, benefits, working conditions, etc., between an employer and some or all of its employees, who are represented by a recognized labor union. regarding wages, hours and working conditions.

Consumer Price Index: The statistical measure of changes, if any, in the overall price level of consumer goods and services. The index is often called the "cost-of-living index."
Cost-Benefit Analysis: A decision-making tool that allows a comparison of options based on the level of benefit derived and the cost to achieve the benefit from different alternatives.

Debt Burden: The amount of debt carried by an issuer usually expressed as a measure of value (i.e., debt as a percentage of assessed value, debt per capita, etc.). Sometimes debt burden refers to debt service costs as a percentage of the total annual budget.

Debt Service: The repayment cost, usually stated in annual terms and based on an amortization schedule, of the principal and interest on any particular bond issue.

Encumbrance: A reservation of funds to cover obligations arising from purchase orders, contracts, or salary commitments that are chargeable to, but not yet paid from, a specific appropriation account.

Enterprise Funds: An enterprise fund is a separate accounting and financial reporting mechanism for municipal services for which a fee is charged in exchange for goods or services. It allows a community to demonstrate to the public the portion of total costs of a service that is recovered through user charges and the portion that is subsidized by the tax levy, if any. With an enterprise fund, all costs of service delivery--direct, indirect, and capital costs—are identified. This allows the community to recover total service costs through user fees if it chooses. Enterprise accounting also enables communities to reserve the "surplus" or net assets unrestricted generated by the operation of the enterprise rather than closing it out to the general fund at year-end. Services that may be treated as enterprises include, but are not limited to, water, sewer, hospital, and airport services.

Equalized Valuations (EQVs): The determination of the full and fair cash value of all property in the community that is subject to local taxation.

City of Monte Sereno | Budget Book FY 2023-24 Page 381 of 478 Page 73 Estimated Receipts: A term that typically refers to anticipated local revenues often based on the previous year's receipts and represent funding sources necessary to support a community's annual budget. (See Local Receipts) Exemptions: A discharge, established by statute, from the obligation to pay all or a portion of a property tax. The exemption is available to particular categories of property or persons upon the timely submission and approval of an application to the assessors. Properties exempt from taxation include hospitals, schools, houses of worship, and cultural institutions. Persons who may qualify for exemptions include disabled veterans, blind individuals, surviving spouses, and seniors.

Expenditure: An outlay of money made by municipalities to provide the programs and services within their approved budget.

Fiduciary Funds: Repository of money held by a municipality in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and other funds. These include pension (and other employee benefit) trust funds, investment trust funds, private- purpose trust funds, and agency funds.

Fixed Assets: Long-lived, assets such as buildings, equipment and land obtained or controlled as a result of past transactions or circumstances.

Fixed Costs: Costs that are legally or contractually mandated such as retirement, FICA/Social Security, insurance, debt service costs or interest on loans.

Float: The difference between the bank balance for a local government’s account and its book balance at the end of the day. The primary factor creating float is clearing time on checks and deposits. Delays in receiving deposit and withdrawal information also influence float.

Full Faith and Credit: A pledge of the general taxing powers for the payment of governmental obligations. Bonds carrying such pledges are usually referred to as general obligation or full faith and credit bonds.

Fund: An accounting entity with a self-balancing set of accounts that are segregated for the purpose of carrying on identified activities or attaining certain objectives in accordance with specific regulations, restrictions, or limitations.

Fund Accounting: Organizing financial records into multiple, segregated locations for money. A fund is a distinct entity within the municipal government in which financial resources and activity (assets, liabilities, fund balances, revenues, and expenditures) are accounted for independently in accordance with specific regulations, restrictions or limitations. Examples of funds include the general fund and enterprise funds. Communities whose accounting records are organized according to the Uniform Municipal Accounting System (UMAS) use multiple funds.

GASB 34: A major pronouncement of the Governmental Accounting Standards Board that establishes new criteria on the form and content of governmental financial statements. GASB 34 requires a report on overall financial health, not just on individual funds. It requires more complete information on the cost of delivering value estimates on public infrastructure assets, such as bridges, road, sewers, etc. It also requires the presentation of a narrative statement the government's financial performance, trends and prospects for the future.

GASB 45: This is another Governmental Accounting Standards Board major pronouncement that each public entity account for and report other postemployment benefits in its accounting statements. Through actuarial analysis, municipalities must identify the true costs of the OPEB earned by employees over their estimated years of actual service.

General Fund: The fund used to account for most financial resources and activities governed by the normal appropriation process.

General Obligation Bonds: Bonds issued by a municipality for purposes allowed by statute that are backed by the full faith and credit of its taxing authority.

Governing Body: A board, committee, commission, or other executive or policymaking bodyof a municipality or school district.

Indirect Cost: Costs of a service not reflected in the operating budget of the entity providing the service. An example of an indirect cost of providing water service would be the value of time spent by non-water department employees processing water bills. A determination of these costs is necessary to analyze the total cost of service delivery. The matter of indirect costs arises most often in the context of enterprise funds.

Interest: Compensation paid or to be paid for the use of money, including amounts payable at periodic intervals or discounted at the time a loan is made. In the case of municipal bonds, interest payments accrue on a day-to-day basis, but are paid every six months.

City of Monte Sereno | Budget Book FY 2023-24 Page 382 of 478 Page 74 Interest Rate: The interest payable, expressed as a percentage of the principal available for use during a specified period of time. It is always expressed in annual terms.

Investments: Securities and real estate held for the production of income in the form of interest, dividends, rentals or lease payments. The term does not include fixed assets used in governmental operations.

Line Item Budget: A budget that separates spending into categories, or greater detail, such as supplies, equipment, maintenance, or salaries, as opposed to a program budget.

Local Aid: Revenue allocated by the state or counties to municipalities and school districts.

Maturity Date: The date that the principal of a bond becomes due and payable in full.

Municipal(s): (As used in the bond trade) "Municipal" refers to any state or subordinate governmental unit. "Municipals" (i.e., municipal bonds) include not only the bonds of all political subdivisions, such as cities, towns, school districts, special districts, counties but also bonds of the state and agencies of the state.

Note: A short-term loan, typically with a maturity date of a year or less.

Objects of Expenditures: A classification of expenditures that is used for coding any department disbursement, such as “personal services,” “expenses,” or “capital outlay.”
Official Statement: A document prepared for potential investors that contains information about a prospective bond or note issue and the issuer. The official statement is typically published with the notice of sale. It is sometimes called an offering circular or prospectus.

Operating Budget: A plan of proposed expenditures for personnel, supplies, and other expenses for the coming fiscal year.

Overlapping Debt: A community's proportionate share of the debt incurred by an overlapping government entity, such as a regional school district, regional transit authority, etc.

Performance Budget: A budget that stresses output both in terms of economy and efficiency.

Principal: The face amount of a bond, exclusive of accrued interest.

Program: A combination of activities to accomplish an end.

Program Budget: A budget that relates expenditures to the programs they fund. The emphasis of a program budget is on output.

Purchased Services: The cost of services that are provided by a vendor.

Refunding of Debt: Transaction where one bond issue is redeemed and replaced by a new bond issue under conditions generally more favorable to the issuer.

Reserve Fund: An amount set aside annually within the budget of a town to provide a funding source for extraordinary or unforeseen expenditures.

Revaluation: The assessors of each community are responsible for developing a reasonable and realistic program to achieve the fair cash valuation of property in accordance with constitutional and statutory requirements. The nature and extent of that program will depend on the assessors’ analysis and consideration of many factors, including, but not limited to, the status of the existing valuation system, the results of an in-depth sales ratio study, and the accuracy of existing property record information.

Revenue Anticipation Note (RAN): A short-term loan issued to be paid off by revenues, such as tax collections and state aid. RANs are full faith and credit obligations.

Revenue Bond: A bond payable from and secured solely by specific revenues and thereby not a full faith and credit obligation.

Revolving Fund: Allows a community to raise revenues from a specific service and use those revenues without appropriation to support the service.

City of Monte Sereno | Budget Book FY 2023-24 Page 383 of 478 Page 75 Sale of Real Estate Fund: A fund established to account for the proceeds of the sale of municipal real estate other than proceeds acquired through tax title foreclosure.

Stabilization Fund: A fund designed to accumulate amounts for capital and other future spending purposes, although it may be appropriated for any lawful purpose.

Surplus Revenue: The amount by which cash, accounts receivable, and other assets exceed liabilities and reserves.

Tax Rate: The amount of property tax stated in terms of a unit of the municipal tax base; for example, $14.80 per $1,000 of assessed valuation of taxable real and personal property.

Tax Title Foreclosure: The procedure initiated by a municipality to obtain legal title to real property already in tax title and on which property taxes are overdue.

Trust Fund: In general, a fund for money donated or transferred to a municipality with specific instructions on its use. As custodian of trust funds, the treasurer invests and expends such funds as stipulated by trust agreements, as directed by the commissioners of trust funds or by the community's legislative body. Both principal and interest may be used if the trust is established as an expendable trust. For nonexpendable trust funds, only interest (not principal) may be expended as directed.

Uncollected Funds: Recently deposited checks included in an account’s balance but drawn on other banks and not yet credited by the Federal Reserve Bank or local clearinghouse to the bank cashing the checks. (These funds may not be loaned or used as part of the bank’s reserves and they are not available for disbursement.) Undesignated Fund Balance: Monies in the various government funds as of the end of the fiscal year that are neither encumbered nor reserved, and are therefore available for expenditure once certified as part of free cash.

Unreserved Fund Balance (Surplus Revenue Account): The amount by which cash, accounts receivable, and other assets exceed liabilities and restricted reserves. It is akin to a "stockholders’ equity" account on a corporate balance sheet. It is not, however, available for appropriation in full because a portion of the assets listed as "accounts receivable" may be taxes receivable and uncollected. (See Free Cash)
Valuation (100 Percent): The legal requirement that a community’s assessed value on property must reflect its market, or full and fair cash value.

City of Monte Sereno | Budget Book FY 2023-24 Page 384 of 478 Page 76

APPENDIX
City of Monte Sereno | Budget Book FY 2023-24 Page 385 of 478 Page 77 RESOLUTION NO. XXXX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MONTE

SERENO ADOPTING THE BUDGET FOR THE CITY OF MONTE SERENO FOR THE FISCAL YEAR 2023-2024 AND MAKING APPROPRIATIONS

THEREFORE
WHEREAS, there has been presented to this City Council for its ConsideraƟon and adopƟon an annual budget (“Budget”) for the City of Monte Sereno for the Fiscal Year 2023- 2024 and
WHEREAS, the City Council has considered the Budget; and WHEREAS, the City Council has approved the Budget, the total amount of operaƟng expenditures for all funds is $4,124,148 and the total amount of the capital budget for all funds is $1,921,329 for a total Budget of $6,045,477.

BE IT RESOLVED by the City Council of the City of Monte Sereno that the Budget is hereby adopted as the Budget for the City of Monte Sereno for the Fiscal Year 2023-2024.

BE IT FURTHER RESOLVED that amounts set out as expenses in the Budget for the purposes expressed therein are hereby appropriated.

REGULARLY passed and adopted this 20th day of June, 2023.

AYES:

NOES:

ABSTAIN:

ABSENT:

BY:_____________________________________
Bryan Mekechuk , Mayor
ATTEST:
____________________________
Gloisy Gonzalez-Langarica, City Clerk