Agenda packet — Audit Committee, November 30, 2022 (part 1 of 2)

City of Santa Clara
Meeting Agenda
Audit Committee
Virtual Meeting10:30 AMWednesday, November 30, 2022
Pursuant to California Government Code Section 54953(e) and City of Santa Clara Resolution 22-9150, the Audit Committee meeting will be held by teleconference only. No physical location will be available for this meeting; however, the City of Santa Clara continues to have methods for the public to participate remotely:

Join from a PC, Mac, iPad, iPhone or Android device:

Please click this URL to join: https://santaclaraca.zoom.us/j/99199624617 Webinar ID: 991 9962 4617
Or join by phone:

US: +1 669 900 6833

CALL TO ORDER AND ROLL CALL

CONSENT CALENDAR

1. Audit Committee Minutes22-1270
Approve the Audit Committee minutes of September
30, 2022.

Recommendation:

PUBLIC PRESENTATIONS
[This item is reserved for persons to address the body on any matter not on the agenda that is within the subject matter jurisdiction of the body. The law does not permit action on, or extended discussion of, any item not on the agenda except under special circumstances. The governing body, or staff, may briefly respond to statements made or questions posed, and appropriate body may request staff to report back at a subsequent meeting.]

GENERAL BUSINESS

Page 1 of 3 ends

Audit Committee Meeting Agenda November 30, 2022

2. Overview of the Draft City of Santa Clara Audited Annual Comprehensive Financial Report (ACFR) and Audited Silicon Valley Power (SVP) Financial Statements for Fiscal Year Ended June 30, 2022
22-1265
Accept the City of Santa Clara Audited Annual
Comprehensive Financial Report and Silicon Valley
Power Financial Statements for Fiscal Year Ended
June 30, 2022 and recommend that the reports are
forwarded for note and file to the full Council at the
December 13, 2022 Council and Authorities
Concurrent meeting.

Recommendation:

ADJOURNMENT
Future Audit Committee Meetings will be scheduled at a later date.

MEETING DISCLOSURES

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Audit Committee Meeting Agenda November 30, 2022
The time limit within which to commence any lawsuit or legal challenge to any quasi-adjudicative decision made by the City is governed by Section 1094.6 of the Code of Civil Procedure, unless a shorter limitation period is specified by any other provision. Under Section 1094.6, any lawsuit or legal challenge to any quasi-adjudicative decision made by the City must be filed no later than the 90th day following the date on which such decision becomes final. Any lawsuit or legal challenge, which is not filed within that 90-day period, will be barred. If a person wishes to challenge the nature of the above section in court, they may be limited to raising only those issues they or someone else raised at the meeting described in this notice, or in written correspondence delivered to the City of Santa Clara, at or prior to the meeting. In addition, judicial challenge may be limited or barred where the interested party has not sought and exhausted all available administrative remedies.

If a member of the public submits a speaker card for any agenda items, their name will appear in the Minutes. If no speaker card is submitted, the Minutes will reflect "Public Speaker."
In accordance with the requirements of Title II of the Americans with Disabilities Act of 1990 ("ADA"), the City of Santa Clara will not discriminate against qualified individuals with disabilities on the basis of disability in its services, programs, or activities, and will ensure that all existing facilities will be made accessible to the maximum extent feasible. The City of Santa Clara will generally, upon request, provide appropriate aids and services leading to effective communication for qualified persons with disabilities including those with speech, hearing, or vision impairments so they can participate equally in the City’s programs, services, and activities. The City of Santa Clara will make all reasonable modifications to policies and programs to ensure that people with disabilities have an equal opportunity to enjoy all of its programs, services, and activities.

Agendas and other written materials distributed during a public meeting that are public record will be made available by the City in an appropriate alternative format.

Contact the City Clerk’s Office at 1 408-615-2220 with your request for an alternative format copy of the agenda or other written materials.

Individuals who require an auxiliary aid or service for effective communication, or any other disability-related modification of policies or procedures, or other accommodation, in order to participate in a program, service, or activity of the City of Santa Clara, should contact the City’s ADA Coordinator at 408-615-3000 as soon as possible but no later than 48 hours before the scheduled event.

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City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
22-1270 Agenda Date: 11/30/2022

REPORT TO AUDIT COMMITTEE

SUBJECT
Audit Committee Minutes

RECOMMENDATION
Approve the Audit Committee minutes of September 30, 2022.

City of Santa Clara Printed on 11/23/2022Page 1 of 1
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City of Santa Clara
Meeting Minutes
Audit Committee
Draft
11:00 AM Virtual Meeting09/30/2022
Pursuant to California Government Code Section 54953(e) and City of Santa Clara Resolution 22-9142, the Audit Committee meeting will be held by teleconference only. No physical location will be available for this meeting; however, the City of Santa Clara continues to have methods for the public to participate remotely:

Join from a PC, Mac, iPad, iPhone or Android device:

Please click this URL to join: https://santaclaraca.zoom.us/j/99199624617 Webinar ID: 991 9962 4617
Or join by phone:

US: +1 669 900 6833

CALL TO ORDER AND ROLL CALL
Kevin Park, Kathy Watanabe, and Suds JainPresent 3 -

CONSENT CALENDAR

1. 22-1089 Audit Committee Minutes
Recommendation: Approve the Audit Committee minutes of March 14, 2022.

A motion was made by Council Member Jain, seconded by Council Member Watanabe, to approve staff recommendation. The motion carried by the following vote:

Aye: Park, Watanabe, and Jain3 -

PUBLIC PRESENTATIONS
None.

GENERAL BUSINESS

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09/30/2022Audit Committee Meeting Minutes

2. 22-1218 Overview of Santa Clara Stadium Authority Fiscal Year 2021/22 Annual Financial Statements and Audit Results Presentation by KPMG, LLP Recommendation: Accept the Santa Clara Stadium Authority Fiscal Year 2021/22 Annual Financial Statements and recommend that the Stadium Authority note and file the report at the October 18, 2022 Joint Council and Authorities Concurrent and Stadium Authority meeting.

Santa Clara Stadium Authority Treasurer Lee gave a PowerPoint presentation.

Committee Members' comments and questions followed.

Santa Clara Stadium Authority Treasurer Lee, Lisa Avis (Managing Director, KPMG, LLP) and Assistant Finance Director Lam addressed the Committee Members' questions.

Lisa Avis (Managing Director, KPMG, LLP) gave a PowerPoint presentation.

Several comments were made by the Audit Committee including: 1) KPMG to provide the presentation ahead of the Audit Committee meeting, 2) present a clean audit letter from KPMG to the Council, 3) discussion of remaining debt service payments, and 4) material changes that would require a re-review by the Committee.

Santa Clara Stadium Authority Treasurer Lee, Lisa Avis (Managing Director, KPMG, LLP) and Assistant Finance Director Lam addressed the Committee Members' questions.

A motion was made by Member Jain, seconded by Member
Watanabe, to approve staff recommendation subject to some modifications in the final. The motion carried by the following vote:

Aye: Park, Watanabe, and Jain3 -

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09/30/2022Audit Committee Meeting Minutes

3. 22-349 Overview of the City Auditor’s Office Semi-Annual Status Report as of September 30, 2022
Recommendation: Accept the City Auditor’s Office Semi-Annual Status Report as of September 30, 2022 recommend that the report be forwarded for note and file to the full Council at the October 18, 2022 Council and Authorities Concurrent meeting.

Audit Manager Noce
gave a PowerPoint presentation.

Committee Members' comments and questions followed.

Audit Manager Noce and Assistant City Attorney Reuter addressed the Committee Members' questions.

A motion was made by Member Jain, seconded by Member
Watanabe, to approve staff recommendation. The motion carried by the following vote

Aye: Park, Watanabe, and Jain3 -

ADJOURNMENT
Committee Member Watanabe and Chair Park had questions and comments on the next meeting date and format.

Audit Manager Noce answered that a poll for a December date will be sent out and recommends to separate out the internal audit portion into another meeting.

Chairperson Park adjourned the meeting at 12:23 PM.

A motion was made by Member Jain, seconded by Member
Watanabe, to adjourn the meeting. The motion carried by the following vote:

Aye: Park, Watanabe, and Jain3 -
Future Audit Committee Meetings will be scheduled at a later date.

MEETING DISCLOSURES

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09/30/2022Audit Committee Meeting Minutes
The time limit within which to commence any lawsuit or legal challenge to any quasi-adjudicative decision made by the City is governed by Section 1094.6 of the Code of Civil Procedure, unless a shorter limitation period is specified by any other provision. Under Section 1094.6, any lawsuit or legal challenge to any quasi-adjudicative decision made by the City must be filed no later than the 90th day following the date on which such decision becomes final. Any lawsuit or legal challenge, which is not filed within that 90-day period, will be barred. If a person wishes to challenge the nature of the above section in court, they may be limited to raising only those issues they or someone else raised at the meeting described in this notice, or in written correspondence delivered to the City of Santa Clara, at or prior to the meeting. In addition, judicial challenge may be limited or barred where the interested party has not sought and exhausted all available administrative remedies.

Agendas and other written materials distributed during a public meeting that are public record will be made available by the City in an appropriate alternative format.

Contact the City Clerk’s Office at 1 408-615-2220 with your request for an alternative format copy of the agenda or other written materials.

Page 4 ends

City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
22-1265 Agenda Date: 11/30/2022

REPORT TO AUDIT COMMITTEE

SUBJECT
Overview of the Draft City of Santa Clara Audited Annual Comprehensive Financial Report (ACFR) and Audited Silicon Valley Power (SVP) Financial Statements for Fiscal Year Ended June 30, 2022

BACKGROUND
City Charter Section 1319 requires that an independent certified public accountant (CPA) audit the City’s records and accounts on an annual basis. In compliance with the Charter, the City engaged the audit firm of Maze and Associates to perform an independent audit of the City’s financial statements.

The ACFR and SVP financial statements present the audited financial information of the City in accordance with Generally Accepted Accounting Principles (GAAP) applicable to government entities. The statements provide the Audit Committee and City Council valuable information for financial oversight as well as providing information to the citizens of Santa Clara.

DISCUSSION
The role of the Audit Committee (Committee) is to provide oversight of the City’s financial reporting processes, internal controls, and independent auditors. Amy Meyer, Shareholder, from Maze and Associates will present the audit results to the Committee and provide an overview of the audit. This includes the audit report, financial statement disclosures, internal control related matters and other items.

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.

FISCAL IMPACT
Costs associated with the preparation of this report are included in the City’s FY 2022/23 Adopted Operating Budget.

PUBLIC CONTACT
Public contact was made by posting the Audit Committee agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, [email protected] <mailto:[email protected]>, or at the public information desk at any City of Santa Clara City of Santa Clara Printed on 11/23/2022Page 1 of 2
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22-1265 Agenda Date: 11/30/2022
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RECOMMENDATION
Accept the City of Santa Clara Audited Annual Comprehensive Financial Report and Silicon Valley Power Financial Statements for Fiscal Year Ended June 30, 2022 and recommend that the reports are forwarded for note and file to the full Council at the December 13, 2022 Council and Authorities Concurrent meeting.

Reviewed by: Kenn Lee, Director of Finance
Approved by: Rajeev Batra, City Manager

ATTACHMENTS

1. Draft Annual Comprehensive Financial Report (ACFR)

2. Draft Silicon Valley Power (SVP) Financial Statements

3. Draft Memorandum on Internal Control
City of Santa Clara Printed on 11/23/2022Page 2 of 2
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Annual Comprehensive
Financial Report
Fi
scal Year Ended
June 30, 2022
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ANNUAL COMPREHENSIVE FINANCIAL
REPORT

FISCAL YEAR ENDED JUNE 30, 2022

THE

MISSION CITY

CITY OF SANTA CLARA, CALIFORNIA
1500 WARBURTON AVENUE
SANTA CLARA, CA 95050-3796

PREPARED BY DEPARTMENT OF FINANCE
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Introductory Section

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CITY OF SANTA CLARA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

TABLE OF CONTENTS
For the year ended June 30, 2022

Page

INTRODUCTORY SECTION
Letter of Transmittal .................................................................................................................................................. v Roster of Council and Commission Members ........................................................................................................ xiv Executive Management Team .................................................................................................................................. xv GFOA Certificate of Achievement ......................................................................................................................... xvi Organization Chart ................................................................................................................................................. xvii Local Map ............................................................................................................................................................. xviii

FINANCIAL SECTION
Independent Auditor’s Report on Basic Financial Statements .................................................................................. 1 Management’s Discussion and Analysis .................................................................................................................... 5 Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position ..................................................................................................................... 28 Statement of Activities ......................................................................................................................... 30 Fund Financial Statements
Governmental Funds
Balance Sheet ....................................................................................................................................... 34 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position.................................................................................................................................... 38 Statement of Revenues, Expenditures, and Changes in Fund Balances ............................................... 38 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ........................................................................................................................................ 42 Proprietary Funds
Statement of Net Position ..................................................................................................................... 44 Statement of Revenues, Expenses, and Changes in Fund Net Position ............................................... 48 Statement of Cash Flows ...................................................................................................................... 50 Fiduciary Funds
tatement of Fiduciary Net Position ....................................................................................................... 56 Statement of Fiduciary Net Position..................................................................................................... 57 Notes to Basic Financial Statements ................................................................................................................. 59 DRAFT

CITY OF SANTA CLARA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

TABLE OF CONTENTS
For the year ended June 30, 2022

Page

Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios (Miscellaneous Plan) .................................................................................................................... 152 Schedule of Plan Contributions (Miscellaneous Plan) ....................................................................... 154 Schedule of Changes in the Net Pension Liability and Related Ratios (Safety Plan) ........................ 156 Schedule of Plan Contributions (Safety Plan) .................................................................................... 158 Schedule of Changes in the Net OPEB Liability and Related Ratios (OPEB Plan) ........................... 160 Schedule of Plan Contributions (OPEB Plan) .................................................................................... 161 Notes to Schedule of Employer Contributions (OPEB Plan) ............................................................. 162 General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual (Non-GAAP Legal Basis) ........................................................... 163 Santa Clara Housing Successor Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual (Non-GAAP Legal Basis) ............................... 165 Notes to Required Supplementary Information .................................................................................. 166 Supplementary Information
Non-Major Governmental Funds
Combining Balance Sheet .................................................................................................................. 172 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .......................... 176 Special Revenue Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual (Non-GAAP Legal Basis) ................................................. 180 Non-Major Enterprise Funds
Combining Statement of Net Position ................................................................................................ 182 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ........................... 186 Combining Statement of Cash Flows ................................................................................................. 188 Internal Service Funds
Combining Statement of Net Position ................................................................................................ 194 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ........................... 198 Combining Statement of Cash Flows ................................................................................................. 200 Private Purpose Trust Funds
Combining Statement of Net Position ................................................................................................ 206 Combining Statement of Changes in Net Position ............................................................................. 207 Custodial Funds
Combining Statement of Net Position ................................................................................................ 208 Combining Statement of Changes in Net Position ............................................................................. 209 DRAFT

CITY OF SANTA CLARA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

TABLE OF CONTENTS
For the year ended June 30, 2022

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iii

STATISTICAL SECTION (UNAUDITED)
City of Santa Clara

1. Net Position by Component – Last Ten Fiscal Years .................................................................... 214

2. Changes in Net Position – Last Ten Fiscal Years ........................................................................ 215

3. Fund Balances – Governmental Funds – Last Ten Fiscal Years ................................................... 218

4. Changes in Fund Balances – Governmental Funds – Last Ten Fiscal Years ................................ 219

5. Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ............................................................................................................................................ 221

6. Property Tax Rates Direct and Overlapping Governments – Last Ten Fiscal Years ............................................................................................................................................ 222

7. Principal Property Tax Payers 2017-18 and 2010-11 Comparison for General Fund ............................................................................................................................................. 223

8. Property Tax Levies and Collections – Last Ten Fiscal Years ...................................................... 224

9. Principal Sale/Use Tax Contributors ............................................................................................. 225

10. Electric Utility Charge for Services by Source ........................................................................... 226

11. Ratios of Outstanding Debt by Type - Last Ten Fiscal Years ..................................................... 227

12. Population and Assessed Valuation – Last Ten Fiscal Years ....................................................... 228

13. Computation of Direct and Overlapping Bonded Debt\ ............................................................... 229

14. Legal Debt Margin Information – Last Ten Fiscal Years ............................................................ 230

15. Pledged Revenue Coverage Electric Revenue Bond – Last Ten Fiscal Years ............................. 231

16. Demographic and Economic Statistics – Last Ten Calendar Years ............................................. 232

17. Principal Employers – Current Year and Ten Years Ago ............................................................ 233

18. Full-Time Equivalent Budgeted City Employees by Program/Function – Last Ten Fiscal Years .......................................................................................................................... 234

19. Operating Indicators by Function/Activity – Last Ten Fiscal Years ............................................ 235

20. Capital Assets Statistics by Function – Last Ten Fiscal Years ..................................................... 236

21. Statement of Insurance Coverage ................................................................................................. 237 Successor Agency

1. Historical Tax Increment – Last Ten Fiscal Years ......................................................................... 241

2. Ten Largest Assessees – Taxable Value ........................................................................................ 242

3. Assessment Appeal Activity of Top 20 Assessees ......................................................................... 243

4. Computation of Direct and Overlapping Bonded Debt .................................................................. 244

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Letter of Transmittal

November 30, 2022

The Honorable Mayor and City Council
City of Santa Clara
Santa Clara, CA 95050
Dear Mayor and Members of the City Council:

It is our pleasure to submit for your information the Annual Comprehensive Financial Report (ACFR) of the City of Santa Clara (City) for the fiscal year ended June 30, 2022. The City compiles and prepares the annual financial report to provide interested parties with reliable information concerning the financial condition and results of operations for the City.

Responsibility for the accuracy of the data and the fairness of presentation, including all footnotes and disclosures, rests with the City. Management of the City has established a comprehensive internal control framework that is designed to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with Generally Accepted Accounting Principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal control has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

Per the City Charter (Section 1319, Independent Audit) the City’s financial statements have been audited by Maze & Associates, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2022 are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year ended June 30, 2022 are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report.

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The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require that agencies expending more than $750,000 in federal monies, are required to have the independent auditor report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and legal requirements involving the administration of federal awards. These reports are available in the City’s separately issued Single Audit Report, scheduled for release in March 2023.

Management has provided a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). The letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors.

This report is divided into three sections:
 The Introductory Section includes this letter of transmittal, an organizational overview of the City government, and prior awards received.
 The Financial Section consists of the independent auditor’s report, Management’s Discussion and Analysis, Basic Financial Statements (which include the Government-Wide Financial Statements, Fund Financial Statements, and Notes to Basic Financial Statements), Required Supplementary Information, and a Supplementary Section containing the Combined and Individual Fund Financial Statements and Schedules.
 The Statistical Section includes a number of tables of unaudited data depicting the financial history of the City, demographics, and other selected information about the City.

PROFILE OF THE CITY OF SANTA CLARA
The City is located in the County of Santa Clara, California, and is approximately 45 miles southeast of San Francisco and three miles west of downtown San Jose. It is situated in the northern part of the County and occupies approximately 19.3 square miles.

The City enjoys a diversified industrial and commercial base. Santa Clara is headquarters to some of the nation's leading electronics, telecommunications, computer, and semiconductor firms. The City is also home to a university, a community college, an adult learning center, a general hospital, a theme park, and a stadium.

The City’s population is estimated at 129,100 indicating the City remains an attractive place both to live and work. The City is one of the most highly desirable areas to live because of the high- quality services it provides to residents and its business friendly environment.

The City of Santa Clara, also known as the Mission City, is a charter city incorporated in 1852 under the laws of the State of California. The City’s powers are exercised through a Council/Manager form of government. The City Council is made up of the Mayor, elected at large, and six councilmembers elected by district serving as the legislative authority. The City Council appoints a City Manager who is responsible for the overall management and administration of the City, a City Attorney to represent and advise the City Council and all City officers in all matters of law pertaining to their offices, and a City Auditor to audit and approve all bills, invoices, payrolls, demands or charges against the City government before payment and, with the advice of the City Attorney, advise the City Council as to the regularity, DRAFT

vii

legality and correctness of such claims, demands or charges. The Police Chief and the City Clerk are also publicly elected officials.

The City provides a full range of services. These services include police, fire protection and emergency dispatch; electric, water, and sanitary sewer services; the construction and maintenance of streets and infrastructure; parks and recreational activities and cultural events; planning and zoning; library; cemetery; and general administrative and support services.

LOCAL ECONOMY
The local economy continued to improve during FY 2021/22 as the nation, State, and local economies continued to recover from COVID-19. On a national level, unemployment rates in June 2022 totaled

3.6%. This rate was well below the record setting high of 14.7% in April 2020, and almost at the pre- pandemic unemployment rate of 3.5%. The unadjusted unemployment rate in the San José-Sunnyvale- Santa Clara Metropolitan Statistical Area (MSA) was 2.3% in June 2022.

At the local level, several of the City’s General Fund revenues continue to be impacted, with the largest declines in the transient occupancy tax, sales tax, and fees for services categories. In response to the economic environment stemming from impacts of the COVID-19 pandemic, the City implemented various cost savings strategies at the end of March 2020. These actions included a hiring freeze in addition to more controls across overtime, as-needed staffing, marketing, travel, and technology and vehicle purchases.

While the nature of business travel, work, and how customers transact goods and services has evolved through the pandemic, FY 2021/22 saw the continued recovery of the impact of COVID-19 on the local economy. Tax revenue recovery is underway, however, remain significantly below pre-pandemic levels.

The City continued budget balancing efforts during the fiscal year in part through one-time ARPA federal funding totaling $26 million, use of reserves, and further expenditure and revenue actions. In May 2021, the City established policies for cost recovery of parks and recreation fees and concluded a fee study that adjusted and maximized recovery of services, as appropriate. As the City looks ahead, we are forecasting a $27 million ongoing General Fund deficit starting in FY 2023/24. A workplan considering several options of new revenues, expenditure or service deferments and maintaining cost controls to generate one-time savings is underway.

FINANCIAL INFORMATION
Long-term Financial Planning
The City Council has adopted key Council Strategic Pillars to guide long-term policy decisions and address the economic challenges that the City faces. The pandemic induced structural budget deficit will continue to stress the City’s resources, but the City also continues to recognize the need to fund reserves and utilize a multi-pronged strategy to ensure ongoing expenditures are in alignment with ongoing revenues. The Council Strategic Pillars are:
 Promote and Enhance Economic, Housing and Transportation Development  Deliver and Enhance High Quality Efficient Services and Infrastructure  Enhance Community Sports, Recreational and Arts Assets  Enhance Community Engagement and Transparency
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 Ensure Compliance with Measure J and Manage Levi’s Stadium  Manage Strategically Our Workforce Capacity and Resources  Promote Sustainability and Environmental Protection
In addition, the City produces an annual Ten-Year Financial Forecast. The purpose of the Forecast is to provide policy-makers and the public an updated assessment of the City’s fiscal health that takes into account the latest economic developments. The report includes historical perspective on revenues and expenditures and a ten-year financial outlook beyond the adopted budget year. The value of this type of analysis is to give the City Council, staff, and the public a tool to assist with strategic decision-making as they work to adopt the budget for the coming year. The Forecast is a collaborative effort between the City Manager’s Office, Finance Department, and City departments. Individual projections of revenues and expenditures are developed based on trend analyses, input from available economic reports, consultant recommendations, and input from other subject matter experts. The most current information available is incorporated into the Plan and refined on a moving forward basis as part of the City’s commitment to fiscal responsibility.

The Forecast does not include the following:
 One-time funding sources and one-time expenditure needs;  The cost to address unmet/deferred capital infrastructure needs;  Revenue and staffing impacts of development projects; and  Additional contributions to Reserves (Budget Stabilization Reserve, Capital Projects Reserve, Pension Reserve).

Historically, the City has funded many of capital infrastructure and equipment needs with one-time funds on a pay-as-you-go basis. The use of one-time funds as the funding mechanism for capital improvements and various equipment that rely on the General Fund creates challenges. The lack of sufficient one-time funding has resulted in a backlog of unmet/deferred infrastructure needs. As part of the budget process, in May 2021, staff presented an updated unmet/deferred infrastructure need of over $570 million over the next five-years. Staff will continue to evaluate potential options to create capacity to address those funding needs.

In addition to the elements described above that are not factored into the Forecast, the City has identified various factors that could have potential positive or negative impacts on the Forecast. These include:
 More robust economic recovery following the COVID-19 vaccinations;  Less economic recovery as a result of worsening COVID-19 impacts due to variants and vaccine hesitancy;
 Future economic slowdown/recession;
 State/federal legislative changes and legal challenges;  Labor costs outside the budget assumptions;
 CalPERS actuarial changes or reform actions;
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 Unanticipated critical capital/infrastructure needs; and  Maintenance impacts and timing of development projects.

In January 2022, the Forecast indicated that the City was facing a $19.6 million ongoing deficit starting in FY 2023/24. In June 2022, that figure grew to a projected $27 million. The plan is to address the shortfall with a combination of the following:
 Ongoing expenditure reductions
 One-time savings from cost control measures
 Potential ballot measures and other revenue generating actions  Potential labor negotiations
While we continue to face impacts from the pandemic, and recovery has begun, many economists are now projecting a continued unsettled economic environment with high inflation, continued supply chain issues, geo-political instability, and the potential for a potential extended recession.

Internal Controls
The management of the City is responsible for establishing and maintaining internal controls designed to ensure that the assets of the City are protected from loss, theft or misuse, and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). Internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the stated framework. City management believes the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions.

Budgetary Controls
As part of the City's internal controls, it maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annually appropriated budget approved by the City Council. In addition, a two-year Capital Improvement Project Budget is adopted and a Ten-Year Financial Forecast is updated and presented to the City Council annually. The City Council is responsible for approving the appropriation of fiscal resources to cover estimated expenditures for each fiscal year. Expenditures are appropriated in each fund to departments, offices, and agencies for various goods, services, and capital projects described in the budget. The legal appropriation control is established at the department level in each fund. For select funds where expenditures are not allocated to a specific department, the appropriation control is established at the fund level. For capital funds, the appropriation control is at the project level. Transfers of funding between budgetary funds require City Council appropriation and approval. City Council approval is required for a budget amendment during the fiscal year which may include the use of reserves or fund balances, and approval of appropriations of grant monies. Per Article XIII, Section 1305 of the City Charter, appropriations lapse at the end of each fiscal year; therefore, unencumbered funds allocated for specific projects, donations, and grants require City Council appropriation for use in the following fiscal year.

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Budgetary transfers between accounts or expenditure category may be done through Finance Department or City Manager’s Office approval as long as they are conducted within the legal appropriation control limit set by the City Council.

Independent Audit
The City Charter and State of California statutes require the City to have an annual audit by an independent certified public accountant. The City goes to the market with a formal Request for Proposal for audit services every five years. The accounting firm of Maze & Associates, Certified Public Accountants, was selected by the City Council again in 2021 again after the City conducted a competitive procurement process. This is the first year of audit in the new contract with Maze & Associates. In addition to meeting the requirements set forth in City Charter and State statutes, the audit is designed to meet the requirements of the federal Single Audit Act of 1984, as amended in 1996 and by the recent Uniform Guidance. The auditors' report on the basic financial statements and the supplementary combining statements and schedules are included in the financial section of this report. The auditors' reports related specifically to the single audit are included in a separately issued single audit document on file with the City Clerk’s Office.

MAJOR INITIATIVES
Addressing our Capital Infrastructure
Looking ahead, the City Council took action to adopt a two-year capital investment plan that focuses on our capital infrastructure, supporting the facilities that serve our residents and community. The Biennial Capital Budget totals $588 million and the Five-Year CIP totals $830 million, supporting infrastructure improvements throughout the City. Of this CIP amount, $627 million (76%) funds capital projects for the City’s utilities and there is sufficient funding in the associated utility funds to support these projects. The other projects total $203 million and fund improvements to the parks, trails, libraries, transportation system, storm system, convention center and other City facilities. There are significant funding gaps in these areas and unfunded projects identified in this budget total $571.4 million over the next five years.

This funding gap does not fully represent all the unmet/deferred infrastructure needs throughout the City beyond the five-year CIP period. Long term funding strategies are needed to meet these infrastructure needs as the General Fund does not have sufficient funding to cover these capital costs. Staff will continue to review new funding sources over the next couple years to begin to address the unmet infrastructure needs.

Fiscal Sustainability

The FY 2022/23 General Fund balancing strategy adopted as part of the FY 2021/22 and FY 2022/23 biennial budget remains in place. Because the budget used one-time balancing actions and reserves, additional budget balancing actions will be necessary in the upcoming FY 2023/24 and FY 2024/25 Biennial Operating Budget that will be adopted in June 2023. Based on the latest Ten-Year General Fund Forecast, an ongoing shortfall of approximately $27 million is projected and will be addressed in the next Biennial Operating Budget. A combination of revenue solutions, expenditure reductions and use of reserves is again expected to be used. Work to identify new ongoing sources has been underway, including fiscal sustainability measures for consideration on the November 2022 ballot. These measures will be critical to better position the City moving forward and reduce the level of service disruptions that may be needed to address the budget deficit.

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Development Projects
More than $3 billion in new development projects are on the horizon for Santa Clara in the next few years, with the likelihood of more to come. There are many residential and commercial projects in various stages of planning. While these projects are underway, it is important to note that changes due to COVID-19 has caused some pause to activity as developers learn about the long-term impacts related to community gatherings, engagement, and regulations. Furthermore, the recent fiscal uncertainty with high inflation impacts to construction costs and a sharp interest rates increases resulting in higher borrowing costs creates a potential for a slowdown in economic activity. As these projects are both sensitive to new community requirements and an economic downturn: therefore, flexibility will be required. Below are highlights of a few of the larger projects:

Related Santa Clara Project
The Related Santa Clara Project is envisioned to be an approximately 240-acre, multi-phased urban city development located in the heart of the Silicon Valley. The project will create a new center of activity for the community and region, providing significant mixed-use development, retail offerings, office buildings, hotel rooms, and rental residential dwellings at an urban scale, as well as accessible outdoor spaces and new infrastructure to support the development.

Downtown Master Plan
The City of Santa Clara is in the process of planning for the revitalization of our Downtown by developing a Precise Plan that will provide guidance for new development within a portion of the Downtown Focus Area. Following an initial community engagement effort, three land use scenarios/conceptual plans have been developed. Additional review and testing of the land use/design options, a larger context study to understand compatibility and competition from other large development projects, and an El Camino Real intersection study to understand multi modal connectivity from regional transit to downtown will be performed. This work will focus on market feasibility, retail strategy and connectivity.

Electric Vehicle (EV) Charging
SVP’s EV charging infrastructure will support the City’s conversion to clean energy and prepare for future installations in accordance with California standards. This project meets the City Council’s priority toward sustainability and will expand new EV charging stations throughout the City over the next five years.

Community Park North- Phase I
Per the Developer Agreement, a 34.9-acre parcel, formerly part of the City's golf course, will be developed into Santa Clara’s second community park. This project is funded from a Developer Contribution in the amount $5 million, of which $500,000 is for design and engineering and $4.5 million for construction of Phase I improvements. Phase I will include community outreach, schematic design and design development, and program planning. Phase I improvements will be determined after the community outreach process.

Freedom Circle Mixed Use Project
This project proposes a General Plan Amendment and Re-zoning to Planned Development to construct a mixed-use development project on a 16.6 acre site within the Freedom Circle specific plan area, that consists of 1,018 residential units, 606,968 square feet of office space, 18,653 square feet of commercial DRAFT

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space and 2.5 acres of publicly accessible open space, including bicycle and pedestrian connections to the San Tomas Aquino Creek Trail.

Benton Street Mixed Use Project
Developed by Prometheus, this project currently under construction consists of up to 355 apartment units including eight live-work units, 650 parking spaces, 1,601 square feet of leasing office space, 346 square feet pet spa area,1,528 square feet of bike amenity space, an amenity roof deck with 4,341 square feet of club room and a fitness center, three private courtyards and a public courtyard facing The Alameda. The project includes approximately 22,000 square feet of retail space and potentially an additional 2,364 square feet of commercial space within 8 live-work units.

Kylii Mixed Use Development Project
This project is in review for a General Plan amendment for a nine-parcel property to amend the designation from High-Intensity Office/Research to a newly established mixed-use designation allowing a high-intensity mix of office, commercial, and residential uses. The proposed amendment could support future development on the property. Potential development area includes 3.5 million square feet of office and 6,000 housing units.

FINANCIAL POLICIES
The City has adopted a comprehensive set of financial policies. These policies address items such as budget, cash management, interfund loans, investments, reserves, and debt management. The City Council reviews and approves budgetary policies as part of the annual budget process. Investment and debt policy statements are reviewed and approved by the City Council under separate cover.

AWARDS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement in Excellence in Financial Reporting to the City for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2021. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of state and local government financial reports and is valid for a period of one year only. The City has received this prestigious award for the past thirtieth consecutive years.

To be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. We believe that our current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Programs’ requirements and we are submitting it to GFOA to determine its eligibility for another certificate.

ACKNOWLEDGEMENTS
The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department. We wish to thank all City departments for their assistance in providing the data necessary to prepare this report. Credit and thanks are also due to the Mayor and City DRAFT

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Councilmembers for their unfailing support for maintaining the highest standards of professionalism in the management of the City’s finances.

Respectfully submitted,
______________________________ ______________________________ Rajeev Batra Kenn Lee
City Manager Director of Finance

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xiv

Roster of Council and Commission Members

ROSTER OF COUNCIL AND COMMISSION MEMBERS

CITY COUNCIL

Mayor Lisa M. Gillmor
Councilmember District 1 Kathy Watanabe
Councilmember District 2 Raj Chahal
Councilmember District 3 Karen Hardy
Councilmember District 4 Kevin Park
Councilmember District 5 Sudhanshu “Suds” Jain
Councilmember District 6 Anthony J. Becker

BOARD OF LIBRARY TRUSTEES CIVIL SERVICE COMMISSION

Leonne Broughman, Jan Hintermeister, Stephen
Ricossa, Debbie Tryforos, Jonathan Evans
Tahir Naim, Willie D. Brown Jr., John Casey,
Franklin J. Felizardo, Carolyn G. McAllister,

CULTURAL COMMISSION HISTORICAL AND LANDMARKS

COMMISSION

Candida A. Diaz, Debra von Huene, Jonathan
Marinaro, Paul McNamara, Louis Samara,
Siddarth Sundaram, Jennifer Garcia Vega
Kathleen Romano, Michael Celso, Amy Kirby,
Megan Swartzwelder, Patricia Leung, Ana
Vargas-Smith, Ed Stocks

PLANNING COMMISSION PARKS AND RECREATION COMMISSION

Nancy A. Biagini, Mario Bouza, Ricci Herro,
Qian Huang, Lance Saleme, Priya Cherukuru,
Yashraj Bhatnagar
Burt Field, Sajid Hai, Maureen Reilly Chu, Kelly
Gonzalez, Brittany Ricketts, Eversley Forte,
Dana Caldwell

SENIOR ADVISORY COMMISSION

SALARY SETTING COMMISSION
Wanda Buck, James Hohenshelt, Grant L.

McCauley, Nancy Toledo, Edmund Drozek, Tom
Freitas, Veena Sterling, Judy Hubbard
Eric Chu, Marjorie Banko, MV Kumar, John
Sontag, Ram Misra

YOUTH COMMISSION

Namita Gaidhani (Alternate), Simren Garg, Aarav
Gupta, Fatimah Ismail, Maryam Ismail
(Alternate), Ryan Kim, Jasmine Kelly-Tanti,
Khadeejah Khan, Rajvi Khanjan Shroff, Kira
Liang, Keith Maben, Malia Martin, Samaira
Mehta, Hiranya Parekh, Sudeepthi Ravipati,
Samarth Suresh, Sarah Zuo

DOWNTOWN COMMUNITY TASK FORCE

Butch Coyne, Rob Mayer, Dan Ondrasek,
Mathew Reed, Chan Thai, Adam Thompson,
Ana Vargas-Smith, Atisha Varshney, Debra Von
Huene

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EXECUTIVE MANAGEMENT TEAM

CITY MANAGER
Rajeev Batra

CITY ATTORNEY CITY AUDITOR
James Sanchez (Interim) Vacant

CITY CLERK
Hosam Haggag

CHIEF OPERATING OFFICER
Nadine Nader

ASSISTANT CITY MANAGER CHIEF ELECTRIC UTILITY OFFICER
/ASSISTANT CITY MANAGER
Cynthia Bojorquez Manuel Pineda

CHIEF OF POLICE FIRE CHIEF
Pat Nikolai Ruben Torres

DIRECTOR OF HUMAN RESOURCES DIRECTOR OF FINANCE
Aracely Azevedo Kenn Lee

DIRECTOR OF PARKS & RECREATION DIRECTOR OF INFORMATION TECHNOLOGY James F. Teixeira Gaurav Garg

CITY LIBRARIAN DIRECTOR OF WATER AND SEWER UTILITIES
Patty Wong Gary Welling

DIRECTOR OF PUBLIC WORKS DIRECTOR OF COMMUNITY DEVELOPMENT Craig Mobeck Andrew Crabtree

Executive Management Team
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GFOA Certificate of Achievement

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Organization Chart

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Local Map
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Financial Section
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1 Independent Auditor’s Report on Basic Financial Statements

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2 DRAFT

3 DRAFT

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5 Management’s Discussion and Analysis
MANAGEMENT’S DISCUSSION AND ANALYSIS
The Management’s Discussion and Analysis (MD&A) of the City of Santa Clara’s (City) Annual Comprehensive Financial Report provides an overview of the City’s financial activities for the fiscal year ended June 30, 2022. The intent of this discussion and analysis is to look at the City’s financial performance. Readers should review the discussion and analysis in conjunction with the basic financial statements, as well as the notes to the financial statements to enhance their understanding of the City’s financial performance.

FINANCIAL HIGHLIGHTS
Financial highlights for fiscal year June 30, 2022 are as follows:
 The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources by $2.2 billion in fiscal year 2021-22. Of this amount, $(170) million represents unrestricted net position, an increase of $20 million from fiscal year 2020-21. The deficit is comprised of a negative balance of $283 million for governmental activities and a positive balance of $113 million for business-type activities. The negative net position in governmental activities is primarily due to the net pension liability of $347 million and the net Other Post Employment Benefits (OPEB) liability of $23 million as of June 30, 2022.  The City’s total net position that increased by $198 million includes a $48 million increase in governmental activities primarily from the moderately growing economy since pandemic and a $150 million increase in business-type activities mainly from rate increases in Electric Utility and increased equity in the Sewer Utility joint project equity.  The net pension liability decreased by $151 million or 25.2% during fiscal year 2021-22 to $448 million from $599 million. The changes were mainly due to the increase in investment earnings.

Deferred outflows of resources related to pensions are a $87 million at June 30, 2022, a decrease of $9 million from prior year. Deferred inflows of resources related to pensions are $118 million at June 30, 2022, an increase of $117 million from prior fiscal year. The increase is primarily due to a higher net return on investments from CalPERS. More details on the net pension liability are included in Note 13.
 The net OPEB liability increased by $5 million or 13.9% during fiscal year 2021-22 to $41 million at June 30, 2022 from $36 million in fiscal year 2021-22. More details on the net OPEB liability are included in Note 16.
 The City’s total liabilities, excluding net pension liability and net OPEB liability, increased by $4 million to $1,105 million at June 30, 2022. The increase of the liabilities is mainly due to the $2.6 million lease liabilities from the GASB87 implementation in fiscal year 2021-22. More details on leases are included in Note 4.
 As of June 30, 2022, the City’s governmental funds reported combined fund balances of $325 million, an increase of $8 million from the prior year. At June 30, 2022, $77 million is in the unassigned fund balance and available for spending at the City’s discretion.  At the close of fiscal year 2021-22, the General Fund had assets of $334 million and a fund balance of $141 million. This represents a decrease in fund balance of $37 million, or 20.8% from prior fiscal year. The decrease was mainly due to a fund recategorization for the building permit related activities. The building related development fund balance of $29 million were reclassified to the development service fee fund in Special Revenue Fund category. Of the total fund balance, $111 million was unrestricted (the total of committed, assigned, and unassigned components of fund balance).

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

6  In November 2012, the Santa Clara Stadium Authority (Stadium Authority) elected to adjust its fiscal year to April 1 through March 31 to conform with the fiscal year of Stadium Funding Trust (FinanceCo). This report covers the twelve month period from April 1, 2021 through March 31, 2022. As of March 31, 2022, buildings, infrastructure and land improvements equaled $831 million and the assets of the Stadium Authority exceeded its liabilities by $76 million.  The City’s total outstanding long-term debt decreased by $33 million during the current fiscal year primarily due to the repayment of Stadium Authority debt.

OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the City as a whole. This report consists of six parts – introductory section, financial/MD&A section, basic financial statements, required supplementary information, supplementary information, and statistical section.

The basic financial statements include two types of statements that present different views of the City:
 The Government-wide Financial Statements provide both long-term and short-term information about the City’s overall financial status.
 The Fund Financial Statements focus on individual parts of the government, reporting the City’s operations in more detail than the government-wide statements.

Government-wide Financial Statements
Government-wide statements report information about the City as a whole using accounting methods similar to those used by private-sector companies. They include the Statement of Net Position and the Statement of Activities.

The Statement of Net Position presents information on all of the government’s assets, deferred outflows of resources, liabilities and deferred inflows of resources. Over time, increases or decreases in the City’s net position may serve as an indicator of whether the financial position of the City is improving or deteriorating.

The Statement of Activities provides information about the City’s revenues and expenses, regardless of the timing of related cash flows. The Statement of Activities explains in detail the change in net position for the fiscal year.

The Government-wide Financial Statements are divided into two categories:
 Governmental Activities—all of the City’s basic services are governmental activities. Included in basic services are the City Council, City Manager, City Clerk, City Attorney, Information Technology, Human Resources, Finance, Parks and Recreation, Library, Planning and Inspection, Public Works, Police, and Fire. These services are principally supported by taxes and intergovernmental revenues.
 Business-Type Activities—unlike governmental services, these services are intended to recover all or a significant portion of their costs through user fees and charges. All the City’s enterprise activities are reported as business-type activities, including the Major funds (Electric, Water, DRAFT

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

7 Sewer, Water Recycling utilities, and Stadium Authority) and Non-Major funds (Solid Waste, Cemetery, Santa Clara Convention Center, and Sports and Open Space Authority).

The City is the primary government in this report. These financial statements include four entities that, although legally separate, are important because they are blended component units of the City. These component units are the Santa Clara Stadium Authority, City of Santa Clara Sports and Open Space Authority, the Santa Clara Housing Authority, and the City of Santa Clara Public Facilities Financing Corporation. These component units have been included as an integral part of the City (that is, they have been “blended” with those of the City) and they are not reported as separate discrete component units in these financial statements.

Fund Financial Statements
The Fund Financial Statements provide detailed information about each of the City’s most significant funds, called major funds. Each major fund is presented individually, with all non-major funds combined in a single column on each fund statement. The non-major fund statements are presented in the Supplementary Information section of this report. Major funds present the primary activities of the City for the year and may change from year to year as a result of changes in the pattern of the City’s activities.

All the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental Funds: Most of the City’s basic services are included in Governmental Funds which focus on how money flows into and out of these funds and the balance left at fiscal year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental funds statements provide a detailed short-term view of the City’s general governmental operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. Because the focus of governmental funds is narrower than that of the Government-wide Financial Statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the Government-wide Financial Statements.

By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

Proprietary Funds: Enterprise and Internal Service Fund Financial Statements are prepared on the full accrual basis of accounting, similar to that used by private sector companies. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Revenues, Expenses, and Changes in Net Position. The City’s Proprietary Funds are the same as the business-type activities reported in the Government-wide Statements but provide more detail and additional information, such as cash flows.

Since the City’s Internal Service Funds provide goods and services only to the City’s governmental and business-type activities, their activities are only reported at the fund level. Internal Service Funds cannot be considered major funds because their revenues are derived from other City funds. Revenues between funds are eliminated in the Government-wide Financial Statements and any related profits or losses are returned to the activities in which they were created, along with any residual net position of the Internal Service Funds.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

8 Fiduciary Funds: Fiduciary Funds are prepared on the full accrual basis, similar to the Proprietary Funds.

The City has three types of Fiduciary Funds: the Custodial Funds (which includes Employee Supplemental Funds, Special Assessments, and Custodial Deposits), and the Private Purpose Trust Funds (which includes the Charitable Trust and Successor Agency). The City’s fiduciary activities are reported separately in the Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position. These activities are excluded from the City’s Financial Statements because the City cannot use these assets to finance its own operations.

Notes to the Financial Statements
The notes provide additional information that is necessary to acquire a full understanding of the data provided in the Government-wide and Fund Financial Statements. The Notes to the Financial Statements follow the basic financial statements.

Other information
In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information. This information includes budgetary comparison schedules and the City’s progress in funding its obligation to provide pension and other post-employment benefits to its employees. Required supplementary information can be found immediately following the Notes to the Financial Statements.

GOVERNMENT-WIDE FINANCIAL STATEMENTS ANALYSIS
Citywide Financial Statements
This section focuses on the City’s net position and changes in net position of its governmental and business-type activities for the fiscal year ending June 30, 2022. As noted earlier, the City’s total assets and deferred outflows of resources exceed total liabilities and deferred inflows of resources by $2.2 billion at the end of the fiscal year, an increase in net position of $198 million.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

9 2022 2021* 2022 2021* 2022 2021*
Cash and investments 371$ 346$ 688$ 702$ 1,059$ 1,048$ Other assets 306 144 547 364 853 508 Capital assets 637 640 1,461 1,445 2,098 2,085 Total Assets 1,314 1,130 2,696 2,511 4,010 3,641 Deferred outflows from refunding - - 6 7 6 7 Deferred outflows OPEB related 2 1 2 1 4 2 Deferred outflows pension related 69 76 18 20 87 96 - - Total Deferred Outflows
of Resources 71 77 26 28 97 105 12 14 451 482 463 496 Net OPEB liability 23 20 18 16 41 36 Net pension liability 347 464 101 135 448 599 Other liabilities 89 93 552 512 641 605 Total Liabilities 471 591 1,122 1,145 1,593 1,736 - - 42 13 42 13 Deferred inflows from refunding - - 2 2 2 2 Deferred inflows Lease-related 159 - 4 - 163 - Deferred inflows OPEB related 2 3 1 3 3 6 Deferred inflows pension related 93 1 25 - 118 1 Total Deferred Inflows
of Resources 254 4 74 18 328 22 Net investment in capital assets 626 626 1,080 1,042 1,706 1,668 Restricted 317 276 333 234 650 510 Unrestricted (283) (290) 113 100 (170) (190) Total Net Position 660$ 612$ 1,526$ 1,376$ 2,186$ 1,988$ Table 1
Governmental And Business-Type Net Position
(in millions)
Governmental Activities
Long-term debt outstanding
Business-Type Activities Total
* Not restated for the implementation of GASB Statement No. 87, Leases, discussed in Notes 2C and 4.

Deferred inflows on derivative
instruments

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

10 The largest portion of the City’s net position, $1.7 billion (78%), is its investment in capital assets (e.g., land, infrastructure, buildings, machinery and equipment), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide services to its residents and other stakeholders. Accordingly, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, the resources needed to repay this debt must be provided from other sources because the capital assets themselves cannot be used to liquidate these liabilities.

The restricted portion of the City’s net position of $650 million (30%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $(170) million (-8%) is unrestricted and is negative due to the City’s net pension and OPEB liabilities.

At the end of the current fiscal year, the City is able to report positive balances in all reported categories of net position except for the Information Technology Services Internal Service Fund, Workers’ Compensation Insurance Claims Internal Service Fund, Special Liability Insurance Claims Internal Service Fund, and Solid Waste Enterprise Fund.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

11 2022 2021 2022 2021 2022 2021
48$ 33$ 889$ 666$ 937$ 699$ 34 17 - - 34 17 6 12 1 3 7 15 57 56 - - 57 56 74 68 - - 74 68 11 3 - - 11 3 7 6 - - 7 6 27 25 - - 27 25 6 6 12 14 18 20 (14) (5) (27) (6) (41) (11) - - 14 1 14 1 7 10 - - 7 10 Other 59 25 - - 59 25 322 256 889 678 1,211 934 38 34 - - 38 34 1 1 - - 1 1 2 2 - - 2 2 2 2 - - 2 2 10 10 - - 10 10 39 42 - - 39 42 20 20 - - 20 20 72 88 - - 72 88 58 71 - - 58 71 15 16 - - 15 16 11 11 - - 11 11 - - 552 455 552 455 - - 46 45 46 45 - - 30 30 30 30 - - 6 6 6 6 - - 33 30 33 30 - - 1 1 1 1 - - 12 5 12 5 - - 65 41 65 41 268 297 745 613 1,013 910 54 (41) 144 65 198 24 (6) (6) 6 6 - - 48 (47) 150 71 198 24 Change in accounting principal - 9 - - - 9 612 650 1,376 1,305 1,988 1,955 660$ 612$ 1,526$ 1,376$ 2,186$ 1,988$ Net position - July 1, as restated
Net position - June 30
Santa Clara Stadium Authority
Increase(decrease) in net position before transfers
Increase (decrease) in net position
Total expenses
Water
Sewer
Transfers in (out)
Water Recycling
Solid Waste
Cemetery
Equity in income (losses) of joint ventures
Library
Utilities:

Electric
General revenues:

Taxes:

Transient occupancy
Other
Ad valorem property
Sales
Capital grants and contributions
Operating grants and contributions
Revenues:

Program revenues:

Activities
Charges for services
Activities Total
Table 2
Governmental and Business-Type Changes in Net Position
(in millions)
Governmental Business-Type
Contribution in lieu of taxes
Investment earnings
Net increase (decrease) in fair value of investments
Planning and Inspection
Finance
Public Works
Parks and Recreation
Public Safety:

Police
Fire
Rents and royalties
Total revenues
Expenses:

General Administration
City Clerk
City Attorney
Human Resources
Santa Clara Convention Center

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

12 Governmental Activities - governmental activities increased the City’s net position by $48 million. The increase was due to receipt of one-time $26 million Coronavirus State and Local Fiscal Recovery revenues and $18 million of impact fee revenues from significant development projects in the City.

Business-type Activities - business-type activities increased the City’s net position by $150 million. This is primarily due to an increase of $55 million in the Electric Utility as a result of increased developer contributions and increases in the joint venture equity and an $82 million equity increase in the Sewer Utility joint project.

Governmental Activities
The chart below presents revenues by source for Governmental Activities. General revenues are composed of taxes and other revenues not specifically generated by, or restricted to, individual activities.

All tax revenues and investment earnings are included in general revenues.

Sales taxes
17% Ad valorem property taxes
22%
Transient occupancy taxes
3%
Other taxes
2%
Investment earnings
2%
Contribution in lieu
8%
Rents and royalties
2%Program revenues
27%
Other revenues
17%
Sources of Revenue

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

13 The following analysis presents a comparison of fiscal year 2021-22 and fiscal year 2020-21 by the total cost and net cost of each of the City’s largest programs. Net cost is defined as total program cost less the revenues generated by those specific activities. It is common to see Governmental Activities as net cost generators, wherein costs of governmental activities are greater than the revenues they generate.

Total Cost
of Services
2022 2021 2022 2021
General Administration 38$ 34$ -$ 26$ City Clerk 1 1 1 1 City Attorney 2 2 2 2 Human Resources 2 2 2 2 Finance 10 10 10 10 Public Works 39 42 24 15 Parks and Recreation 20 20 18 19 Public Safety:

Police 72 88 70 86 Fire 58 71 49 63 Planning and Inspection 15 16 (6) (1) Library 11 11 11 11 Totals 268$ 297$ 181$ 234$ of Services
Net Cost
Table 3
Governmental Activities
(in millions)

In fiscal year 2021-22, total cost of services decreased $29 million and net cost decreased $53 million.

The total cost of services in General Administration were $38 million, an increase of $4 million from fiscal year 2020-21, and the net total cost of services in the General Administration were $448 thousand, a decrease of $26 million from the prior fiscal year. The decrease in the General Administration net cost of services is due primarily to the $26 million of federal stimulus funds that was used to continue critical essential public safety services. The total cost of services in Public Safety was $130 million, a decrease of $29 million from fiscal year 2020-21 and the decrease is mainly attributed to the $26 million decrease in the CalPERS pension expenditure due to higher investments earnings.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

14 Business-type Activities
The following analysis provides the total costs and net costs of each of the City’s enterprise funds. Net cost is defined as total program cost less the revenues generated by each enterprise fund.

Total Cost
of Services
2022 2021 2022 2021
Utilities:

Electric 552 $ 456 $ (59)$ (72)$ Water 46 45 (6) (7) Sewer 30 30 (86) 14 Water Recycling 6 6 - - Solid Waste 33 30 (2) 3 Cemetery 1 1 - 1 Santa Clara Convention Center 12 5 3 3 Santa Clara Stadium Authority 65 41 6 2 Totals 745 $ 614 $ (144)$ (56)$ of Services
Table 4
Business-Type Activities
(in millions)
Net Cost

The City’s business-type total cost of services increased $131 million and net cost of services decreased $88 million in fiscal year 2021-22. The net cost of services for the Sewer Utility were ($86) million, a decrease of $100 million from the prior year. This net cost decrease can mainly be attributed to the equity increase in the sewer joint project with City of San Jose. The total cost of services in the Electric Utility Fund increased by $96 million were due to higher costs of resource purchases.

FUND FINANCIAL STATEMENTS
Financial Analysis of Governmental Funds
The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose.

At June 30, 2022, the City’s governmental funds reported a combined fund balance of $325 million, an increase of $8 million or 2.7% in comparison with the prior fiscal year. Approximately 23.6% or $77 million constitutes unassigned fund balance, which is available for spending at the City’s discretion. The remainder of the fund balance is either nonspendable, restricted, committed, or assigned to indicate that it DRAFT

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

15 is 1) not in spendable form, $7 million, 2) restricted for particular purposes, $133 million, 3) committed for particular purposes, $98 million, or 4) assigned for particular purposes, $10 million.

Governmental fund revenues were $322 million, an increase of $62 million, or 23.9%, from $260 million in the prior year. Most of this increase is attributed to $26 million of Coronavirus State and Local Fiscal Recovery fund revenues and a $18 million increase in the impact fees revenues due to the significant development projects in the City.

Governmental fund expenditures were $303 million, a slight increase of $5 million or 1.7% from the prior year. The increase is net effect of the $16 million increase in the Citywide departments and $11 million decrease in the capital outlay.

General Fund

Revenues
The City’s General Fund revenues totaled $221 million in fiscal year 2021-22, a decrease of $5 million or

2.2% from the prior fiscal year.

Sales tax accounts for approximately 25.7% of direct General Fund revenues. Sales tax revenue increased $1 million from the prior year to $57 million with the roll out of mass vaccinations and the lifting of pandemic-related restrictions. However, sales tax revenue was still $8 million lower than pre-pandemic levels.

Property tax (ad valorem) is the largest revenue source of General Fund revenues. For fiscal year 2021- 22 were $75 million, an increase of $6 million or 8.7% from the prior year. The increase is a result of growth in the assessed valuation on secured properties and the value of new construction projects being added to the tax roll.

Transient occupancy taxes (TOT) is calculated as a percentage of City hotel/motel room charges. The City Council approved a rate increase from 9.5% to 11.5% effective January 1, 2022. This implemented one-half of the up to four percentage point increase approved by the voters in November 2020. Due to COVID-19 safety restrictions, TOT plummeted at the end of fiscal year 2019-20 and through fiscal year 2020-21. In fiscal year 2021-22, the TOT revenues were $11 million, an $8 million or 166.6% increase over fiscal year 2020-21. However, it remains well below pre-COVID-19 levels.

Licenses, permits, fines and penalties revenues excluding building related activities were $5.4 million in business licenses, parking permit, and miscellaneous permit in fiscal year 2021-22 compared to $3.1 million in the previous year. The 74.1% increase is the result of a moderately growing local economy and the significant decline due to COVID-19 in fiscal year 2019-20 and 2020-21. Starting in fiscal year 2021- 22, the building development related permits are reflected in a separate Building Development Services Fund.

Intergovernmental revenues were $3.1 million in fiscal year 2021-22 compared to $2.8 million in the previous year. The increase is due to a one-time ARPA employer credit because of the Supplemental Paid Sick Leave requirements during the pandemic.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

16 Charges for service, which excludes building development related activities, totaled $37 million in fiscal year 2021-22 compared to $30 million in the prior fiscal year, an increase of 23.3%. This increase is largely attributed to the recovery in parks and recreation services and stadium related reimbursements.

Contributions in-lieu of taxes were approximately $27 million in fiscal year 2021-22, a $2 million increase from the prior fiscal year. The increase is due to an increase in the consumption and retail rates.

Interest and rent revenues were $12 million in fiscal year 2021-22, a $3 million decrease from the prior fiscal year due to lower interest rates and cash balances.

Expenditures
General Fund expenditures totaled $210 million for fiscal year 2021-22, the same as the prior fiscal year.

This amount excludes encumbrances, re-appropriations, and building related activities.

Salaries and benefits expenditures were $161 million in fiscal year 2021-22 compared with $184 million in fiscal year 2020-21 primarily due to a significant decrease in CalPERS pension expenditures resulting from higher investment earnings.

Other operating expenditures, including materials, services, and supplies, internal service fund charges and minor capital outlays, were $49 million in fiscal year 2021-22, a decrease of $4 million from the prior fiscal year. The decrease is primarily due to a $4 million construction loan disbursement to the Agrihood project developer in the previous fiscal year.

The uses of the other financing sources for fiscal year 2021-22 were $48 million, an $18 million increase from the prior fiscal year. The increase is primarily due to a one time building inspection reserve transfer to the newly established New Development Service Fee fund.

Fund Balance
As of June 30, 2022, total fund balance in the General Fund was $141 million, down $37 million from fiscal year 2020-21. Table 5A shows the breakdown of various components compared with the prior fiscal year.
2022 2021 Net Change
Nonspendable 7 $ 14 $ (7) $
Restricted 23 26 (3)
Committed 24 40 (16)
Assigned 10 7 3
Unassigned 77 91 (14)
Total General Fund Balance 141 $ 178 $ (37) $ Table 5A
General Fund Balance for the Fiscal Year Ended June 30, 2022 (in millions)

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

17 General Fund Budgetary Highlights
The City’s budget is a flexible-spending plan, which commits resources to the accomplishment of City Council goals and objectives. During the fiscal year, the City Council took action to amend the adopted General Fund budget. A summary of the budgetary comparison schedule for the General Fund, located in the required supplementary information following the notes to the financial statements, is shown in the following table:

Original Budget Compared to Final Budget

Original Final
Budgeted Budgeted Net
Amount Amount Change
Revenues $ 250 $ 227 $ (23)
Expenditures $ 247 $ 224 $ (23)
Other financing sources (uses) $ (35) $ (40) $ (5) General Fund Budget for the Fiscal Year Ended June 30, 2022 Table 5B
(in millions)

Adjustments to the original budget were based on the following:
 The $23 million decrease in budgeted revenues is mainly due to a one-time transfer of the budgeted Coronavirus State and Local Fiscal Recovery funds to the American Rescue Plan Act Fund to account for the public safety salary expenditures to the extent of the revenue loss due to the pandemic.
 The decrease in budgeted expenditures is primarily due to a $26 million budget expenditure transfer from the General Fund to the American Rescue Plan Act Fund to account for the public safety salary expenditures to the extent of the revenue loss due to the pandemic.  The increase in budgeted Other Financing Uses is primarily due to a $4.3 million Building Inspection Reserve remaining balance transfer to the New Development Services Fee fund and $1.9 million transfer to the Public Right-of-Way ADA improvement project.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

18 Final Budget Versus Actual
Final
Budgeted Actual
Amount Amount Variance
Revenues 227 $ 232 $ 5 $
Expenditures 224 $ 209 $ (15) $
Other financing sources (uses) (40) $ (40) $ - $ General Fund Final Budget Versus Actual for the Fiscal Year Ended June 30, 2022 Table 5C
(in millions)

The most significant differences between actual and final budgeted amounts are explained as follows:
 The final budgeted revenues resulted in a $5 million positive variance mainly due to a $3 million increase in the ad valorem taxes and $2 million increase in TOT.  Actual expenditures were $15 million lower than the final budget as a result of lower departmental costs. See the General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget Actual (Non-GAAP Basis) for additional details.

Santa Clara Housing Successor
The Santa Clara Housing Successor (SCHS) Fund accounts for the activities related to the housing assets assumed by the City as Housing Successor to the Redevelopment Agency. The activities are governed by Community Redevelopment Law and must be used to provide housing for people with low and moderate incomes.

The SCHS’s revenues were approximately $6.5 million in fiscal year 2021-22. An increase of $5.2 million in prepaid lease revenues is primarily the result of development of land held many years for redevelopment. The other revenues of $1.1 million received were mostly loan repayments on low income loans. The general expenditures were $612 thousand, 10% lower than the prior year. Expenditures are for case management services offered to persons experiencing (or at risk of) homelessness, on-going administration and labor cost related to developing land held for development of affordable housing, and managing and monitoring assets.

Non-Major Governmental Funds
These funds are not presented separately in the Basic Financial statements but are individually presented in the Supplemental Information section of this report.

Financial Analysis of Enterprise Funds
Enterprise Fund net position totaled $1.5 billion at the end of fiscal year 2021-22, an increase of $149 million or 9.8% over the prior fiscal year. The increase is mainly from the Sewer Utility Fund and Electric Utility Fund. An $82 million increase in the Sewer Utility Fund is attributed to a $83 million DRAFT

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

19 increase in the Sewer Utility joint project equity with the City of San Jose. The $55 million increase in the Electric Utility Fund was due to a $29 million increase in developer contribution in various development projects in the City and a $13 million increase in the joint venture equity in the Electric Utility Fund.

The change in the equity in joint venture in fiscal year 2021-22 was a gain of $70 million, compared to a $27 million loss in the previous fiscal year. This increase of $97 million is mostly due to $83 million increased equity loss in the San Jose Santa Clara Joint Wastewater Treatment Facility project. Not including the joint venture activity and net change in the fair value of the investment, non-operating expenses in fiscal year 2021-22 were $18 million, a decrease of $1 million from the previous fiscal year.

Electric Utility

This fund accounts for the operation of the City’s electric utility services. Charges for Services revenues were $502 million in fiscal year 2021-22 compared with $453 million in fiscal year 2021-22. The main reason for this increase was due to a 3% rate increase effective January 1, 2022 and increased consumption.

Retail operating expenses were $526 million in fiscal year 2021-22 compared with $432 million in fiscal year 2020-21, an increase of $94 million or 21.8%. Operating expenses were higher primarily due to high prices for purchased resources.

Revenues of wholesale power operations increased to $36 million in the current fiscal year, up from $22 million in fiscal year 2020-21. The costs of wholesale power purchases increased to $18 million from $12 million in the prior fiscal year. The increase in wholesale power sales and purchases in fiscal year 2021- 22 was due to the overall high priced resource market.

Interest revenues was $6 million in fiscal year 2021
-22, down from $7 million in fiscal year 2021-22 due
primarily to a lower interest rate environment. Interest expense was $3 million in the current year, which decreased by $1 million from fiscal year 2020-21. The decrease of interest expenses in fiscal year 2021- 22 was due to lower interest payments on refunded Electric bonds.

The Electric Utility Fund had a net position of $971 million at June 30, 2022, an increase of $56 million from the prior fiscal year. Of this amount, $510 million was net investment in capital assets, $8 million was restricted for contractual obligation, and $453 million was unrestricted. The Electric Utility Fund is a participant in a number of joint ventures including Northern California Power Agency (NCPA), the Transmission Agency of Northern California (TANC), M-S-R Public Power Agency (MSR PPA), and M- S-R Energy Authority (MSR EA).

Water Utility
This fund accounts for the operation of the City’s water utility services. Operating revenues were $51 million for fiscal year 2021-22 which is consistent with the prior fiscal year.

Operating expenses were $46 million in fiscal year 2021-22, compared to $45 million in fiscal year 2020-

21. The increase is primarily due to higher maintenance cost which includes repairs for aging wells and permit fees. The Water Utility Fund’s net position had a net position of $76 million at June 30, 2022.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

20 Sewer Utility
This fund accounts for the maintenance of the City’s sewer lines and related facilities. Operating revenues of the Sewer Utility increased from $43 million in fiscal year 2020-21 to $59 million in the current year.

This increase is due to increased revenue earned for Sewer Conveyance fees, increased customer service revenue and reimbursements of operation and maintenance fees paid in the prior fiscal year.

Operating expenses were $30 million in fiscal year 2021-22, which was consistent with prior fiscal year.

The Sewer Utility Fund had a net position of $367 million at June 30, 2022. Of this amount, $32 million was net investment in capital assets, $281 million was restricted for joint venture capital projects and $54 million was unrestricted. The Sewer Utility, together with the City of San Jose, owns the San Jose/Santa Clara Regional Wastewater Facility which is administered by the City of San Jose. The Sewer Utility’s ownership share is approximately 19.461% of the assets, capital and operating costs. In fiscal year 2020- 21, the City of San Jose reported that the gain of the Utility’s equity in the Regional Wastewater Facility was $55 million (fiscal year 2021-22 amounts were not available at the time of this report).

Water Recycling

This fund accounts for the ongoing maintenance and operations of the City’s wastewater reclamation system. Operating revenues and expenses remained at the prior fiscal year amount of $6 million. The net position at June 30, 2022 is $6 million.

Santa Clara Stadium Authority (Stadium Authority)
These funds account for the development and operation of Levi’s Stadium. As of March 31, 2022, the Stadium Authority recorded approximately $58 million in operating revenue, $20 million more than prior year. This was mainly due to increase in charges for services from NFL games and smaller special events being held and increase in rents and licenses. Operating expenses were $50 million, increasing $24 million from the prior fiscal year. This increase is primarily because, pursuant to the August 31, 2022 Settlement Agreement between StadCo, ManagementCo, and Stadium Authority, Stadium Authority paid shared stadium expenses and other expenses from prior fiscal years’ that were previously withheld from payment. Net position at March 31, 2022 was $76 million, a decrease of $2 million from the previous fiscal year. Refer to Note 6.

Solid Waste

This fund accounts for the administration of the City’s garbage and rubbish collection service. Operating revenues were $35 million in fiscal year 2021-22, an increase of $8 million from the prior fiscal year.

The increase was due to a solid waste rate increase effective July 1, 2021. Operating expenses were $33 million in fiscal year 2021-22, an increase of 10% from fiscal year 2020-21. This was due to cost increase of refuse service providers. This fund has a deficit net position of $800 thousand.

Cemetery
This fund accounts for the Mission City Memorial Park’s operations. Operating revenues were $1.0 million, 18% higher than the prior fiscal year. Operating expenses remained consistent with the prior year at $1.4 million. Net position at June 30, 2022 was $2.5 million. This fund has historically run a deficit in its operation and capital activities, however, in the current fiscal year, the write-off of the advances of DRAFT

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

21 $7.1 million from the General Fund to the Cemetery Fund was approved by Council in May 2022. It was determined that the potential repayment of these advances is unlikely in the City’s ten-year General Fund Forecast due to the limited revenue sources from the Cemetery Fund.

Santa Clara Convention Center
This fund accounts for the operations of the Santa Clara Convention Center. Operating revenues were $8.5 million in fiscal year 2021-22, while operating expenses were $11.8 million. Net position at June 30, 2022 was $25 million. On November 1, 2019, the City entered into an agreement with Levy Premium Foodservice Limited Partnership (Levy) to manage the foodservice operations at the Convention Center and Levy agreed to pay an operating investment of $5.75 million to promote the economic development of the City. The investment is amortized on a straight-line basis over 15 years.

Sports and Open Space Authority (SOSA)

This fund accounts for the acquisition and preservation of open space within the City and the development of local sports activities. There were no operating revenues in fiscal year 2021-22 due to the expiration of the operating lease. Operating expenses were $9 thousand, with a net position at June 30, 2022 of $2 million.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

22 CAPITAL ASSETS
At June 30, 2022, the City’s capital assets totaled $637 million in Governmental Activities, and $1.46 billion in Business-Type Activities, net of depreciation. Capital Assets are invested in a broad range of categories, as shown in Table 6.
2022 2021 Net Change
Governmental Activities:

Land 125$ 125$ -$
Construction in progress 52 46 6 Land improvements 29 29 - Buildings 217 217 -
Infrastructure 624 611 13 Machinery and equipment 85 84 1 Right-to-use leased Equipment 1 - 1 Less accumulated depreciation (496) (472) (24) Totals 637$ 640$ (3)$
Business-Type Activities:

Land 19$ 19$ -$
Construction in progress 64 109 (45) Land improvements - - - Buildings 918 919 (1)
Right-to-use leased building 3 -
Infrastructure 1,223 1,118 105 Machinery and equipment 26 24 2 Less accumulated depreciation (790) (744) (46) Totals 1,463$ 1,445$ 18$
Table 6
Capital Assets at June 30, 2022
(in millions)

The increase of $20 million in the Governmental Funds asset base was primarily due to $12.5 million in improvement in street and sidewalk/curb infrastructure and $0.5 million of Contributed Infrastructure from various developers. The $105 million increase in Enterprise Funds infrastructure is mainly due to $91 million in Electric infrastructure improvements in substation and transformer projects and a $9 million tank rehabilitation water project.

The Capital Improvement Project Budget for fiscal year 2021-22 and the Five-Year Financial Plan for fiscal year 2021-22 through fiscal year 2025-26 contain more detailed discussions of Capital Projects planned for the City of Santa Clara. See Note 9 to the financial statements for additional details on fiscal year 2021-22 capital assets.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

23 DEBT ADMINISTRATION
Each of the City’s debt issues is discussed in detail in Note 10 to the financial statements. At June 30, 2022 the City’s debt was comprised of the following:

Balance Balance
Governmental Activity Debt: June 30, 2022 June 30, 2021 Net Change Refunding Certificates of Participation, Series 2013 12$ 14$ (2) $ Santa Clara Public Facilities Financing Corporation - 1 (1) Business-Type Debt:

Electric Utility Revenue Bonds, net of unamortized discount 44 53 (9) Electric Loan Agreements 99 103 (4) Sewer Utility Loan Agreements 28 28 - StadCo Subordinated Loan(1)
20 23 (3)
StadCo CFD Advance (1)
30 30 -
Stadium Funding Trust Loan(1)
230 244 (14)
Total Debt 463$ 496$ (33) $
(1) Stadium Authority's long-term obligations are based on a March 31 fiscal year end.

Table 7
Outstanding Debt at June 30, 2022
(in millions)
Lease Agreement Between City of Santa Clara and City of

SUCCESSOR AGENCY
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (AB 26) that provided for the dissolution of all redevelopment agencies in the State of California. On February 1, 2012 all redevelopment agencies in California were effectively dissolved. The Successor Agency for the Santa Clara Redevelopment Agency is currently in the process of winding down the affairs of the former Redevelopment Agency.

See Notes 21 and 22 for further information on the Redevelopment Agency dissolution and Successor Agency activities.

ECONOMIC OUTLOOK
The economy of the City is discussed in the accompanying Transmittal Letter.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

24 CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This Annual Comprehensive Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances. A separate Annual Financial Report for Silicon Valley Power is available upon request. Questions about this Report should be directed to the City of Santa Clara Finance Department, 1500 Warburton Avenue, Santa Clara, California, 95050, telephone (408) 615-2340.

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Basic Financial Statements

DRAFT

27 See accompanying notes to basic financial statements

CITY OF SANTA CLARA

GOVERNMENT-WIDE FINANCIAL STATEMENTS

STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire City’s financial activities and financial position. They are prepared on the same basis as is used by most businesses, which means they include all the City’s assets and deferred outflows of resources and all its liabilities and deferred inflows of resources, as well as all its revenues and expenses. This is known as the full accrual basis—the effect of all the City’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between City funds have been eliminated.

The Statement of Net Position reports the excess of the City’s total assets and deferred outflows of resources over the City’s total liabilities and deferred inflows of resources, including all the City’s capital assets and all its long-term debt. The Statement of Net Position presents similar information to the balance sheet format, but presents it in a way that focuses the reader on the composition of the City’s net position, by subtracting total liabilities and deferred inflows from total assets and deferred outflows.

The Statement of Net Position summarizes the financial position of all the City’s Governmental Activities in a single column, and the financial position of all the City’s Business-Type Activities in a single column; these columns are followed by a total column that presents the financial position of the entire City.

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

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

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

Both these Statements include the financial activities of the City, the Santa Clara Housing Authority, the Santa Clara Stadium Authority, the City of Santa Clara Sports and Open Space Authority, and the City of Santa Clara Public Facilities Financing Corporation, which are legally separate but are component units of the City.

DRAFT

28 See accompanying notes to basic financial statements

Governmental Business-Type
Activities Activities Total
ASSETS
Current Assets
Cash and investments (Note 7):

Pooled cash and investments 346,413,842$ 600,745,212$ 947,159,054$ Investments with fiscal agent 19 42,200,131 42,200,150 Receivables (net of allowance for uncollectible):

Accounts 6,922,685 137,313,513 144,236,198 Interest 1,272,522 2,024,673 3,297,195 Intergovernmental 11,152,021 - 11,152,021 Leases receivable (Note 4) 3,273,612 294,014 3,567,626 Derivative financial instruments (Note 10D) - 15,462,094 15,462,094 Materials, supplies and prepaid 569,714 16,221,025 16,790,739 Land held for development (Note 2H) 7,103,770 - 7,103,770 Total Current Assets 376,708,185 814,260,662 1,190,968,847 Noncurrent Assets
Restricted Cash (Note 7) 23,674,093 10,409,276 34,083,369 Investment with fiscal agent (Note 7) 704,235 15,442,566 16,146,801 Derivative financial instruments (Note 10D) - 26,724,615 26,724,615 Deposits (Note 7) - 19,518,954 19,518,954 Leases receivable, noncurrent (Note 4) 157,205,016 4,241,507 161,446,523 Internal balances (Note 8D) (4,050,946) 4,055,736 4,790 Long term loans, net (Note 2BB) 109,866,605 - 109,866,605 Capital assets (Note 9):

Land and construction in progress 176,775,304 83,188,944 259,964,248 Capital assets being depreciated, net 460,691,042 1,378,244,281 1,838,935,323 Right-to-use leased assets, net of amortization (Note 9) 464,043 2,243,556 2,707,599 Investment in joint ventures (Note 12) 5,485,729 337,569,782 343,055,511 Other 6,933,120 - 6,933,120 Total Noncurrent Assets 937,748,241 1,881,639,217 2,819,387,458 Total Assets 1,314,456,426 2,695,899,879 4,010,356,305

DEFERRED OUTFLOWS OF RESOURCES
Derivative instruments (Note 10D) - 164,564 164,564 Refunding - 6,192,411 6,192,411 OPEB related items (Note 16) 2,101,869 1,666,272 3,768,141 Pension related items (Note 13) 68,528,151 17,821,271 86,349,422 Total Deferred Outflows of Resources 70,630,020 25,844,518 96,474,538

CITY OF SANTA CLARA

STATEMENT OF NET POSITION
June 30, 2022

Statement of Net Position
DRAFT

29 See accompanying notes to basic financial statements

Governmental Business-Type
Activities Activities Total

LIABILITIES
Current Liabilities
Accrued liabilities 41,195,390 73,938,880 115,134,270 Deposits 3,922,251 - 3,922,251 Interest payable 229,551 7,579,143 7,808,694 Accrued compensated absences (Note 2K) 2,334,554 937,242 3,271,796 Unearned revenue, current portion 328,031 22,055,429 22,383,460 Landfill closure liability (Note 11) - 743,000 743,000 Derivative financial instruments (Note 10D) - 164,564 164,564 Current portion of lease obligation (Note 4) 212,291 654,044 866,335 Long-term debt due within one year (Note 10) 980,000 33,992,474 34,972,474 Total Current Liabilities 49,202,068 140,064,776 189,266,844 Noncurrent Liabilities
Long-term portion estimated claims (Note 19) 23,919,000 - 23,919,000 Accrued compensated absences (Note 2K) 18,066,150 7,252,930 25,319,080 Landfill closure liabilities (Note 11) - 5,462,986 5,462,986 Accrued liabilities - 6,665,679 6,665,679 Unearned revenue - 425,271,742 425,271,742 Long-term lease obligation (Note 4) 252,118 1,632,622 1,884,740 Long-term debt due after one year (Note 10) 10,614,394 416,734,697 427,349,091 Net OPEB liability due after one year (Note 16) 22,543,241 17,871,320 40,414,561 Net pension liability due after one year (Note 13) 347,165,409 100,639,137 447,804,546 Total Noncurrent Liabilities 422,560,312 981,531,113 1,404,091,425 Total Liabilities 471,762,380 1,121,595,889 1,593,358,269

DEFERRED INFLOWS OF RESOURCES
Derivative instruments (Note 10D) - 42,186,709 42,186,709 Refunding - 1,537,064 1,537,064 Leases related (Note 4) 159,081,393 4,450,848 163,532,241 OPEB related items (Note 16) 1,604,372 1,271,887 2,876,259 Pension related items (Note 13) 92,967,447 25,104,892 118,072,339 Total Deferred Inflows of Resources 253,653,212 74,551,400 328,204,612 NET POSITION (Note 18)
Net investment in capital assets 625,871,952 1,079,606,407 1,705,478,359 Restricted for:

Capital projects and other agreements 111,776,171 324,662,275 436,438,446 Debt service 493,129 - 493,129 Housing activities 146,668,792 - 146,668,792 Community development 29,261,410 - 29,261,410 Transportation 2,118,981 - 2,118,981 Pension rate stabilization program 21,367,474 8,406,849 29,774,323 Other purposes 5,604,479 - 5,604,479 Total Restricted Net Position 317,290,436 333,069,124 650,359,560 Unrestricted Net Position (283,491,534) 112,921,577 (170,569,957) Total Net Position 659,670,854$ 1,525,597,108$ 2,185,267,962$

CITY OF SANTA CLARA

STATEMENT OF NET POSITION
June 30, 2022
DRAFT

30 See accompanying notes to basic financial statements

Indirect Operating Capital
Expenses Charges for Grants and Grants and
Functions/Programs Expenses Allocation Services Contributions Contributions Governmental Activities:

General Administration 42,905,771$ (5,230,301)$ 9,591,522$ 28,298,690$ 232,867$ City Clerk 1,545,540 (374,054) 26,669 - - City Attorney 2,522,173 (443,324) - - - Human Resources 3,743,554 (1,607,048) - - - Finance 16,518,530 (6,192,675) 33,475 - - Public Works 41,065,819 (2,228,910) 7,340,089 1,848,248 5,838,629 Parks and Recreation 20,519,782 - 2,048,964 235,919 - Public Safety:

Police 71,598,214 (23,396) 986,969 695,251 - Fire 58,116,819 - 6,881,002 2,590,544 - Planning and Inspection 15,486,627 - 21,273,695 279,148 - Library 10,925,423 - 14,780 112,392 - Interest on long term debt 407,527 - - - - Total Governmental Activities 285,355,779 (16,099,708) 48,197,165 34,060,192 6,071,496 Business-type Activities:

Utilities:

Electric 544,451,641 8,101,104 611,549,099 - - Water 42,755,929 2,821,602 51,604,585 - - Sewer 29,124,849 1,397,991 116,443,513 - - Water Recycling 5,610,188 89,984 6,072,084 - - Solid Waste 31,065,717 1,931,017 34,850,904 - - Cemetery 1,219,867 129,713 1,023,685 - - Sports and Open Space Authority 9,163 - - - - Santa Clara Convention Center 11,829,475 - 8,527,284 - - Santa Clara Stadium Authority 63,679,755 1,628,297 58,444,137 - 1,085,574 Total Business-type Activities 729,746,584 16,099,708 888,515,291 - 1,085,574 Total 1,015,102,363$ -$ 936,712,456$ 34,060,192$ 7,157,070$ General Revenues:

Taxes:

Sales
Ad valorem property
Transient occupancy
Other
Contribution in lieu of taxes
Investment earnings
Net (decrease) in the fair value of investments
Equity in gains/(losses) of joint ventures
Rents and royalties
Gain/(loss) on retirement of capital asset
Other
Transfers (Note 8A)
Total General Revenues and Transfers
Change in Net Position
Net Position - beginning
Net Position - ending
Program Revenues

STATEMENT OF ACTIVITIES

CITY OF SANTA CLARA
For the year ended June 30, 2022

Statement of Activities
DRAFT

31 See accompanying notes to basic financial statements

Governmental Business-Type
Activities Activities Total
447,609$ -$ 447,609$
(1,144,817) - (1,144,817) (2,078,849) - (2,078,849) (2,136,506) - (2,136,506) (10,292,380) - (10,292,380) (23,809,943) - (23,809,943) (18,234,899) - (18,234,899) (69,892,598) - (69,892,598) (48,645,273) - (48,645,273) 6,066,216 - 6,066,216
(10,798,251) - (10,798,251) (407,527) - (407,527) (180,927,218) - (180,927,218) - 58,996,354 58,996,354
- 6,027,054 6,027,054
- 85,920,673 85,920,673
- 371,912 371,912
- 1,854,170 1,854,170
- (325,895) (325,895) - (9,163) (9,163) - (3,302,191) (3,302,191) - (5,778,341) (5,778,341) - 143,754,573 143,754,573
(180,927,218) 143,754,573 (37,172,645)
56,901,656 - 56,901,656
74,187,826 - 74,187,826
10,812,400 - 10,812,400
7,316,854 - 7,316,854
27,259,168 - 27,259,168
5,709,087 11,587,384 17,296,471
(13,688,467) (26,594,046) (40,282,513)
- 14,639,161 14,639,161
7,205,051 - 7,205,051
- 17 17
58,510,935 - 58,510,935
(5,747,244) 5,747,244 -
228,467,266 5,379,760 233,847,026
47,540,048 149,134,333 196,674,381
612,130,806 1,376,462,775 1,988,593,581
659,670,854$ 1,525,597,108$ 2,185,267,962$
Net (Expense) Revenue and Changes in Net Position

CITY OF SANTA CLARA

STATEMENT OF ACTIVITIES
For the year ended June 30, 2022
DRAFT

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DRAFT

33 CITY OF SANTA CLARA

FUND FINANCIAL STATEMENTS

GOVERNMENTAL FUNDS
The funds described below were determined to be Major Funds by the City in fiscal year 2021-22. Individual non-major funds may be found in the Supplementary section.

MAJOR GOVERNMENTAL FUNDS

GENERAL FUND
The General Fund accounts for resources and services traditionally associated with government. The General Fund provides administrative, financial, police protection, fire protection, community development, recreation, and maintenance services to the community and other funds. The General Fund accounts for revenues that have unrestricted uses and are not required legally or by contractual agreement to be accounted for in another fund.

SANTA CLARA HOUSING SUCCESSOR FUND
The Santa Clara Housing Successor Fund accounts for the activities related to the housing assets assumed by the City as Housing Successor to the former Redevelopment Agency. The activities are governed by Community Redevelopment Law and must be used to provide housing for people with low and moderate incomes.

DRAFT

34 See accompanying notes to basic financial statements

General Santa Clara
Fund Housing Successor
ASSETS
Cash and investments (Note 7):

Pooled cash and investments 125,712,806$ 8,378,469$ Investments with fiscal agent - current - - Restricted cash 21,367,474 -
Receivables (net of allowance for uncollectibles):

Accounts 5,268,123 -
Interest 1,272,522 -
Loans 4,150,074 97,382,941
Intergovernmental 9,819,609 -
Due from other funds (Note 8B) 136,068 - Materials, supplies and prepaids 284,364 - Land held for development (Note 2H) - 7,103,770 Investments with fiscal agent - noncurrent (Note 7) - - Advances to other funds (Note 8C) 5,539,540 - Lease Receivable 160,478,628 -
Other 22,680 -
Total Assets 334,051,888$ 112,865,180$

LIABILITIES
Accrued liabilities 25,455,418$ 159,722$ Deposits 3,922,251 -
Unearned revenue 328,031 -
Advances from other funds (Note 8C) - - Total Liabilities 29,705,700 159,722

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - Lease revenues 159,081,393 - Unavailable revenue - Loans 4,150,074 97,382,941 Total Deferred Inflows of Resources 163,231,467 97,382,941 FUND BALANCES (Note 18)
Nonspendable 7,243,819 -
Restricted 23,291,211 15,322,517
Committed 23,985,038 -
Assigned 9,843,795 -
Unassigned 76,750,858 -
Total Fund Balances 141,114,721 15,322,517 Total Liabilities, Deferred Inflows of Resources
and Fund Balances 334,051,888$ 112,865,180$

CITY OF SANTA CLARA

GOVERNMENTAL FUNDS

BALANCE SHEET
June 30, 2022

Balance Sheet
DRAFT

35 See accompanying notes to basic financial statements

Non-Major Total
Governmental Funds Governmental Funds
174,857,089$ 308,948,364$
19 19
2,306,619 23,674,093
1,210,977 6,479,100
- 1,272,522 66,235,974 167,768,989
1,332,412 11,152,021
- 136,068
- 284,364
- 7,103,770 704,235 704,235
- 5,539,540 - 160,478,628 - 22,680
246,647,325$ 693,564,393$
5,925,050$ 31,540,190$
- 3,922,251 - 328,031
5,539,540 5,539,540
11,464,590 41,330,012
- 159,081,393 66,235,974 167,768,989
66,235,974 326,850,382
- 7,243,819 95,125,314 133,739,042
73,821,447 97,806,485
- 9,843,795 - 76,750,858 168,946,761 325,383,999
246,647,325$ 693,564,393$

BALANCE SHEET
June 30, 2022

CITY OF SANTA CLARA

GOVERNMENTAL FUNDS

DRAFT

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DRAFT

37 See accompanying notes to basic financial statements TOTAL GOVERNMENTAL FUND BALANCE 325,383,999$
Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds above because of the following:

CURRENT LIABILITIES
The assets and liabilities below are due and payable in less than one year and more than 90 days and therefore are not reported in the Funds:

Current portion of accrued compensated absences (excluding Internal Service Funds) (2,263,079) Interest payable (229,412)

CAPITAL ASSETS
Capital assets used in Governmental Activities are not current assets or financial resources and, therefore, are not reported in the Governmental Funds. 637,466,346 Right to use leases assets used in governmental activities are not financial resources and therefore are not reported in the funds.

Right to use asset equipment net of amortization 464,043

LONG TERM ASSETS
Long-term receivable associated with lease agreements are not current assets or financial resources and, therefore, are not reported in the Governmental Funds 6,910,440 INVESTMENT IN NON-BUSINESS-TYPE JOINT VENTURE 5,485,729

DEFERRED OUTFLOWS OF RESOURCES
OPEB related (excluding Internal Service Funds) 1,998,621 Pension related (excluding Internal Service Funds) 67,423,892

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

Cash and investments 37,465,478
Accounts receivable 443,585
Materials, supplies and prepaid 285,350
Deferred outflows OPEB related items 103,248
Deferred outflows pension related items 1,104,259
Accrued liabilities, including short-term portion of estimated claims (9,655,200) Long-term portion of estimated claims (23,919,000)
Compensated absences - current (71,475)
Compensated absences - long-term (553,118)
Internal balances (4,187,014)
Lease obligations (450,807)
Net OPEB liability (1,107,358)
Net pension liability (6,235,892)
Deferred inflows OPEB related items (78,808)
Deferred inflows pension related items (1,555,572)

LONG TERM LIABILITIES
The assets and liabilities below are not due and payable in the current period and, therefore, are not reported in the Funds:

Reserve against conditional grant balances (9,171,538)
Long-term debt (11,594,394)
Long-term liability associated with lease agreements (13,741) Non-current portion of accrued compensated absences
(excluding Internal Service Funds) (17,513,032)
Net OPEB liability (excluding Internal Service Funds) (21,435,883) Net pension liability (excluding Internal Service Funds) (340,929,517)

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues recorded in governmental funds financial statements resulting from activities in which revenues were earned but funds were not available are reclassified as revenues in Government-Wide Financial Statements. 119,038,143 (1,525,564)
(91,411,875)
NET POSITION OF GOVERNMENTAL ACTIVITIES 659,670,854$
June 30, 2022

CITY OF SANTA CLARA
Pension related (excluding Internal Service Funds)

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET POSITION
OPEB related (excluding Internal Service Funds)

DRAFT

38 See accompanying notes to basic financial statements

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position General Santa Clara
Fund Housing Successor

REVENUES
Taxes:

Sales 56,901,656$ -$
Ad valorem 74,630,557 -
Transient occupancy 10,812,400 -
Other 6,988,597 -
Licenses, permits, fines, and penalties 5,362,982 - Intergovernmental 3,057,483 -
Charges for services 36,784,544 1,845 Contributions in-lieu of taxes 27,259,168 - Interest and rents 12,011,895 186,771 Net increase (decrease) in the fair
value of investments (13,688,467) -
Other 1,028,703 6,334,282
Total Revenues 221,149,518 6,522,898

EXPENDITURES
Current:

General Administration 17,114,341 12,312,123 City Clerk 1,617,989 -
City Attorney 2,681,388 -
Human Resources 3,836,743 -
Finance 16,575,834 -
Public Works 22,830,947 -
Parks and Recreation 18,908,901 -
Public Safety:

Police 62,147,962 -
Fire 50,109,742 -
Planning and Inspection 4,296,711 - Library 9,896,689 -
Capital outlay 66,134 -
Debt service (Note 10):

Principal payments 4,402 - Interest and fiscal fees 386 - Total Expenditures 210,088,169 12,312,123

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 11,061,349 (5,789,225)

OTHER FINANCING SOURCES (USES)
Lease liabilites issused 18,035 - Transfers in (Note 8A) 6,356,119 - Transfers (out) (Note 8A) (54,122,963) - Total Other Financing Sources (Uses) (47,748,809) - NET CHANGE IN FUND BALANCE (36,687,460) (5,789,225) Fund balances - beginning 177,802,181 21,111,742 Fund balances - ending 141,114,721$ 15,322,517 $

AND CHANGES IN FUND BALANCES

STATEMENT OF REVENUES, EXPENDITURES
For the year ended June 30, 2022

CITY OF SANTA CLARA

GOVERNMENTAL FUNDS

Statement of Revenues, Expenditures, and Changes in Fund Balances DRAFT

39 See accompanying notes to basic financial statements

Non-Major Total
Governmental Funds Governmental Funds
-$ 56,901,656$ - 74,630,557 - 10,812,400 328,257 7,316,854
10,818,884 16,181,866
36,871,351 39,928,834
10,407,196 47,193,585
- 27,259,168 1,021,258 13,219,924
- (13,688,467) 34,670,447 42,033,432
94,117,393 321,789,809
12,825,130 42,251,594
- 1,617,989 - 2,681,388 - 3,836,743 - 16,575,834 5,327,242 28,158,189
980,913 19,889,814
15,441,680 77,589,642
12,093,098 62,202,840
11,876,870 16,173,581
114,483 10,011,172
19,195,150 19,261,284
2,005,000 2,009,402
497,604 497,990
80,357,170 302,757,462
13,760,223 19,032,347
- 18,035 49,748,925 56,105,044
(12,494,239) (66,617,202)
37,254,686 (10,494,123)
51,014,909 8,538,224
117,931,852 316,845,775
168,946,761$ 325,383,999$
For the year ended June 30, 2022

CITY OF SANTA CLARA

GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

DRAFT

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DRAFT

41 See accompanying notes to basic financial statements

AND CHANGES IN FUND BALANCES TO THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS 8,538,224$ Amounts reported for governmental activities in the Statement of Activities are different because of the following:

ACCRUAL OF CURRENT ITEMS
The amounts below included in the Statement of Activities do not provide or (require) the use of financial resources over 90 days and therefore are not reported as revenue or expenditures in governmental funds (net change):

Current portion of accrued compensated absences (11,486)

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

The capital outlay expenditures are therefore added back to fund balance 19,243,249 Depreciation expense is deducted from the fund balance
(Depreciation expense is net of Internal Service Fund depreciation of $2,699,239 which has already been allocated to service funds.) ( 21,490,805)
Retirements of capital assets (net of Internal Service Fund retirement of $8,755) (1,966) Contributions of infrastructure improvements by developers and equipment are capitalized in the Statement of Activities, but are not recorded in the Governmental Fund Statements because no cash changed hands. 486,350
JOINT VENTURES - PROFIT FROM EQUITY 784,481

LONG TERM DEBT PROCEEDS AND PAYMENTS
Repayment of bond principal is an expenditure in the governmental funds, but in the Statement of Net Position the repayment reduces long-term liabilities.

Repayment of debt principal is added back to fund balance 2,005,000 Amortization of bond premium 54,297

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

Provision for reserve of conditional grants (509,126)
Non-current portion of accrued compensated absences (80,634) Interest payable 35,780
Unavailable revenue 16,122,940
Lease related expense (212)
OPEB related expense 719,729
Pension related expense 17,175,990

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

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

Change in Net Position - All Internal Service Funds, net 6,417,352 Change in Net Position of Internal Service Funds reported with Business-Type Activities (1,949,115) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 47,540,048$ For the year ended June 30, 2022

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES

DRAFT

Reconciliation of the Governmental Funds Statement o f Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities This page intentionally left blank
DRAFT

43 CITY OF SANTA CLARA

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

The City has identified the funds below as major proprietary funds in fiscal year 2021-22.

GAAP does not require the disclosure of budget versus actual comparisons regarding proprietary funds that are major funds.

ELECTRIC UTILITY FUND
This fund accounts for the operation of the City’s electric utility, a self-supporting activity that provides services on a user charge basis to residences and businesses.

WATER UTILITY FUND
This fund accounts for the operation of the City’s water utility, a self-supporting activity that provides services on a user charge basis to residences and businesses.

SEWER UTILITY FUND
The sewer utility fund accounts for the maintenance of the City’s sewer lines and related facilities. It is a self-supporting activity that provides services on a user charge basis to residences and businesses.

WATER RECYCLING UTILITY FUND
This fund accounts for the ongoing maintenance and operations of the City’s waste water reclamation system. It is a self-supporting activity that provides services on a user charge basis from the sale of non- potable water for irrigation and landscaping.

SANTA CLARA STADIUM AUTHORITY FUND
The Santa Clara Stadium Authority Fund was established in 2011 to provide for development and operation of Levi’s Stadium (home of the NFL’s San Francisco 49ers). In November 2012, the Santa Clara Stadium Authority changed its fiscal year ending date from June 30 th to March 31st to conform with the fiscal year of
Stadium Funding Trust.

DRAFT

44 See accompanying notes to basic financial statements

Electric Water Sewer
Utility Utility Utility
ASSETS
Current assets:

Cash and investments (Note 7):

Pooled cash and investments 417,583,298$ 27,799,800$ 74,308,645$ Investments with fiscal agent 15,196,469 - - Receivables (net of allowance for uncollectible):

Accounts 98,415,474 9,225,575 6,788,031 Interest 1,614,768 104,629 273,817 Leases receivable (Note 4) 239,156 27,429 27,429 Derivative financial instrument (Note 10D) 15,462,094 - - Due from other funds (Note 8B) 2,686,894 468,932 750,234 Materials, supplies and prepaids 13,804,838 1,260,746 139,442 Total current assets 565,002,991 38,887,111 82,287,598 Noncurrent assets:

Restricted cash (Note 7) 6,146,358 1,570,550 1,350,785 Investment with fiscal agent (Note 7) 3,906,331 - - Derivative financial instrument (Note 10D) 26,724,615 - - Deposits (Note 7) 19,518,954 - - Leases receivable, noncurrent (Note 4) 2,365,415 938,046 938,046 Right-to-use leased assets, net of amortization (Note 9) 2,243,556 - - Capital assets (Note 9):

Land 14,371,743 661,268 725,328
Buildings, infrastructure and land improvements 1,065,938,843 105,710,862 62,150,752 Equipment 9,941,798 3,869,659 5,005,789 Construction in progress 63,161,131 43,992 78,715 1,153,413,515 110,285,781 67,960,584
Less accumulated depreciation 520,317,069 51,056,292 27,862,251 Net capital assets 633,096,446 59,229,489 40,098,333 Investment in joint ventures (Note 12) 57,312,242 - 280,257,540 Total noncurrent assets 751,313,917 61,738,085 322,644,704 Total assets 1,316,316,908 100,625,196 404,932,302

DEFERRED OUTFLOWS OF RESOURCES
Derivative instruments (Note 10D) 164,564 - - Refunding 6,192,411 - - OPEB related items (Note 16) 1,217,486 232,871 116,059 Pension related items (Note 13) 13,021,377 2,490,626 1,241,282 Total deferred outflows of resources 20,595,838 2,723,497 1,357,341

CITY OF SANTA CLARA

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
June 30, 2022
Business-type Activities-Enterprise Funds

PROPRIETARY FUNDS
Statement of Net Position

DRAFT

45 See accompanying notes to basic financial statements

Water Santa Clara Non-Major Internal Service
Recycling Stadium Authority Enterprise Funds
Utility (as of March 31, 2022) Funds TOTAL (Note 2B)
7,168,313$ 55,762,515$ 18,492,425$ 601,114,996$ 37,095,694$ - 27,003,662 - 42,200,131 - 896,593 13,089,965 8,897,875 137,313,513 443,585 26,166 5,293 - 2,024,673 - - - - 294,014 - - - - 15,462,094 - - - 280,954 4,187,014 34,980 - 1,015,999 - 16,221,025 285,350 8,091,072 96,877,434 27,671,254 818,817,460 37,859,609 108,715 - 1,232,868 10,409,276 - - 11,536,235 - 15,442,566 - - - - 26,724,615 - - - - 19,518,954 - - - - 4,241,507 450,514 - - - 2,243,556 - - - 3,092,872 18,851,211 - 1,257,070 826,227,884 80,211,731 2,141,497,142 - - 3,991,661 3,012,143 25,821,050 42,604,659 - 468,766 585,129 64,337,733 - 1,257,070 830,688,311 86,901,875 2,250,507,136 42,604,659 159,355 128,181,110 61,497,834 789,073,911 30,545,068 1,097,715 702,507,201 25,404,041 1,461,433,225 12,059,591 - - - 337,569,782 - 1,206,430 714,043,436 26,636,909 1,877,583,481 12,510,105 9,297,502 810,920,870 54,308,163 2,696,400,941 50,369,714 - - - 164,564 - - - - 6,192,411 - 20,348 - 79,508 1,666,272 103,248 217,628 - 850,358 17,821,271 1,104,259 237,976 - 929,866 25,844,518 1,207,507 (continued)
Business-type Activities-Enterprise Funds

CITY OF SANTA CLARA

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
June 30, 2022

DRAFT

46 See accompanying notes to basic financial statements

Electric Water Sewer
Utility Utility Utility

LIABILITIES
Current liabilities:

Accrued liabilities 60,306,912 4,634,627 198,722 Interest payable 1,618,146 - 207,541 Unearned revenue - - - Due to other funds (Note 8B) - - - Accrued compensated absences (Note 2K) 774,797 114,575 20,184 Current portion of landfill closure liability (Note 11) - - - Current portion of long-term debt (Note 10) 13,580,000 - 778,152 Current portion derivative financial instruments (Note 10D) 164,564 - - Current portion of leases obligation (Note 4) 654,044 - - Total current liabilities 77,098,463 4,749,202 1,204,599 Noncurrent liabilities:

Unearned revenue - - - Long-term accrued liabilities - - - Long-term portion estimated claims - - - Long-term compensated absences (Note 2K) 5,995,836 886,650 156,196 Landfill closure liability (Note 11) - - - Long-term debt (Note 10) 129,196,165 - 26,859,162 Long-term leases obligation (Note 4) 1,632,622 - - Net OPEB liability (Note 16) 13,057,945 2,497,620 1,244,769 Net pension liability (Note 13) 73,533,480 14,064,900 7,009,690 Total noncurrent liabilities 223,416,048 17,449,170 35,269,817 Total liabilities 300,514,511 22,198,372 36,474,416

DEFERRED INFLOWS OF RESOURCES
Derivative instruments (Note 10D) 42,186,709 - - Refunding 1,537,064 - - Leases ralated (Note 4) 2,571,068 939,890 939,890 OPEB related items (Note 16) 929,326 177,752 88,588 Pension related items (Note 13) 18,343,263 3,508,553 1,748,599 Total deferred inflows of resources 65,567,430 4,626,195 2,777,077 NET POSITION (Note 18)
Net investment in capital assets 511,984,541 59,229,489 32,461,019 Restricted for capital projects and other agreements 6,146,358 1,267,460 280,853,194 Unrestricted 452,699,906 16,027,177 53,723,937 Total net position (deficit) 970,830,805$ 76,524,126$ 367,038,150$ Adjustment to report the cumulative internal balance for the net effect of the activity between the internal service funds and the enterprise funds over time.

Net position of business-type activities
June 30, 2022
Business-type Activities-Enterprise Funds

CITY OF SANTA CLARA

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
DRAFT

47 See accompanying notes to basic financial statements

Water Santa Clara Non-Major Internal Service
Recycling Stadium Authority Enterprise Funds
Utility (as of March 31, 2022) Funds TOTAL (Note 2B)
1,315,319 1,689,217 5,794,083 73,938,880 9,655,200 - 5,753,456 - 7,579,143 31 - 15,076,480 6,978,949 22,055,429 - - 131,278 - 131,278 4,221,994 1,093 - 26,593 937,242 71,475 - - 743,000 743,000 - - 19,634,322 - 33,992,474 - - - - 164,564 - - - - 654,044 207,893 1,316,412 42,284,753 13,542,625 140,196,054 14,156,593 - 425,271,742 - 425,271,742 - - 6,665,679 - 6,665,679 - - - - - 23,919,000 8,458 - 205,790 7,252,930 553,118 - - 5,462,986 5,462,986 - - 260,679,370 - 416,734,697 - - - - 1,632,622 242,883 218,238 - 852,748 17,871,320 1,107,358 1,228,971 - 4,802,096 100,639,137 6,235,892 1,455,667 692,616,791 11,323,620 981,531,113 32,058,251 2,772,079 734,901,544 24,866,245 1,121,727,167 46,214,844 - - - 42,186,709 - - - 1,537,064 - - - - 4,450,848 - 15,531 - 60,690 1,271,887 78,808 306,573 - 1,197,904 25,104,892 1,555,572 322,104 - 1,258,594 74,551,400 1,634,380 1,097,715 449,429,602 25,404,041 1,079,606,407 12,059,591 108,715 41,272,892 3,420,505 333,069,124 - 5,234,865 (414,683,168) 288,644 113,291,361 (8,331,594) 6,441,295$ 76,019,326$ 29,113,190$ 1,525,966,892 3,727,997$ (369,784)
1,525,597,108$
June 30, 2022
Business-type Activities-Enterprise Funds

CITY OF SANTA CLARA

PROPRIETARY FUNDS

STATEMENT OF NET POSITION

DRAFT

48 See accompanying notes to basic financial statements

Electric Water Sewer
Utility Utility Utility
Operating revenues:

Charges for services 502,373,290$ 50,330,756$ 59,098,239$ Rents, royalties and licensing - - - Insurance refunds and other - - - Mandated program receipts 14,223,250 - - Renewable energy credits 2,024,100 - - Wholesale resource sales 36,048,240 - - Other 12,355,712 476,665 -
Total operating revenues 567,024,592 50,807,421 59,098,239 Operating expenses:

Salaries and benefits 41,165,220 6,166,503 2,970,148 Materials, services and supplies 461,111,832 38,028,241 26,035,549 General and administrative - - - Mandated program disbursements 5,533,938 - - Wholesale resources purchases 18,370,965 - - Amortization- Right to use assets 673,067 - - Depreciation 23,547,718 1,738,593 1,337,408 Total operating expenses 550,402,740 45,933,337 30,343,105 Operating income (loss) 16,621,852 4,874,084 28,755,134 Nonoperating revenues (expenses):

Interest revenue 6,065,834 278,666 1,013,248 Net change in the fair value of investments (21,010,694) (1,405,557) (3,832,473) Rents and royalties 3,898,215 61,724 61,724 Other revenue 40,626,292 735,440 1,977,267 Interest expense (3,117,699) - (511,834) Equity in income (losses) of joint ventures 14,639,161 - 55,306,283 Gain (loss) on retirement of assets - 17 - Total nonoperating revenues (expenses) 41,101,109 (329,710) 54,014,215 Income (loss) before
contributions and transfers 57,722,961 4,544,374 82,769,349 Contributions - - - Transfers in (Note 8A) 330,000 686,108 229,616 Transfers (out) (Note 8A) (2,637,123) (267,066) (613,118) Change in net position 55,415,838 4,963,416 82,385,847 Total net position - beginning 915,414,967 71,560,710 284,652,303 Total net position - ending 970,830,805$ 76,524,126$ 367,038,150$ Adjustment for the net effect of the current year activity between the internal service funds and the enterprise funds.

Change in net position of business-type activities
Business-type Activities-Enterprise Funds

CITY OF SANTA CLARA

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN FUND NET POSITION
For the year ended June 30, 2022

Statement of Revenues, Expenses, and Changes in Fund Net Position DRAFT

49 See accompanying notes to basic financial statements

Water Santa Clara Non-Major
Recycling Stadium Authority Enterprise Internal Service Utility (as of March 31, 2022) Funds Total Funds
6,066,691$ 11,720,968$ 43,516,986$ 673,106,930$ 37,902,499$ - 46,723,169 - 46,723,169 - - - - - 641,577 - - - 14,223,250 - - - - 2,024,100 - - - - 36,048,240 - - - 874,423 13,706,800 - 6,066,691 58,444,137 44,391,409 785,832,489 38,544,076 375,732 - 2,109,030 52,786,633 6,833,930 5,303,140 30,651,977 42,793,958 603,924,697 12,467,388 - 2,780,884 - 2,780,884 14,835,276 - - - 5,533,938 - - - - 18,370,965 - - - - 673,067 207,930 25,141 16,979,469 1,571,639 45,199,968 2,699,239 5,704,013 50,412,330 46,474,627 729,270,152 37,043,763 362,678 8,031,807 (2,083,218) 56,562,337 1,500,313 99,991 4,128,756 889 11,587,384 37 (345,322) - - (26,594,046) - - - 10,464 4,032,127 - 5,393 - - 43,344,392 161,559 - (14,895,722) - (18,525,255) (716) - - - 69,945,444 - - - - 17 (8,755) (239,938) (10,766,966) 11,353 83,790,063 152,125 122,740 (2,735,159) (2,071,865) 140,352,400 1,652,438 - 1,085,574 - 1,085,574 - - - 8,086,270 9,331,994 6,133,161 - - (67,443) (3,584,750) (1,368,247) 122,740 (1,649,585) 5,946,962 147,185,218 6,417,352 6,318,555 77,668,911 23,166,228 (2,689,355) 6,441,295$ 76,019,326$ 29,113,190$ 3,727,997$ 1,949,115
149,134,333$
Business-type Activities-Enterprise Funds

CITY OF SANTA CLARA

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN FUND NET POSITION
For the year ended June 30, 2022

DRAFT

50 See accompanying notes to basic financial statements

Electric Water Sewer
Utility Utility Utility

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 494,683,368$ 49,984,803$ 52,548,473$ Payments to suppliers (438,473,513) (39,405,272) (20,252,955) Payments to employees for salaries and benefits (45,739,420) (7,078,843) (3,565,934) Internal activity - payments to other funds - - - Claims paid - - - Rents, royalties and licenses received 3,823,785 68,572 68,572 Other receipts 48,415,239 890,231 1,939,610 Renewable energy credits 2,024,100 - - Wholesale resource sales 36,048,240 - - Resource trading escrow deposit (13,996,290) - - Charges for joint project contributions - - (43,382,453) Net cash provided (used) by operating activities 68,414,544 4,459,491 (12,644,687)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
(Increase) in due from other funds (83,679) (105,256) (124,439) Decrease in due from other funds - - - Increase in due to other funds - - - Deposits to pension rate stablization fund (662,638) (154,791) 37,657 Transfers in 330,000 686,108 229,616 Transfers (out) (2,637,123) (267,066) (613,118) Cash Flows from Noncapital Financing Activities (3,053,440) 158,995 (470,284)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Contribution from Community Facilities District - - - Acquisition and construction of capital assets, net (50,687,039) (5,333,432) (1,237,261) Proceeds from sale of assets - 17 - Principal payments on capital debt (13,632,958) - (761,763) Interest paid on capital debt (3,325,270) - (518,627) Cash Flows from Capital and Related
Financing Activities (67,645,267) (5,333,415) (2,517,651)

CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in the fair value of investments (21,010,694) (1,405,557) (3,832,473) Interest and dividends 5,944,739 259,435 1,025,243 Fiscal agent investment sales 16,294,079 - - Fiscal agent investment purchases (16,900,863) - - Cash Flows from Investing Activities (15,672,739) (1,146,122) (2,807,230) For the year ended June 30, 2022
Business-type Activities-Enterprise Funds

CITY OF SANTA CLARA

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS

Statement of Cash Flows
DRAFT

51 See accompanying notes to basic financial statements

Water Santa Clara Non-Major
Recycling Stadium Authority Enterprise Internal Service Utility (as of March 31, 2022) Funds Totals Funds
6,380,700$ 24,286,339$ 39,855,211$ 667,738,894$ 38,670,765$ (5,107,399) (29,446,734) (39,912,592) (572,598,465) (10,893,933) (460,656) - (2,555,396) (59,400,249) (7,180,662) - - - - (525,273) - - - - (11,416,300) - 41,840,919 10,464 45,812,312 - 43,658 - 866,558 52,155,296 162,482 - - - 2,024,100 - - - - 36,048,240 - - - - (13,996,290) - - - - (43,382,453) - 856,303 36,680,524 (1,735,755) 96,030,420 8,817,079 - - (25,010) (338,384) (2,105) - - - - - - 7,972 - 7,972 340,489 (38,265) - - (818,037) - - - 975,121 2,220,845 6,133,161 - - (67,443) (3,584,750) (1,368,247) (38,265) 7,972 882,668 (2,512,354) 5,103,298 - - - - - - (1,064,907) (303,398) (58,626,037) (2,169,296) - - - 17 - - (17,353,477) - (31,748,198) (207,639) - (14,374,662) - (18,218,559) (716) - (31,974,140) (303,398) (107,773,871) (2,378,367) (345,322) - - (26,594,046) - 97,982 4,123,966 889 11,452,254 37 - (67,162,401) - (50,868,322) - - 65,864,017 - 48,963,154 - (247,340) 2,825,582 889 (17,046,960) 37

STATEMENT OF CASH FLOWS
For the year ended June 30, 2022

CITY OF SANTA CLARA

PROPRIETARY FUNDS
Business-type Activities-Enterprise Funds

DRAFT

52 See accompanying notes to basic financial statements

Electric Water Sewer
Utility Utility Utility
Net increase (decrease) in cash and cash
equivalents (17,956,902) (1,861,051) (18,439,852) Cash and cash equivalents at beginning of period 441,686,558 31,231,401 94,099,282 Cash and cash equivalents at end of period 423,729,656$ 29,370,350$ 75,659,430$ Cash and cash equivalents:

Pooled cash and investments 417,583,298 $ 27,799,800$ 74,308,645$ Restricted cash 6,146,358 1,570,550 1,350,785 Total cash and cash equivalents 423,729,656$ 29,370,350$ 75,659,430$ Reconciliation of operating income (loss) to net cash
provided (used) by operating activities:

Operating income (loss) 16,621,852$ 4,874,084$ 28,755,134$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:
(Decrease) Increase in lease obligation 616,466 - - (Decrease) Increase in due to OPEB system (438,425) (83,859) (41,794) (Decrease) Increase in due to retirement system (4,738,491) (906,340) (451,703) Amortization - - - Depreciation 23,547,718 1,738,593 1,337,408 Change in assets and liabilities:

Receivables, net (21,670,483) (826,594) (801,038) Prepaid expense - - - Inventory (1,668,043) (414,814) - Restricted Cash 662,638 154,791 (37,657) Accrued liabilities 24,350,379 (946,283) 45,824 Long-term portion estimated claims - - - Compensated absences 602,716 77,859 (102,289) Unearned revenue - - - Other receipts 44,524,507 792,054 2,033,881 Wholesale trading escrow deposit (13,996,290) - - Charges for joint project contributions - - (43,382,453) Net cash provided (used) by operating activities 68,414,544$ 4,459,491$ (12,644,687)$ NONCASH TRANSACTIONS:

Forgiveness of advances -$ -$ -$ Joint Ventures
Nonoperating income (loss) 14,639,161$ -$ 55,306,283$ -$ -$ -$ Capital Contribution For the year ended June 30, 2022
Business-type Activities-Enterprise Funds

CITY OF SANTA CLARA

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS

DRAFT

53 See accompanying notes to basic financial statements

Water Santa Clara Non-Major
Recycling Stadium Authority Enterprise Internal Service Utility (as of March 31, 2022) Funds Totals Funds
570,698 7,539,938 (1,155,596) (31,302,765) 11,542,047 6,706,330 48,222,577 20,880,889 642,827,037 25,552,931 7,277,028$ 55,762,515$ 19,725,293$ 611,524,272$ 37,094,978$ 7,168,313$ 55,762,515$ 18,492,425$ 601,114,996$ 37,095,694$ 108,715 - 1,232,868 10,409,276 - 7,277,028$ 55,762,515$ 19,725,293$ 611,524,272$ 37,095,694$ 362,678$ 8,031,807$ (2,083,218)$ 56,562,337$ 1,500,313$ - - - 616,466 207,930 (7,328) - 2,248 (569,158) (37,184) (79,194) - (340,325) (6,516,053) (401,841) - - - - - 25,141 16,979,469 1,571,639 45,199,968 2,699,239 314,009 (1,700,739) (4,158,933) (28,843,778) 1,051,831 - (1,015,999) - (1,015,999) - - - - (2,082,857) (84,432) 38,265 - - 818,037 - 195,741 (1,375,735) 2,881,366 25,151,292 2,689,448 - - (136,146) (136,146) 937,000 1,598 - 27,857 607,741 92,293 - - 489,293 489,293 - 5,393 9,937,904 10,464 57,304,203 162,482 - - - (13,996,290) - - - - (43,382,453) - 856,303$ 36,680,524$ (1,735,755)$ 96,030,420$ 8,817,079$ -$ -$ 7,111,149$ 7,111,149$ -$ -$ -$ -$ 69,945,444$ -$ -$ 1,085,574$ -$ 1,085,574$ -$ For the year ended June 30, 2022
Business-type Activities-Enterprise Funds

CITY OF SANTA CLARA

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS

DRAFT

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DRAFT

55 CITY OF SANTA CLARA

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

PRIVATE PURPOSE TRUST FUNDS
These funds are used to report resources of all other trust arrangements under which principal and income benefit individuals, private organizations, or other governments.

CUSTODIAL FUNDS
Custodial funds are used to account for assets held by the City for community or private organizations, or as an agent for its employees or for assessment districts. The financial activities of these funds are excluded from the City-wide financial statements, but are presented in separate Fiduciary Fund financial statements. Individual non-major Custodial funds may be found in the Supplementary section.

DRAFT

56 See accompanying notes to basic financial statements

tatement of Fiduciary Net Position
Private Purpose Custodial
Trust Funds Funds
ASSETS
Current assets
Cash and investments:

Pooled cash and investments (Note 7) 1,272,560 $ 793,166 $ Receivables (net of allowance for uncollectibles):

Interest and rent 229,364 -
Leases receivable (Note 22) 736,474 -
Total current assets 2,238,398 793,166
Noncurrent assets
Leases receivable-noncurrent (Note 22) 43,699,299 - Investment with fiscal agent-noncurrent-noncurrent (Note 7) 2,859,692 - Land held for resale 532,542 -
Total noncurrent assets 47,091,533 -
Total Assets 49,329,931 793,166

LIABILITIES
Unearned revenues 110,917 -
Due to other agencies 630,000 -
Total Liabilities 740,917 -

DEFERRED INFLOWS OF RESOURCES
Leases related 43,617,753 -
Total deferred inflows of resources 43,617,753 -

NET POSITION
Held in trust for private purpose 3,508,266 - Restricted for individuals, organization and other governments 1,462,995 793,166 Total Net Position 4,971,261$ 793,166$

CITY OF SANTA CLARA

FIDUCIARY FUNDS

STATEMENT OF FIDUCIARY NET POSITION
June 30, 2022

DRAFT

57 See accompanying notes to basic financial statements

Statement of Fiduciary Net Position

Private Purpose Custodial
Trust Funds Funds

ADDITIONS
Contributions:

Employee contributions -$ 138,214$ Other plans - 1,340,818
Gifts and bequest - 675
Total contributions - 1,479,707 Investment income:

Net change in fair value of investments (326,060) - Interest and rents 3,102,511 6,139
Net investment income 2,776,451 6,139
Other - -
Total additions 2,776,451 1,485,846

DEDUCTIONS
General and administrative 79,756 82,401 Benefits paid - 107,543
Pass through to the Stadium Authority - 1,085,575 Pass through to the County of Santa Clara 2,120,000 - Total deductions 2,199,756 1,275,519
576,695 210,327
Net position - beginning 4,394,566 582,839
Net position - ending 4,971,261$ 793,166$

CITY OF SANTA CLARA

FIDUCIARY FUNDS

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
For the Year Ended June 30, 2022
Net increase (decrease) in fiduciary net
position
DRAFT

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DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

59 Notes to Basic Financial Statements
NOTE 1 – DEFINITION OF THE REPORTING ENTITY
The City of Santa Clara (City), also known as the Mission City, is a charter city incorporated in 1852 under the laws of the State of California. The City Charter establishes the Council/Manager form of government.

The City’s citizens elect a City Council of seven citizens, six councilpersons and a Mayor elected at-large, who serve a term of four years each, and who, in turn, appoint a City Manager.

The City is located in the County of Santa Clara, California, approximately 45 miles southeast of San Francisco. It is situated in the northern part of the County and occupies approximately 18.41 square miles.

The City's population of 130,127 accounts for 6.9% of the total Santa Clara County estimated population of

1.9 million.

The City provides a full range of municipal services, including police and fire, library, recreation, community services, public works, parks, sanitation, planning and community development, public improvements, electric, water and sewer services.

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

A. City of Santa Clara Sports and Open Space Authority
The City of Santa Clara Sports and Open Space Authority (SOSA) was created by the City Council in 1974 for the acquisition and development of open space within the City. The members of the City Council are also members of SOSA's Board of Directors and, as such, are authorized to transact business and exercise power to purchase, lease or otherwise obtain and dispose of real and personal property, to acquire, construct, maintain, repair, manage and operate real and personal property, including leasing to private operators for commercial purposes, surplus space which is not economical to use for open space planning. The City performs all accounting and administrative functions of SOSA. The operations of SOSA have been included in the Supplementary Information section in the Non-Major Enterprise Funds.

B. City of Santa Clara Public Facilities Financing Corporation The City of Santa Clara Public Facilities Financing Corporation (PFFC) was formed in 1997 for the purpose of issuing Certificates of Participation (COPs) to provide financing for the construction of the major City facilities. Members of the City Council are also members of the PFFC Board. Debt service on the COPs is secured by lease payments made by the City's General Fund to the PFFC for the use of the constructed facilities for public purposes. In accordance with lease agreements, the PFFC assigns lease payments received from the City to the trustee for payment to the certificate holders. The operations of PFFC have been included in the Supplementary Information section in the Non-Major Governmental Fund. The individual COPs and the related facilities are described in Note 10B.

C. Santa Clara Housing Authority
The Santa Clara Housing Authority (SCHA) was established by the City Council in 2011 to assume the responsibility of housing projects for the former Redevelopment Agency (former RDA). SCHA also assumes the responsibility for housing loans, which are long-term and were made under various programs, DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 1 – DEFINITION OF THE REPORTING ENTITY (continued)

60 for qualifying individuals and groups. The members of the City Council are also members of SCHA's Board of Directors and, as such, are authorized to transact business and exercise power to plan, engineer, and implement development projects. The City performs all accounting and administrative functions of SCHA.

The financial activities of SCHA have been reported in the accompanying Non-Major Governmental Fund financial statements.

D. Santa Clara Stadium Authority
The Santa Clara Stadium Authority (SCSA) was established by the City Council in 2011 to provide for development and operation of Levi’s Stadium. The members of the City Council are also members of SCSA's Board of Directors and, as such, are authorized to manage the stadium, transact business and exercise power to plan, engineer, and construct the stadium. The City performs all accounting and administrative functions of SCSA. The financial activities of SCSA have been reported in the accompanying Enterprise Fund financial statements.

On November 13, 2012, an amendment was made to the JPA Agreement to change SCSA’s fiscal year end date from June 30
th to March 31 st. As such, the financial activities reported for SCSA are as of fiscal year ended March 31, 2022. In addition, the annual financial report was audited by KPMG, an independent auditing firm, and a copy of the report can be found on the City’s website.

NOTE 2 - FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT

ACCOUNTING POLICIES
A. Basic Financial Statements
The City's Basic Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.

The significant accounting policies are described below:

Government-wide Financial Statements: The Statement of Net Position and the Statement of Activities display information about the primary government (the City) and its component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Interfund Services provided and used are allocated to governmental and business-type activities, as appropriate. These statements distinguish between the governmental and business-type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

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

Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and (c) fees, grants and contributions that are restricted to financing DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

61 the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

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

Enterprise funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with an enterprise fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds are charges to customers for services. Operating expenses for the City's enterprise funds include the costs of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

B. Major Funds
Major funds are defined as funds that have either assets combined with deferred outflows of resources, liabilities combined with deferred inflows of resources, revenues or expenditures/expenses equal to 10% of corresponding totals for all governmental or enterprise funds and at least 5% of the aggregate amount to all governmental and enterprise fund for the same item. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds. All other funds, called non-major funds, are combined, and reported in a single column, regardless of their fund-type.

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

General Fund - This is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

Santa Clara Housing Successor Fund - This fund accounts for the activities related to the housing assets assumed by the City as Housing Successor to the former Redevelopment Agency. The activities are governed by Community Redevelopment Law and must be used to provide housing for people with low and moderate incomes. Revenues received are primarily loan repayments on low income loans and investment earnings that are restricted for use on other low and moderate income housing loans and projects.

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

Electric Utility Fund - This fund accounts for the operation of the City's electric utility, a self-supporting activity that provides services on a user charge basis to residences and businesses.

Water Utility Fund - This fund accounts for the operation of the City's water utility, a self-supporting activity that provides services on a user charge basis to residences and businesses.

Sewer Utility Fund - This fund accounts for the maintenance of the City's sewer lines and related facilities. It is a self-supporting activity that provides services on a user charge basis to residences and businesses.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

62 Water Recycling Utility Fund - This fund accounts for the ongoing maintenance and operations of the City's wastewater reclamation system. It is a self-supporting activity that provides services on a user charge basis from the sale of non-potable water for irrigation and landscaping.

Santa Clara Stadium Authority Fund - The Stadium Authority was established to provide for development and operation of Levi’s Stadium.

The City also reports the following fund types:

Internal Service Funds - These funds account for maintenance of vehicles and communication equipment, information technology, public works capital project management, general liability, and workers' compensation claims, all of which are provided to other departments on a cost-reimbursement basis.

Fiduciary Funds - These funds account for assets held by the City in trust for community or private organizations, or as an agent for its employees or for assessment districts without city commitment. The financial activities of these funds are excluded from the City-wide financial statements, but are presented in separate Fiduciary Fund financial statements.

The Successor Agency to the Redevelopment Agency of the City of Santa Clara (Successor Agency) was created to serve as a custodian for the assets and to wind down the affairs of the former RDA. The Successor Agency is a separate public entity from the City, subject to the direction of an Oversight Board. The Oversight Board is comprised of seven-member representatives from local government bodies: two County of Santa Clara (County) representatives; the Mayor of the City of Santa Clara; the County Superintendent of Education; the Chancellor of California Community Colleges; one Santa Clara Valley Water District representative; and one former RDA employee appointed by the Mayor. The City performs all accounting and administrative functions of the Successor Agency. The financial activities of the Successor Agency have been reported in the accompanying basic financial statements in the Private Purpose Trust Fund. See Notes 21 and 22 for information regarding the Successor Agency.

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

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

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

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

63 The City allocates certain indirect expenses incurred by the General Government activity to those activities that benefit from services received.

During the year ended June 30, 2022, the City implemented the following GASB Statements:

The 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.

As a result, the beginning the balances of leases receivable and deferred inflows of resources related to leases were $208,995,619 and $209,176,421 as of July 1, 2021. The balances of the lease payable and intangible right-to-use asset were $3,520,953 and $3,593,103 as of July 1, 2021. The City restated and increased the balances in that amount, and the net effect on beginning net position and fund balance was zero. See the Leases disclosure in Note 4.

The 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.

The GASB issued Statement No. 97 “Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans-An Amendment of GASB Statements No.14 and No. 84, and a Supersession of GASB Statement No. 32.” The objectives of this statement are to (1) increase consistency and comparability related to reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. This statement becomes effective for periods beginning after June 15, 2021. The implementation required a change to the disclosure in Note 15.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

64 The GASB issued Statement No. 99, Omnibus 2022. The primary objective of this Statement is to enhance comparability in reporting and improve the consistency of authoritative literature by addressing practice issues identified during implementation and application of certain GASB statements. The provisions of this Statement related to LIBOR, SNAP, and Leases, were implemented during fiscal year 2022.

The City is analyzing the effects of the following pronouncements and plans to adopt them by the effective dates:

The GASB issued Statement No. 91 “Conduit Debt Obligation.” The objective of this statement is to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practices.

This statement becomes effective for periods beginning after December 15, 2021. The City is currently evaluating the impact on the financial statements.

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

The removal of LIBOR as an appropriate benchmark interest rate is effective for reporting periods ending after December 31, 2021. The City is currently evaluating the impact on the financial statements.

The GASB issued Statement No. 94 “Public-Private and Public-Public Partnerships and Availability Payment Arrangements.” The objective of this statement is to address issues related to public-private and public-public partnership arrangements and to provide guidance for accounting and financial reporting for availability payment arrangements. This statement becomes effective for periods beginning after June 15, 2022. The City is currently evaluating the impact on the financial statements.

The GASB issued Statement No. 96 “Subscription-Based Information Technology Arrangements.” The objective of this statement is to provide guidance on the accounting and financial reporting for subscription- based information technology arrangements (SBITAs) for government end users. This statement becomes effective for periods beginning after June 15, 2022. The City is currently evaluating the impact on the financial statements.

The GASB issued Statement No. 99 “Omnibus 2022." The primary objective of this Statement is to enhance comparability in reporting and improve the consistency of authoritative literature by addressing practice issues identified during implementation and application of certain GASB statements. This statement becomes effective for periods beginning after June 15, 2022. The provisions of this Statement related to PPS, SBITAS, and financial guarantees and the classification and reporting of derivative instructions within the scope of Statement 53 are being currently being evaluated.

The GASB issued Statement No. 100 “
Accounting Changes and Errors Corrections". The objective of this statement is to establish accounting and financial reporting requirements for (a) accounting changes and (b) the correction of an error in previously issued financial statements. This statement becomes effective for periods beginning after June 15, 2023. The City is currently evaluating the impact on the financial statements.

The GASB issued Statement No. 101 “Compensated Absences". The objective of this statement is to amend the existing requirements for the recognition of compensated absences liability. This statement becomes DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

65 effective for periods beginning after December 15, 2023. The City is currently evaluating the impact on the financial statements.

D. Cash and Investments
While maintaining safety and liquidity, the City maximizes investment return by pooling its available cash for investment purposes. Unless there are specific legal or contractual requirements to do otherwise, interest earnings are apportioned among funds according to average monthly cash and investment balances. It is generally the City's intention to hold investments until maturity. City investments are stated at fair value (see Note 7).

Cash and cash equivalents for purposes of the statement of cash flows include pooled cash and investments and cash designated for construction. Transactions with City-wide cash management pools are similar to those with external investment pools; therefore, since pooled cash and investments have the same characteristics as demand deposits in that the City's individual funds and component units may withdraw additional monies at any time without prior notice or penalty, pooled cash and investments are considered essentially demand deposit accounts.

Cash and investments with fiscal agent, a bond reserve investment pool, and amounts classified as deposits are not considered cash and cash equivalents.

E. Interfund Transactions and Balances
During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. The related receivables and payables are classified as "due from other funds," and "due to other funds" in the fund financial statements. Long-term interfund receivables and payables are recorded as advances to/from other funds in the fund financial statements.

Transactions constituting reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are generally recorded as expenditures/expenses in the reimbursing fund and as revenue in the fund that is reimbursed.

Internal balances represent the net interfund receivables and payables remaining after the elimination of all such balances within governmental and business-type activities, and are reported only in the government- wide financial statements.

F. Inventory of Materials and Supplies
Inventory of materials and supplies is accounted for using the consumption method and is stated at average cost. Inventory consists of expendable supplies held for consumption by all departments of the City. The cost is recorded as an expenditure or expense in the appropriate fund at the time individual inventory items are withdrawn for use. The General Fund inventory amount is equally offset by a non-spendable fund balance, which indicates that it does not constitute available expendable resources.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

66 G. Restricted Assets
Restricted assets are monies or other resources, the use of which is restricted by legal or contractual requirements.

H. Land Held for Development
The Santa Clara Housing Successor, through execution of an assignment and assumption agreement with the City and the former RDA has assumed responsibility for housing projects and parcels of land purchased to develop or redevelop blighted properties within the Redevelopment areas. Such land parcels are accounted for as investments on the balance sheet at the lower of cost or net realizable value or agreed-upon sales price if a disposition agreement has been made with a developer.

Individual parcels which have experienced other than temporary fair value decline are written down to estimated current market value. No appreciation is recorded if the current estimated net realizable value of an individual parcel exceeds cost.

I. Capital Assets
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available except for intangible right-to-use lease assets, the measurement of which is discussed in Note 2W below. Contributed capital assets are valued at their estimated acquisition value on the date contributed. The City's policy is to capitalize equipment with costs exceeding $5,000 and buildings, improvements and infrastructure with costs exceeding $20,000.

Major outlays for capital assets and improvements are capitalized as projects are constructed.

Public domain (infrastructure) assets, which include roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and traffic signals, have been capitalized and reported in the government-wide financial statements. Depreciation has been calculated on all capital assets, including infrastructure and the right-to- use leased buildings and equipment, on a straight-line basis over the estimated useful lives of the assets.

Useful Lives
Years
Capitalization
Threshold
Buildings and improvements 20-50 $ 20,000 Right-to-use leased buildings 20-50 20,000 Land improvements 20-50 20,000
Machinery and equipment 3-25 5,000 Right-to-use leased equipment 3-25 5,000 Infrastructure 10-50 20,000

Some capital assets may be acquired using Federal and State grant funds, or they may be contributed by developers or other governments. These contributions are accounted for as revenues at the time the capital assets are contributed.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

67 The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets.

Capital assets and the related obligations acquired under lease/purchase agreements are capitalized and accounted for in accordance with current accounting standards.

J. Joint Ventures
The City participates in several joint ventures. In accordance with GAAP investments in these joint ventures are accounted for on the equity method (see Note 12). If the City's equity in net losses of joint ventures exceeds its investment, use of the equity method is suspended except to the extent that the City is obligated to provide further financial support or has guaranteed obligations of the joint ventures.

The City advances funds to certain of its joint ventures in the form of refundable advances, project advances and operating and maintenance advances. Refundable advances accrue interest at rates stated in the related agreements. Operating, maintenance and project advances are charged to operations when incurred.

Capitalized project costs are charged to operations in the event that a project is determined to be not economically feasible.

K. Compensated Absences
Amounts of vested or accumulated vacation leave and certain benefits that are not expected to be liquidated with expendable available financial resources are reported in the Governmental Activities portion of the government-wide financial statements only. Vested or accumulated vacation leave and benefits of proprietary funds are recorded as an expense and liability of those funds as the benefits accrue to employees. Vacation time is earned based on length of service in amounts ranging between 10 and 24 days per year. City employees are allowed to carry over unused vacation earned. The maximum amount of time that can be carried over varies, depending on the employee's rate of accrual, with an upper limit of 400 hours for most employees. Employees are paid for unused vacation and certain benefits upon separation from employment.

In accordance with GAAP a liability for sick leave and benefits is accrued using the vesting method. The vesting method provides that a governmental entity estimates its accrued sick leave liability based on the sick leave accumulated at the balance sheet date by those employees who currently are eligible to receive termination payments as well as other employees who are expected to become eligible in the future to receive such payments. Amounts of sick leave payments that are not expected to be liquidated with expendable available financial resources are reported in the Governmental Activities portion of the government-wide financial statements only. No expenditure is reported for these amounts in the governmental fund financial statements.

That portion of compensated absences that is unused reimbursable leave still outstanding following an employee's resignation or retirement at year end, is an expense and current liability to the respective fund(s) that an employee charges their time to.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

68 The accrual for compensated absences comprised the following at June 30, 2022. The long-term portion of governmental activities compensated absences is liquidated primarily by the General Fund.

Governmental Business-Type
Activities Activities Total
Beginning Balance 20,216,291$ 7,718,577$ 27,934,868$ Additions 2,110,246 1,199,173 3,309,419 Payments (1,925,833) (727,578) (2,653,411) Ending Balance 20,400,704$ 8,190,172$ 28,590,876$ Current Portions 2,334,554$ 937,242$ 3,271,796$

L. Risk Management
The City is self-insured up to $3 million to provide general liability protection. In addition to the City's self- insurance, the City also maintains excess general liability with coverage up to $50 million.

The City is also self-insured up to $750,000 per claim for Workers' Compensation Claims. These self- insurance programs are administered by outside agencies. The City also maintains excess workers' compensation insurance for workers' compensation claims over $750,000 per claim with coverage up to statutory limits with PRISM (formerly CSAC Excess Insurance Authority).

The City maintains property damage coverage through the Public Entity Property Insurance Program (APIP), which has a plan limit of $917 million. The City maintains boiler and machinery property coverage of $100 million per occurrence in excess of self-insured amounts varying from $25,000 to $100,000 per occurrence.

No claims settlement amount exceeded the City's insurance coverage in the past fiscal years.

The City also maintains a Faithful Performance, Crime Coverage Bond with a plan limit of $10 million through PRISM.

M. Long-Term Obligations
Long-term obligations are reported in the Governmental Activities portion of the government-wide financial statements. Long-term liabilities expected to be financed from proprietary fund operations are accounted for in those funds.

N. Pensions
For purposes of measuring the net pension liability and deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City of Santa Clara, California Public Employees’ Retirement System (CalPERS) plan (Plan) and additions to and deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

69 O. Accounting for Encumbrances
The City utilizes an encumbrance system of accounting wherein encumbrances outstanding at year end, for which the goods or services have not been received, are not reported as expenditures, but are reported as a component of the fund balance category available for subsequent year expenditures based on the encumbered appropriation authority carried over to the next fiscal year. The City Charter requires recording encumbrances as a charge against appropriations in the accounting period in which a purchase order is issued, rather than in the accounting period when goods or services are received.

Under the modified accrual basis of accounting, in accordance with GAAP, expenditures are recorded when the goods or services are received. Adjustments to convert expenditures from the modified accrual basis to the budgetary basis are reflected in the schedule of revenues, expenditures, and changes in fund balances - budget and actual (non-GAAP legal basis) (see Note 3 and Required Supplementary Information).

P. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position includes a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has three items that qualify for reporting in this category: deferred outflow related to the refunding of debt, pension and OPEB.

In addition to liabilities, the statement of financial position includes a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. In the government‐wide financial statements the City reports deferred amounts related to derivative instruments, refunding of debt, leases and deferred amounts related to pension and OPEB.

Q. Net Position and Fund Balance Equity
Fund balances and net position are reported in classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. For governmental fund reporting, the City considers restricted fund balance to have been spent first when an expenditure is incurred, followed by committed, assigned and unassigned fund balances (in order of spending). For government-wide reporting, the City considers restricted net position to have been spent first when an expenditure is incurred, followed by unrestricted net position.

R. Bond Discounts/Premiums
In governmental funds, bond discounts and premiums are recognized in the current period. Bond discounts and premium for proprietary funds and entity-wide financial statements are deferred and amortized over the term of the bonds using the straight-line method of accounting.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

70 S. Property Taxes
The State of California Constitution Article XIII A provides that the combined maximum tax rate on any given property may not exceed 1% of its assessed value except for voter approved incremental property taxes adopted prior to the passage of Article XIII A and any additional amount for general obligation debt approved by voters subsequent to the passage of Article XIII A.

Assessed value is calculated at 100% of market value as defined by Article XIII A and may be increased by no more than 2% per year unless there is a new construction on the property or the property is sold or transferred. The State Legislature has determined the method of distribution of receipts from the 1% tax levy among the counties, cities, school districts and other districts.

Santa Clara County (County) assesses properties and bills and collects property taxes on behalf of the City as follows:

Secured Unsecured
Valuation dates January 1 January 1
Lien/levy dates January 1 January 1
Due dates 50% on November 1, 50% on February 1 Upon receipt of billing Delinquent as of December 10 (for November), April 10 (for February)
August 31

The term "unsecured" refers to taxes on property not secured by liens on real property and generally includes business use personal property.

The City participates in the Teeter Plan offered by the County whereby cities receive 100% of secured property tax levied in exchange for foregoing any interest and penalties collected on delinquent taxes.

Property taxes levied are recorded as revenue when received from the County. Property taxes expected to be collected within 60 days of the end of the fiscal year are recorded as revenue.

The City's net assessed valuation for the year ended June 30, 2022, was $52 billion, an increase of 4.30% compared to the previous year. The average tax rate was 1.19% per $100 of assessed valuation.

T. Contribution In-Lieu of Taxes
Contribution in lieu of taxes is a general revenue of the governmental funds. It is levied on receipts of the City-owned and operated Electric Utility (Silicon Valley Power) in accordance with the City Charter. Non- City owned and operated electric utilities pay a franchise fee, which is also a governmental activities general revenue source.

U. Special Assessment Districts with City Commitment
Recognition of revenue related to noncurrent receivables of special assessment district funds is deferred until such receivables become current. There is no reserve for delinquent receivables since liens exist against the DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

71 related properties and hence the City's management believes the City will ultimately receive value equal to the delinquent receivables. Surplus fund balances remaining at the completion of a special assessment district project are disposed of in accordance with City Council resolutions and with the applicable assessment bond laws of the State of California.

V. Income Taxes
The City falls under the purview of Internal Revenue Code, Section 115 and corresponding California Revenue and Taxation Code provisions. As such, it is not subject to federal or state income taxes.

W. Lease Agreements
A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment.

Lessee - The City is a lessee for noncancellable lease of equipment and buildings. The City recognizes a lease liability and an intangible right‐to‐use lease asset (lease asset) in the government‐wide financial statements.

At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight‐line basis over its useful life.

Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments as follows:
 The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.
 The lease term includes the noncancellable period of the lease.  Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

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

Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the statement of net position.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

72 Lessor - The City is a lessor for noncancellable leases of land, building, and fiber optics. The City recognizes a lease receivable and a deferred inflow of resources in the government‐wide and governmental fund financial statements.

At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts as follows:
 The City uses its estimated incremental borrowing rate as the discount rate for leases.  The lease term includes the noncancellable period of the lease.  Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

X. Arbitrage Rebate Liability
Arbitrage rebate liabilities, if any, are included in accrued liabilities.

Y. Revenue Recognition
Electric, Water, Sewer and Solid Waste Fund revenues are recognized based on cycle billings periodically rendered to customers. Revenues for services provided, but not billed at the end of a fiscal year, are recognized and accrued based on estimated consumption.

Governmental Activities revenues subject to accrual include taxes, intergovernmental revenues, interest and charges for services.

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

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

73 AA. Financial Instruments
Financial instruments included in the City's basic financial statements, excluding cash and investments, consisted of accounts receivable, accrued liabilities and bonds payable. The carrying amounts are a reasonable estimate of fair value.

BB. Conditional Grants
The City has several programs under which it extends loans to qualifying individuals or groups for the purpose of improving the City's housing stock and/or its supply of low-and moderate-income housing.

Certain of these loans provide for the eventual forgiveness of the loan balance if the borrower complies with all the terms of the loan over its full term. The City accounts for these loans as conditional grants in the City- wide financial statements, and provides a reserve against their eventual forgiveness using the straight-line method over the life of the respective loan. As of June 30, 2022, conditional grants of $24,357,245 were offset by reserves of $9,171,538.

CC. Use of Estimates
The preparation of basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the basic financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

DD. Vehicle Registration Fee
On November 2, 2010, Santa Clara County voters approved Measure B, which levies a $10 annual vehicle registration fee (VRF). The statue requires that fees collected be used only to pay for programs and projects that have a relationship or benefit to the owners of motor vehicles paying the fee and are consistent with the regional transportation plan. All revenue collected by Santa Clara Valley Transportation Authority, administrator of VRF are allocated on a population basis to cities in Santa Clara County. The City has committed and used the revenue from Measure B towards various street maintenance and traffic signal timing upgrade projects. The Vehicle Registration Fees are reported in the Streets and Highways Improvement Capital Projects Fund.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 2 – FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

74 As of June 30, 2022, the balance of the Vehicle Registration Fees are as follows:

Vehicle Registration
Fee
Beginning Balance July 1, 2021 2,942,852$
Intergovernmental revenue 799,227
Interest 41,774
Expenditures (1,037,364)
Ending Balance June 30, 2022 2,746,489$

NOTE 3 – BUDGETS AND BUDGETARY ACCOUNTING
The budget of the City is a detailed operating plan that identifies estimated costs and activities in relation to estimated revenues. The budget includes: (1) the projects, services and activities to be provided during the fiscal year, (2) the estimated revenue available to finance the operating plan, and (3) the estimated spending requirements of the operating plan.

The budget process is the mechanism through which policy decisions are made, implemented and controlled.

The City Charter requires that the City establish a budgetary system for general operations and prohibits expending funds for which there is no legal appropriation. The City is required to adopt a budget on or before June 30 for the ensuing fiscal year that begins July 1. Activities of the General Fund, the Santa Clara Housing Successor, and the Maintenance Special Revenue Funds are included in the annual appropriated operating budget. The procedures followed to establish the budgetary data reflected in the accompanying required supplementary information to the basic financial statements are as follows:

1. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. This includes a Five-Year Financial Plan to aid in the planning and funding of operations and capital projects over the next five years.

2. Public hearings are conducted to obtain public comments.

3. The operating and capital budgets are legally enacted through the passage of a minute order.

From the effective date of the budget, the amounts stated therein as proposed expenditures become appropriations to the applicable governmental funds. The City Council may amend the budget by motion during the fiscal year. The legal appropriation control is established at the department level in each fund.

For select funds where expenditures are not allocated to a specific department, the appropriation control is established at the fund level. Transfers of funding between budgetary funds require City Council appropriation and approval. City Council approval is required for a budget amendment during the fiscal year which may include the use of reserves or fund balances, and approval of appropriations of grant monies. Per Article XIII, Section 1305 of the City Charter, appropriations lapse at the end of each fiscal year; therefore, unencumbered funds allocated for specific projects, donations, and grants require City Council appropriation for use in the following fiscal year.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 3 – BUDGETS AND BUDGETARY ACCOUNTING (continued)

75 Budgetary transfers between accounts or expenditure category may be done through Finance Department or City Manager’s Office approval as long as they are conducted within the legal appropriation control limit set by the City Council.

Budget information is presented on a non-GAAP budgetary basis. Budgeted revenue amounts represent the original budget modified by adjustments authorized during the year. Budgeted expenditure amounts represent original appropriations adjusted for supplemental appropriations and transfers during the year.

Budget amounts in the schedules of revenues, expenditures and changes in fund balances-budget and actual, include supplemental appropriations approved by the City Council during the year.

For the actual GAAP basis financial statements, encumbered appropriations are not reported as expenditures, but are reported as a reservation of fund balance available for subsequent year expenditures, based on the encumbered appropriation authority carried over to the next fiscal year.

In addition to the annual Operating Budget, each year the City Council adopts a project length Capital Improvement Project budget biennially.

NOTE 4 – LEASE AGREEMENTS
In June 2017, the Government Accounting Standards Board (GASB) issued Statement No. 87, Leases.

GASB Statement No. 87 (GASB 87) increases the usefulness of governmental financial statements by requiring recognition of certain lease assets and liabilities for all leases, including those that previously were classified as operating leases and recognized as income by lessors and expenditures by lessees. GASB 87 replaces the previous lease accounting methodology and establishes a single model for lease accounting based on the foundational principle that leases are a financing of the right to use an underlying asset.

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. 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 2021-

22. The balances related to leases receivable and deferred inflows of resources as of June 30, 2022 are:

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 4 – LEASE AGREEMENTS (continued)

76 Leases Receivable
Deferred Inflow of
Resources
Governmental activities
General Fund 160,478,628$ 159,081,393$
Business-type activities
Electric Utility 2,604,571$ 2,571,068$
Water Utility 965,475 939,890
Sewer Utility 965,475 929,890
4,535,521$ 4,440,848$
Total leases receivable 165,014,149$ 163,522,241$

A. Lease Receivable
During the current fiscal year, the City began leasing the two properties located at 1000 Lafayette Street, known as Peddler’s Plaza, and 900 Lafayette Street, known as Commerce Plaza. In 1971, the City entered long-term ground leases which expired in September 2021 and April 2022 respectively. These two properties have been long discussed as integral components of a long-term vision for rebuilding downtown. The planning process on a specific plan for downtown is not complete and it will be several more years before any redevelopment of the properties could begin to occur. The two buildings are occupied, and it would be beneficial to the City if there is ongoing occupancy of the structures.

The City extended their respective current leases under generally the same terms for a limited period (up to two years) to allow time for the City and its new management company to transition into their new roles. The City recognized $65,573 in lease revenue and $134 in interest revenue for Peddler’s Plaza, $312,782 in lease revenue and $798 in interest revenue for Commerce Plaza, during the current fiscal year related to these two leases.

As of June 30, 2022, the City’s receivable for lease payments was $109,330 for Peddler’s Plaza and $2,731,994 for Commerce Plaza. Also, the City has deferred inflow of resources associated with leases that will be recognized as revenue over the lease term. As of June 30, 2022, the balance of the deferred inflow of resources was $109,289 for Peddler’s Plaza and $2,731,897 for Commerce Plaza.

B. Original City Leases
Irvine Company Disposition and Development Agreement With Ground Lease (DDA) for Office Park Development
In April 2000, the former RDA entered into a Disposition and Development Agreement (DDA) with Ground Lease with The Irvine Company (Developer) for development of the site as an office/R&D complex. The DDA contemplated the former RDA obtaining title to the entire property from the City prior to entering into ground leases with the Developer. The site is subdivided into three parcels to accommodate the phased development of the project. Only Parcel 2 was conveyed to the former RDA. Parcels 1 & 3 were always held by the City and not subject to terms of the subsequent RDA dissolution.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 4 – LEASE AGREEMENTS (continued)

77 In March 2006, the DDA and the Ground Lease were amended to update the status of conditions precedent; amend the schedule of performance; and clarify terms and conditions relating to Parcel 1 and Parcel 3. In October 2012, the City entered into two ground leases with the Irvine Company for Parcels 1 and 3. The term of both leases is 80 years after the effective date of October 31, 2012, and therefore both leases shall expire on October 31, 2092. The rent commencement date is November 1, 2012. Under the terms of the leases the City will receive specified amounts for minimum rent subject to certain events or time periods and then inflationary adjustments at times specified in the leases. For the fiscal year ended June 30, 2022, the City recognized $1,313,281 in lease revenue and $2,119,663 in interest revenue for Parcel 1 and $633,191 in lease revenue and $1,021,983 in interest revenue for Parcel 3. As of June 30, 2022, the City’s receivable for lease payments for Parcel 1 was $92,976,087 and the balance of the deferred inflow of resources was $92,367,434. The City’s receivable for lease payments for Parcel 3 was $44,827,877 and the balance of the deferred inflow of resources was $44,534,419.

C. City Leases Pursuant to the Terms of the January 8, 2016 Settlement Agreement On March 8, 2011, the City and the former RDA adopted resolutions authorizing the execution of property conveyance agreements for the conveyance of certain real property owned by the former RDA. The agreements conveyed the properties subject to existing leases to the City. Properties included California’s Great America Theme Park, Techmart, Hyatt Regency, and Hilton Hotel.

The actions taken by the former RDA related to the asset transfers were validly authorized and conformed with the requirements of the Community Redevelopment Law as it existed at the time of the actions.

Pursuant to ABx1 26, the Redevelopment Dissolution Law, the State Controller’s Office is to review any asset transfers that occurred between a redevelopment agency and any other public agency after January 1, 2011 and if the assets have not been contractually committed to a third party and to the extent allowed by state and federal law, the Controller, after completing its review is to order the return of the assets to the Successor Agency. The Successor Agency received a Controller’s order on September 10, 2013 ordering the City to transfer the assets back to the Successor Agency. The validity of that order was the subject of litigation in Sacramento Superior Court (Sharma vs. City of Santa Clara). Additionally, on July 26, 2013, the Court granted the County of Santa Clara, the Santa Clara Unified School District, and the Santa Clara County Office of Education (Petitioners) motion for a preliminary injunction (temporary restraining order), restricting the City from selling, transferring, encumbering, spending, or otherwise depleting or wasting any real property interests received from the former RDA.

On January 8, 2016 the City executed a Settlement Agreement in Sharma vs the City of Santa Clara. This Settlement Agreement calls for the City to return to the Successor Agency certain properties that the former Redevelopment Agency transferred to the City prior to dissolution. The properties returned are as follows:

The Great America Theme Park Property, the Hilton Hotel Property, the North/South Parking Lots, the Gateway Parcel 2 Property, the Hyatt Hotel Property, The Techmart Property, and the Martinson Childcare Center Property. The Settlement Agreement requires the City to forego the long term lease revenues generated by the properties. Lease revenues collected from July 1, 2012 to June 30, 2016 have been passed on to the Successor Agency. Additional information concerning the Settlement Agreement can be found in Note 22.

The Settlement Agreement provides clarity that the City retains title to the main parking lot property for the Great America Theme Park and the Hyatt Hotel Ballroom Space. The agreement provides that rental income from these properties beginning July 1, 2015 is the property of the City.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 4 – LEASE AGREEMENTS (continued)

78 California’s Great America Theme Park Parking Lot Lease The City and Cedar Fair entered into various agreements to operate and manage the theme park. As agreed in the Settlement Agreement, the Great America Theme Park Main Parking Lot is and always has been owned by the City and the City is entitled to any lease revenues generated from the Main Parking Lot after June 30, 2015. Pursuant to the Fourth Amendment of the ground lease, the City allows Cedar Fair to use certain City property adjacent to the Theme Park property for parking. Under the terms of the amended Ground Lease, Cedar Fair pays the City annually for use of such property for parking. For the fiscal year ended June 30, 2022, the City recognized $107,952 in lease revenue and $8,458 in interest revenue. As of June 30, 2022, the City’s receivable for lease payments was $702,335 and the balance of the deferred inflow of resources was $710,685.

Hyatt Ballroom Lease Agreement
In April 1985, the former RDA entered into various agreements for the development of a certain piece of land for the eventual operation of a high quality hotel and related facilities, including a ballroom. The resulting lease agreement pertaining to the City owned ballrooms for an initial term of 50 years. The Lessee has options to renew the lease for four additional periods of ten years each and one additional period of nine years. In 2013, Hyatt Equities, LLC. sold its interest to Inland American Lodging Acquisitions, Inc., the terms and conditions of the lease agreements remain in effect.

The minimum rent of the Ballroom lease is adjusted every three years according to the April 1985 agreement. Due to the COVID-19 impacts, the City agreed to waive and abate the ballroom lease from March 1 2020 to October 1, 2021. For the fiscal year ended June 30, 2022, the City recognized $327,702 in lease revenue and $101,344 in interest revenue. As of June 30, 2022, the City’s receivable for lease payments was $4,334,263 and the balance of the deferred inflow of resources was $4,205,506.

D. North South Parking Lot Lease
On May 22, 2018, the City Council authorized the City Manager to make an offer to purchase the Successor Agency owned North South Parcel and further authorized the execution of a Purchase and Sale Agreement for the property. The transfer of the property was settled on July 24, 2018. As part of the acquisition, the City accepted and assumed all of the duties, obligations, liabilities, commitments and covenants of Successor Agency accruing from and after the settlement date with respect to or arising under the lease with Cedar Fair.

For the fiscal year ended June 30, 2022, the City recognized $26,187 in lease revenue and $5,506 in interest revenue. As of June 30, 2022, the City’s receivable for lease payments was $486,230 and the balance of the deferred inflow of resources was $486,645.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 4 – LEASE AGREEMENTS (continued)

79 E. Leases Liabilities
A summary of governmental activities and business-type activities lease payable transactions for the fiscal year ended June 30, 2022, are as follows:

Balance
June 30, 2021 Balance Current
(as restated) Retirements June 30, 2022 Portion
Governmental activities
Lease liabilites 676,480$ (212,071)$ 464,409$ 212,291 $ Business-type activities
Lease liabilites 2,916,624$ (629,957)$ 2,286,667$ 654,044 $ Total lease liabilities 3,593,104$ (842,028)$ 2,751,076$ 866,335 $

The future principal and interest lease payments as of June 30, 2022, are as follows:

For the Year
Ending June 30 Principal Interest Principal Interest
2023 212,291 $ 852 $ 654,044 $ 21,893$
2024 212,705 438 681,619 14,596
2025 39,413 102 710,181 6,920
2026 - - 240,822 553
Total 464,409 $ 1,392 $ 2,286,666 $ 43,962$
Governmental activities Busines-type activities

NOTE 5 - ENTERPRISE FUND MANAGEMENT AGREEMENTS
A. Santa Clara Convention Center

During fiscal year 2018-19, the City performed a competitive bidding process to select a new management company for the Convention Center. On March 12, 2019, the City Council approved a resolution to enter into a new agreement with Global Spectrum, LP, doing business as Spectra Venue Management (Spectra), to manage and operate the Convention Center effective March 18, 2019. The initial term of this agreement began on March 18, 2019 and runs through June 30, 2024 with the option to extend the agreement for two subsequent terms of five (5) years by serving notice to Spectra no later than 180 days from the expiration of the term period. Under the terms of this agreement, Spectra will receive an annual base management fee for its’ operation of the Convention Center and an additional management fee if certain performance measures are met. For fiscal year ended June 30, 2022, the City paid Spectra $165,000 in management fees.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 5 – ENTERPRISE FUND MANAGEMENT AGREEMENTS (continued)

80 In May 2019, the City issued a request for proposal (RFP) to select a qualified company to provide Food and Beverage Operations for the Convention Center. The City entered into an agreement with Levy Premium Foodservice Limited Partnership (Levy) on November 1, 2019 to manage the foodservice operations at the Convention Center. The initial term of this agreement began on November 1, 2019 and expires on June 30, 2025. Upon expiration of the initial term, the City has the option to extend this agreement for two subsequent terms of five (5) years each by serving notice to Levy no later than 180 calendar days from expiration of term period. Under the terms of this agreement, Levy will receive management fees equal to

4.5% of gross receipts plus an additional fee of 8% of net receipts. For the fiscal year ended June 30. 2022, the City paid Levy $53,189 in fees.

In accordance with the November 1, 2019 executed agreement, Levy agreed to pay the City $5,750,000 consisting of $5,000,000 for an Operations Investment to be used for pre-opening expenses and other improvements to the foodservice facilities at the Convention Center, and a $750,000 Community Enrichment Investment to be spent on programs that drive community enrichment, develop local partnerships and promote economic development of the City. Both of these are amortized on a straight-line basis over 15 years. In the event that this agreement terminates for any reason prior to full amortization of the investment funds, the City is obligated to reimburse Levy for the unamortized amount.

NOTE 6 – SANTA CLARA STADIUM AUTHORITY
A. Credit Agreement
The Restated Credit Agreement dated as of June 19, 2013 was entered into by and among Stadium Funding Trust (FinanceCo), SCSA, and Goldman Sachs Bank. Under the Restated Credit Agreement, FinanceCo issued private placement notes and obtained a loan from a consortium of lenders and will loan SCSA up to $450 million and StadCo up to $400 million. Additionally, SCSA and StadCo entered into the Restated StadCo Obligations Agreement on June 19, 2013 under which StadCo will loan up to $500 Million to SCSA to pay costs associated with the development of Levi’s Stadium.

B. Management Agreement
The Stadium Management Agreement dated as of March 28, 2012 was entered into by and among the SCSA, Forty Niners Stadium Management Company LLC (Management), and StadCo. The SCSA and StadCo selected ManagementCo to provide management services for the Stadium on each entity’s behalf on a continual, year-round basis, including overseeing the day-to-day operations and maintenance of the Stadium.

The Stadium Management Agreement has an initial term of 25 years, plus a 15 year renewal option. On November 13, 2012 the First Amendment to the Stadium Management Agreement was approved. This First Amendment establishes incentive management fees, clarifies certain responsibilities of ManagementCo, preserves the amount of concessions income earned by SCSA and StadCo, and addresses liability issues regarding a possible Solar Site License Agreement with NRG.

The Stadium Management Agreement gives ManagementCo the responsibility to oversee the concessions agreements but not to enter into the concessions agreements without SCSA and StadCo’s prior consent. The Concessions Operating Agreement dated February 2018 was reviewed by SCSA and StadCo and entered into by and between ManagementCo and Levy Premium Foodservice Limited Partnership (Levy). The Concessions Operating Agreement has an initial term of 12 years which runs from April 16, 2018 through DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 6 – SANTA CLARA STADIUM AUTHORITY (continued)

81 April 15, 2030 and it grants Levy the exclusive right to provide food and beverage services and merchandise services at all events at Levi’s Stadium.

C. Ground Lease
On February 28, 2012, the SCSA entered into a lease (the Ground Lease) with the City whereby the City leases the Stadium site to the SCSA. The Ground Lease was amended on June 19, 2013.

The Ground Lease has an initial term of 40 years. The first lease year commenced on the first day following the substantial completion of construction (August 1, 2014) and ended on the next following March 31st. The subsequent lease years will start on April 1st and end on the following March 31st. The SCSA will have five successive extension options, each four years in duration, which would commence following the initial term expiration date.

The Ground Lease provides that the City will receive a fixed ground rent (Fixed Ground Rent) of $180 thousand for the first year of Stadium operations payable by the Stadium Authority. Beginning in the second year of Stadium operations and annually thereafter through the tenth year of Stadium operations, the Fixed Ground Rent will increase annually by $35 thousand. Beginning in the 11th year of Stadium operations, Fixed Ground Rent will be increased to equal $1 million, and thereafter will be increased by $100 thousand every five years through the end of the initial term of the Ground Lease. If the term of the Ground Lease is extended, then, during the first extension term, the Fixed Ground Rent will equal $1.58 million; and if and to the extent the Ground Lease is further extended, the Fixed Ground Rent will be increased by $80 thousand every four years thereafter through the expiration of the term of the Ground Lease. While the Fixed Ground Rent payments vary over the course of the Ground Lease, Ground Lease expense is recorded on a straight-line basis. Therefore $979 thousand of ground lease expense was reported in each of the fiscal years ended March 31, 2022 and 2021.

The Ground Lease also provides that the City will receive a performance-based rent equal to 50% of the net income from non-NFL events, less certain credits including 50% of the Fixed Ground Rent, payable by the SCSA. If certain of the credits are not used within the year incurred or the next five succeeding years, the credits will expire.

The following schedule summarizes the minimum future payments due under this lease:

Fiscal Year Ground Lease
Ending March 31 Amount
2023 460,000$
2024 495,000
2025 1,000,000
2026 1,000,000
2027 1,000,000
Thereafter 34,500,000
Total 38,455,000$

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 6 – SANTA CLARA STADIUM AUTHORITY (continued)

82 D. Stadium Lease
On March 28, 2012, the SCSA entered into a lease with StadCo whereby the Stadium Authority leases the Stadium to StadCo. On June 19, 2013, the same parties entered into an Amended and Restated Stadium Lease Agreement (the Stadium Lease).

The Stadium Lease has an initial term of 40 years commencing on the first day following the substantial completion of construction (August 1, 2014) and includes five successive options to extend the term by four years each. The Stadium Lease is divided into two seasons:
 the Tenant Season, which includes the NFL season (including preseason, regular season and postseason NFL games) and runs from August 1 through January 31; and  the Stadium Authority Season, which runs from February 1 through July 31.

Pursuant to the Stadium Lease, the Stadium Authority and StadCo will be entitled to receive and collect separate revenues. Initially, rent payable by StadCo to the Stadium Authority was $24.5 million per year.

This amount was established pursuant to the Stadium Lease in connection with the take-out financing, which occurred on June 19, 2013. The Stadium Lease allowed for one opportunity to adjust the rent if operating or debt service expenses are either more or less than projected in determining the initial rent. Based on the changes to the projected operating and debt service expenses, the provisions for a one-time rent adjustment were triggered. At the Stadium Authority Board (Board) meeting held on March 22, 2016, the Board decided not to adjust the rent, and instead passed a motion to pursue the informal dispute resolution procedures and to proceed to the arbitration process if necessary. Thereafter, on May 3, 2016 StadCo filed for arbitration with the Stadium Authority.

On June 18, 2018, the arbitrator entered an Arbitration Award in favor of the Stadium Authority and against StadCo. This award adjusted the facility rent from $24.5 million to $24.76 million, an increase of $262,000.

This increase is retroactive to the first lease year resulting in a total amount owed to the Stadium Authority of $1.31 million for the first five lease years, through March 31, 2019. In addition to the adjustment to the facility rent, the Stadium Authority was entitled to reimbursement of its legal fees, determined by the arbitrator to be $2.28 million. The lease also provides for a fair market rent adjustment in year 33.

The Stadium Authority received $25.3 million and $17.3 million in stadium rent from StadCo in each of the fiscal years ended March 31, 2022 and 2021, respectively. There were three NFL events that were cancelled because of County COVID-19 restrictions, therefore; lease revenues in fiscal year 2021-22 were higher than the prior year.

The Stadium Authority may elect to expand the Tenant Season to consist of the entire lease year, from April 1 through the next succeeding March 31 (Stadium Authority Put Right), by delivering written notice to StadCo. The Stadium Authority Put Right may be exercised at any time during lease year 13, or at any time that the Management Company Revolving Loan balance exceeds $20 million. The expansion of the Tenant Season will be effective as of the applicable Tenant Season Expansion Date as set forth in the Stadium Lease.

Effective from and after the Tenant Season Expansion Date, and continuing through the remainder of the Stadium Lease term, the Tenant Season will consist of the entire lease year.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 6 – SANTA CLARA STADIUM AUTHORITY (continued)

83 E. ManagementCo Expense Settlement
On August 31, 2022, the Stadium Authority entered into a settlement agreement with StadCo and ManagementCo over disputes regarding the Operating and Management Expenses, Shared Expenses, and Capital Expenditures that were previously withheld for fiscal year 2020, 2021, and 2022. As part of the settlement, the Stadium Authority agreed to recognize the $15.8 million of unpaid ManagementCo expenses along with the $426 thousand interest expenses from the Revolving Loan. The Stadium Authority will not have to pay for the unpaid expenses since ManagementCo already paid for the expenses through the Revolving Loan draws and year-end excess cash. Additionally, the Stadium Authority will reverse the receivable balances previously recorded for the year-end excess cash diversions that ManagementCo took to pay off the Revolving Loan balance. As part of the settlement, Stadium Authority did not confirm or agree to ManagementCo's prior actions or draws under the Revolving Loan. The unpaid expenses were properly recognized in fiscal year ending March 31, 2022.

In addition, the Stadium Authority agreed to discontinue the current practice of reviewing the prevailing wage documentations and sending it off to a labor consultant to review and approve prior to payments. The Stadium Authority will rely on ManangementCo’s new internal Prevailing Wage Laws compliance policy and procedures and process the Capital Expenditures invoice payments as they come in. The Stadium Authority also agreed to restart paying the Operating and Management Expenses and Shared Stadium Expenses based on the approved budget and have ManagementCo provide a year-end true up of the actual expenses at the end of each fiscal year.

NOTE 7 – CASH AND INVESTMENTS
A. Pooled Cash and Investments
The City pools cash from all sources and all funds except restricted cash and investments with fiscal agent.

Allocable portions of the pooled portfolio for each fund type are reported under the captions “Pooled cash and investments” and “Restricted Cash”. Interest income earned on pooled cash and investments is allocated to various funds based on average cash balances of each fund unless there are specific legal or contractual requirements to do otherwise.

Total cash and investments of the City was $1,064 million as of June 30, 2022. This amount includes the City’s pooled cash and cash investments of $1,002.8 million, and cash and investments with fiscal agents of $61.2 million.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 7 – CASH AND INVESTMENTS (continued)

84 Of the City's total cash and investments, the following shows the allocation as presented on the accompanying statements of net position:

Statement of Net Position
Pooled cash and investments 947,159,054$
Investments with fiscal agent - current 42,200,150
Restricted cash 34,083,369
Deposits 19,518,954
Investments with fiscal agent - noncurrent 16,146,801
Fiduciary Funds
Pooled cash and investments 2,065,726
Investments with fiscal agent - noncurrent 2,859,692
Total Cash and Investments 1,064,033,746$

The City’s cash and investments balances in Governmental Funds, Enterprise Funds, Internal Service Funds, Private Purpose Trust, and Fiduciary Funds were as follows:

Governmental Enterprise
Internal
Service Fiduciary
Funds Funds Funds Funds Total
Pooled cash and
investments 308,948,364$ 601,114,996$ 37,095,694$ 2,065,726$ 949,224,780$ Investments with fiscal
agent - current 19 42,200,131 - - 42,200,150 Restricted cash 23,674,093 10,409,276 - - 34,083,369 Investments with fiscal
agent - noncurrent 704,235 15,442,566 - 2,859,692 19,006,493 Deposits - 19,518,954 - - 19,518,954 Total cash and
investments 333,326,711$ 688,685,923$ 37,095,694$ 4,925,418$ 1,064,033,746$

B. Investments Authorized by the California Government Code and the City’s Investment Policy
The City’s investment strategy is to invest cash not required for current obligations in U.S. government securities, federal government agency securities, highly rated money market instruments and other investments in accordance with the City’s investment policy for a maximum term of five years for the General Fund portfolio. The City Council has authorized the purchase of securities with maturities greater than five years, specifically for the Electric Cost Reduction Account. This strategy allows the City to minimize its exposure to credit, market, and liquidity risk while maintaining a reasonable return on its portfolio.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 7 – CASH AND INVESTMENTS (continued)

85 The City’s investment policy, in compliance with the City of Santa Clara Charter, Article IX, Section 904 (d) and (h), and the California Government Code authorizes the City to invest in securities that are consistent with the City’s cash management strategy and long-term goals and objectives. The City is authorized to invest in the following types of instruments, and the table also identifies certain provisions of the California Government Code, or the City’s investment policy where it is more restrictive:

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 7 – CASH AND INVESTMENTS (continued)

86 Authorized Investment Type
Maximum
Maturity
Minimum
Credit
Quality
Maximum
Percentage
of Portfolio
Maximum
Investment In
One Issuer
U.S. Treasury Obligations 7 years N/A 100% 100%
U.S. Agency Securities
(A) 7 years Top three
ratings
categories
80%
(B) 40%
Negotiable Certificates of Deposit 5 years A/A1 30% 5%
Bankers Acceptances 180 days N/A 25% 5%
Commercial Paper 270 days A1 / P1 25% 5%
(C)
California Local Agency Investment Fund N/A N/A None $75M Per A/C Repurchase Agreements 60 days N/A 50% 20%
Reverse Repurchase Agreements
(requires City Council approval)
92 days N/A 20% 10%
Municipal Obligations 7 years N/A 20% 5%
Medium Term Corporate Notes 5 years Top three
ratings
categories
25% 5%
Mutual Funds / Money Market Funds N/A Top rating
category
20% 10%
Joint Power Authority Investment Pools N/A Top rating
category
100% 100%
Supranational Obligations 5 years AA 20% 10%
Asset-Backed Securities 5 years AA 10% 5%
Non-Negotiable Certificates of Deposit 5 years N/A 10% 5% Mortgage-Backed Securities 12 years
(D) AA 15% 5%
(A) Securities issued by the Federal Farm Credit Bank (FFCB), the Federal Home Loan Bank (FHLB), (B) Callable securities are limited to 30% of the portfolio. (C) No more than 10% of the outstanding commercial paper of any single issuer. time of purchase for Mortgage-Backed Securities (MBS). Maximum Final Maturity for MBS's = 30 years with balloon payments.

Corporation (FHLMC), local agencies and other U.S. government -sponsored enterprises. the Federal National Mortgage Association (FNMA), and the Federal Home Loan Mortgage (D) Maximum Weighted Average Life with Current Public Securities Association Assumptions =12 years

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 7 – CASH AND INVESTMENTS (continued)

87 C. Investments with Fiscal Agents
The City invests bond proceeds restricted for construction in instruments that are stated in the Investment Policy and in various return-guaranteed investment agreements. These investments are invested in accordance with bond indentures and the maturities of each investment should not exceed the final maturity of each bond. Bond proceeds investments are reported monthly to the City Council.

The City also maintains required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged reserves to be used if the City fails to meet its obligations under these debt issues. The California Government Code 53601 (L) allows these funds to be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness, other agreements, or certificates of participation in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance.

Former RDA and Electric Reserve Fund bond proceeds restricted for construction projects are invested and held by the trustee as fiscal agent investments. All funds have been invested as permitted under the Code.

These investments are usually scheduled to mature when cash is needed to fulfill the requirements of the underlying bond and trust agreements.

The City also invests funds in the Bentzien Trust in accordance with the investment policy of the Trust that allows investment in cash and short-term investments (up to 20%), fixed income investments including U.S.

Government, U.S. Government Agency, Asset and Mortgage Backed securities, debt issued by U.S.

Corporations and fixed income mutual funds (30% to 60% of portfolio’s aggregate fair value), and equity securities or mutual funds (40% to 70% of portfolio’s aggregate fair value). Investments in U.S. Corporate debt shall be limited to an amount per issuer not to exceed 10% of the aggregate fair value of the portfolio, and upon initial purchase by the Adviser, must be of investment grade as rated by Moody’s and/or Standard and Poor’s rating services. The maximum maturity of an individual bond shall not exceed fifteen years and the average maturity shall not exceed ten years. Individual equity purchases shall have an equivalent securities rating of B- or better. Individual equity purchases shall not exceed five percent of the portfolio’s aggregate fair value.

D. Pension Rate Stabilization Program
In February 2017, the City Council approved a Pension Rate Stabilization Program, (PRSP) Trust administered by Public Agency Retirement Services (PARS). The PRSP is an irrevocable trust and qualifies as an Internal Revenue Section 115 trust. This trust will assist the City in mitigating the CalPERS contribution rate volatility. Investments of funds held in Pension Rate Stabilization Program (PRSP) are governed by the Investment Guideline Document for the investment account and by the agreement for administrative services with the Public Agency Retirement Services (PARS), rather than the general provisions of the California Government code or the City’s investment policy. The City elected a discretionary investment approach which allows the City to maintain oversight of the investment management, control on target yield and the portfolio’ risk tolerance. The assets in this program will eventually be used to fund Pension Plan obligations.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 7 – CASH AND INVESTMENTS (continued)

88 E. Interest Rate, Credit Risks and Fair Value Measurement Interest rate risk is the risk that an investment’s value will be adversely affected by a change in interest rates.

In general, the longer the time to maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. To reduce interest rate risk, the City diversifies the portfolio into a wide range of investments with different maturities, and maintains a reasonable average maturity of less than three years. This approach significantly mitigates adverse market volatility and maximizes returns.

The average maturity of the City’s pooled investment portfolio at June 30, 2022 was approximately 2.08 years and the City has the ability to and generally intends to hold all investments to maturity. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustees) to market interest rate fluctuations is provided in the investment table that shows the distribution of the City's investments by maturity.

Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. Credit risk is measured by the assignment of a rating by a nationally recognized statistical rating organization.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 7 – CASH AND INVESTMENTS (continued)

89 Presented below is the actual rating as of June 30, 2022 for each investment type:

Credit Under 180 181 - 365 1 - 3 3 - 5 Over 5 Fair
Type o f Inves tment Rating Days Days Years Years Years Value Cash N/A 176,746,148$ - $ -$ -$ - $ 176,746,148$ US Treasury Notes Aaa 6,289,457 78,506,430 174,937,653 97,375,315 - 357,108,855 Federal Farm Credit Bank Aaa 6,813,072 4,999,800 60,872,940 9,270,500 - 81,956,312 Federal Home Loan Bank Aaa - - 24,883,500 - - 24,883,500 Federal National Mortgage Association Aaa 4,997,650 - 41,058,196 1,707,666 - 47,763,512 Federal Home Loan Mortgage Corporation Aaa - 4,893,650 13,711,231 8,613,353 - 27,218,234 Corporate Notes Aaa - - 9,953,100 4,611,500 - 14,564,600 Corporate Notes Aa - - 25,016,983 14,650,137 - 39,667,120 Corporate Notes A - - 63,012,539 40,788,214 - 103,800,753 Supranational Notes Aaa - 7,178,104 10,456,646 - - 17,634,750 Asset-Backed Securities Aaa - - - 11,025,322 - 11,025,322 Municipal Notes Aaa - - - 2,502,986 - 2,502,986 Municipal Notes Not Rated - 1,403,173 - - - 1,403,173 Negotiable Certificates of Deposit A-1 - 10,861,730 - - - 10,861,730 Money Market Funds Not Rated 984,447 - - - - 984,447 State Investment P ool (LAIF) Not Rated 59,929,358 - - - - 59,929,358 Total Cash and Investments -
City Treasury 255,760,132 107,842,887 423,902,788 190,544,993 - 978,050,800 Cash (Debt Fund) N/A 6,085,210 - - - - 6,085,210 Government Agency Notes (Bentzien Trust) Aaa 14,954 49,611 35,052 144,894 244,511 Municipal Notes (Bentzien Trust) Aaa - - 50,853 74,363 75,751 200,967 Municipal Notes (Bentzien Trust) Aa - - 86,199 117,442 104,861 308,502 Municipal Notes (Bentzien Trust) A - - 51,036 47,555 - 98,591 Municipal Notes (Bentzien Trust) BBB - - - 50,163 - 50,163 Corporate Notes (Bentzien Trust) BBB - - 35,183 34,697 - 69,880 Corporate Notes (Bentzien Trust) A - - 25,058 - - 25,058 Corporate Stock (Bentzien Trust) A & B 872,276 - - - - 872,276 (c ontinue d)
Maturity
Cas h and Inves tments - Other:

Cas h and Inves tments - City Treas ury:

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 7 – CASH AND INVESTMENTS (continued)

90 Credit Under 180 181 - 365 1 - 3 3 - 5 Over 5 Fair
Type o f Inves tment Rating Days Days Years Years Years Value Mutual Fund - Dreyfus Money Market (Bond
P roceeds) Aaam 2,149,658 - - - - 2,149,658 Mutual Fund - Blackrock Money Market (Debt Fund) Aaam 704,254 - - - - 704,254 Mutual Fund - Goldman FS Government Mutual Fund
(Debt Fund) Aaam
8,473,195 - - - - 8,473,195 Mutual Fund - JP Morgan Mutual Fund
(Debt Fund) Aaam
4,544,394 - - - - 4,544,394 Mutual Fund - International
Equities (Bentzien Trust) Not Rated 162,924 - - - - 162,924 Mutual Fund - Fixed Income
(Bentzien Trust) Not Rated 693,244 - - - - 693,244 Mutual Fund - Fidelity Treasury
(Debt Fund) Not Rated
11,536,236 - - - - 11,536,236 Mutual Fund - Equities
(Bentzien Trust) Not Rated 150,373 - - - - 150,373 Mutual Fund - Federated P rime (Bentzien Trust) Aaam 96,432 - - - - 96,432 Exchange Traded Funds
(Bentzien Trust) Not Rated 48,786 - - - - 48,786 P ension Rate Stabilization Investment
(Cash and Equivalents) Not Rated 1,597,047 - - - - 1,597,047 P ension Rate Stabilization Investment
(Mutual Funds-Equity) Not Rated 8,553,781 - - - - 8,553,781 P ension Rate Stabilization Investment
(Mutual Funds-Fixed Income) Not Rated
19,549,525 - - - - 19,549,525 Collateral Obligations (ADM & CAISO) Not Rated 19,518,954 - - - - 19,518,954 84,736,289 263,939 297,940 359,272 325,506 85,982,946 Total Cash and Investments 340,496,421$ 108,106,826 $ 424,200,728 $ 190,904,265 $ 325,506 $ 1,064,033,746$ Total Cash and Investments - Other
Maturity
Cas h and Inves tments - Other: (co ntinued)

The City accounts for investments in accordance with GAAP, which requires governmental entities to report certain investments at fair value based on quoted market information obtained from recognized sources. The City has reported its investments at fair value with the exception of its share of external investment pools and mutual funds, the carrying value of which approximates fair value. In determining the change in fair value of its investments, the City used an aggregate method of calculation.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 7 – CASH AND INVESTMENTS (continued)

91 The City categorizes its fair value measurements within the fair value hierarchy established by GAAP. The hierarchy is based on the valuation input used to measure the fair value of asset. 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.

Inves tments
and Derivative
Ins truments
Meas ured at
Fair Value
Quo ted P rices
in Active
Markets fo r
Identical
As s ets
Significant
Other
Obs ervable
Inputs
6/30/2022 Level 1 Level 2 Exempt (1)
Inves tments by Fair Value Level
U.S. Treasury Notes 357,108,855$ 357,108,855$ -$ -$ Federal Farm Credit Bank 81,956,312 - 81,956,312 - Federal Home Loan Bank 24,883,500 - 24,883,500 - Federal National Mortgage Association 47,763,512 - 47,763,512 - Federal Home Loan Mortgage Corporation 27,218,234 - 27,218,234 - Corporate notes 158,032,473 - 158,032,473 - Municipal Notes 3,906,159 - 3,906,159 - Asset-Backed Securities 11,025,322 - 11,025,322 - Supranational Notes 17,634,750 - 17,634,750 - Certificates of Deposit 10,861,730 - 10,861,730 - Wells Fargo Money Market Fund 984,447 - - 984,447 Total Short Term Investments 741,375,294 357,108,855 383,281,992 984,447 U.S. Treasury Notes (Bentzien Trust) 248,985 248,985 - - Federal Farm Credit Bank (Bentzien Trust) - - - - Federal Home Loan Bank (Bentzien Trust) - - - - Government Agency Notes (Bentzien Trust) 244,511 - 244,511 - Municipal Notes (Bentzien Trust) 200,967 - 200,967 - Municipal Notes (Bentzien Trust) 308,502 - 308,502 - Municipal Notes (Bentzien Trust) 98,591 - 98,591 - Municipal Notes (Bentzien Trust) 50,163 - 50,163 - Corporate Notes (Bentzien Trust) 69,880 - 69,880 - Corporate Notes (Bentzien Trust) 25,058 - 25,058 - Mutual Fund - Dreyfus Money Market (Bond P roceeds) 2,149,658 - - 2,149,658 Mutual Fund - Blackrock Money Market (Debt Fund) 704,254 - - 704,254 Mutual Fund - Goldman FS Government Mutual Fund
(Debt Fund) 8,473,195 - - 8,473,195 Mutual Fund - JP Morgan Money Market Funds (Debt
Fund)
4,544,394 - - 4,544,394 Mutual Fund - Money Market (Bentzien Trust) - - - - Mutual Fund - International Equities (Bentzien Trust) 162,924 - 162,924 - (c ontinue d)
Fair Value Meas urements Us ing
Short Term Investments
Debt Securities and Other

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 7 – CASH AND INVESTMENTS (continued)

92 Inves tments
and Derivative
Ins truments
Meas ured at
Fair Value
Quo ted P rices
in Active
Markets fo r
Identical
As s ets
S ignificant
Other
Obs ervable
Inputs
6/30/2022 Level 1 Level 2 Exempt (1)
Mutual Fund - Fixed Income (Bentzien Trust) 693,244 - 693,244 - Mutual Fund - Fidelity Treasury (Debt Fund) 11,536,236 - 11,536,236 - Mutual Fund - Equities
(Bentzien Trust) 150,373 - 150,373 - Mutual Fund - Federated P rime (Bentzien Trust) 96,432 - 96,432 - P ension Rate Stabilization Investment
(Cash and Equivalents)
1,597,047 1,597,047 -
P ension Rate Stabilization Investment
(Mutual Funds-Equity)
8,553,781 8,553,781 - - P ension Rate Stabilization Investment
(Mutual Funds-Fixed Income)
19,549,525 15,261,761 4,287,764 - Collateral Obligations (ADM & CAISO) 19,518,954 - - 19,518,954 Total Debt Securities and Other 78,976,673 25,661,574 17,924,645 35,390,455 Corporate Stock (Bentzien Trust) 872,276 872,276 - - Exchange Traded Funds (Bentzien Trust) 48,786 48,786 - - Total Equity Securities 921,062 921,062 - - Total Investment by Fair Value Level 821,273,029 383,691,490 401,206,637 36,374,902 Inves tments Meas ured at the Amo rtized Co s t
State Investment P ool (LAIF) 59,929,358 - - 59,929,358 Total Investments Measured at the Amortized Cost 59,929,358 - - 59,929,358 Total Investments 881,202,387 383,691,490 $ 401,206,637 $ 96,304,260$ Cas h in Banks 182,831,358
To tal Cas h and Inve s tme nts 1,064,033,746$
Inves tments Derivative Ins truments
Open contract power trading - Current Assets 15,462,094$ 15,462,094 Open contract Gas trading - Non-current Assets 26,724,615 26,724,615 Total Investment Derivative Instruments 42,186,709$ 42,186,709$ Equity Securities
Fair Value Meas urements Us ing
Debt Securities and Other (continued)

The City utilizes a third party pricing service to determine fair market prices for its individually held investments. Evaluations are based on market information available at the time and generated using proprietary evaluated pricing models and methodologies.

Bentzien Trust investment in stocks and U.S. Treasuries are valued using prices quoted in active markets for those securities. All other Bentzien Trust debt securities are valued using a Market Approach methodology by Standard & Poor’s Securities Evaluation Inc. The Market Approach uses prices and other relevant information generated by market transactions involving identical or similar assets, liabilities or a group of assets and liabilities.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 7 – CASH AND INVESTMENTS (continued)

93 Level 1 investments are valued using a marketable actively traded assets closing price for identical assets.

Level 2 investments are determined by using quoted prices for similar assets.

F. Concentration of Credit Risk
Investments in the securities of any individual issuers that represent 5% or more of total Citywide investments are shown in the table below:

Issuer Bond-rating Fair Value % of Holding
Federal Farm Credit Bank Aaa 81,956,312$ 7.7%

G. Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. Under California Government Code Section 53651, depending on specific types of eligible securities, a bank must deposit eligible securities posted as collateral with its Agent having a fair value of 105% to 150% of the City’s cash on deposit. All of the City’s deposits are either insured by the Federal Depository Insurance Corporation (FDIC) or collateralized with pledged securities held in the trust department of the financial institutions.

The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer) to a transaction, the City will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The City’s Investment Policy limits its exposure to custodial credit risk by requiring that all security transactions entered into by the City, including collateral for repurchase agreements, be conducted on a delivery-versus-payment basis. Securities are to be held by a third party custodian.

H. Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations The City has no investments that are highly sensitive to interest rate fluctuations to a greater degree than already disclosed in the Interest Rate Risk Section above.

I. Local Agency Investment Fund
The City is a voluntary participant in the Local Agency Investment Fund (LAIF). LAIF is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California.

LAIF’s investment portfolio mainly consists of Treasuries, loans, Federal Agency securities, and collateralized mortgage obligations. Each regular LAIF account is permitted to have up to 15 transactions per month, with a minimum transaction amount of $5,000, a maximum transaction amount of $75 million and at least 24 hours advance notice for withdrawals of $10 million or more. Bond proceeds accounts are subject to one time deposit with no cap and are set up with a monthly draw down schedule. The carrying value of LAIF approximates fair value.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

94 NOTE 8 – INTERFUND TRANSACTIONS AND BALANCES
A. Interfund Transfers
With Council approval, resources may be transferred from one City fund to another.

Transfers between funds during the fiscal year ended June 30, 2022 were as follows:

Fund Receiving Transfers Fund Making Transfers Amount
General Fund Non-Major Governmental 3,931,647$ A Internal Service Fund 1,324,739 B
Electric Utility 1,059,733 C
Santa Clara Convention Center 40,000 D
Non-Major Governmental General Fund 39,775,495 E Cemetery 822 F
Sewer Utility 113,118 F
Solid Waste 26,621 F
Water Utility 267,066 F
Electric Utility 1,086,323 F
Non-Major Governmental 8,479,480 G
Internal Service Funds General Fund 6,014,310 H Electrc Utility 118,851 I
Cemetery General Fund 7,969,558 J
Electric Utility General Fund 330,000 K
Sewer Utility Internal Service Funds 43,508 L Electric Utility 186,108 M
Solid Waste General Fund 33,600 N
Water Utility Electric Utility 186,108 M
Sewer Utility 500,000 O
Santa Clara Convention Center Non-Major Governmental 83,112 P Total Interfund Transfers 71,570,199$

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 8 – INTERFUND TRANSACTIONS AND BALANCES (continued)

95 The reasons for material transfers are set forth below:
(A) Transfer to general fund from capital project funds and special revenue funds to return the excess funding.
(B) Return the savings from electric vehicle purchase in the Automotive Service fund and CIP Management
Service Fee fund.
(C) Transfer to general fund for the positions to support Electric Utility operation. (D) Transfer to general fund for the COVID relief programs. (E) Transfer to fund various capital projects, maintenance district, to pay the debt, and COVID-19 related activities.
(F) Transfer to fund their respective share of financial, human resources software, utility billing, and other projects.
(G) Transfer from Special Revenue fund to fund various street related capital projects. (H) Transfer to Special Liability fund to cover higher estimated insurance claims and to Automotive Service for fire engine purchase.
(I) Transfer from electric Greenhouse Gas program to fund the vehicle revolving fund on the electric vehicle purchases.
(J) Transfer to write off the interfund advance to Cemetery fund and subsidize the cemetery operation. (K) Transfer to fund the Electric Utility fiber project. (L) Returning the saving from CIP Management Service Fee fund to the original funding source. (M) Return the savings from the Electric Utility capital improvement project to the original funding sources. (N) Transfer to provide rebates to the Solid Waste customers for COVID relief. (O) Transfer to fund Water Utility capital improvement projects. (P)
Transfer fund to Santa Clara Convention Center capital improvement project from Public Facilties Capital Project fund, the original funding source is from convention center operting funds.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 8 – INTERFUND TRANSACTIONS AND BALANCES (continued)

96 B. Current Interfund Balances
Current interfund balances arise in the normal course of business and are expected to be repaid shortly after the end of the fiscal year. The following is a summary of interfund balances as of June 30, 2022.

Receivable Fund Payable Fund Amount
General Fund Santa Clara Stadium Authority 136,068$
Receivable by Governmental Funds 136,068
Electric Utility Internal Service Funds 2,686,894
Water Utility Internal Service Funds 468,932
Sewer Utility Internal Service Funds 750,234
Cemetery Internal Service Funds 280,954
Receivable by Enterprise Funds 4,187,014
Internal Service Funds Internal Service Funds 34,980
Receivable by Internal Service Funds 34,980
Total 4,358,062$
Note: The City uses due to/due from as a balancing mechanism in funds with negative cash balances.

C. Long-Term Interfund Advances
At June 30, 2022, the funds below had made advances which were not expected to be repaid within the next year.

Fund Receiving
Advance/Commitment
Fund Making
Advance/Commitment
Amount of
Advance/Commitment
Parks and Recreation Facilities General Fund 5,539,540$ Total 5,539,540$

Cemetery Fund The General Fund has historically subsidized the operating costs of the cemetery. The potential repayment of these advances is unlikely in the City’s ten-year General Fund Forecast due to the limited revenue sources from the Cemetery Fund. The Council approved to write off the accumulated outstanding advance from the General Fund in amount of $7,111,149 in May 2022.

Parks and Recreation Facilities Fund has a $5,539,540 advance that bears interest which is based on the City’s weighted average portfolio rate and will be repaid to the General Fund in annual installments when Mitigation Fee Act funding becomes available.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 8 – INTERFUND TRANSACTIONS AND BALANCES (continued)

97 D. Internal Balances
Internal balances represent the net interfund receivables and payables remaining after the elimination of all such balances within governmental, successor agency and business-type activities. The $4,790 net internal balance in the Statement of Net Position is due to the different fiscal year end dates between the City and the Santa Clara Stadium Authority (refer to Note 1D for more information).

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

98 NOTE 9 – CAPITAL ASSETS
A. Capital Assets Summary
Capital Assets at June 30, 2022 are comprised of:

Balance Retirements/ Balance
June 30, 2021 Additions Adjustments Transfers June 30, 2022 Governmental Activities
Non Depreciable Assets:

Land 124,518,835$ -$ $ - $ - 124,518,835$ Construction in progress 45,872,339 19,122,482 - (12,738,352) 52,256,469 - - Total Non Depreciable Assets 170,391,174 19,122,482 - (12,738,352) 176,775,304 Capital assets being depreciated:

Land improvements 29,018,702 - - 63,972 29,082,674 Buildings 217,214,792 - - 152,245 217,367,037 Infrastructure 611,291,469 486,350 - 12,522,135 624,299,954 Machinery & equipment 84,156,821 2,290,063 (1,110,712) - 85,336,172 - -
Total Capital assets being depreciated 941,681,784 2,776,413 (1,110,712) 12,738,352 956,085,837 Less accumulated depreciation for:

Land improvements (17,933,255) (1,270,068) - - (19,203,323) Buildings (73,953,705) (4,265,708) - - (78,219,413) Infrastructure (315,529,968) (14,866,069) - - (330,396,037) Machinery & equipment (64,887,814) (3,788,199) 1,099,991 - (67,576,022) - -
Total accumulated depreciation (472,304,742) (24,190,044) 1,099,991 - (495,394,795) - - Net Depreciable Assets 469,377,042 (21,413,631) (10,721) 12,738,352 460,691,042 - - Governmental Activity Net Capital Assets 639,768,216$ (2,291,149)$ (10,721)$ -$ 637,466,346$

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

99 NOTE 9 – CAPITAL ASSETS (continued)

Balance Retirements/ Balance
June 30, 2021 Additions Adjustments Transfers June 30, 2022 Business-Type Activities
Non Depreciable Assets:

Land 18,851,211$ $ - $ - $ - 18,851,211$
Construction in progress 108,862,491 60,186,602 (184,412) (104,526,948) 64,337,733 Total Non Depreciable Assets 127,713,702 60,186,602 (184,412) (104,526,948) 83,188,944 Capital Assets being depreciated:

Land Improvements 102,407 - - - 102,407 Buildings 918,524,826 - (21,248) - 918,503,578 Infrastructure 1,118,364,209 - - 104,526,948 1,222,891,157 Machinery & equipment 24,189,097 1,721,928 (89,975) - 25,821,050 - - Total Capital Assets being depreciated 2,061,180,539 1,721,928 (111,223) 104,526,948 2,167,318,192 Less accumulated depreciation for:

Land Improvements (77,125) (2,571) - - (79,696) Buildings & improvements (175,818,118) (18,219,533) - - (194,037,651) Infrastructure (550,117,944) (25,627,187) - - (575,745,131) Machinery & equipment (17,950,730) (1,350,678) 89,975 - (19,211,433) Total accumulated depreciation (743,963,917) (45,199,969) 89,975 - (789,073,911) Net Depreciable Assets 1,317,216,622 (43,478,041) (21,248) 104,526,948 1,378,244,281 Enterprise Activity Net Capital Assets 1,444,930,324$ 16,708,561$ (205,660)$ -$ 1,461,433,225$

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

100
NOTE 9 – CAPITAL ASSETS (continued)
B. Right-to-use Leased Assets Summary
Right-to-use leased assets at June 30, 2022 are comprised of:

Balance
June 30, 2021 Balance
(as restated) Additions June 30, 2022
Governmental Activities
Right-to-use leased equipment 676,479$ - $ 676,479$ Less accumulated depreciation for:

Right-to-use leased equipment - (212,436) (212,436) - - Governmental Activities Net RTU Assets 676,479$ (212,436)$ 464,043$ Balance
June 30, 2021 Balance
(as restated) Additions June 30, 2022
Business-Type Activities
Right-to-use leased buildings 2,916,623$ - $ 2,916,623$ Less accumulated depreciation for:

Right-to-use leased buildings - (673,067) (673,067) Enterprise Activities Net Capital Assets 2,916,623$ (673,067)$ 2,243,556$ Right-to-use (RTU) lease assets being depreciated:

Right-to-use (RTU) lease assets being depreciated:

C. Construction in Progress Summary
Construction in Progress for governmental activities as of June 30, 2022 consisted of the following projects:

Future
Governmental Projects Authorized Expended Commitments
Transportation Improvements 41,824,372$ 9,584,229$ 32,240,143$ Parks and Recreation Improvements 49,769,191 32,996,798 16,772,393 City Building Improvements 18,893,662 9,675,442 9,218,220 Total 110,487,225$ 52,256,469$ 58,230,756$

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 101

Construction in Progress for business-type activities as of June 30, 2022 consisted of the following:

Future
Enterprise Fund Projects Authorized Expended Commitments Electric Projects 172,807,033$ 63,161,131$ 109,645,902$ Water and Sewer Projects 8,389,780 122,707 8,267,073 Stadium Authority Projects 13,860,515 468,766 13,391,749 Santa Clara Convention Center Projects 3,278,522 585,129 2,693,393 Total 198,335,850$ 64,337,733$ 133,998,117$

Details of these projects are available from the City on request.

D. Depreciation Allocation
Depreciation expense is charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or program are as follows:

Governmental Activities:

General Administration 1,202,408$
Finance 5,421
Public Works 15,443,169
Parks and Recreation 1,881,605
Public Safety
Police 878,293
Fire 565,618
Planning and Inspection 26,572
Library 1,492,225
21,495,311
Capital assets held by the City's Internal Service
Funds are charged to the various functions
based on their usage of the assets 2,907,169
Total Governmental Activities 24,402,480$
Business-Type Activities:

Utility Funds:

Electric Utility 24,220,786$
Water Utility 1,738,593
Sewer Utility 1,337,408
Water Recycling Utility 25,141
Solid Waste 6,079
Cemetery 8,104
Santa Clara Convention Center 1,557,456
Santa Clara Stadium Authority 16,979,469
Total Business-Type Activities 45,873,036$

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 102

NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS
A. Summary of Long-Term Obligations
Issue Date Final Maturity Interest rate
Governmental Activity Debt:

General Long-Term Debt:

General obligation bonds
2010 City of Santa Clara Lease Financing Agreement 7/13/2010 7/1/2022 3.65% 2013 Refunding Certificates of Participation 3/28/2012 2/1/2032 2%-3.75% Unamortized Premium/Discount
Subtotal Government Activity Debt
Business-Type Activity Debt:

Electric Utility:
2013 Series A Revenue Bonds 4/24/2013 7/1/2022 3%-5%
2018 Series A Revenue Bonds 12/18/2018 7/1/2027 0.05
Unamortized Premium/Discount
Santa Clara Stadium Authority (2):

Term A loan 6/19/2013 4/1/2039 5.00%
Subtotal Business Activity Debt-Bonds and Loan
Direct borrowing:

Electric Utility:
2020-1 Series Revenue Bonds 4/10/2020 7/1/2032 1.74%
2020-2 Series Revenue Bonds 4/10/2020 7/1/2028 1.31%
2020-3 Series Revenue Bonds 4/10/2020 7/1/2024 0.58%
Sewer Utility:
2016 Trimble Road Loan 3/8/2016 2/1/2031 2.14%
2020 Sewer Installment Sale Agreement 6/11/2020 7/1/2024 Variable Santa Clara Stadium Authority(2):

StadCo CFD Advance(1) 4/1/2013 12/31/2054 5.73%
StadCo Subordinated Loan 3/28/2012 3/31/2043 5.50%
Subtotal Business Activity Debt from Direct Borrowing
Subtotal Enterprise Activity Debt
Total Long-Term Debt Obligations
(2) Stadium Authority's long-term obligations are based on a March 31 fiscal year end. (see Note 1D) Type of Indebtedness
(1) Payments are made as the Mello-Roos tax is collected and transmitted to the Community Facilities District (CFD) by the hotels in the District.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 103

Authorized
Outstanding as of
June 30, 2021
Additions,
Transfers, and
Amort. of
Discounts
Debt Retired /
Defeased
Outstanding as
of June 30, 2022
Current
Portion
10,207,000$ 1,065,000$ - $ 1,065,000$ -$ - $ 18,540,000 12,005,000 - 940,000 11,065,000 980,000 583,691 (54,297) - 529,394 - 28,747,000 13,653,691 (54,297) 2,005,000 11,594,394 980,000 64,380,000 8,865,000 - 4,320,000 4,545,000 4,545,000 48,800,000 40,110,000 - 4,785,000 35,325,000 5,110,000 4,519,398 (753,233) - 3,766,165 - 282,794,108 244,160,240 - 14,022,001 230,138,239 14,723,000 395,974,108 297,654,638 (753,233) 23,127,001 273,774,404 24,378,000 52,985,000 52,985,000 - - 52,985,000 - 34,315,000 34,315,000 - - 34,315,000 - 16,720,000 15,740,000 - 3,900,000 11,840,000 3,925,000 12,000,000 8,399,077 - 761,763 7,637,314 778,152 50,000,000 20,000,000 - - 20,000,000 - 38,000,000 29,502,893 871,610 - 30,374,503 - 233,138,533 23,132,426 - 3,331,476 19,800,950 4,911,322 437,158,533 184,074,396 871,610 7,993,239 176,952,767 9,614,474 833,132,641 481,729,034 118,377 31,120,240 450,727,171 33,992,474 861,879,641$ 495,382,725$ 64,080$ 33,125,240$ 462,321,565$ 34,972,474$

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 104

B. City’s Long-term Obligations
2010 City of Santa Clara Lease Financing Agreement
On July 13, 2010, the City entered into a new agreement with the PFFC in order to provide funds for the refunding of the City’s 1997 Certificates of Participation for the Police Administration building. The PFFC entered into a separate agreement with the assignee, Bank of America, N.A. Debt Service on the new Lease Agreement is secured by lease payments made by the City to the assignee for use of the Police Administration site. On March 22, 2012, Bank of America sold and transferred the agreement to Capital One Public Financing, LLC with no change to the terms, covenants, or conditions of the contract or the payment schedule.

As of June 30, 2022, the City has paid off the entire long-term lease obligation. 2013 Central Park Library Refunding Certificates of Participation (2013 COPs) On March 28, 2013, the PFFC issued $18.54 million to provide funds to refund outstanding 2002A COPs.

The 2013 COPs mature annually beginning February 1, 2014 through February 1, 2032 and bear coupon rates ranging from 2% to 3.75%. Debt Service is secured by lease payments to be made by the City to the PFFC for use of the library. The PFFC assigns the lease payments to the certificate owners.

In the event of default there is no remedy of acceleration of the total lease payments nor the maturities of the Certificates. The City will be liable only for the lease payments on an annual basis, and in the event of default, the trustee would be required to seek a separate judgement each year for that year’s defaulted lease payments.

Compliance
Various debt agreements governing the City’s bonds contain a number of covenants, including continuing disclosure requirements. The City is in compliance with these specific covenants and all other material covenants governing the particular bond issues. No event of default, as defined in the bond indentures, has occurred or is occurring.

Various debt agreements governing the Enterprise Funds’ revenue bonds contain a number of covenants, including those that require the City to maintain and preserve the respective enterprise in good repair and working order, to maintain certain levels of insurance and to fix and collect rates, fees and charges so as to maintain certain debt coverage ratios. The City is in compliance with these specific covenants and all other material covenants governing the particular revenue bond issues. No event of default as defined in the bond indentures has occurred or is occurring.

C. Enterprise Funds
Electric Utility
Electric Revenue Refunding Bonds, Series 2013A
On April 24, 2013, the City issued $64.38 million of the Electric Revenue Bonds, Series 2013A (Electric 2013A Bonds), to provide funds, together with other available moneys, to refinance outstanding Electric DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 105

2003A Bonds. The Electric 2013A Bonds mature annually beginning on July 1, 2014 through July 1, 2028 and bear coupon rates ranging from 3.00% to 5.00%. Debt service on the Electric 2013A Bonds is secured by a pledge of net revenues of SVP.

As of April 1, 2020, $43.705 million of the Electric 2013A Bonds were outstanding and $30.725 million would be callable at par beginning January 1, 2023. With the passage of the Tax Cuts and Jobs Act on December 22, 2017 (“tax reform”), the tax legislation eliminated advance refunding of tax-exempt bonds beginning Jan 1, 2018, and therefore tax-exempt advance refunding is no longer a refinancing option.

On April 10, 2020, SVP refinanced $30.725 million callable portion of the outstanding principal amount of Electric 2013 A Bonds through a direct placement with Bank of America, N.A. under a Taxable to Tax- Exempt Conversion structure. The refunding resulted in overall debt service savings of $1,706,384. The net present value of the debt service savings is called an economic gain and after an addition for prior funds on hand of $203 amounted to $1,703,470. See Notes below for Subordinated Electric Revenue Refunding Bonds, Series 2020-2.

As of June 30, 2022, $4.545 million non-callable principal of Electric 2013A Bonds were outstanding. In the event of default, SVP will transfer to the trustee all adjusted net revenues held by it and received thereafter and the trustee will disburse all adjusted net revenues and any other funds then held or thereafter received by the trustee under the provisions of indenture. In the case of default, the trustee will be entitled to declare the bond obligation of all bonds then outstanding to be due and payable immediately.

Electric Revenue Refunding Bonds, Series 2018A
On December 18, 2018, SVP issued $48.8 million of Electric Revenue Refunding Bonds, Series 2018A (Electric 2018A Bonds) to refinance $54.58 million outstanding principal amount of Variable Rate Demand Electric Revenue Refunding Bonds, Series 2008B and terminate a related swap agreement. The Electric 2018A Bonds bear 5% coupon rate, mature annually beginning on July 1, 2019 through July 1, 2027, and were sold at an All-In True Interest Cost of 2.32%. Debt service on the Electric 2018A Bonds is secured by a pledge of net revenues of SVP.

In the event of default, the City will transfer to the trustee all adjusted net revenues held by it and received thereafter and the Trustee will disburse all adjusted net revenues and any other funds then held or thereafter received by the trustee under the provisions of indenture. In the case of default, the trustee will be entitled to declare the bond obligation of all bonds then outstanding to be due and payable immediately.

Subordinate Electric Revenue Refunding Bonds, Series 2020-1

The City Council determined that it was in the best interests of the City to enter into a credit facility with a bank for the purpose of refunding all of the outstanding Electric 2011A Bonds; and for the indebtedness created under such credit facility to be evidenced by a subordinate electric revenue bond to be issued by the City and delivered to the Bank as authorized by Resolution No. 20-8834 adopted by the City Council on April 7, 2020.

On April 10, 2020, the City entered into a loan agreement with Bank of America, N.A., (the “Loan Agreement”) and issued $52.985 million of Subordinate Electric Revenue Refunding Bonds, Series 2020-1 (Electric 2020-1 Bonds) to refinance $54.830 million outstanding principal amount of Electric Series 2011A Bonds under a Taxable to Tax-Exempt Conversion structure. The Electric 2020-1 Bonds were originally DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 106

issued as taxable bonds with coupon rates of 1.74% and were converted to a tax-exempt rate of 1.36% per annum effective April 2, 2021. The Electric 2020-1 Bonds mature annually beginning on July 1, 2028 through July 1, 2032 and were sold at a true interest cost of 1.43% with an average coupon rate of 1.40%.

Debt service on the Electric 2020-1 Bonds is secured by a pledge of Available Electric Revenues of SVP on a basis subordinate to outstanding Senior Electric Revenue Bonds, if any.

Subordinate Electric Revenue Refunding Bonds, Series 2020-2

The City Council determined that it was in the best interests of the City to enter into a credit facility with a bank for the purpose of refunding a portion of the outstanding Electric 2013A Bonds; and for the indebtedness created under such credit facility to be evidenced by a subordinate electric revenue bond to be issued by the City and delivered to the Bank as authorized by Resolution No. 20-8834 adopted by the City Council on April 7, 2020.

On April 10, 2020, the City entered into a loan agreement with Bank of America, N.A. and issued $34.315 million of Subordinate Electric Revenue Refunding Bonds, Series 2020-2 (Electric 2020-2 Bonds) to refinance $30.725 million of the callable portion of the outstanding Electric Revenue Refunding Bonds, Series 2013 A. The Electric 2020-2 Bonds bear 1.31% coupon rates, mature annually beginning on July 1, 2023 through July 1, 2028, and were sold at a true interest cost of 1.21% with an average coupon rate of

1.15%. Electric 2020-2 Bonds were priced at taxable rates and will convert to tax-exempt at the earlier of the call date of January 1, 2023 or the reversal of the advance refunding prohibition. Both the taxable rate and tax-exempt rate at conversion were fixed at the time of issuance. Debt service on the Electric 2020-2 Bonds is secured by a pledge of Available Electric Revenues of SVP on a basis subordinate to outstanding Senior Electric Revenue Bonds, if any.

Subordinate Electric Revenue Refunding Bonds, Series 2020-3

The City Council determined that it was in the best interests of the City to enter into a credit facility with a bank for the purpose of refunding of the outstanding Electric Series 2014; and for the indebtedness created under such credit facility to be evidenced by a subordinate electric revenue bond to be issued by the City and delivered to the Bank as authorized by Resolution No. 20-8834 adopted by the City Council on April 7, 2020.

On April 10, 2020, the City issued $16.720 million of Subordinate Electric Revenue Refunding Bonds, Series 2020-3 (Electric 2020-3 Bonds) to refinance $19.413 million outstanding principal amount of Subordinated Electric Revenue Bonds, Series 2014. The Electric 2020-3 Bonds bear 0.58% coupon rates, mature annually beginning on July 1, 2020 through July 1, 2024, and were sold at a true interest cost of

0.70%. Debt service on the Electric 2020-3 Bonds is secured by a pledge of Available Electric Revenues of SVP on a basis subordinate to outstanding Senior Electric Revenue Bonds, if any.

In the event of default under the loan agreement for the 2020-1 bonds, 2020-2 bonds or 2020-3 bonds (including a failure by the City to pay principal or interest on the related bonds, a failure by the City to perform or observe its covenants, a default in other specified indebtedness or obligations of the City, certain acts of bankruptcy or insolvency, or other specified events of default), the Bank has the right, upon written notice to the City, to accelerate and declare the City’s obligation to repay the related bonds and all other obligations of the City to the Bank under such loan agreement to be immediately due and payable.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 107

Pledges of Future Electric Revenues
The pledge of future Electric Fund revenues ends upon repayment of all outstanding principal on bonds and loans, which is scheduled to occur in fiscal year 2032-33. For fiscal year 2021-22, Electric Fund revenues, including operating revenues and non-operating interest earnings, amounted to $554.2 million and operating costs including operating expenses, but not interest, depreciation or amortization whole amounted to $492.7 million. Net revenues available for debt service amounted to $61.5 million which represented a coverage ratio of 3.8 on the $16.2 million of debt service.

Sewer Utility
Installment Sale Agreement, Series 2016
On March 8, 2016, the City entered into an Installment Sale Agreement with the PFFC in order to provide funds for the Trimble Road Trunk Sanitary Sewer Improvement Project (the “Project”). The PFFC entered into a separate Assignment Agreement with the DNT Asset Trust, a wholly owned subsidiary of JP Morgan Chase National Association (the “Agreement”), to assign its rights under the Installment Sale Agreement to DNT Asset Trust. The Agreement, in the amount of $12,000,000, carries an interest rate of 2.14% and the final payment is due February 1, 2031. Installment payments on the Agreement are secured by a pledge of net revenues of the Wastewater System. Net revenue of $28.8 million was available for debt service payments of $0.7 million.

In the event of default there is no remedy of acceleration of the total installment payments. The City will be liable only for the installment payments as they become due during the terms of the agreement. There are no significant finance-related consequences for termination.

Installment Sale Agreement, Series 2020
On June 11, 2020, the City entered into an Installment Sale Agreement (the “ISA”) with the PFFC to provide funds for the San Jose/Santa Clara Regional Wastewater Facility Project (the “Project”). The PFFC entered into a separate Assignment Agreement with JPMorgan Chase Bank, N.A. (the “Assignment Agreement”), to assign its rights under the ISA to JPMorgan Chase Bank, N.A. The ISA in the amount of $50,000,000 carries a variable rate of interest equal to 80% of 1-month LIBOR (reset daily), plus .95% per annum. The City may draw on the Installment Sale Agreement as necessary with an initial $20,000,000 drawn on the date of closing. Interest is due each January 1 and July 1, commencing January 1, 2021. Principal on outstanding advances is due on or before July 1, 2024. In addition, the PFFC shall pay an undrawn fee on any amount not yet drawn at a rate of .325% per annum on each interest payment date. Installment payments on the Agreement are secured by a pledge of net revenues of the Wastewater System on a subordinate basis to the Trimble Road Installment Payments. Net revenue of $28.8 million less the Installment Sale Agreement, Series 2016 debt service payment of $0.7 million are available for future payments.

In March 2020, the Governmental Accounting Standards Board (GASB) issued Statement No. 93, Replacement of Interbank Offered Rates. The objective of this statement is to address accounting and financial reporting implication that results from the replacement of an IBOR. The City is currently working DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 108

with JPMorgan to update the agreement to reflect the use of new interest rate, which is targeted to be completed by the end of first quarter of calendar year 2023.

Santa Clara Stadium Authority
Stadium Funding Trust Loan
The Restated Credit Agreement by and among FinanceCo, the Stadium Authority and Goldman Sachs Bank was entered into on June 19, 2013. FinanceCo agreed to loan the Stadium Authority up to $450 million.

Under the Restated Credit Agreement, the loan from FinanceCo consists of the Term A Loan and the Term B Loan. On March 31, 2016, the Stadium Authority paid the remaining amount due on the Term B Loan.

Term A Loan
The Term A Loan was made in the amount of $282.79 million. This loan bears interest at a fixed rate of

5.00%, payable semi-annually, with annual principal payments due beginning in April 2018. The Term A Loan has a maturity date of April 1, 2039 and is subject to certain prepayment premiums. The loan was fully drawn at closing. As of March 31, 2022, $230.1 million was outstanding.

In the event of default under the loan agreement, FinanceCo has the right, upon written notice to the Stadium Authority, to accelerate and declare the Stadium Authority’s obligation to repay the related loan to FinanceCo to be immediately due and payable.

StadCo CFD Advance
In May of 2010, the City of Santa Clara completed the proceedings to establish a Community Facilities District (CFD) for the purpose of financing certain publicly owned facilities and public services associated with Levi’s Stadium.

On June 11, 2013, the CFD, the Stadium Authority, and StadCo entered into a Reimbursement Agreement under which the CFD would agree to reimburse the Stadium Authority for costs of certain publicly owned facilities and public services constructed for Levi’s Stadium. The reimbursement can only be made from a special tax generated by the CFD, as and when received by the CFD.

StadCo has agreed to advance to the Stadium Authority funds to pay for the CFD Infrastructure (StadCo CFD Advance). To evidence the Stadium Authority’s obligation to repay the StadCo CFD Advance, the Stadium Authority and StadCo also executed a note on June 11, 2013. The StadCo CFD Advance has a maximum principal of $38 million and an interest rate of 5.73%.

During the year ended March 31, 2022, as the special CFD tax was submitted to the Stadium Authority, a number of payments were made on the StadCo CFD Advance. These payments were made mid-way through each quarter. The interest that accrued between the last StadCo CFD Advance payment and the end of the year is added to principal. These payments totaled $1.7 million, which included $1.7 million in interest and $0 in principal. The Stadium Authority made $819 thousand in payments and added the remaining unpaid balance to the principal during the year. As of March 31,2022, $30.4 million was outstanding, which includes $872 thousand of interest added to principal as of March 31, 2022.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 109

StadCo Subordinated Loan
The Restated StadCo Obligations Agreement dated as of June 19, 2013 was entered into by and between StadCo and the Stadium Authority as part of the take-out financing process. Under the Restated StadCo Obligations Agreement, StadCo will loan the Stadium Authority an amount not to exceed $500 million with a fixed 5.50% interest rate. Required principal repayments started in March 2016 and the Stadium Authority may prepay the loan at any time.

Payments totaling $4.6 million were made on the loan during the year. This included a $3.3 million in principal prepayment and $1.3 million in interest. As of March 31, 2022, $19.8 million was outstanding.

Debt service on this loan is secured by a pledge of available Stadium Authority revenues on a basis subordinate to outstanding senior loans, if any.

In the event of default under the loan agreement, StadCo has the right, upon written notice to the Stadium Authority, to accelerate and declare the Stadium Authority’s obligation to repay the related loan to StadCo to be immediately due and payable.

D. Derivative Instruments
Under hedge accounting, the increase (decrease) in the fair value of a hedge is reported as a deferred cash flow hedge on the statement of net position. For the reporting period, all of SVP’s derivatives meet the hedge effectiveness tests defined by GAAP.

Notional Amounts and Fair Values- SVP Future Derivative Instruments SVP maintains a Market Risk Management Policy, which among other things, sets forth the guidelines for the purchase and sale of certain financial instruments defined as hedge instruments in support of market power purchase and sales transactions. The primary goal of these guidelines is to provide a framework for the operation of an energy price hedging program to better manage SVP’s risk exposure in order to stabilize pricing and costs for the benefit of SVP and its customers.

Consistent with hedge accounting treatment meeting effectiveness tests, changes in fair value are reported as deferred flows of resources on the statement of net position until the contract expiration that occurs in conjunction with the hedged expected energy purchase/sales transaction. When hedging contracts expire, at the time the purchase/sales transactions occur, the deferred balance is recorded as a component of Purchased Power. For energy derivatives, fair values are estimated by comparing contract prices to forward market prices quoted by third party market participants.

SVP had the following future derivative instruments outstanding at June 30, 2022 with Archer Daniels Midland Company to hedge cash flows on sales of excess resources in CAISO market in the future months.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 110

Long Short
Effective
Date
Maturity
Date
Average
Price Classification Amount Classification Amount
20,800 6/1/2022 6/30/2022 $57.50 Derivative
Instrument 412,672$ Deferred
inflow 412,672$
10,000 7/1/2022 7/31/2022 98.00 Derivative
Instrument (80,500) Deferred
outflow (80,500)
10,800 8/1/2022 8/31/2022 98.00 Derivative
Instrument 247,860 Deferred
inflow 247,860
10,000 9/1/2022 9/30/2022 98.00 Derivative
Instrument 66,500 Deferred
inflow 66,500
15,200 6/1/2022 6/30/2022 62.75 Derivative
Instrument 89,832 Deferred
inflow 89,832
8,600 7/1/2022 7/31/2022 73.00 Derivative
Instrument (78,604) Deferred
outflow (78,604)
7,800 8/1/2022 8/31/2022 73.00 Derivative
Instrument (5,460) Deferred
outflow (5,460)
8,000 9/1/2022 9/30/2022 73.00 Derivative
Instrument 52,400 Deferred
inflow 52,400
704,700$ 704,700$
Long Short
Effective
Date
Maturity
Date
Average
Price Classification Amount Classification Amount
6,245,000 7/1/2020 12/31/2025 $2.42 Derivative
Instrument 13,536,965$ Deferred
inflow 13,536,965$
6,400,000 1/1/2021 12/31/2025 0.56 Derivative
Instrument 3,135,450 Deferred
inflow 3,135,450
12,490,000 1/1/2022 12/31/2025 2.64
Derivative
Instrument 24,326,130 Deferred
inflow 24,326,130
12,800,000 1/1/2022 12/31/2025 1.03 Derivative
Instrument 318,900 Deferred
inflow 318,900
41,317,445$ 41,317,445 $
Grand Total 42,022,145$ 42,022,145 $
Notional
Notional
Amount (MMBtu) Fair Value Change in Fair Value
Amount (MWh) Fair Value Change in Fair Value

Credit risk

Credit risk is the risk of loss due to a counterparty defaulting on its obligations. SVP is exposed to credit risk if hedging instruments are in asset positions. In order to eliminate counterparty credit risk, SVP has transacted both long term power and gas contracts on the Futures market on Intercontinental Exchange (ICE). As of June 30, 2022, $42.2 million of SVP’s open derivative power and gas contracts were in an asset position, and the fair values of those open contracts were positive. $0.2 million of SVP’s open derivative power contracts were in a liability position, and the fair values of those open contracts were negative. The open contract was with ADM Investor Service, Inc., a clearing member of ICE and a company of Archer Daniels Midland Company who was rated A by Standard & Poor’s as of June 30, 2022.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 111

SVP’s policy for requiring collateral on hedging instruments varies based on individual contracts and counterparty credit ratings. Under the brokerage agreements with Archer Daniels Midland Company, the accounts are prefunded by SVP. If the account value falls below zero, margin calls are invoked. At June 30, 2022, SVP had posted collateral of $19,518,954 deposited with CAISO and Archer Daniels Midland Company for resource energy trading.

It is also SVP's policy to negotiate netting arrangements whenever it has entered into more than one bilateral transactions with counterparty. Under the terms of these arrangements, should one party become insolvent or otherwise default on its obligations, the non-defaulting party may accelerate and terminate all outstanding transactions and net their fair values so that a single amount will be owed by (or to) the non-defaulting party.

Termination Risk
SVP’s futures contracts are traded over the counter and have no termination risk.

Price Risk
With respect to price risk under power Futures contracts, on purchase contracts (long positions), SVP receives the CAISO NP15 average daily rate at settlement and pays the fixed contracted rate entered into on the trade date; on sales contracts (short positions), SVP pays the CAISO NP15 average daily rate at settlement and receives the fixed contracted rate entered into on the trade date. With respect to price risk under gas Futures contracts, on purchase contracts (long positions), SVP receives PG&E Citygate average daily price at settlement and pays the fixed contracted rate entered into on the trade date; on sales contracts (short positions), SVP pays the PG&E Citygate average daily price at settlement and receives the fixed contracted rate entered into on the trade date. SVP is exposed to risk because the contract prices are different from the settlement prices.

E. Repayment Requirements
As of June 30, 2022, the debt service requirements to maturity for the City’s long-term obligations, with determinable payment dates and the funds from which payment will be made are as follows:

Government Activities
For the Year
Ending June 30 Principal Interest Principal Interest Principal Interest 2023 980,000$ 420,275$ 9,655,000$ 1,752,125$ 4,703,152$ 1,362,384$ 2024 1,030,000 371,275 5,440,000 1,374,750 30,494,893 1,218,281 2025 1,085,000 319,775 5,795,000 1,093,875 10,476,995 1,119,831 2026 1,120,000 285,869 6,005,000 798,875 6,739,465 1,031,663 2027 1,150,000 249,469 6,320,000 490,750 6,822,310 953,203 2028-2032 5,700,000 598,800 6,655,000 166,375 59,930,499 2,785,327 2033 - - - - 7,610,000 51,748 11,065,000$ 2,245,463$ 39,870,000$ 5,676,750$ 126,777,314$ 8,522,437$ Business-Type Activities (excluding Santa Clara Stadium Authority) Bonds Debt from direct borrowingLease and COPs

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 10 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued) 112

Principal Outstanding as Reported in Government Activities 11,065,000$ Principal Outstanding as Reported in Business Type Activities 166,647,314 Total Principal Outstanding as Reported 177,712,314
Principal Outstanding - Stadium Authority(1) 280,313,692 Unamortized Discount/Premium 4,295,559
Total Long-term Obligations 462,321,565$
(1) The principal outstanding for Stadium Authority is as of March 31, 2022. Please refer to Santa Clara Stadium Authority's separately issued Financial Statements Note 5 for details.

Reconciliation of Long-term Obligations

F. Debt Limitations and Restrictions
The amounts of the City’s legal debt limit and debt margin (as defined by Section 1309 of the City Charter) as of June 30, 2022, is $7.8 billion. There are a number of limitations and restrictions contained in the various bond indentures. The City is in compliance with all significant limitations, covenants, and restrictions.

G. Arbitrage
According to the regulations set forth by the U. S. Treasury Department, for bond issues subject to arbitrage rebate, earnings in excess of the stated bond rate must be rebated to the federal government every five years.

As of June 30, 2022, the City has twelve outstanding bond issues that are subject to the arbitrage rebate regulations. The City monitors the earnings on each of these issues and records any accrued rebate liability at the end of each individual bond year.

NOTE 11 - SOLID WASTE LANDFILL CLOSURE
The City of Santa Clara All Purpose Landfill (Landfill) was closed in September 1993. Federal and state laws and regulations require closure activities such as removal of landfill structures, decommissioning of environmental control systems, site security, and final cover construction and postclosure care such as ongoing monitoring of environmental impact. The City's postclosure plan (Plan) accepted by the California Integrated Waste Management Board, which is now the California Department of Resources Recycling and Recovery (CalRecycle), addresses all the attendant issues. Based on the Plan and pertaining laws and regulations, an estimated Landfill Postclosure Care Cost Obligation is recorded and updated annually. The postclosure care liability is accrued in the Solid Waste Enterprise Fund in accordance with GAAP. This obligation is payable from solid waste user fees.

The City also has a Pledge of Revenue Agreement establishing financial assurance for postclosure maintenance of the Landfill with CalRecycle, which was adopted on October 12, 1999. Financial assurance in the amount of $600,000 will be maintained in a separate account. In addition, the agreement requires funds to be pledged annually for post-closure maintenance and corrective action costs.

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 11 – SOLID WASTE LANDFILL CLOSURE (continued)

113

The City has pledged $245,000 for postclosure maintenance expenses and $209,000 for corrective action in 2022-23. These amounts are subject to annual inflation factors, as stipulated by CalRecycle.

At June 30, 2022, a liability in the amount of $6,205,986 was reported based on the estimated remaining postclosure care costs to meet the regulatory requirements. During fiscal year 2022, the City incurred post- closure expenses of $850,531 and increased the liability by $1,361,458 based on revised estimates of future costs. The estimated liability is based on the amount that would be paid if all equipment, facilities, and services required to monitor and maintain the landfill were acquired as of June 30, 2022. However, the actual cost of postclosure care and corrective action may be higher or lower due to inflation, changes in technology, or changes in landfill laws and regulations.

NOTE 12 – PARTICIPATION IN JOINT VENTURES
A. Investments in Joint Venture
The City participates in significant joint ventures: Northern California Power Agency (NCPA), the Transmission Agency of Northern California (TANC), San Jose-Santa Clara Water Pollution Control Plant and Clean Water Financing Authority (SJSC), M-S-R Energy Authority (MSR EA), M-S-R Public Power Agency (MSR PPA) and Silicon Valley Animal Control Authority (SVACA).

The separately issued financial statements of these joint ventures (as noted below) are available on request.

Date of latest audited
financial statement Joint Venture’s address
NCPA 6/30/2021 651 Commerce Dr. Roseville, CA 95678
TANC 6/30/2021 P.O. Box 15129 Sacramento, CA 95851
SJSC 6/30/2021 200 E. Santa Clara St. San Jose, CA 95113 MSR EA 12/31/2021 P.O. Box 4060 Modesto, CA 95352
MSR PPA 12/31/2021 P.O. Box 4060 Modesto, CA 95352
SVACA 6/30/2021 3370 Thomas Road Santa Clara, CA 95051

DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 12 – PARTICIPATION IN JOINT VENTURES (continued)

114

The City’s basic financial statements reflect the following investments in joint ventures as of June 30, 2021 (latest information available):

Participating
percentage Investment
Method of
accounting
NCPA
Geothermal 44.39%
Hydroelectric 37.02%
Combustion Turbine 41.67%
Lodi Energy Center 25.75%
TANC 9.64% 6,185,241 Equity
SJSC
(1) 19.46% 280,257,540 Equity
MSR EA 33.40% - Suspended
MSR PPA 35.00% 7,904,404 Equity
(2)
SVACA 56.50% 5,485,729 Equity
Total $343,055,511
(1) The investment in San Jose/Santa Clara Regional Wastewater Facility includes the current year capital contribution. (2)
$43,222,597 Equity
The equity method of accounting for investment in MSR PPA was suspended prior to fiscal year ended June 30, 2021. Starting in fiscal year 2022, equity method was used for SVP's investment with MSR PPA.

B. Contingent Liability
Under the terms of the various joint venture agreements, the City is contingently liable for a portion of the long-term debt of the entities under take-or-pay agreements, letters of credit, guarantees or other similar agreements. Sewer revenue bonds issued by the San Jose-Santa Clara Clean Water Financing Authority were no longer outstanding as they were fully redeemed on November 15, 2020. Based on the most recent audited financial statements of the individual joint ventures as of June 30, 2021, the City was contingently liable for long-term debt as follows (in thousands):

Total Participating Contingent
Debt Share Liability
NCPA 597,178$ 33.00% 197,084$
TANC 169,945 9.65% 16,402
MSR PPA 26,425 35.00% 9,249
Total 793,548$ 222,735$

In addition, the City would, under certain conditions, be liable to pay a portion of the costs associated with the operations of the entities. Under certain circumstances, such as default or bankruptcy of the other participants, the City may also be liable to pay a portion of the debt of these joint ventures on behalf of those participants and seek reimbursement from those participants.

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Take-or-Pay commitments expire upon final maturity of outstanding debt for each project. Final fiscal year debt expirations as of June 30, 2021 are as follows:

Entitlement Debt Service
Project Debt Expiration Share % Share %
NCPA - Geothermal Project (NGP) July-2024 44.3905% 44.3905% NCPA - Hydroelectric Project (NHP) July-2032 37.0200% 37.0200% NCPA - Lodi Energy Center (NLEC)
(1)
June-2040 25.7500% 30.9657%
TANC - CA-OR Transmission Project (COTP) May-2039 9.7386% 9.6512% MSR PPA - San Juan Plant July-2022 35.0000% 35.0000%
(1) The SVP's debt service share in NLEC on issue one is 46.1588%, on issue two is 0%.

A summary of the City’s “Take-or-Pay” contracts and related projects and its contingent liability for the debt service including principal and interest payments at June 30, 2021 is as follows (latest information available):

Fiscal Year NGP NHP NLEC COTP MSR PPA Total
2022 2,197,534$ 12,858,730$ 7,566,771$ 1,003,698$ 9,711,100$ 33,337,833$ 2023 2,198,863 12,870,163 7,567,678 1,008,307 23,645,011 2024 1,541,819 14,375,558 7,565,130 1,348,027 - 24,830,534 2025 1,545,765 14,399,154 7,565,513 1,465,120 - 24,975,552 2026 - 7,912,261 7,581,031 1,464,903 - 16,958,195 2027-2031 - 39,516,428 38,615,584 7,324,369 - 85,456,381 2032-2036 - 17,218,945 38,621,715 7,324,877 - 63,165,537 2037-2041 - - 37,973,144 4,394,758 - 42,367,902 Total 7,483,981$ 119,151,239$ 153,056,566$ 25,334,059$ 9,711,100$ 314,736,945$

C. Northern California Power Agency (NCPA)
NCPA was formed in 1968 as a joint powers agency in the State of California. Its membership consists of sixteen public agencies. NCPA is generally empowered to sell, purchase, generate, transmit, manage electrical energy and provide regulatory and legislative advocacy. Members participate in the projects of NCPA on an elective basis. Therefore, the participation percentage varies for each project in which it participates.

A Commission comprised of one representative for each member governs NCPA. The Commission is responsible for the general management of the affairs, property, and business of NCPA. Under the direction of the General Manager, the staff of NCPA is responsible for providing various administrative, operating and planning services for NCPA and its associated power corporations.

Project Financing and Construction
NCPA’s project construction and development programs have been individually financed by project revenue bonds collateralized by NCPA’s assignment of all payments, revenues and proceeds associated with its interest in each project. Each project participant has agreed to pay its proportionate share of debt service and other costs of the related project, notwithstanding the suspension, interruption, interference, reduction or DRAFT

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curtailment of output from the project for any reason. Certain of the revenue bonds are additionally supported by municipal bond insurance credit enhancements.

Hydroelectric Project
NCPA is contracted to finance, manage, construct, and operate Hydroelectric Project Number One for the licensed owner, Calaveras County Water District (CCWD). In exchange, NCPA has the right to the electric output of the project for 50 years from February 1982. NCPA also has an option to purchase power from the project in excess of the CCWD’s requirements for the subsequent 50 years, subject to regulatory approval.

Geothermal Project
The NCPA Geothermal Plants have historically experienced greater than anticipated declines in steam production from the existing geothermal wells. Although initially operated as baseload generation projects at full capability (238MW), NCPA changed its steam field production from baseload to load-following and reduced average annual steam production. Along with other steam field operators in the area, the Agency began implementing various operating strategies to further reduce the rate of decline in steam production.

The Agency has modified both steam turbine units and the associated steam collection system to enable generation with lower pressure steam at higher mass-flow rates to optimize the utilization of the available steam resource. In fiscal year 2019-20, NCPA began a well-workover program to restore underperforming wells.

Based upon current operation protocols and forecasted operations, NCPA expects average annual generation and peak capacity to decrease further, reaching approximately 68 MW by the year 2040.

Combustion Turbine Project No. 1
NCPA owns five dual (natural gas and fuel oil) combustion turbine units, each of which is nominally rated at 25 MW, which are collectively known as the Combustion Turbine Project No. 1. These units were completed in 1986 and are designed to provide peak power and reserve requirements and emergency support.

Each purchaser is responsible under its power sales contract for paying an entitlement share in Combustion Turbine Project No. 1 of all NCPA’s costs of such project.

Lodi Energy Center
On May 24, 2010, SVP entered into an agreement with NCPA for a 25.75% interest in the Lodi Energy Center, a 280 MW combined cycle natural gas fired power plant, located in Lodi, California. The project received approval from the California Energy Commission in April 2010 and was placed into operation in November 2012. In January 2020, the Lodi Energy Center suffered a catastrophic turbine failure. NCPA replaced the turbine with a newer state-of-the-art turbine which could use hydrogen as a cleaner fuel source.

The majority of the replacement cost was covered by NCPA’s insurance resulting in relatively minimal financial impact to project participants.

D. Transmission Agency of Northern California (TANC)
TANC was organized under the California Government Code pursuant to a joint powers agreement entered into by 15 Northern California utilities. The purpose of TANC is to provide electric transmission and other facilities for the use of its members through its authority to plan, acquire, construct, finance, operate and DRAFT

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maintain facilities for electric power transmission. The joint powers agreement provides that the costs of TANC’s activities can be financed or recovered through assessment of its members or from user charges through transmission contracts with its members. Each TANC member has agreed to pay a pro-rata share of the costs to operate TANC and for payment of debt service, and has the right to participate in future project agreements.

The joint powers agreement remains in effect until all debt obligations and interest thereon have been paid, unless otherwise extended by the members.

California-Oregon Transmission Project
TANC is a participant and also the Project Manager of the California-Oregon Transmission Project (Project), a 340-mile long, 500-kilovolt alternating current transmission project between Southern Oregon and Central California. As Project Manager, TANC is responsible for the overall direction and coordination of all Project operations and maintenance, additions and betterments, and for general and administrative support.

The Project was declared commercially operable on March 24, 1993, with a rated transfer capability of 1,600 megawatts and provides a third transmission path between the electric systems of the Pacific Northwest and those in California. The Project has successfully met and completed the major environmental requirements.

As of June 30, 2021, the most recent data available, TANC’s investment in the Project was $546.5 million, less accumulated depreciation and amortization of $290.3 million.

In connection with its participation in the Project, TANC has an entitlement balance of the Project’s transfer capability of approximately 1,362 megawatts and is obligated to pay an average of approximately 80% of the operating costs associated with the Project. TANC incurred and initially capitalized all costs for project construction since they were expected to be recovered through reimbursement from Project participants and from the successful operations of the Project’s transmission lines. The Project agreement among the participating members provides that each member agrees to make payments, from its revenues, to TANC for project costs incurred and for payment of debt service.

Santa Clara has historically been obligated to pay 20.47% of TANC’s COTP operating and maintenance expenses and 20.70% of TANC’s COTP debt service and 22.16% of the Vernon acquisition debt. Santa Clara has also been entitled to 20.4745% of TANC’s share of COTP transfer capability (approximately 278 MW net of third party layoffs of TANC) on an unconditional take-or-pay basis. Starting on July 1, 2014 Santa Clara laid-off 147 MWs of this entitlement to other TANC members under a 25 year agreement.

During the term of this agreement the parties taking on the entitlement will pay all associated debt service, operations and maintenance costs, and all administrative and general costs. Santa Clara’s portion of the operating and maintenance expenses and the COTP debt service is 10.004 %.

E. San Jose/Santa Clara Regional Wastewater Facility and Clean Water Financing Authority (SJSC)
The City and the City of San Jose jointly own the San Jose/Santa Clara Regional Wastewater Facility, (RWF). The RWF provides wastewater treatment services to Santa Clara, San Jose, and seven other tributary agencies. The City of San Jose is the administering agency for the RWF. The San Jose/Santa Clara Clean Water Financing Authority (Authority) was created in 1981 to provide financing for capital improvements at the RWF.

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In 1959, the City and the City of San Jose entered into an agreement to construct and operate the RWF, (formerly referred to as the San Jose/Santa Clara Water Pollution Control Plant). Under the terms of the agreement, the cities own an undivided interest in the RWF and share in the capital and operating costs on a pro rata basis, determined by the ratio of each city’s assessed valuation to the sum of both cities assessed valuations. Such percentages are determined annually and applied to the capital and operating costs of the RWF, determined on an accrual basis. For the fiscal year ended June 30, 2021, the City’s portion of the plant capacity was approximately 19.46%, which is also its interest in the net position of the RWF.

Zero Waste Energy Development Company Ground Lease
On June 21, 2011, the San Jose City Council approved a ground lease with Zero Waste Energy Development Company (ZWED) to lease a portion of the former Nine Par landfill, which is a part of the San Jose/Santa Clara Regional Wastewater Facility lands. ZWED would lease the property in three phases. Under the terms of the proposed lease, ZWED will lease 40.7 acres from the City of San Jose for an initial term of seven years from the date of execution for all three leaseholds. The base rent for the initial phase (Phase 1) of the property would be payable as a proportional credit against the expenditure of site development costs estimated at $11.8 million or as a payment of $850,000 per year. Rent for the subsequent phases will be based on the amount of organic waste processed at the facility. Over the 30-year life of the lease, the estimate payment is a minimum of $16.5 million. The incoming revenue will be distributed between the City of Santa Clara, City of San Jose, and the tributary agencies to the RWF based on the master agreements with each agency.

South Bay Water Recycling Program
The South Bay Water Recycling Program (SBWR), a regional water reclamation program, is part of an action plan adopted by the Regional Water Quality Control Board (RWQCB) which limits the RWF on the amount of effluent discharged into San Francisco Bay in order to prevent conversion of salt marsh and destruction of endangered species habitat. Flow limits are not included in the current five year permit from the RQWCB. SBWR has a master plan to guide the continued operation and potential expansion of the SBWR in the absence of the previous regulatory drivers. The master plan was completed in December of 2014 and accepted by the City of San Jose and the Santa Clara Valley Water District during fiscal year 2014-

15. Under the previously approved action plan, SBWR was required to reclaim 21.1 million gallons per day (MGD) of plant effluent for nonpotable use by November 1, 1997, (Phase 1) and an additional 24.30 MGD by December 31, 2000 (Phase 2). The action plan also requires assessment of alternatives for potable reuse, including a potable pilot plant to be coordinated with the Santa Clara Valley Water District. In addition to habitat preservation, the project reduces the mass trace contaminates discharged to the San Francisco Bay and provides a reliable source of water to offset potable water demands. The current master plan recognizes that primary drivers for the continued operation and expansion of the recycled water system are based in the need for water supply, rather than wastewater discharge reduction.

When first built, the SBWR distribution system included approximately 67 miles of pipe, a four million gallon reservoir, a transmission pump station, and two booster pump stations. These facilities were constructed between 1996 and 1998 at a capital cost of approximately $140 million funded by the tributary agencies, grants and bond proceeds. Santa Clara’s share of Phase 1 costs was approximately $20.07 million.

Within Santa Clara, seven miles of distribution mains were added to the system in 2010 and 2011 and the entire SBWR distribution system now consists of over 140 miles of pipeline.

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Proceeds from the City of San Jose 1995 Series A and B Bonds and other funds were used to pay for the City of San Jose’s share of Phase 1. The City contributed existing capital reserves, existing recycled water distribution system, and additional construction of system extensions. Other sources for funding of Phase 1 include U.S. Bureau of Reclamation grants, State of California Revolving Fund loans, $6.45 million transferred in fiscal year 1995 from the Clean Water Financing Authority to the City of San Jose Wastewater Treatment Plant Capital Fund, and cash contributions from other participating agencies. The 2010 and 2011 extensions of the distribution system were funded in part by a combination of grants from the American Recovery and Reinvestment Act of 2009 (ARRA) and the United State Bureau of Reclamation totaling $10.4 million.

In June 1997, the RWQCB approved the Proposed Revision to the South Bay Action Plan (the Plan), which describes the projects necessary to reduce average dry weather effluent flow from the RWF to below 120 MGD and protect salt marsh habitat for endangered species in the South Bay as required by RWQCB Order 94-117. These projects include expanding the Phase 1 nonpotable water distribution system by extending additional piping, placing greater emphasis on water conservation programs, reducing infiltration inflow, augmenting stream flow, and creating wetlands. The estimated costs of $127.5 million has been funded through a combination of State Revolving Fund loans, Equipment Replacement Reserves, Sewage Treatment Plant Connection Fees, federal grants, in-kind services and cash contributions.

F. M-S-R Public Power Agency (MSR PPA)
MSR PPA is a joint power agency formed in 1980 by the Modesto Irrigation District, the City and the City of Redding, California, to develop or acquire and manage electric power resources for the benefit of the members. The personnel of its members and contract professional staff perform the administrative and management functions of MSR PPA. The member’s income and expense sharing ratio is as follows:

Modesto Irrigation District – 50%; City of Santa Clara – 35%; and City of Redding – 15%.

Prior to fiscal year ended December 31, 2020, SVP’s equity in MSR PPA’s net losses exceeds its investments and, therefore, the equity method of accounting for the investment was suspended. As of December 31, 2021, the date of the latest available audited financial statements, SVP was in a positive equity position of $7.9 million. The equity method of accounting of SVP’s investment in MSR PPA was applied.

Under the joint exercise of power agreement, which formed MSR PPA, the City is responsible for funding up to 35 percent of MSR PPA’s operating cost, to the extent such funding is necessary. During the year ended June 30, 2022, the City made no contributions to fund its share of operating deficits. If there were such contributions, they would be included in the Electric Utility Enterprise Fund expenses.

MSR PPA’s principal activity is a 28.8% ownership interest in a 507-megawatt unit of a coal-fired electricity generating plant located in New Mexico (San Juan Plant). The San Juan plant was jointly owned by the Public Service Company of New Mexico (PNM) (38.5%), MSR PPA (28.8%) and other municipal power entities (32.7%). On December 31, 2017, MSR PPA divested its ownership interest in the San Juan plant and no longer receives electric energy or capacity from the San Juan Generating Station.

In 2006, MSR PPA entered into a Wholesale Purchase and Sale Agreement and a Shaping and Firming Agreement with Avangrid Renewables, Inc. to provide renewable wind energy to the Members from the Big Horn I Wind Energy Project (Big Horn I Project) with a nominal installed capacity of approximately 199.5 MW. The City receives the power purchased by MSR PPA from the Big Horn I Project. The City’s share equates to approximately a 105 MW share of the output at a cost comparable to combined cycle gas-fuel DRAFT

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generation. Power deliveries commenced on October 1, 2006 and will continue through September 30, 2026.

Through an amendment of the original agreements MSR PPA has an obligation to continue to take the same output through September 30, 2031, or if the Big Horn Project is repowered MSR PPA will have a right of first offer to negotiate a long-term power purchase for such repowered project. The participation in this project is as follows: Modesto Irrigation District – 12.5%; City of Santa Clara – 52.5%; and City of Redding – 35%.

In 2009, MSR PPA entered into a Power Purchase Agreement and Redelivery Agreement with Avangrid Renewables Inc. to purchase additional wind power energy from the same site, called Big Horn II, with a nominal installed capacity of 50 MW for a twenty-year period. Deliveries of energy under this project began on November 1, 2010. The participation in this project is as follows: Modesto Irrigation District – 65%; City of Santa Clara – 35%.

M-S-R PPA San Juan
In 2015, the MSR PPA Commission approved a number of agreements (the “San Juan Restructuring Agreements”) to provide for the interests of MSR PPA and certain other San Juan Participants (the “exiting participants”) in the San Juan Generation Station to be transferred to the remaining San Juan Participants effective December 31, 2017. In addition to the ownership divesture, the San Juan Restructuring Agreements provide for, among other things, the allocation of ongoing responsibility for decommissioning costs, mine reclamation costs and any environmental remediation obligations among the exiting participants and the remaining San Juan Participants, and the establishment and funding of mine reclamation and plant decommissioning trust funds. The San Juan Restructuring Agreements were subsequently executed by all nine San Juan Generation Station owners and PNM Resources Development Company (a non-utility affiliate of PNM) and, following receipt of regulatory approvals, became effective on January 31, 2016. Various other implementing agreements and amendments to existing San Juan project agreements to effect the restructuring have also been executed. Closing of the ownership restructuring of the San Juan Generation Station and the divestiture of MSR PPA’s interests in San Juan Unit No. 4 was completed on schedule on December 31, 2017.

G. M-S-R Energy Authority (MSR EA)
MSR EA is a joint power agency formed in 2008 by the Modesto Irrigation District, the City of Santa Clara, and the City of Redding, California, to develop or acquire and manage natural gas resources for the benefit of the members. The personnel of its members and contract professional staff perform the administrative and management functions of MSR EA. The member’s income and expense sharing ratio is as follows: Modesto Irrigation District – 33.3%; City of Santa Clara – 33.4%; and City of Redding – 33.3%.

The City’s equity in MSR EA’s net losses exceeds its investment and, therefore, the equity method of accounting for the investment has been suspended. As of December 31, 2021, the date of the latest available audited financial statements, the City’s unrecognized share of member’s deficit of MSR EA was $27.2 million. Under the joint exercise of power agreement, which formed MSR EA, the City is responsible for funding up to 33.4% of MSR EA’s operating cost, to the extent such funding is necessary. During the year ended June 30, 2022, the City made no contributions to fund its share of operating deficits. If there were such contributions, they would be included in the Electric Utility Enterprise Fund expenses.

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In 2009, the City of Santa Clara, along with the Cities of Modesto and Redding participated in the M-S-R Energy Authority Gas Prepay Project. The Gas Prepay Project provides the City of Santa Clara, through a Gas Supply Agreement with MSR EA dated September 10, 2009, a secure and long-term supply of natural gas of 7,500 MM Btu (Million British thermal unit) daily or 2,730,500 MM Btu annually through December 31, 2012, and 12,500 MM Btu daily, or 4,562,500 MM Btu annually thereafter until September 30, 2039.

The agreement provides this supply at a discounted price below the spot market price (the Pacific Gas & Electric City gate index) over the next 30 years. As of December 31, 2021, bonds issued by MSR EA to finance the City’s share of the Gas Prepay Project were outstanding in the principal amount of $500,200,000.

These bonds were initially sold on August 27, 2009. Under the Gas Supply Agreement, MSR EA will bill the City for actual quantities of natural gas delivered each month on a “take-and-pay” basis. MSR EA has contracted with Citigroup Energy, Inc. (“CEI”) to use the proceeds of the Gas Prepay bond issue to prepay CEI for natural gas. CEI has guaranteed repayment of the bonds, and responsibility for bond repayment is non-recourse to the City of Santa Clara. Moreover, any default by the other Gas Prepay Project participants is also non-recourse to the City.

H. Silicon Valley Animal Control Authority
The City is a member of the Silicon Valley Animal Control Authority, (SVACA), established in 2000 to deliver animal control and sheltering services to three communities: the cities of Santa Clara, Campbell, and Monte Sereno. SVACA provides field and shelter services and staffing to support adoption and spay/neuter programs. SVACA purchased and retrofitted an existing cold-shell office building in Santa Clara that became a fully operating animal shelter. The shelter opened in the third quarter of 2006. SVACA is governed by a Board of Directors comprised of one appointed Councilmember from each of the four member cities.

During the fiscal year ended June 30, 20222, the City of Santa Clara contributed $1,062,366 to SVACA. The City’s equity interest in SVACA was $5,485,729 at June 30, 2021 (the most recent audited information available). Audited financial statements are available from SVACA, located at 3370 Thomas Road, Santa Clara, CA 95051.

NOTE 13 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN A. Plan Description
The City contributes to the California Public Employees Retirement System (CalPERS), an agent multiple- employer defined benefit plan, which is a public employee retirement system that acts as a common investment and administrative agent for participating public entities within the State of California. CalPERS offers a menu of benefit provisions and other requirements that are established by State statutes within the Public Employee Retirement law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance. CalPERS issues a separate Annual Comprehensive Financial Report. Copies of the CalPERS’ annual financial report may be obtained from the CalPERS website at www.calpers.ca.gov.

The City’s defined benefit pension plans for Miscellaneous and Safety employees with CalPERS provide retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. All permanent (full-time and part-time) and eligible “as-needed” hourly City employees are required to participate in CalPERS. Employees fall under two categories, Classic and PEPRA. Employees DRAFT

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hired on or before December 31, 2012 are considered Classic PERS members. Employees hired on or after January 1, 2013 fall into the PEPRA PERS members.

B. Pension Plan Benefits
On September 12, 2012, the State of California passed Assembly Bill (AB) 340, which created the Public Employees’ Pension Reform Act (PEPRA). PEPRA implemented new benefit formulas and final compensation period, as well as new contribution requirements for new employees hired on or after January 1, 2013 who meet the definition of new member under PEPRA. Please refer to the Pension Reform section of the CalPERS website for more information regarding when an employee will be considered a new member under PEPRA.

Benefits for employees in the Miscellaneous Plan and Safety Plan vest after five years of CalPERS credited service. The retirement benefits are based on the retiree’s age, years of CalPERS credited service, and benefit factor of 2.7% at 55 for the Classic Miscellaneous Plan members and 3% at 50 for the Classic Safety Plan members. For members under PEPRA, the benefit factor is reduced to 2% at 62 for the Miscellaneous Plan and 2.7% at 57 for the Safety Plan.

Miscellaneous Plan
Participants in this plan are eligible for service retirement and receive graduated benefits upon attaining the age of 50 and with at least five years of credited service with a CalPERS employer. The service retirement benefit is a monthly allowance equal to the product of the benefit factor (2.7% at 55 for Classic members or 2% at 62 for PEPRA members), years of service, and final compensation (monthly average of member’s highest 12 or 36 (for new members) consecutive months full-time equivalent monthly pay). The service retirement benefit for this group is not capped. The compensation limit for Classic members for the 2022 calendar year is $305,000. Employees with membership dates prior to July 1, 1996 are not impacted by this limit. The compensation limit for PEPRA for calendar year 2022 is $134,974 for employees covered by Social Security and is adjusted annually with the CPI for all Urban Consumers.

Safety Plan
Participants in this plan are eligible for service retirement upon attaining the age of 50 and with at least five years of credited service with a CalPERS employer. The service retirement benefit is a monthly allowance equal to the product of the benefit factor (3% at 50 for Classic members or 2.7% at 57 for new members), years of service, and final compensation. For Classic Fire Safety employees, the final compensation is the monthly average of member’s highest 36 consecutive months full-time equivalent monthly pay for both Classic and new members, and for Classic Police Safety employees, it is the monthly average of the member’s highest 12 or 36 (for new members) consecutive months full-time equivalent monthly The service retirement benefit for the Safety Plan group is capped at 90% of final compensation for the Classic members. PEPRA members have an annual compensation limit on reportable earnings. The compensation limit for calendar year 2022 is $161,969 for employees not covered by Social Security and is adjusted annually with the CPI for all Urban Consumers.

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

Hire date
Prior to
January 1,
2013
On or After
January 1,
2013
Prior to
January 1,
2013
On or After
January 1,
2013
Benefit formula 2.7% @ 55 2.0% @ 62 3.0% @ 50 2.7% @ 57 Benefit vesting schedule 5 years service 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life monthly for life Retirement age 50 - 55 52 - 67 50 50 - 57
Monthly benefits, as a % of
eligible compensation 2.00% - 2.70% 1.00% - 2.50% 3.00% 2.00% - 2.70% Required employee contribution rates 8.00% 6.50%
Public Safety - Fire 9.00% 11.75%
Public Safety - Police 9.00% 11.75%
Required employer contribution rates 11.160% 11.160% 21.230% 21.230% Required unfunded liability contribution
Miscellaneous Safety
$24,570,525 $20,872,387

Beginning in fiscal year 2015-16, CalPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability. The dollar amounts are billed on a monthly basis. The City’s required contribution for the miscellaneous plan’s unfunded liability was $24,570,525 in fiscal year 2021-22. The City’s required contribution for the safety plan’s unfunded liability was $20,872,387 in fiscal year 2021-22.

Employees Covered
At the valuation date, June 30, 2020 and measurement date June 30, 2021, the following employees were covered by the benefits terms for each Plan:

Miscellaneous Safety
1,026 497
539 78
Active employees 741 289
Total 2,306 864
Inactive employees or beneficiaries currently
receiving benefits
Inactive employees entitled to but not yet
receiving benefits

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C. 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 the rate. Funding contributions for both Plans are determined annually 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 rate of employees. For the year ended June 30, 20222, the City’s contributions to the miscellaneous and safety plans were $34,126,897 and $32,084,531, respectively.

D. Net Pension Liability
The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plans’ fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2021, using an annual actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Payroll Growth
Projected Salary Increase
Investment Rate of Return
(1)
Post Retirement Benefit Increase
Mortality
(2)
(1) Net of pension plan investment and administrative expenses; including inflation All Plans
June 30, 2020
June 30, 2021

7.15%

2.50%
Entry-Age Normal Cost Method
Derived using CalPERS' membership data for all funds
(2)

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' December 2017 experience study report available on CalPERS' website.

The lesser of Contract COLA or 2.5% until Purchasing
Power applies, 2.5% thereafter

2.75%
Varies by Entry-Age and Service

7.15%

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NOTE 13 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)

125

The underlying mortality assumptions and all other actual assumption used in the June 30, 2020 valuation were based on the results of a December 2017 actuarial experience study for the period 1997 to 2015.

Further details of the Experience Study can be found on the CalPERS website.

Discount Rate
The discount rate used to measure the total pension liability for the Plan was 7.15%. The projection of cash flows used to determine the discount rate for the Plan assumed that 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 statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members for all plans in the PERF. Therefore, the long-term expected rate of return on plan investments was applied to all period of projected benefit payments to determine the total pension liability for the Plan.

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

In determining the long-term expected rate of return, CalPERS took into account both short-term and long- term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ assets classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ 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 rounded 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 equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

The table below reflects the long-term expected real rates of return by asset class.

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For the year ended June 30, 2022
NOTE 13 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)

126

Asset Class
(1)
Assumed Asset
Allocation
Real Return
Years 1 - 10
(2)
Real Return
Years 11+
(3)
Public Equity 50.00% 4.80% 5.98%
F
ixed Income 28.00% 1.00% 2.62%
Inflation Assets - 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Assets 13.00% 3.75% 4.93%
Liquidly 1.00% - -0.92%
100.00%
(2) An expected inflation of 2.00% used for this period. (3) An expected inflation of 2.92% used for this period. (1) In the CalPERS Annual Comprehensive Financial Report, 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.

E. Changes in the Net Pension Liability
The changes in the Net Pension Liability for each Plan follows:

Miscellaneous Plan:

Total Pension
Liability
Plan Fiduciary Net
Position
Net Pension
Liability/(Asset)
Balance at June 30, 2020 measurement date 799,410,972$ 494,872,454 $ 304,538,518 $ Changes in the year:

Service cost 15,428,984 - 15,428,984 Interest on the total pension liability 56,183,036 - 56,183,036 Differences between expected and actual
experience 1,328,853 - 1,328,853 Contributions - employer - 31,272,528 (31,272,528) Contributions - employees - 6,333,120 (6,333,120) Net investment income - 112,780,714 (112,780,714) Benefit payments, including refunds of
employee contributions (45,355,148) (45,355,148) - Administrative expense - (494,347) 494,347 Net changes 27,585,725 104,536,867 (76,951,142) Balance at June 30, 2021 measurement date 826,996,697$ 599,409,321$ 227,587,376$ Increase (Decrease)

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For the year ended June 30, 2022
NOTE 13 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)

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Safety Plan:

Total Pension
Liability
Plan Fiduciary Net
Position
Net Pension
Liability/(Asset)
Balance at June 30, 2020 measurement date 835,779,951$ 541,301,220$ 294,478,731$ Changes in the year:

Service cost 15,750,690 - 15,750,690 Interest on the total pension liability 59,165,587 - 59,165,587 Differences between expected and actual
experience 7,316,002 - 7,316,002 Contributions - employer - 29,084,516 (29,084,516) Contributions - employees - 5,742,937 (5,742,937) Net investment income - 122,207,114 (122,207,114) Benefit payments, including refunds of
employee contributions (46,961,121) (46,961,121) - Administrative expense - (540,727) 540,727 Net changes 35,271,158 109,532,719 (74,261,561) Balance at June 30, 2021 measurement date 871,051,109$ 650,833,939$ 220,217,170$ Combined Total 1,698,047,806$ 1,250,243,260$ 447,804,546$ Increase (Decrease)

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

Miscellaneous Safety
1% Decrease 6.15% 6.15%
Net Pension Liability 329,339,664$ 344,044,055$
Current Discount Rate 7.15% 7.15%
Net Pension Liability 227,587,376$ 220,217,170$
1% Increase 8.15% 8.15%
Net Pension Liability 142,776,616$ 126,402,796$
Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

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For the year ended June 30, 2022
NOTE 13 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)

128

F. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2022, the City recognized pension expense of $19,461,190 for the Miscellaneous Plan and $22,687,233 for the Safety Plan, for total pension expense of $42,148,423.

At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Miscellaneous Plan:

Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to measurement date 34,126,897$ -$ Changes of assumptions - -
Differences between expected and actual experience 6,174,491 - Net differences between projected and actual earnings
on pension plan investments - (56,772,710) Total 40,301,388$ (56,772,710)$

Safety Plan:

Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to measurement date 32,084,531$ -$ Changes of assumptions - (158,754) Differences between expected and actual experience 13,963,503 - Net differences between projected and actual earnings
on pension plan investments - (61,140,875) Total 46,048,034$ (61,299,629)$
Combined Total 86,349,422$ (118,072,339)$
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NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 13 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)

129

The reported $34,126,897 for the Miscellaneous Plan and $32,084,531 for the Safety Plan 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 pension will be recognized as pension expense as follows:

Measurement Period
Ended June 30
Miscellaneous Plan
Annual Amortization
Safety Plan
Annual Amortization
2022 (10,165,196)$ (9,414,056)$
2023 (11,466,512) (9,286,380)
2024 (13,417,009) (12,180,424)
2025 (15,549,502) (16,455,266)
G. Subsequent Events
On July 12,2021, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-21.

Based on the thresholds specified in CalPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of .20% from 7.00% to 6.80%. Since CalPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle, the board elected to defer any changes to the asset allocation until the ALM process concluded, and the board could make its final decision on the asset allocation in November 2021.

On November 17, 2021, the board adopted a new strategic asset allocation. The new asset allocation along with the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of 6.90% (net of investment expense but without a reduction of administrative expense) for financial reporting purposes. This includes a reduction in the price inflation assumption from

2.50% to 2.30% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modifications to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the board. These new assumptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date.

NOTE 14 – RETIREMENT PLAN - DEFINED CONTRIBUTION PLAN
The City’s Public Agency Retirement System Plan (PARS Plan) is a compulsory retirement plan that qualifies under Section 401 of the Internal Revenue Code covering City employees who are not members of CalPERS. Under the provisions of the PARS Plan, the City makes no contributions; however, all administrative costs of the plan are funded by the City. The PARS Plan administrator is Phase II Systems.

The total assets of the PARS Plan are held in trust for the employees and are not included in the City’s assets or equity.

NOTE 15 – DEFERRED COMPENSATION PLAN
City employees may defer a portion of their compensation under a City sponsored deferred compensation plan created in accordance with Internal Revenue Code Section 457. Under this plan, participants are not DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

NOTE 15 – DEFERRED COMPENSATION PLAN (continued)

130

taxed on the deferred portion of their compensation until distributed to them; distributions may be made only at termination, retirement, death or in an emergency as defined by the Internal Revenue Service.

The Plan is part of the public agency agent multiple-employer defined contribution plan that is administered by Nationwide. Benefit provisions under the Plan are established by City Resolution.

The laws governing deferred compensation plan assets require plan assets to be held by a trust for the exclusive benefit of plan participants and their beneficiaries. Since the assets held under these plans are not the City’s property and are not subject to City control, they have been excluded from these financial statements.

The City has no liability for any losses incurred by the Plan and does not participate in any gains, but does have the duty of due care that would be required of an ordinary prudent investor. The City has a contract with Nationwide to manage and invest the assets of the Plan. The administrator pools the assets of the Plan with those of other participants and does not make separate investments for the City. The assets in the Plan are the sole property of the participants or their beneficiaries. Since the assets held under the Plan are not the City’s property and are not subject to claims by general creditors of the City, they have been excluded from these financial statements. The Plan requires investments to be stated at fair market value and it requires all gains and losses on Plan investments to accrue directly to participant accounts.

Under the terms of the Memorandum of Understanding (MOU) with the Police Officers Association Unit 2, Police Officers Association Recruits Unit 2R, and the Unclassified Police Management Association, the City is required to make a monthly contribution of $150 to each employee and under the MOU with the Public Safety Non‐Sworn Employees Association Unit 10, the City is required to make a monthly contribution of $100 to each employee. The City’s required contributions for the year ended June 30, 2022 totaled $308,435.

NOTE 16 – OTHER POST EMPLOYMENT BENEFITS
A. Plan Description
The City’s agent multiple-employer defined benefit Other Post Employment Benefit (OPEB) Plan, which was established by City Council in fiscal year 2007-08 in accordance with GAAP, provides reimbursements to retirees for qualified expenses. Employees who have retired from the City with at least ten years of service and meet certain criterion based upon retirement date, household income in the most recent calendar year and age are entitled to reimbursements for qualified expenses. Annual maximum reimbursement amounts differ depending on when an employee retired from City service. The majority of retirees may be eligible for a maximum of $4,626 in annual reimbursements. Amendments to benefit provisions are negotiated by the various bargaining units at the City and must be approved by Council. In fiscal year 2007- 08, the City established an irrevocable exclusive agent multiple-employer defined benefit trust which is administered by Public Agency Retirement Services (PARS). The City is the Plan administrator, and PARS administers the investment trust for the City’s Plan. The trust is used to accumulate and invest assets necessary to reimburse retirees. Separate financial reports are issued by PARS for the OPEB Plan Trust. The report can be obtained by writing to PARS at 4350 Von Karman Avenue, Suite 100, Newport Beach, CA 92660, or by calling 1-800-540-6369.

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NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

NOTE 16 – OTHER POST EMPLOYMENT BENEFITS (continued)

131

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the OPEB plan and additions to and deduction from the OPEB’s fiduciary net position have been determined on the same bases. For this purpose OPEB benefit payments are recognized when currently due and payable in accordance with the benefits terms. Investments are report at fair value.

Generally accepted accounting principles require that the reporting results must pertain to liability and asset information within certain defined timeframes. For the fiscal year 2021-22, the following time frames were used.

Measurement Date
Measurement Period
Actuarial valuation date
(1)
June 30, 2022
June 30, 2020
July 1, 2021 to June 30, 2022
(1) Update procedures were used to roll forward the Total OPEB liability from the valuation date to the measurement date.

B. Plan Membership
As of June 30, 2022, membership in the plan consisted of the following:

Number of
Covered Employees
661
281
Active employees 973
Total 1,915
Inactive employees currently receiving benefits
Inactive employees entitled to but not yet receiving
benefit payments

C. Contributions
The OPEB Plan trust annual contributions are based upon actuarial determine contributions. The contribution requirements are established and may be amended by the City Council. Plan members do not make contributions to the plan; the plan is funded entirely by employer contributions. For the fiscal year ending June 30, 2022 the City’s cash contributions were $4,054,583 in payments to the trust, $14,747 in administrative expenses paid outside of the trust, and the estimated implied subsidy was $999,000, for total contributions of $5,068,330.

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For the year ended June 30, 2022

NOTE 16 – OTHER POST EMPLOYMENT BENEFITS (continued)

132

D. Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2022 and the total OPEB liability used to calculate the Net OPEB liability was determined by an actuarial valuation dated June 30, 2020, rolled forward to June 30, 2022 using standard actuarial methods, based on the following actuarial methods and assumptions:

Actuarial Assumptions
Actuarial Assumption
Actuarial valuation date
Discount rate
Inflation
Salary increases
Investment rate of return
Funding policy
Mortality, Disability,
Termination, and Retirement
Mortality Improvement
Healthcare cost trend rates
Healthcare participation for future
retirees - Cash subsidy
PEMHCA minimum only: Currently covered: 80%, Waived: 25% Healthcare participation for future
retirees - PEMHCA implied subsidy Currently covered: 80% Waived: 25% Significant Actuarial Assumptions Used in Total OPEB Liability Crossover analysis showed benefit payments always fully funded by plan assets
June 30, 2022 Measurement Date
June 30, 2020

4.75% at June 30, 2022
Other plans: : Currently covered: 80%, Waived: 40%
CalPERS 1997-2015 Experience Study
Full pre-funding to PARS trust

5.25% at June 30, 2020
Medicare (Kaiser) - 5% for 2022 scaling down to 4.0% in year

2.75%
Medicare (Non-Kaiser) - 6.1% for 2022 scaling down to 4.0% in year 2076
PARS portfolio: Moderately Conservative
Non-Medicare - 7% for 2022, scaling down to 4.0% in year 2076 Mortality projected fully generational with Scale MP-2020 Aggregate 3%

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NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

NOTE 16 – OTHER POST EMPLOYMENT BENEFITS (continued)

133

E. Discount Rate
The discount rates used to measure the total OPEB liability was 4.75% as of June 30, 2022. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rate equal to the actuarially determined contributions rates. Based on those assumptions, the OPEB 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 OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Asset Class
Target
Allocation
Long-Term Expected
Real Rate of Return
Mutual Funds - Equity 29% 4.82%
Mutual Funds - Fixed Income 65% 1.47%
REIT'S 1% 3.76%
Cash and equivalent 5% 0.06%
100%
Expected Inflation 2.75%
Discount Rate 4.75%

F. Changes in the OPEB Liability
The changes in the Net OPEB liability and Fiduciary Net Position are as follows:
2022 2021
Total OPEB Liability $ 67,638 $ 65,587 Fiduciary Net Position (27,223) (28,877)
Net OPEB Liability 40,415$ 36,710$
Plan Fiduciary Net Position as a
percentage of the Total OPEB Liability 40.2% 44.0%
Net OPEB Liability
(In Thousands)

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

NOTE 16 – OTHER POST EMPLOYMENT BENEFITS (continued)

134

The changes in Net OPEB details as follow:

Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability/(Asset)
Balance at June 30, 2021 measurement date 65,586$ 28,876$ 36,710$ Changes in the year:

Service cost 2,344 - 2,344 Interest 3,145 - 3,145 Differences between expected and actual
experience - - - Change in Assumption - - - Contributions - employer
(1)
- 5,068 (5,068)
Net investment income - (3,222) 3,222 Benefit payments (3,437) (3,437) - Administrative expense - (62) 62 Net changes 2,052 (1,653) 3,705 Balance at June 30, 2022 measurement date 67,638$ 27,223$ 40,415$ (1) Includes implied subsidy of $999 thousand
Increase (Decrease)
Changes in Net OPEB Liability
(In Thousands)

G. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following table presents the net OPEB liability of the Plan as of June 30, 2022, calculated using the discount rate of 4.75%, as well as what the plan’s net OPEB liability would be if it were calculated using a discount rate that is 1% point lower or 1% point higher than the current rate. 1% Decrease Current Rate 1% Increase
(3.75%) (4.75%) (5.75%)
Net OPEB Liability 49,339$ 40,415$ 33,078$ Sensitivity of Net OPEB Liability to Changes in Discount Rate (In Thousands)

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

NOTE 16 – OTHER POST EMPLOYMENT BENEFITS (continued)

135

H. Sensitivity of the Net OPEB Liability to Healthcare Cost Trend Rates The following table presents the net OPEB liability of the City, as of June 30, 2022, as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1% point lower or 1% point higher than the current rate.
1% Decrease Current Rate 1% Increase
(6% Non-Medicare
4% Medicare
decreasing to 3.0% )
(7% Non-Medicare
5% Medicare
decreasing to 4.0% )
(8% Non-Medicare
6% Medicare
decreasing to 5.0% )
Net OPEB Liability 31,091$ 40,415$ 52,060$ Sensitivity of Net OPEB Liability to Changes in Healthcare Care Trend Rates (In Thousands)

I. OPEB Expense and Deferred Outflows and Inflows of Resources Related to OPEB For the year ended June 30, 2022, the City recognized OPEB expense as follows:
2022
Fund level expense $ 4,054
Actuarial Expense (343)
OPEB Expense 3,711$
OPEB Expense
(In Thousands)

As of fiscal year ended June 30, 2022, the City reported deferred outflows as of resources related to OPEB from the following sources.

Deferred Outflows
of Resources
Deferred Inflows
of Resources
Changes of assumptions 1,166$ 2,070$
Differences between expected and actual experience - 806 Net differences between projected and actual earnings
on OPEB plan investments 2,602 -
Total 3,768$ 2,876$
Deferred Outflows and Inflows Balance
(In Thousands)

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

NOTE 16 – OTHER POST EMPLOYMENT BENEFITS (continued)

136

Amounts reported as deferred outflows of resources related to OPEB will be recognized as expense as follows:

For the Year ending June 30 Amount
2023 (489)$
2024 (419)
2025 586
2026 1,148
2027 66
Thereafter -
Recognition of Deferred Outflows and Inflows of Resources in Future OPEB Expense (In Thousands)

NOTE 17 – ELECTRIC UTILITY - SILICON VALLEY POWER (SVP) The City’s Electric Utility Department provides electricity to City residents and businesses under the name Silicon Valley Power (SVP).

A. Long-term Power Purchase Contracts
The City purchases wholesale electric power from various participants of the Western Systems Power Pool (WSPP), NCPA, MSR Public Power Agency (Note 12), Western Area Power Administration, and other sources to supply the power requirements of the City’s electric utility customers under long-term power purchase agreements (PPAs). The City actively manages the financial risks inherent in these PPAs, including the risks arising from the changing spot market prices that move above and below the contract prices and from contract disputes that may arise from time to time. The cost of power under PPAs is included in enterprise fund materials, services and supplies expense and excluded from wholesale resources purchase.

B. Restructuring of the California Electric Industry
Deregulation Legislation and Direct Access
The passage of AB1890 in 1998 triggered fundamental changes in the structure of the electric industry in California. Generally, AB1890 provided for creation of the California Power Exchange (Cal PX), which was to be a clearinghouse for energy transactions among investor-owned utilities, independent generators and power marketers, who in turn would serve so called direct-access customers. AB1890 also created the California Independent System Operator (CAISO), which was to manage the state’s bulk transmission grid.

However, in 2000 and 2001, the price of electricity at the Cal PX became extremely high, and investor- owned utilities were unable to pay for the energy that they needed from the Cal PX. Eventually the Cal PX filed for bankruptcy and was dismantled. Investor-owned utility PG&E and several energy marketers would also file for bankruptcy and over a decade of litigation ensued.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 17 – ELECTRIC UTILITY – SILICON VALLEY POWER (SVP) (continued)

137

The CAISO, however, continues to manage the state’s bulk electric system and the day-ahead and day-of markets, and it has implemented various price controls and tariffs in an effort to avoid repeating the mistakes of 2000 and 2001. Along with balancing control area responsibility, the CAISO has also announced that it will take on the role of reliability coordinator for the region.

Energy Wholesale Trading and Risk Management
SVP participates in the wholesale gas and power market and the CAISO’s centralized market. Since CAISO’s Market Redesign and Technology Upgrade (MRTU), CAISO has become the ultimate buyer and seller in the California day ahead market. Therefore, SVP engages in the trading of commodity forward contracts (gas and electric energy contracts) to secure fuel supply and hedge daily power purchase/sales from/to CAISO. Activities during the fiscal year were substantially considered hedging transactions and, as such, have been accounted for using the settlement method of accounting. Accordingly, related gross sales and purchases totaling $36.0 million and $18.4 million, respectively, for fiscal year ended June 30, 2022, have been separately reported on the statement of revenues, expenses and changes in net position.

The restructured electric wholesale market exposes SVP to various risks including market, credit and operational risks. Active and effective management of these risks associated with the power trading activity is critical to its continued success and contribution to the entire utility. A Risk Management Committee, separate from the units that create the risk exposures, overseen by a Risk Oversight Committee that reports ultimately to the City Council, administers and monitors compliance with the risk policies and procedures on a regular basis. The City and SVP believe that it has the resource commitment, and effective policies and procedures, and is continuing to improve the control structure and oversight for evaluating and controlling the market and credit risks to which it is exposed.

Credit Arrangements
The City of Santa Clara electric utility maintains credit policies, procedures, and systems that help mitigate credit risk and minimize overall credit risk exposure. The policies include transacting only with investment grade counterparties, evaluating potential counterparties’ financial condition and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. Additionally, SVP is a signatory to the WSPP netting agreement supplement and otherwise, enters into master netting arrangements whenever possible and, where appropriate, obtains collateral prior to trade execution. Master netting agreements incorporate rights of setoff that provide for the net settlement of subject contracts with the same counterparty in the event of default.

NOTE 18 – NET POSITION/FUND EQUITY
Net Position is measured on the full accrual basis and presented in the Government-wide Financial Statements, while Fund Balance is measured on the modified accrual basis and presented in the Governmental Funds Financial Statements.

A. Government-wide Financial Statements - Net Position
Net Position is the excess of all the City’s assets and deferred outflow of resources over all its liabilities and deferred inflow of resources, regardless of fund. Net Position is divided into three captions. These captions apply only to Net Position, which is determined only at the government–wide level, and are described below:

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 18 – NET POSITION/FUND EQUITY (continued)

138

Net investment in capital assets describes the portion of Net Position which is represented by the current net book value of the City’s capital assets, less the outstanding balance of any debt issued to finance these assets.

Restricted describes the portion of Net Position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. These principally include developer fees received for use on capital projects, debt service requirements, and redevelopment funds restricted to low and moderate-income purposes.

Unrestricted describes the portion of Net Position which is not restricted as to use.

B. Governmental Fund Financial Statements - Fund Balances The City categorizes fund balance in accordance with GAAP. The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used:

Nonspendable Fund Balance
Amounts that cannot be spent either because they are in a nonspendable form or are required to be maintained intact.

Restricted Fund Balance
Amounts that are constrained to specific purposes by federal, state, county, local laws, or externally imposed conditions by grantors or creditors.

Committed Fund Balance
Amounts that can only be used for specific purposes pursuant to constraints imposed by the City Council, the City’s highest level of decision-making authority, through resolutions. These committed amounts cannot be used for any other purpose unless the Council removes or changes the specific uses through the same type of formal action taken to establish the commitment. These Council actions must occur prior to June 30th of the applicable fiscal year.

Assigned Fund Balance
Amounts that are constrained by the City’s intent are to be used for specific purposes, but are neither restricted nor committed. The City Council delegated the authority to assign amounts to be used for specific purposes to the City Manager per Ordinance 1784, September 16, 2003.

Unassigned Fund Balance
These are either residual positive net resources of the General Fund in excess of what can properly be classified in one of the other four categories in the General Fund, or negative balances in all other funds. The Unassigned Fund Balance includes the Budget Stabilization (Emergency) and Capital Projects Reserves, and other undesignated fund balances. The balances in these accounts are $52.9 million, $9.9 million, and $13.6 million, respectively. Additional information is described in the Stabilization Arrangement section of this note.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 18 – NET POSITION/FUND EQUITY (continued)

139

Under the City’s encumbrance system of accounting, a portion of fund balance that has been encumbered for a specific future use is classified in the appropriate fund balance component based on the nature of the encumbrance.

Fund Balance Classification
Non-Major Fund Balance
General Santa Clara Governmental June 30,
Fund Housing Successor Funds 2021
Nonspendable:

Receivables, inventory & prepaid 307,044$ -$ -$ 307,044$ Leases 1,397,235 - - 1,397,235 Advances to other Funds 5,539,540 - - 5,539,540 Total Nonspendable 7,243,819 - - 7,243,819 Restricted For:

Gas tax programs - - 2,118,981 2,118,981 Housing & Community - 15,322,517 17,250,750 32,573,267 Maintenance districts - - 1,635,977 1,635,977 Operating grants - - 1,952,011 1,952,011 Debt service - - 722,541 722,541 Environmental enforcements 528,409 - - 528,409 Parks & recreation - - 25,036,301 25,036,301 Streets and highway - - 43,014,307 43,014,307 Public safety 364,992 - - 364,992 Library 19,488 - - 19,488 Public facilities 220,181 - 2,501,248 2,721,429 Donations 790,667 - 470,088 1,260,755 Pension rate stabilization program 21,367,474 - - 21,367,474 Storm drain - - 423,110 423,110 Total Restricted 23,291,211 15,322,517 95,125,314 133,739,042 Committed to:

Housing programs - - 4,228,920 4,228,920 Parks & recreation - - 3,382,773 3,382,773 Streets and highway - - 15,803,604 15,803,604 Storm drain - - 6,129,737 6,129,737 Public safety - - 1,332,933 1,332,933 Library - - 160,526 160,526 Public facilities - - 13,991,632 13,991,632 Building inspection - - 28,791,322 28,791,322 Land investment 23,892,284 - - 23,892,284 Historical preservation 92,754 - - 92,754 Total Committed 23,985,038 - 73,821,447 97,806,485 Assigned to:

General Government 9,739,522 - - 9,739,522 Other purposes 104,273 - - 104,273 29,261 Total Assigned 9,843,795 - - 9,843,795 Unassigned: 76,750,858 - - 76,750,858 Total Fund Balances 141,114,721$ 15,322,517$ 168,946,761$ 325,383,999$ Major Funds

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 18 – NET POSITION/FUND EQUITY (continued)

140

C. Fund Balance Policy
When both restricted and unrestricted funds are available for expenditure, the City’s Fund Balance Policy reduces all Governmental Funds Balances in the following order: Restricted, Committed, Assigned, and Unassigned fund balances unless disallowed by City Council or legal requirements.

Stabilization Arrangement
Maintaining financial stabilization is a necessity for sound financial management and fiscal accountability.

Its purpose is to ensure funds are available to cover occasional budgetary shortfalls (i.e., when general unrestricted revenues decline) or other unexpected urgent events. The City’s Budget Stabilization Reserves (Emergency) and Capital Projects Reserves are maintained for these purposes. As of June 30, 2022, the Budget Stabilization and Capital Projects Reserves were $52.9 million and $9.9 million, respectively, and are a component of the General Fund’s Unassigned Fund Balance.

In 1985-86, the City Council established a policy regarding the City's General Contingency Reserve, under which two separate reserves were established.
 The Budget Stabilization Reserve is set aside primarily for weathering economic downturns, emergency financial crisis, or disaster situations. The reserve target is equal to the cost of the City’s General Fund operations for three months (90-days or 25% General Fund operating budget). Given the significant impacts of COVID-19 0n the City’s budget, the City Council Adopted the FY2021-22 budget principles that allow this reserve to drop to 15% of budgeted expenditures.  The Capital Projects Reserve, earmarks funds for a five-year capital improvement program. The minimum target for this reserve is $5 million.

One of the strategic objectives on the 2017-18 Council Goals and Strategic Objectives list is to continue to replenish City reserves and maintain strong, fiscally-sound management policies of City revenues with long term goals in mind.

Pension Rate Stabilization Program Trust
In fiscal year 2016-17, the City established an irrevocable trust account with PARS to pre-fund retirement plan obligations. The contributions placed in the trust will reduce the City’s net pension liability for financial purposes as required by GAAP. As of June 30, 2022, the balances in the pension rate stabilization program trust for the General Fund and Enterprise Funds are listed as follows:

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 18 – NET POSITION/FUND EQUITY (continued)

141

Pension Rate
Stabilization
Balances
General Fund: 21,367,474$
Enterprise Funds:

Electric Utility 6,146,358
Water Utility 1,267,460
Sewer Utility 595,654
Water Recycling 108,715
Solid Waste 288,662
29,774,323$
Fund Name

D. Net Position/Fund Balance Deficits
The funds listed below had an accumulated deficit as of June 30, 2022:

Accumulated
Deficit
Enterprise Funds:

Solid Waste 773,159$
Internal Service Funds:

Information Technology Services 645,102 $
Special Liability Insurance Claims 781,254$
Workers’ Compensation Insurance Claims 11,555,432$
Fund Name

The Solid Waste deficit is mainly due to liabilities incurred for landfill postclosure care and is expected to be funded by charges for services in future years. The Information Technology Service, Special Liability Insurance Claims and Workers Compensation Insurance Claims’ Internal Service Fund accumulated deficits are expected to be offset by future charges to the General Fund and the enterprise funds.

NOTE 19 – RISK MANAGEMENT
The City is exposed to various risks of losses related to torts, errors and omissions, general liability, injuries to employees and unemployment claims. The City currently reports all of its risk management activities in its Internal Service Funds. Claims, expenditures and liabilities are reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated using actuarial methods or other estimating techniques.

The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general liability claims and workers’ compensation claims. The estimated liabilities for general liability and workers’ compensation claims are based on case reserves and include amounts for claims incurred but not DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 19 – RISK MANAGEMENT (continued)

142

reported (IBNR). At June 30, 2022, the estimated claims payable of $31,028,000, consisting of reserves for both reported and IBNR losses, as well as, allocated loss adjustment expenses, have been recorded in the Special Liability and Workers’ Compensation Internal Service Funds, respectively. The claims payable are reported at their present value using expected future investment yield assumptions of 2.5%, and the undiscounted claims at June 30, 2022, totaled $10,057,000 and $20,971,000 for general liability and workers’ compensation claims, respectively.

The estimate of claims due in one year is the City’s best estimate based upon available information which is included in accrued liabilities.

Changes in the reported liability since June 30, 2020 resulted from the following:

Special
Liability
Workers'
Compensation Total
Liability as of June 30, 2020 7,697,000$ 21,603,000$ 29,300,000$ Claims and changes in estimates during fiscal 2020 11,449,175 4,529,703 15,978,878 Claim payments (12,212,175) (4,329,703) (16,541,878) Liability as of June 30, 2021 6,934,000$ 21,803,000$ 28,737,000$ Claims and changes in estimates during fiscal 2022 9,903,230 3,804,070 13,707,300 Claim payments (6,780,230) (4,636,070) (11,416,300) Liability as of June 30, 2022 10,057,000$ 20,971,000$ 31,028,000$ Current Claims Payable 3,172,000$ 3,937,000$ 7,109,000$ Long Term Claims Payable 6,885,000 17,034,000 23,919,000 Liability as of June 30, 2022 10,057,000$ 20,971,000$ 31,028,000$ With respect to the Special Liability accrual of $10 million, the City has numerous unsettled lawsuits filed or claims asserted against it as of June 30, 2022. The City has reviewed these claims and lawsuits in order to evaluate the likelihood of an unfavorable outcome to the City and to arrive at an estimate of the amount or ranges of potential loss to the City. As a result of such review, the City has categorized the various claims and lawsuits as “probable,” “reasonably possible,” and “remote” loss contingencies, as defined by current accounting standards.

The City has determined that the City’s probable loss contingencies, which are accrued for as the estimated liability for claims and lawsuits as of June 30, 2022, are approximately $10 million. The final outcome of claims and lawsuits, which have been categorized as reasonably possible loss contingencies, is not presently determinable and any associated potential loss cannot be estimated. Accordingly, no provision has been made in the accompanying basic financial statements relative to the potential outcome of such claims and lawsuits. However, the ultimate resolution of such claims and lawsuits is not expected to have a material effect on the accompanying basic financial statements.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022

NOTE 20 – COMMITMENTS AND CONTINGENCIES
A. Electricity Purchase Contracts
The City has future commitments under electricity purchase contracts as discussed in Note 17A, and is contingently liable under joint venture agreements discussed in Note 12B.

B. Grant Programs
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be immaterial.

C. Encumbrances
The City uses encumbrances to control expenditure commitments for the year and to enhance cash management. Encumbrances represent commitments related to contracts not yet performed and purchase orders not yet filled (executory contracts; and open purchase orders). Commitments for such expenditure of monies are encumbered to reserve a portion of applicable appropriations. Encumbrances still open at year end are not accounted for as expenditures and liabilities but, rather, as restricted or committed governmental fund balance. As of June 30, 2022, total governmental fund encumbrance balances for the City are as follows:

General Fund 4,471,304$
Santa Clara Housing Successor 131,579
Nonmajor Governmental Funds 24,213,141
Total Governmental Funds 28,816,024$

D. Bay Area Water Supply and Conservation Agency Revenue Bonds Surcharge The City contracts with the City and County of San Francisco for the purchase of water from the Hetch Hetchy System operated by the San Francisco Public Utilities Commission (SFPUC). The City is also a member of the Bay Area Water Supply and Conservation Agency (BAWSCA) which represents the interests of all the 24 cities and water districts, as well as two private utilities, that purchase wholesale water from the SFPUC.

In 2009 the City entered into a new 25 year agreement with the SFPUC. One of the ways that the new agreement differs from the old is in how facilities constructed by the SFPUC that benefit the regional customers are treated from a rate and financial perspective. Under the old agreement, facilities were built, capitalized, and added to the rate base with a rate of return (interest), and then paid for over their useful lives through wholesale rates. Under the new agreement, the SFPUC issues revenue bonds and the debt service (which also includes an interest component) is paid for through rates over the life of the bonds.

During the transition from the old to the new contracts, one of the issues addressed was how to deal with the $370 million in assets that were still being paid for by the wholesale customers under the old agreement. The assets were transferred to the new agreement, assigned a life with an agreed upon rate of return of 5.13%.

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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 20 – COMMITMENTS AND CONTINGENCIES (continued)

144

Also negotiated was a provision to allow the wholesale customers to prepay any remaining existing assets’ unpaid principal balance without penalty or premium. This prepayment was executed through the issuance of bonds by BAWSCA which provide a better interest rate given the favorable rate environment.

BAWSCA issued Revenue Bonds in the principal amount of $335,780,000 in January 2013 to prepay the capital cost recovery payment obligation and fund a stabilization fund. The Bonds mature in October 2034 and are secured by surcharges to the monthly water purchase charges imposed upon the participating members. The Bonds are not a debt obligation of any member, and BAWSCA’s failure to pay its Bonds would not constitute a default by any participating member.

Should any participating member fail to pay its share, BAWSCA will rely on the stabilization fund and will pursue all legal remedies to collect the shortfall from the delinquent member. In the interim, other participating members may have their portion adjusted to insure the continued payment of the debt service surcharge.

The risk of bearing the debt service expense of a defaulting member is not significantly different than the risk each member assumes currently for fluctuations in water purchase charges. Under the Bond indenture, BAWSCA maintains a stabilization fund. If surcharge revenues collected are less than needed (due to a member’s failure to pay timely), BAWSCA uses the stabilization fund to fund the debt service deficiency, and increases the surcharge in the subsequent year to make up for the prior year shortfall and reimburse the stabilization fund account. Also, given that each participating agency’s governing body adopted a Resolution to participate in the Bond issue, Management believes that default is generally very unlikely.

The annual debt service surcharges are a fixed amount for each participant and are calculated by taking the subsequent fiscal year’s debt service, multiplied by each participant’s actual water purchase as a percent of total wholesale customer water purchases from the prior fiscal year. One-twelfth of the annual surcharge is included in the monthly bill from SFPUC. Because each participant’s share of the debt service surcharge is proportional to the amount of water purchased during the prior fiscal year, the City’s share of the debt service will fluctuate from year to year.

The City paid its surcharge of $814,769 during fiscal year 2021-22, which is included as a component of purchased water expenses in the Water Enterprise Fund. The surcharge for fiscal year 2022-23 is estimated to be $571,392.

E. Santa Clara Stadium Authority and Litigation
Asset Retirement Obligation
Pursuant to the Ground Lease, the Stadium Authority may be required to demolish the Stadium and other improvements at the end of the lease term, upon written notice from the City. Pursuant to the Stadium Lease, the Stadium Authority will establish reserves to fund the cost of demolishing the stadium at the end of the lease term. While such reserves are projected to cover the entire demolition cost, StadCo will be responsible for funding any shortfall.

Historical SBL Buffet Costs
On April 30, 2020, the Stadium Authority received an invoice in the amount of $4,388,709 for previously un- billed “complimentary” buffet costs associated with certain SBL holders for the NFL seasons from 2014 thru DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 20 – COMMITMENTS AND CONTINGENCIES (continued)

145

2018. On May 13, 2020, the Stadium Authority issued a response letter disputing the newly-billed costs citing that the costs were not presented in a reasonable manner relative to the financial planning and reporting requirements of the Lease Agreement and Stadium Management Agreement and there is no justification for delaying presentment and demand for payment. The invoices presented also lack sufficient supporting documentations in order to confirm the validity of the costs and charges under the Lease Agreement terms. StadCo and ManagementCo have initiated arbitration proceedings to dispute the Stadium Authority’s position and dispute is still outstanding.

As of March 31, 2022, ManagementCo invoiced an additional $902,081 in new buffet costs to the Stadium Authority through the fiscal year 2021-22 Non-NFL events’ net loss. ManagementCo also issued a certificate of loan to the Stadium Authority under the Management Company Revolving Loan for the buffet amount and subsequently paid off the loan through the year-end excess cash distribution. Stadium Authority objected to and disputes ManagementCo's unauthorized payment of these buffet costs through the Revolving Loan, and also the payment of that loan through year-end excess cash. Pursuant to the parties' August 31, 2022 settlement agreement and stipulation, ManagementCo's draw under the Revolving Loan will be treated as a timely Stadium Authority payment, under protest, and with a full reservation of Stadium Authority's rights and claims. The Stadium Authority recorded a $902,081 receivable from ManagementCo for the loan draw on the buffet costs as of March 31, 2022.

NOTE 21 – REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY

ACTIVITIES
A. Defeased Bonds
Bayshore North Project 2011 Tax Allocation Bonds
On May 11, 2011, the former RDA issued $31.41 million of Bayshore North Project 2011 Tax Allocation Bonds (RDA 2011 Bonds) with an interest rate ranging from 2% to 7.86%, and a final maturity of 2026, to finance various redevelopment activities associated with the former RDA’s Bayshore North Project Area.

The 2011 Bonds were defeased on June 1, 2017.

The following schedule summarizes the defeased 2011 Tax Allocation Bonds:
2011 Series
Ptincipal
Issued Date Issued
Principal
Defeased Maturities Defeased
Redemption
Date
Current Interest Bonds 11,440,000$ May 18, 2011 11,315,000$ June 1, 2026 June 1, 2021 Capital Appreciation Bonds 19,971,295 May 18, 2011 10,643,264 From June 1, 2022 to
June 1, 2026 June 1, 2021
31,411,295$ 21,958,264$

NOTE 22 – Successor Agency lease agreements
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CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 22 – SUCCESSOR AGENCY LEASE AGREEMENTS (continued)

146

On January 8, 2016 the City executed the Settlement Agreement for Sharma vs Successor Agency to Redevelopment Agency of the City of Santa Clara. This Settlement Agreement calls for the City to return to the Successor Agency certain properties that the former Redevelopment Agency transferred to the City prior to dissolution. The properties transferred are as follows: the Great America Theme Park Property (not including the parking lot, see Note 4B), the Hilton Hotel Property, the North/South Parking Lots, the Gateway Parcel 2 Property, the Hyatt Hotel Property (not including the ballroom, see Note 4B), the Techmart Property, and the Martinson Childcare Center Property. All the properties, other than the Martinson Childcare Center Property will be sold by the Successor Agency. Until the properties are sold the rent revenues will be used to pay the Successor Agency’s enforceable obligations. The Settlement Agreement requires the City to forego the long term lease revenues generated by the properties.

Techmart Office Building Ground Lease
In May 1998, the former RDA entered into a long-term ground lease of the Techmart parcel with CarrAmerica. The lease has a 55 year term with options for two additional ten-year terms. The former RDA received $1 million annual rent for each of the first ten years of the lease, which lease revenues were paid by the former RDA to the City pursuant to the First Amended Cooperation Agreement. Rent increases are scheduled as follows: 10% in the eleventh year and every five years thereafter during the initial term and 15% in the first and sixth year of each option term. Under the terms of the lease, CarrAmerica assumed responsibility for all taxes and assessments levied against the Techmart parcel and the Lessor’s interest in the ground lease is unsubordinated to any other financing. On July 13, 2006, CarrAmerica merged with Nantucket Acquisition, Inc., a wholly owned subsidiary of The Blackstone Group; the terms and conditions of the lease agreement remain in effect.

Lease revenues collected from July 1, 2012 to June 30, 2021 in the amount of $11,273,167 were passed on to the Successor Agency. For the fiscal year ended June 30, 2022, the City recognized $1,268,278 in lease revenue and $913,640 in interest revenue. As of June 30, 2022, the City’s receivable for lease payments was $39,989,418 and the balance of the deferred inflow of resources was $39,210,941.

Hyatt Regency Hotel Ground Lease and Ballroom Lease
In April 1985, the former RDA entered into a long-term ground lease with SCCC Associates (Lessee) for the development of a certain portion of that piece of land – the Bayshore North Redevelopment Project Area, and eventual operation of a high quality hotel and related facilities, amenities and improvements including one of the Ballrooms in the Convention Center. The lease is for an initial term of 50 years. The Lessee has options to renew the lease for four additional periods of ten years each and one additional period of nine years. In 2005, SHC New Santa Clara, LLC, the successor-in-interest to SCCC Associates at that time, sold the interest to Hyatt Equities, LLC. In 2013, Hyatt Equities, LLC. sold its interest to Inland American Lodging Acquisitions, Inc.; the terms and conditions of the lease agreements remain in effect. Under the terms of the lease, the former RDA is entitled to receive a specified amount of minimum rent subject to adjustment at times specified in the lease. Lessee may also have an obligation for additional rent calculated as a predetermined percentage of the hotel gross revenues which exceed the amount specified in the lease.

The Settlement Agreement states that a portion of the ground lease payments from the Hyatt Hotel are derived from the Convention Center Ballroom space rental and are not related to the Hyatt Hotel ground lease. The Settlement Agreement states the City shall retain all revenues generated from the Ballroom Agreement starting July 1, 2015. Lease revenues collected from July 1, 2012 to June 30, 2015 in the amount DRAFT

CITY OF SANTA CLARA

NOTES TO BASIC FINANCIAL STATEMENTS
For the year ended June 30, 2022
NOTE 22 – SUCCESSOR AGENCY LEASE AGREEMENTS (continued)

147

of $921,270 were passed on to the Successor Agency. Additional information concerning the Ballroom Lease can be found in Note 4B.

Lease revenues collected from Hyatt from July 1, 2012 to June 30, 2021 in the amount of $14,326,501 were passed on to the Successor Agency. For the fiscal year ended June 30, 2022, the City recognized $343,388 in lease revenue and $104,209 in interest revenue. As of June 30, 2022, the City’s receivable for lease payments was $4,311,433 and the balance of the deferred inflow of resources was $4,406,812.

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Required Supplementary Information
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151

CITY OF SANTA CLARA

REQUIRED SUPPLEMENTARY INFORMATION
This part of the City of Santa Clara’s Annual Comprehensive Report provides detailed information to better understand the data presented within the financial statements and note disclosures.

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS Discloses the changes and components of the net pension liability and related ratios, including the pension plan’s fiduciary net position as a percentage of the total pension liability, and the net pension liability as a percentage of covered payroll.

SCHEDULE OF PLAN CONTRIBUTIONS - PENSION PLAN
Contains information of the employer’s contractually required contribution rates, contributions to the pension plan and related ratios.

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS Discloses the changes and components of the net OPEB liability and related ratios, including OPEB’s Plan Trust Fund net position as a percentage of the total OPEB liability, and the net OPEB liability as a percentage of covered employee payroll.

SCHEDULE OF PLAN CONTRIBUTIONS - OPEB PLAN
Contains information of the employer’s contractually required contribution rates, contributions to the OPEB Plan and related ratios.

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET

AND ACTUAL
Presents the accompanying budget and actual comparison schedules in accordance with the budgetary process.

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152

Miscellaneous Plan
2021 2020
Total Pension Liability
Service cost 15,428,984$ 15,079,332 $
Interest 56,183,036 54,277,035
Changes of assumptions - -
Differences between expected and actual experience 1,328,853 9,229,485 Benefit payments, including refunds of employee contributions (45,355,148) (43,050,194) Net change in total pension liability 27,585,725 35,535,658 Total pension liability - beginning 799,410,972 763,875,314 Total pension liability - ending 826,996,697$ 799,410,972$ Plan Fiduciary Net Position
Contributions - employer 31,272,528$ 28,827,466$
Contributions - employee 6,333,120 6,650,350
Net investment income 112,780,714 24,008,623
Benefit payments, including refunds of employee contributions (45,355,148) (43,050,194) Plan to plan resource movement - - Administrative expense (494,347) (675,430)
Other Misc Income/(Expense)
(2)
- -
Net change in plan fiduciary net position 104,536,867 15,760,815 Plan fiduciary net position - beginning 494,872,454 479,111,639 Plan fiduciary net position - ending 599,409,321$ 494,872,454$ Net Pension Liability - ending 227,587,376$ 304,538,518$

72.48% 61.90%
Covered payroll 92,642,754$ 89,410,939$
Net pension liability as percentage of covered payroll 245.66% 340.61% Notes to schedule:
(1) Fiscal year 2014-15 was the first year of implementation.

CITY OF SANTA CLARA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

MISCELLANEOUS PLAN, AN AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN Last Ten Fiscal Years for the Measurement Periods Ended June 30 (1)
Plan fiduciary net position as a percentage of the total pension liability (2) During fiscal year 2017-18, as a result of GASB No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other Than Pensions, CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB No. 75.

Additionally, CalPERS employees participate in various State of California agent pension plans and during fiscal year 2017- 18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pension.

Schedule of Changes in the Net Pension Liability and Related Ratios (Miscellaneous Plan) DRAFT

153

2019 2018 2017 2016 2015 2014
14,448,007$ 13,159,021$ 11,975,850$ 10,415,730$ 9,909,421$ 10,345,749$ 51,858,572 49,394,806 47,384,580 46,283,869 44,755,550 42,969,016 - (5,067,759) 37,018,109 - (10,233,178) - 10,888,358 10,229,369 (2,176,270) (2,265,081) 108,957 - (41,003,947) (38,252,869) (35,744,281) (33,491,738) (31,858,297) (29,847,146) 36,190,990 29,462,568 58,457,988 20,942,780 12,682,453 23,467,619 727,684,324 698,221,756 639,763,768 618,820,988 606,138,535 582,670,916 763,875,314$ 727,684,324$ 698,221,756$ 639,763,768$ 618,820,988$ 606,138,535$ 25,715,248$ 22,508,822$ 22,015,885$ 18,464,042$ 15,625,285$ 14,887,751$ 6,182,683 5,957,917 5,247,078 5,151,548 4,755,791 5,439,513 30,342,401 36,908,188 44,308,442 2,186,435 9,037,882 61,358,126 (41,003,947) (38,252,869) (35,744,281) (33,491,738) (31,858,297) (29,847,146) - (1,065) - (788) (368) - (326,982) (674,790) (587,320) (247,274) (457,051) - 1,065 (1,281,438) - - - - 20,910,468 25,164,765 35,239,804 (7,937,775) (2,896,758) 51,838,244 458,201,171 433,036,406 397,796,602 405,734,377 408,631,135 356,792,891 479,111,639$ 458,201,171$ 433,036,406$ 397,796,602$ 405,734,377$ 408,631,135$ 284,763,675$ 269,483,153$ 265,185,350$ 241,967,166$ 213,086,611$ 197,507,400$

62.72% 62.97% 62.02% 62.18% 65.57% 67.42%
81,872,333$ 75,515,390$ 71,285,526$ 61,942,363$ 58,051,406$ 58,020,890$ 347.76% 356.81% 371.95% 390.63% 367.07% 340.41%

CITY OF SANTA CLARA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

MISCELLANEOUS PLAN, AN AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN Last Ten Fiscal Years for the Measurement Periods Ended June 30 (1)
Changes in assumptions: None in 2016, 2019, 2020 and 2021. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of the Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the discount rate was reduced from 7.65% to 7.15%. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5% discount rate.

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154

Miscellaneous Plan
2022 2021 2020
Actuarially determined contribution 34,126,897$ 31,035,143$ 28,987,800$ Contributions in relation to the actuarially
determined contributions (34,126,897) (31,035,143) (28,987,800) Contribution deficiency (excess) -$ -$ -$ Covered payroll 92,642,754$ 89,321,766$ 89,410,939$ Contributions as a percentage of
covered payroll 36.84% 34.75% 32.42%
Notes to schedule
Valuation date 6/30/2019 6/30/2018 6/30/2017
Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age normal
Amortization method Level percentage of payroll, closed Remaining amortization period 25 years as of valuation date Asset valuation method 5-year smoothed fair value
Inflation 2.75% for 2015 to 2019, 2.675% for 2020 and 2.50% for 2021 and 2022 Salary increases Varies by Entry Age and Service
Investment rate of return
Retirement age
Mortality
(1) Fiscal year 2014-15 was the first year of implementation.

7.50% for 2015 to 2018, 7.375%, for 2019, 7.25% for 2020, and 7% for 2021 and 2022, net of pension plan investment expense, including inflation The probabilities of Retirement are based on the CalPERS Experience Study The probabilities of mortality are based on CalPERS Experience Study. Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale AA published by the Society of Actuaries for 2015 to 2018.

For 2019, 2020, 2021, and 2022 pre-retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

CITY OF SANTA CLARA

SCHEDULE OF PLAN CONTRIBUTIONS

MISCELLANEOUS PLAN, AN AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN Last Ten Fiscal Years Ended June 30
(1)

Schedule of Plan Contributions (Miscellaneous Plan)
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155

2019 2018 2017 2016 2015
23,615,964$ 25,256,224$ 21,613,984$ 18,543,534$ 15,257,771$ (23,615,964) (25,256,224) (21,613,984) (18,543,534) (15,257,771) -$ -$ -$ -$ -$ 81,872,333$ 75,515,390$ 71,285,526$ 61,942,363$ 58,051,406$

28.84% 33.45% 30.32% 29.94% 26.28%
6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012

CITY OF SANTA CLARA

SCHEDULE OF PLAN CONTRIBUTIONS

MISCELLANEOUS PLAN, AN AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN Last Ten Fiscal Years Ended June 30
(1)

DRAFT

156

Safety Plan
2021 2020
Total Pension Liability
Service cost 15,750,690$ 15,518,467$
Interest 59,165,587 56,740,930
Changes of assumptions - -
Differences between expected and actual experience 7,316,002 10,124,845 Benefit payments, including refunds of employee contributions (46,961,121) (44,599,326) Net change in total pension liability 35,271,158 37,784,916 Total pension liability - beginning 835,779,951 797,995,035 Total pension liability - ending 871,051,109$ 835,779,951$ Plan Fiduciary Net Position
Contributions - employer 29,084,516$ 26,654,865$ Contributions - employee 5,742,937 5,589,396 Net investment income 122,207,114 26,348,251
Benefit payments, including refunds of employee contributions (46,961,121) (44,599,326) Plan to plan resource movement - - Administrative expense (540,727) (744,424) Other Misc Income/(Expense)
(2)
- -
Net change in plan fiduciary net position 109,532,719 13,248,762 Plan fiduciary net position - beginning 541,301,220 528,052,458 Plan fiduciary net position - ending 650,833,939$ 541,301,220$ Net Pension Liability - ending 220,217,170$ 294,478,731$

74.72% 64.77%
Covered payroll 57,190,646$ 53,564,578$
Net pension liability as percentage of covered payroll 385.06% 549.76% Notes to schedule:
(1) Fiscal year 2014-15 was the first year of implementation.

CITY OF SANTA CLARA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

SAFETY PLAN, AN AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN Last Ten Fiscal Years for the Measurement Periods Ended June 30 (1)
Plan fiduciary net position as a percentage of the total pension (2) During fiscal year 2017-18, as a result of GASB No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other Than Pensions, CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB No. 75.

Additionally, CalPERS employees participate in various State of California agent pension plans and during fiscal year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pension.

Schedule of Changes in the Net Pension Liability and Related Ratios (Safety Plan) DRAFT

157

2019 2018 2017 2016 2015 2014
14,861,460$ 13,999,625$ 13,111,358$ 10,985,005$ 10,678,931$ 10,748,085$ 54,154,256 51,713,042 49,741,737 48,410,844 46,944,730 45,454,864 - (3,333,870) 40,842,398 - (11,249,844) - 8,480,853 5,782,119 (1,814,831) (3,491,487) (3,604,245) - (41,984,265) (38,978,890) (37,370,686) (35,868,203) (34,372,454) (33,072,631) 35,512,304 29,182,026 64,509,976 20,036,159 8,397,118 23,130,318 762,482,731 733,300,705 668,790,729 648,754,570 640,357,452 617,227,134 797,995,035$ 762,482,731$ 733,300,705$ 668,790,729$ 648,754,570$ 640,357,452$ 23,458,623$ 20,510,633$ 19,580,881$ 16,679,012$ 14,692,277$ 12,839,821$ 5,781,715 5,395,755 4,913,868 4,376,079 4,079,023 4,866,079 33,408,137 40,902,179 49,621,113 2,362,110 10,236,992 70,347,760 (41,984,265) (38,978,890) (37,370,686) (35,868,203) (34,372,454) (33,072,631) - (1,182) - 788 - - (362,341) (751,243) (658,507) (279,579) (516,273) - 1,182 (1,426,623) - - - - 20,303,051 25,650,629 36,086,669 (12,729,793) (5,880,435) 54,981,029 507,749,407 482,098,778 446,012,109 458,741,902 464,622,337 409,641,308 528,052,458$ 507,749,407$ 482,098,778$ 446,012,109$ 458,741,902$ 464,622,337$ 269,942,577$ 254,733,324$ 251,201,927$ 222,778,620$ 190,012,668$ 175,735,115$

66.17% 66.59% 65.74% 66.69% 70.71% 72.56%
50,808,770$ 47,569,993$ 47,064,869$ 41,116,053$ 38,909,866$ 38,845,554$ 531.29% 535.49% 533.74% 541.83% 488.34% 452.39%

CITY OF SANTA CLARA

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

SAFETY PLAN, AN AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN Last Ten Fiscal Years for the Measurement Periods Ended June 30 (1)
Changes in assumptions: None in 2016, 2019 and 2020. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of the Actuarial Assumptions December 2017.

There were no changes in the discount rate. In 2017, the discount rate was reduced from 7.65% to 7.15%. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5% discount rate.

DRAFT

158

Safety Plan
2022 2021 2020
Actuarially determined contribution 32,084,531$ 29,295,456$ 27,099,469$ Contributions in relation to the actuarially
determined contributions (32,084,531) (29,295,456) (27,099,469) Contribution deficiency (excess) -$ -$ -$ Covered payroll 57,190,646$ 54,912,443$ 53,564,578$ Contributions as a percentage of
covered payroll 56.10% 53.35% 50.59%
Notes to schedule
Valuation date 6/30/2019 6/30/2018 6/30/2017
Methods and assumptions used to determine contribution rates:

CITY OF SANTA CLARA

SCHEDULE OF PLAN CONTRIBUTIONS

SAFETY PLAN, AN AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN Last Ten Fiscal Years Ended June 30
(1)

7.50% for 2015 to 2018, 7.375%, for 2019, 7.25% for 2020, and 7% for 2021, and 2022 net of pension plan investment expense, including inflation The probabilities of Retirement are based on the CalPERS Experience Study The probabilities of mortality are based on CalPERS Experience Study. Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries for 2015 to 2018.

For 2019, 2020,2021, and 2022, pre-retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

Schedule of Plan Contributions (Safety Plan)
DRAFT

159

2019 2018 2017 2016 2015
23,484,760$ 22,002,506$ 19,735,867$ 17,365,058$ 14,776,850$ (23,484,760) (22,002,506) (19,735,867) (17,365,058) (14,776,850) -$ -$ -$ -$ -$ 50,808,770$ 47,569,993$ 47,064,869$ 41,116,053$ 38,909,866$

46.22% 46.25% 41.93% 42.23% 37.98%
6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012

CITY OF SANTA CLARA

SCHEDULE OF PLAN CONTRIBUTIONS

SAFETY PLAN, AN AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN Last Ten Fiscal Years Ended June 30
(1)

DRAFT

160
2022 2021 2020 2019 2018 2017
Total OPEB Liability
Service cost 2,344$ 2,091 $ 2,030 $ 2,264 $ 2,198 $ 2,134 $ Interest 3,145 3,292 3,200 3,478 3,343 3,194 Differences between expected and actual
experience - (326) - (1,644) - - Changes of assumptions - 1,709 - (5,838) - - Benefit payments including refunds (3,437) (3,592) (3,498) (3,096) (3,036) (2,034) Net change in total OPEB liability 2,052 3,174 1,732 (4,836) 2,505 3,294 Total OPEB liability - beginning 65,586 62,412 60,680 65,516 63,011 59,717 Total OPEB liability - ending 67,638$ 65,586 $ 62,412 $ 60,680 $ 65,516 $ 63,011 $ Plan Fiduciary Net Position
Contributions - employer 5,068$ 4,535 $ 4,696 $ 5,366 $ 6,300 $ 2,733 $ Net investment income (3,222) 2,957 1,403 1,410 524 738 Benefit payments including refunds (3,437) (3,592) (3,498) (3,096) (3,036) (2,034) Administrative expense (62) (59) (100) (91) (71) (73) Net change in plan fiduciary net position (1,653) 3,841 2,501 3,589 3,717 1,364 Plan fiduciary net position - beginning 28,876 25,035 22,534 18,945 15,228 13,864 Plan fiduciary net position - ending 27,223$ 28,876 $ 25,035 $ 22,534 $ 18,945 $ 15,228 $ Net OPEB Liability - ending 40,415$ 36,710 $ 37,377 $ 38,146 $ 46,571 $ 47,783 $

40.2% 44.0% 40.1% 37.1% 28.9% 24.2%
Covered-employee payroll 169,613$ 163,594 $ 164,431 $ 151,453 $ 135,297 $ 102,468 $

23.8% 22.4% 22.7% 25.2% 34.4% 46.6%
Notes to schedule:
(1) Fiscal year 2016-17 was the first year of implementation.

CITY OF SANTA CLARA

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS

OPEB PLAN, AN AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PLAN Last Ten Fiscal Years for the Measurement Periods Ended June 30 (1)
(In Thousands)
Plan fiduciary net position as a percentage
of the total OPEB liability
Net OPEB liability as percentage of covered
payroll

Schedule of Changes in the Net OPEB Liability and Re lated Ratios (OPEB Plan) DRAFT

161

2022 2021 2020 2019 2018 2017
Actuarially determined contribution 4,748$ 4,826 $ 4,681 $ 5,306 $ 5,466$ 2,981 $ Contributions in relation to the actuarially

determined contributions 5,068 4,535 4,696 5,366 6,300 2,981 Contribution deficiency (excess) (320)$ 291 $ (15) $ (60)$ (834)$ - $ Covered-employee payroll 169,613 163,594 164,431 151,453 135,297$ 102,468 $ Contributions as a percentage of

covered payroll 2.99% 2.77% 2.86% 3.54% 4.66% 2.91%
Notes to schedule:
(
1) Fiscal year 2016-17 was the first year of implementation.

CITY OF SANTA CLARA

SCHEDULE OF PLAN CONTRIBUTIONS

OPEB PLAN, AN AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PLAN Last Ten Fiscal Years Ended June 30
(1)
(In Thousands)

Schedule of Plan Contributions (OPEB Plan)
DRAFT

162

Actuarial valuation date June 30, 2020
Actuarial cost method Entry Age Normal, Level Percentage of Payroll Amortization method Level percent of payroll
Unfunded liability amortization
Asset valuation method
Discount rate 5.25%
General inflation 2.75%
Healthcare trend
Mortality CalPERS 1997-2015 Experience Study
Mortality improvement

CITY OF SANTA CLARA
Notes to Schedule of Employer Contribution (OPEB Plan)
Post-retirement mortality projected fully generational with Scale MP-2020
Methods and Assumptions for 2021-22 Actuarially Determine Contributions 15 years (open period) for method, assumption, plan changes, and gains and losses
Maximum 30-year combined period
Investment gains and losses spread over a 5-year rolling period.

Not less that 80% nor greater than 120% of fair value
Non-Medicare - 7% for 2022, decreasing to an ultimate rate of 4% in 2076
Medicare (Non-Kaiser)- 6.1% for 2022 decreasing to an
ultimate rate of 4% in 2076
30 years (closed period) for initial UAAL
(18 Years remaining on June 30, 2021)
20 years (closed period) for implied subsidy on 06/30/2019 (18 years remaining on June 30, 2021)
Medicare (Kaiser)- 5% for 2022 decreasing to an ultimate rate of 4% in 2076

Notes to Schedule of Employer Contributions (OPEB Pl an) DRAFT

163

Variance with
Budgeted Amounts Final Budget
Actual Amounts Positive
Original Final Budgetary Basis (Negative)

REVENUES
Taxes:

Sales 58,183,000$ 58,183,000$ 56,901,656$ (1,281,344)$ Ad valorem 71,559,000 71,559,000 74,630,557 3,071,557 Transient occupancy 9,000,000 9,000,000 10,812,400 1,812,400 Other 6,080,000 6,080,000 6,988,597 908,597 Licenses, permits, fines and penalties 5,181,135 5,181,135 5,169,954 (11,181) Intergovernmental 26,205,801 2,837,454 2,996,606 159,152 Charges for services 36,944,512 36,949,512 36,375,116 (574,396) Contributions in-lieu of taxes 24,700,000 24,700,000 27,259,168 2,559,168 Interest and rents 12,433,222 12,615,522 10,590,985 (2,024,537) Other 198,000 198,000 815,530 617,530 Total Revenues 250,484,670 227,303,623 232,540,569 5,236,946

EXPENDITURES
General Government:

General Administration 20,844,243 21,892,791 16,510,558 5,382,233 City Clerk 1,470,231 1,604,231 1,345,556 258,675 City Attorney 3,097,380 3,097,380 2,996,701 100,679 Human Resources 4,133,810 4,265,810 3,849,444 416,366 Finance 17,439,442 17,705,142 16,957,767 747,375 Total General Government 46,985,106 48,565,354 41,660,026 6,905,328 Public Works 23,201,356 23,430,108 23,011,339 418,769 Parks and Recreation 20,982,990 20,982,990 18,773,650 2,209,340 Public Safety:

Police 79,870,137 65,129,268 62,253,369 2,875,899 Fire 60,581,403 50,809,615 50,207,371 602,244 Total Public Safety 140,451,540 115,938,883 112,460,740 3,478,143 Planning and Inspection 4,493,357 4,513,357 3,037,304 1,476,053 Library 10,764,727 10,764,727 9,910,594 854,133 Total Expenditures 246,879,076 224,195,419 208,853,653 15,341,766 For the year ended June 30, 2022

CITY OF SANTA CLARA

GENERAL FUND

SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)

General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual (Non-GAAP Legal Basis)
DRAFT

164

Variance with
Budgeted Amounts Final Budget
Actual Amounts Positive
Original Final Budgetary Basis (Negative)

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 3,605,594 3,108,204 23,686,916 20,578,712

OTHER FINANCING SOURCES (USES)
Transfers in 3,432,617 6,350,884 6,350,869 (15) Transfers (out) (38,296,855) (46,829,314) (46,829,314) - Total Other Financing Sources (Uses) (34,864,238) (40,478,430) (40,478,445) (15)

EXCESS (DEFICIENCY) OF REVENUES AND

OTHER SOURCES OVER EXPENDITURES
AND OTHER USES - BUDGETARY BASIS (31,258,644)$ (37,370,226)$ (16,791,529)$ 20,578,697$ ADJUSTMENTS TO BUDGETARY BASIS:

Prior year encumbrances recognized on the GAAP basis (4,817,658) Current year encumbrances recognized on the budgetary basis 4,445,951 Net change in receivables recognized on the GAAP basis (18,863,222) Net change in accrued liabilities recognized on the GAAP basis (622,753) Net change in funds for GAAP Basis not included in annual budget (38,249) Beginning Fund balance 177,802,181
Ending Fund balance 141,114,721$
For the year ended June 30, 2022
(continued)

CITY OF SANTA CLARA

GENERAL FUND

SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)

DRAFT

165

Variance
Actual Amount Positive
Original Final Budgetary Basis (Negative)

REVENUES
Charges for services - $ -$ 1,845$ 1,845 $ Interest and rents 50,000 50,000 186,771 136,771 Other 300,000 5,500,000 6,334,282 834,282 Total Revenues 350,000 5,550,000 6,522,898 972,898

EXPENDITURES
Current:

General Administration
Salary & benefits 333,979 333,979 241,084 92,895 Material, service & supplies 559,000 559,000 483,974 75,026 Internal service fund charges 22,661 22,661 22,661 - Capital outlay - 16,700,000 11,700,000 5,000,000 Total General Administration 915,640 17,615,640 12,447,719 5,167,921 Total Expenditures 915,640 17,615,640 12,447,719 5,167,921

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (565,640) (12,065,640) (5,924,821) 6,140,819

EXCESS (DEFICIENCY) OF REVENUES AND

OTHER SOURCES OVER EXPENDITURES
AND OTHER USES (565,640) $ (12,065,640)$ (5,924,821) 6,140,819 $ ADJUSTMENTS TO BUDGETARY BASIS:

Expenditures of prior year encumbrances recognized on the GAAP basis (344,361) Current year encumbrances recognized on the budgetary basis 131,579 Net change in accrued liabilities recognized on the GAAP basis 348,378 Beginning Fund balance 21,111,742
Ending Fund balance 15,322,517$

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)
Budgeted Amounts
For the year ended June 30, 2022

AND CHANGES IN FUND BALANCES

CITY OF SANTA CLARA

SANTA CLARA HOUSING SUCCESSOR

SCHEDULE OF REVENUES, EXPENDITURES

Santa Clara Housing Successor Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual (Non-GAAP Legal Basis)

DRAFT

CITY OF SANTA CLARA

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
June 30, 2022

166

NOTE 1 – REQUIRED SUPPLEMENTARY INFORMATION
A. BUDGETS AND BUDGETARY ACCOUNTING
The results of operations are presented in the budget and actual comparison statement in accordance with the budgetary process (budgetary basis) to provide a meaningful comparison with the budget.

The major differences between the budgetary basis actual and GAAP basis actual are as follows:
 Year-end encumbrances are recognized as the equivalent of expenditures in the budgetary basis financial statements, while encumbered amounts are not recognized as expenditures on the GAAP basis until the liability is incurred.
 Expenditures of prior year encumbrances are recognized on the GAAP basis in the current year, while on the budgetary basis prior year encumbrances were recognized in the prior year.  Accrued liabilities and compensated absences are recognized on the GAAP basis, while the budgetary basis does not recognize accrued liabilities.  Revenues considered susceptible to accrual on the GAAP basis are not recognized on the budgetary basis until received.
 Special item resulted from dissolution of the Agency are included in the City’s GAAP basis financial statements. However, formal budgets are not prepared for non-cash transactions, and as such are excluded from the budgetary basis financial schedules.
 Increases to certain GAAP basis advances to other funds are treated as expenditures for budgetary basis financial statements.

Notes to Required Supplementary Information
DRAFT

Supplementary Information
DRAFT

DRAFT

169

CITY OF SANTA CLARA

NON-MAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

GAS TAX
The fund accounts for revenues and expenditures received from the State under Street and Highways Codes Sections 2105 (Gas Tax 2105), 2106 (Collier-Unruh) and 2107 (Special Gas Tax) and from the State under the Road Repair and Accountability Act of 2017 under the Streets and Highways Code Section 2030. The allocations must be spent for street maintenance or construction and a limited amount for engineering.

HUD PROGRAMS
This fund accounts for grant funds received from other governmental agencies for the purpose of developing viable urban communities.

CITY AFFORDABLE HOUSING
This fund accounts for the City’s Below Market Housing Program for low and moderate income residents.

SANTA CLARA HOUSING AUTHORITY FUND
On February 22, 2011, the Santa Clara Housing Authority (SCHA), a special revenue fund, was established to account for housing loans to assist in providing affordable housing. On March 8, 2011, the City, former RDA, and the SCHA executed an assignment and assumption agreement whereby the SCHA assumed responsibility for housing loans for qualifying individuals and groups. Loans assigned were made under various programs; substantially all are long-term in nature.

MAINTENANCE
This fund accounts for the maintenance of the Lawrence Station Community Facility District and two Parking Districts located near the City’s Convention Center and the downtown area. Funds are received by means of a Special Benefit Assessment levied against the property owners in the respective districts.

OPERATING GRANTS FUND
This fund accounts for grant funds received from other governmental agencies for various operating activities.

NEW DEVELOPMENT SERVICE FEE
This fund accounts for the revenues and expenditures from the new development-related fees that are imposed upon new development projects in the City.

DRAFT

170
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DRAFT

CITY OF SANTA CLARA
NON-MAJOR GOVERNMENTAL FUNDS (continued)

171

DEBT SERVICE FUNDS

PUBLIC FACILITIES FINANCING CORPORATION (PFFC)
This fund accumulates monies for the repayment of Certificates of Participation, which are financed by lease payments made by the City’s General Fund to the PFFC for use of the Police Administration Building and Library sites.

CAPITAL PROJECTS FUNDS

PARKS AND RECREATION FACILITIES
This fund was established to account for revenues, contributions and reimbursements received and costs incurred in connection with the acquisition and construction of the City parks.

STREETS AND HIGHWAYS IMPROVEMENT
This fund is used to account for revenues and expenditures related to road construction and traffic improvements.

STORM DRAIN IMPROVEMENT
This fund is used to account for revenues and expenditures related to the construction or modification of the City’s storm drainage system.

FIRE DEPARTMENT IMPROVEMENT
This fund is used to account for revenues and expenditures related to the construction or modification of City fire stations.

LIBRARY DEPARTMENT IMPROVEMENT
This fund is used to account for revenues and expenditures related to the construction or modification of the City’s library facilities.

PUBLIC FACILITIES
This fund is used to account for revenues and expenditures related to the construction, acquisition or modification of public improvements not accounted for in another Capital Projects Fund.

DRAFT

172

HUD City Affordable
Gas Tax Programs Housing
ASSETS
Cash and investments:

Pooled cash and investments 1,646,020 $ 1,031,175$ 16,185,598$ Investments with fiscal agent - current - - - Restricted cash - - - Receivables (net of allowance for uncollectibles):

Accounts - - - Loans - 10,964,058 48,730,846 Intergovernmental 472,961 435,276 - Investments with fiscal agent - noncurrent - - - Total Assets 2,118,981$ 12,430,509$ 64,916,444$

LIABILITIES
Accrued liabilities -$ 309,174$ 92,125$ Unearned revenue - - - Advances from other funds - - - Total Liabilities - 309,174 92,125

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - Loans - 10,964,058 48,730,846 Total Deferred Inflows of Resources - 10,964,058 48,730,846

FUND BALANCES
Restricted 2,118,981 1,157,277 16,093,473 Committed - - - Total Fund Balances 2,118,981 1,157,277 16,093,473 Total Liabilities, Deferred Inflows of Resources
and Fund Balances 2,118,981$ 12,430,509$ 64,916,444$

NON-MAJOR GOVERNMENTAL FUNDS

CITY OF SANTA CLARA

COMBINING BALANCE SHEET
June 30, 2022

SPECIAL REVENUE FUNDS

Combining Balance Sheet

DRAFT

173

Santa Clara Operating New Development Public Facilities Housing Authority Maintenance Grants Fund Service Fee Financing Corp. 4,248,160$ 1,260,441$ 1,607,896$ 29,502,259$ 18,287$ - - - - 19 - 156,961 - - - - 284,355 - - - 6,541,070 - - - - - 349 423,826 - - - - - - 704,235 10,789,230$ 1,702,106$ 2,031,722$ 29,502,259$ 722,541$ 19,240$ 66,129$ 79,711$ 240,849$ -$ - - - - - - - - - - 19,240 66,129 79,711 240,849 - 6,541,070 - - - - 6,541,070 - - - - - 1,635,977 1,952,011 470,088 722,541 4,228,920 - - 28,791,322 - 4,228,920 1,635,977 1,952,011 29,261,410 722,541 10,789,230$ 1,702,106$ 2,031,722$ 29,502,259$ 722,541$ June 30, 2022

DEBT SERVICE FUNDSPECIAL REVENUE FUNDS

CITY OF SANTA CLARA

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET

DRAFT

174

Parks Streets
and and Storm
Recreation Highways Drain
Facilities Improvement Improvement
ASSETS
Cash and investments:

Pooled cash and investments 34,063,399$ 59,771,296$ 7,120,207$ Investments with fiscal agent - current - - - Restricted cash - 2,149,658 - Receivables (net of allowance for uncollectibles):

Accounts - - 133,399 Loans - - - Intergovernmental - - - Investments with fiscal agent - noncurrent - - - Total Assets 34,063,399$ 61,920,954$ 7,253,606$

LIABILITIES
Accrued liabilities 104,785$ 3,103,043$ 700,759$ Unearned revenue - - - Advances from other funds 5,539,540 - - Total Liabilities 5,644,325 3,103,043 700,759

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - Loans - - - Total Deferred Inflows of Resources - - -

FUND BALANCES
Restricted 25,036,301 43,014,307 423,110
Committed 3,382,773 15,803,604 6,129,737 Total Fund Balances 28,419,074 58,817,911 6,552,847 Total Liabilities, Deferred Inflows of Resources
and Fund Balances 34,063,399$ 61,920,954$ 7,253,606$

CITY OF SANTA CLARA

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET
June 30, 2021 (continued)

CAPITAL PROJECTS FUNDS

DRAFT

175

Total
Fire Library Non-Major
Department Department Public Governmental
Improvement Improvement Facilities Funds
1,375,902$ 167,026$ 16,859,423$ 174,857,089$ - - - 19 - - - 2,306,619 - - 793,223 1,210,977 - - - 66,235,974 - - - 1,332,412 - - - 704,235 1,375,902$ 167,026$ 17,652,646$ 246,647,325$ 42,969$ 6,500$ 1,159,766$ 5,925,050$ - - - - - - - 5,539,540 42,969 6,500 1,159,766 11,464,590 - - - 66,235,974 - - - 66,235,974 - - 2,501,248 95,125,314 1,332,933 160,526 13,991,632 73,821,447 1,332,933 160,526 16,492,880 168,946,761 1,375,902$ 167,026$ 17,652,646$ 246,647,325$

CAPITAL PROJECTS FUNDS

CITY OF SANTA CLARA

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET
June 30, 2021 (continued)

DRAFT

176

HUD City Affordable
Gas Tax Programs Housing

REVENUES
Taxes:

Other -$ -$ -$
Intergovernmental 5,352,279 2,063,111 16,611 Charges for services - - 30,688 Interest and rents 253,506 437 191,544 Other - 537,657 9,120,912 - - - Total Revenues 5,605,785 2,601,205 9,359,755

EXPENDITURES
Current:

General Administration - 2,690,143 5,039,720 Public Works - - - Parks and Recreation - - - Public Safety:

Police - - - Fire - - -
Planning and Inspection - - - Library - - - Capital outlay - - - Debt service:

Principal payments - - - Interest and fiscal fees - - - - - - Total Expenditures - 2,690,143 5,039,720

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 5,605,785 (88,938) 4,320,035

OTHER FINANCING SOURCES (USES)
Transfers in 382,163 - - Transfers (out) (6,046,580) (24,000) -
Total Other Financing Sources (Uses) (5,664,417) (24,000) - NET CHANGE IN FUND BALANCE (58,632) (112,938) 4,320,035 Fund balances - beginning 2,177,613 1,270,215 11,773,438 Fund balances - ending 2,118,981$ 1,157,277$ 16,093,473$

SPECIAL REVENUE FUNDS

CITY OF SANTA CLARA

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
For the year ended June 30, 2022

Combining Statement of Revenues, Expenditures, and C hanges in Fund Balances

DRAFT

177

DEBT SERVICE FUND
Santa Clara Operating New Development Public Facilities Housing Authority Maintenance Grants Fund Service Fee Financing Corp. -$ 328,257$ -$ -$ -$ - - 27,327,765 - - - 937,225 65,997 7,181,833 - 59,767 11,750 - - 623 470,505 - - 335,491 - - - - - - 530,272 1,277,232 27,393,762 18,336,208 623 166,829 - 201,753 - - - 1,619,258 86 - - - 13,924 210,437 - - - - 15,441,680 - - - - 11,718,958 - - - - 107,919 11,768,951 - - - 104,483 - - - - - - - - - - - 2,005,000 - - - - 497,604 - - - - - 166,829 1,633,182 27,785,316 11,768,951 2,502,604 363,443 (355,950) (391,554) 6,567,257 (2,501,981) - 771,349 826,293 22,347,656 2,501,439 - (383,097) (13,333) (185,200) - - 388,252 812,960 22,162,456 2,501,439 363,443 32,302 421,406 28,729,713 (542) 3,865,477 1,603,675 1,530,605 531,697 723,083 4,228,920$ 1,635,977$ 1,952,011$ 29,261,410$ 722,541$

SPECIAL REVENUE FUNDS

CITY OF SANTA CLARA

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
For the year ended June 30, 2022

DRAFT

178

Parks Streets
and and Storm
Recreation Highways Drain
Facilities Improvement Improvement

REVENUES
Taxes:

Other -$ -$ -$
Intergovernmental 59,245 1,847,939 -
Charges for services - - 1,478,423 Interest and rents 276,420 217,546 6,794 Other 18,688,729 1,395,274 - - - - Total Revenues 19,024,394 3,460,759 1,485,217

EXPENDITURES
Current:

General Administration - - - Public Works - 3,266,768 400,705 Parks and Recreation 756,552 - - Public Safety:

Police - - -
Fire - - -
Planning and Inspection - - - Library - - - Capital outlay 1,174,639 11,799,378 2,417,883 Debt service:

Principal payments - - - Interest and fiscal fees - - - - - - Total Expenditures 1,931,191 15,066,146 2,818,588

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 17,093,203 (11,605,387) (1,333,371)

OTHER FINANCING SOURCES (USES)
Transfers in 200,000 19,321,679 600,411
Transfers (out) (2,037,768) (426,889) (2,115,134) Total Other Financing Sources (Uses) (1,837,768) 18,894,790 (1,514,723) NET CHANGE IN FUND BALANCE 15,255,435 7,289,403 (2,848,094) Fund balances - beginning 13,163,639 51,528,508 9,400,941 Fund balances - ending 28,419,074$ 58,817,911$ 6,552,847$

CAPITAL PROJECTS FUNDS

CITY OF SANTA CLARA

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
For the year ended June 30, 2021 (continued)

DRAFT

179

Total
Fire Library Non-Major
Department Department Public Governmental
Improvement Improvement Facilities Funds
-$ -$ -$ 328,257$ - - 204,401 36,871,351 - - 713,030 10,407,196 - - 2,871 1,021,258 - - 4,121,879 34,670,447 - - - - - 5,042,181 94,117,393 - - 4,726,685 12,825,130 - - 40,425 5,327,242 - - - 980,913 - - - 15,441,680 374,140 - - 12,093,098 - - - 11,876,870 - 10,000 - 114,483 80,399 34,784 3,688,067 19,195,150 - - - 2,005,000 - - - 497,604 - - - - 454,539 44,784 8,455,177 80,357,170 (454,539) (44,784) (3,412,996) 13,760,223 837,110 7,872 1,952,953 49,748,925 (236) - (1,262,002) (12,494,239) 836,874 7,872 690,951 37,254,686 382,335 (36,912) (2,722,045) 51,014,909 950,598 197,438 19,214,925 117,931,852 1,332,933$ 160,526$ 16,492,880$ 168,946,761$

CAPITAL PROJECTS FUNDS

CITY OF SANTA CLARA

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
For the year ended June 30, 2021 (continued)

DRAFT

180

Maintenance
Variance
Actual Amount Positive
Budget Budgetary Basis (Negative)

REVENUES
Taxes-Other 331,481$ 328,257$ (3,224)$ Charges for services 937,331 937,225 (106) Interest and rents 3,639 11,750 8,111 Total Revenues 1,272,451 1,277,232 4,781

EXPENDITURES
Current:

Total Public Works 2,022,287 1,612,693 409,594 Total Parks and Recreation 286,798 136,863 149,935 - Total Expenditures 2,309,085 1,749,556 559,529

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (1,036,634) (472,324) 564,310

OTHER FINANCING SOURCES (USES)
Transfers in 771,349 771,349 - Transfers out (383,097) (383,097) - Total Other Financing Sources (Uses) 388,252 388,252 -

EXCESS (DEFICIENCY) OF REVENUES AND

OTHER SOURCES OVER EXPENDITURES
AND OTHER USES (648,382)$ (84,072) 564,310$ ADJUSTMENTS TO BUDGETARY BASIS:

Expenditures of prior year encumbrances recognized on the GAAP basis (65,791) Current year encumbrances recognized on the budgetary basis 180,782 Net change in accrued liabilities recognized on the GAAP basis 1,383 Beginning Fund balance 1,603,675
Ending Fund balance 1,635,977$

CITY OF SANTA CLARA

SPECIAL REVENUE FUNDS

SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL (NON-GAAP LEGAL BASIS)
For the year ended June 30, 2022

Special Revenue Funds Schedule of Revenues, Expendit ures, and Changes in Fund Balances – Budget and Actual (Non-GAAP Legal Basis)

DRAFT

181

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS
Non-Major Enterprise Funds are used to finance and account for operations and activities performed by designated departments in the City or through third party agreements.

SOLID WASTE FUND
This fund accounts for the administration of the City’s garbage and rubbish collection service.

CEMETERY FUND
This fund accounts for the activities of the Mission City Memorial Park.

SANTA CLARA CONVENTION CENTER FUND
The Santa Clara Convention Center Fund was established in 1984 to account for the operations of the City’s Convention Center or through third party agreements.

SPORTS AND OPEN SPACE AUTHORITY FUND (SOSA)
SOSA was created by the City Council in 1974 for the acquisition and development of open space within the City and the development of local sports activities.

DRAFT

182

Solid
Waste Cemetery
ASSETS
Current assets:

Cash and investments:

Pooled cash and investments 5,735,257$ 2,881,742$ Receivables (net of allowance for uncollectible):

Accounts 6,487,254 8
Due from other funds - 280,954 Total current assets 12,222,511 3,162,704
Noncurrent assets:

Restricted cash 1,098,006 -
Capital assets:

Land - 1,096,874
Buildings, infrastructure and land improvements 127,362 1,280,641 Equipment 37,170 17,705
Construction in progress - -
164,532 2,395,220
Less accumulated depreciation 81,545 1,142,149 Net capital assets 82,987 1,253,071
Total noncurrent assets 1,180,993 1,253,071
Total assets 13,403,504 4,415,775

DEFERRED OUTFLOWS OF RESOURCES
OPEB related items 56,899 22,609
Pension related items 608,550 241,808
Total deferred outflows of resources 665,449 264,417

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF NET POSITION
June 30, 2022

Combining Statement of Net Position
DRAFT

183

Santa Clara Sports and TOTAL
Convention Open Space Non-Major
Center Authority Enterprise Funds
9,870,764$ 4,662$ 18,492,425$ 2,410,613 - 8,897,875 - - 280,954 12,281,377 4,662 27,671,254 134,862 - 1,232,868 - 1,995,998 3,092,872 78,803,728 - 80,211,731 2,957,268 - 3,012,143 585,129 - 585,129 82,346,125 1,995,998 86,901,875 60,274,140 - 61,497,834 22,071,985 1,995,998 25,404,041 22,206,847 1,995,998 26,636,909 34,488,224 2,000,660 54,308,163 - - 79,508 - - 850,358 - - 929,866 (continued)

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF NET POSITION
June 30, 2022

DRAFT

184

Solid
Waste Cemetery

LIABILITIES
Current liabilities:

Accrued liabilities 3,634,303 17,324
Unearned revenue - -
Accrued compensated absences 6,213 20,380 Current portion of landfill closure liability 743,000 - Total current liabilities 4,383,516 37,704
Noncurrent liabilities:

Long-term compensated absences 48,078 157,712 Landfill closure liability 5,462,986 -
Net OPEB liability 610,261 242,487
Net pension liability 3,436,571 1,365,525
Total noncurrent liabilities 9,557,896 1,765,724 Total liabilities 13,941,412 1,803,428

DEFERRED INFLOWS OF RESOURCES
OPEB related items 43,432 17,258
Pension related items 857,268 340,636
Total deferred inflows of resources 900,700 357,894

NET POSITION
Net investment in capital assets 82,987 1,253,071 Restricted for capital projects and other agreements 1,098,006 2,187,637 Unrestricted (1,954,152) (921,838)
Total net position (deficit) (773,159)$ 2,518,870$

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF NET POSITION
June 30, 2022

DRAFT

185

Santa Clara Sports and TOTAL
Convention Open Space Non-Major
Center Authority Enterprise Funds
2,142,456 - 5,794,083 6,978,949 - 6,978,949 - - 26,593 - - 743,000 9,121,405 - 13,542,625 - - 205,790 - - 5,462,986 - - 852,748 - - 4,802,096 - - 11,323,620 9,121,405 - 24,866,245 - - 60,690 - - 1,197,904 - - 1,258,594 22,071,985 1,995,998 25,404,041 134,862 - 3,420,505 3,159,972 4,662 288,644 25,366,819$ 2,000,660$ 29,113,190$ June 30, 2022

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF NET POSITION

DRAFT

186

Solid
Waste Cemetery
Operating revenues:

Charges for services 33,973,882$ 1,015,820$
Other 866,558 7,865
Total operating revenues 34,840,440 1,023,685 Operating expenses:

Salaries and benefits 1,007,939 770,122
Materials, services and supplies 32,236,654 602,864 Depreciation 6,079 8,104
Total operating expenses 33,250,672 1,381,090 Operating income (loss) 1,589,768 (357,405) Nonoperating revenues (expenses):

Interest revenue (32,225) 30,221
Rents and royalties 10,464 -
Total nonoperating revenues (expenses) (21,761) 30,221 Income (loss) before
contributions and transfers 1,568,007 (327,184) Transfers in 33,600 7,969,558
Transfers (out) (26,621) (822)
Change in net position 1,574,986 7,641,552 Total net position - beginning (2,348,145) (5,122,682) Total net position - ending (773,159)$ 2,518,870$

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN FUND NET POSITION
For the year ended June 30, 2022

Combining Statement of Revenues, Expenses, and Chang es in Fund Net Position

DRAFT

187

Santa Clara Sports and TOTAL
Convention Open Space Non-Major
Center Authority Enterprise Funds
8,527,284$ -$ 43,516,986$ - - 874,423 8,527,284 - 44,391,409 326,379 4,590 2,109,030 9,949,867 4,573 42,793,958 1,557,456 - 1,571,639 11,833,702 9,163 46,474,627 (3,306,418) (9,163) (2,083,218) 2,754 139 889 - - 10,464 2,754 139 11,353 (3,303,664) (9,024) (2,071,865) 83,112 - 8,086,270 (40,000) - (67,443) (3,260,552) (9,024) 5,946,962 28,627,371 2,009,684 23,166,228 25,366,819$ 2,000,660$ 29,113,190$ For the year ended June 30, 2022

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN FUND NET POSITION

DRAFT

188

Solid
Waste Cemetery

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 31,959,870$ 1,023,685$
Payments to suppliers (31,216,463) (607,432)
Payments to employees for salaries and benefits (1,386,026) (838,401) Rents and royalties received 10,464 -
Other receipts 866,558 -
Net cash provided (used) by operating activities 234,403 (422,148)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
(Increase) in due from other funds - (25,010) Transfers in 33,600 858,409
Transfers (out) (26,621) (822)
Cash Flows from Noncapital Financing Activities 6,979 832,577

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition and construction of capital assets, net - - Cash Flows from Capital and Related
Financing Activities - -

CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends (32,225) 30,221
Cash Flows from Investing Activities (32,225) 30,221 Net increase (decrease) in cash and cash
equivalents 209,157 440,650
Cash and cash equivalents at beginning of period 6,624,106 2,441,092 Cash and cash equivalents at end of period 6,833,263$ 2,881,742$ Cash and cash equivalents:

Pooled cash and investments 5,735,257$ 2,881,742$ Restricted cash 1,098,006 -
Total cash and cash equivalents 6,833,263$ 2,881,742$

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF CASH FLOWS
For the year ended June 30, 2022

Combining Statement of Cash Flows
DRAFT

189

Santa Clara Sports and TOTAL
Convention Open Space Non-Major
Center Authority Enterprise Funds
6,871,656$ - $ 39,855,211$ (8,084,124) (4,573) (39,912,592) (326,379) (4,590) (2,555,396) - - 10,464 - - 866,558 (1,538,847) (9,163) (1,735,755) - - (25,010) 83,112 - 975,121 (40,000) - (67,443) 43,112 - 882,668 (303,398) - (303,398) (303,398) - (303,398) 2,754 139 889
2,754 139 889
(1,796,379) (9,024) (1,155,596) 11,802,005 13,686 20,880,889
10,005,626$ 4,662$ 19,725,293$
9,870,764$ 4,662$ 18,492,425$
134,862 - 1,232,868 10,005,626$ 4,662$ 19,725,293$
(continued)

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF CASH FLOWS
For the year ended June 30, 2022

DRAFT

190

Solid
Waste Cemetery
Reconciliation of operating income (loss) to net cash
provided (used) by operating activities:

Operating income (loss) 1,589,768$ (357,405)$
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:
(Decrease) Increase in due to OPEB system (20,489) 22,737 (Decrease) Increase in due to retirement system (221,452) (118,873) Depreciation 6,079 8,104
Change in assets and liabilities:

Receivables, net (2,014,012) -
Accrued liabilities 1,020,191 (4,568)
Long-term portion estimated claims (136,146) - Compensated absences - 27,857
Unearned revenue - -
Other receipts 10,464 -
Net cash provided (used) by operating activities 234,403$ (422,148)$ NONCASH TRANSACTIONS:

Forgiveness of advances -$ 7,111,149$

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF CASH FLOWS
For the year ended June 30, 2022

DRAFT

191

Santa Clara Sports and TOTAL
Convention Open Space Non-Major
Center Authority Enterprise Funds
(3,306,418)$ (9,163) $ (2,083,218)$ - - 2,248 - - (340,325) 1,557,456 - 1,571,639 (2,144,921) - (4,158,933) 1,865,743 - 2,881,366 - - (136,146) - - 27,857 489,293 - 489,293 - - 10,464 (1,538,847)$ (9,163)$ (1,735,755)$ -$ -$ 7,111,149$ For the year ended June 30, 2022

CITY OF SANTA CLARA

NON-MAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF CASH FLOWS

DRAFT

This page intentionally left blank
DRAFT

193

CITY OF SANTA CLARA

INTERNAL SERVICE FUNDS
Internal Service Funds are used to finance and account for special activities and services performed by a designated department for other departments in the City on a cost reimbursement basis.

The concept of major funds does not extend to internal service funds because they do not do business with outside parties. For the Statement of Activities, the net revenues or expenses of each internal service fund are eliminated by netting them against the operations of the other City departments which generated them.

The remaining balance sheet items are consolidated with these same funds in the Statement of Net Position.

However, internal service funds are still presented separately in the Fund financial statements, including the funds below.

AUTOMOTIVE SERVICES
This fund accounts for the maintenance and replacement of vehicles and equipment used by all City departments. The source of revenue for this fund is rental fees charged to the various departments.

TECHNICAL EQUIPMENT SERVICES
This fund accounts for the maintenance and replacement of communication and computer equipment used by City departments. The source of revenue for this fund is rental fees charged to the various departments.

PUBLIC WORKS CAPITAL PROJECTS MANAGEMENT
This fund accounts for the Public Works staff time and non-personnel costs utilized to manage and work on specific capital improvement programs of the City. The source of revenue for this fund is fees charged to the departments requiring Public Works capital project services.

INFORMATION TECHNOLOGY SERVICES
This fund accounts for citywide cost associated with computer and telephone equipment replacement as well as other services including new or upgraded software, additional licenses for new users, and general information technology services provided to all City departments. The source of revenue for this fund is fees charged to the departments that require information technology services.

SPECIAL LIABILITY INSURANCE CLAIMS
This fund was established to account for the cost of claims and administrative costs for the City’s self- insured general liability program.

WORKERS’ COMPENSATION INSURANCE CLAIMS
This fund is used to account for the cost of claims for service connected with injuries and illnesses sustained by members of the City’s work force.

DRAFT

194

Technical PW Capital
Automotive Equipment Projects
Services Services Management
ASSETS
Current assets:

Cash and investments:

Pooled cash and investments 12,021,989$ 1,778,773$ 772,531$ Receivables (net of allowance for
uncollectible):

Accounts 7,134 - - Due from other funds 34,980 - - Materials, supplies and prepaids 259,412 - - Total current assets 12,323,515 1,778,773 772,531 Noncurrent assets:

Right-to-use leased assets, net of amortization - - - Capital assets:

Equipment 39,219,442 3,379,177 - Total capital assets 39,219,442 3,379,177 - Less accumulated depreciation 27,324,747 3,216,798 - Net capital assets 11,894,695 162,379 - Total noncurrent assets 11,894,695 162,379 - Total assets 24,218,210 1,941,152 772,531

DEFERRED OUTFLOWS OF RESOURCES
OPEB related items 70,841 - - Pension related items 757,667 - - Total deferred outflows of resources 828,508 - -

COMBINING STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDS

CITY OF SANTA CLARA
June 30, 2022

Combining Statement of Net Position

DRAFT

195

Special Workers'
Information Liability Compensation
Technology Insurance Insurance
Services Claims Claims TOTAL
3,903,464$ 9,566,355$ 9,052,582$ 37,095,694$ 10,744 4,688 421,019 443,585 - - - 34,980 - - 25,938 285,350 3,914,208 9,571,043 9,499,539 37,859,609 450,514 - - 450,514 6,040 - - 42,604,659 6,040 - - 42,604,659 3,523 - - 30,545,068 2,517 - - 12,059,591 453,031 - - 12,510,105 4,367,239 9,571,043 9,499,539 50,369,714 32,407 - - 103,248 346,592 - - 1,104,259 378,999 - - 1,207,507 (continued)
June 30, 2022

CITY OF SANTA CLARA

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF NET POSITION

DRAFT

196

Technical PW Capital
Automotive Equipment Projects
Services Services Management

LIABILITIES
Current liabilities:

Accrued liabilities 349,619 - 62,038 Interest payable - - - Due to other funds 3,317,877 904,117 - Accrued compensated absences 29,425 - - Current portion of lease obligation - - - Total current liabilities 3,696,921 904,117 62,038 Noncurrent liabilities:

Long-term portion estimated claims - - - Long-term compensated absences 227,708 - - Long-term lease obligation - - - OPEB pension liability 759,793 - - Net pension liability 4,278,640 - - Total noncurrent liabilities 5,266,141 - - Total liabilities 8,963,062 904,117 62,038

DEFERRED INFLOWS OF RESOURCES
OPEB related items 54,072 - - Pension related items 1,067,327 - - Total deferred inflows of resources 1,121,399 - -

NET POSITION
Net investment in capital assets 11,894,695 162,379 - Unrestricted 3,067,562 874,656 710,493 Total net position (deficit) 14,962,257$ 1,037,035$ 710,493$

CITY OF SANTA CLARA

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF NET POSITION
June 30, 2022

DRAFT

197

Special Workers'
Information Liability Compensation
Technology Insurance Insurance
Services Claims Claims TOTAL
1,755,275 3,467,297 4,020,971 9,655,200 31 - - 31 - - - 4,221,994 42,050 - - 71,475 207,893 - - 207,893 2,005,249 3,467,297 4,020,971 14,156,593 - 6,885,000 17,034,000 23,919,000 325,410 - - 553,118 242,883 - - 242,883 347,565 - - 1,107,358 1,957,252 - - 6,235,892 2,873,110 6,885,000 17,034,000 32,058,251 4,878,359 10,352,297 21,054,971 46,214,844 24,736 - - 78,808 488,245 - - 1,555,572 512,981 - - 1,634,380 2,517 - - 12,059,591 (647,619) (781,254) (11,555,432) (8,331,594) (645,102)$ (781,254)$ (11,555,432)$ 3,727,997$

CITY OF SANTA CLARA

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF NET POSITION
June 30, 2022

DRAFT

198

Technical PW Capital
Automotive Equipment Projects
Services Services Management
Operating revenues:

Charges for services 8,323,379$ 482,242$ 3,962,714$ Insurance refunds and other - - - Total operating revenues 8,323,379 482,242 3,962,714 Operating expenses:

Salaries and benefits 2,031,708 - 2,973,325 Materials, services and supplies 2,369,634 373,997 435,266 General and administrative - - - Amortization - Right to use assets - - - Depreciation 2,587,735 110,296 - Total operating expenses 6,989,077 484,293 3,408,591 Operating income (loss) 1,334,302 (2,051) 554,123 Nonoperating revenues (expenses):

Interest revenue - - - Other revenue 137,134 - - Interest expense - - - Gain (loss) on retirement of assets (8,755) - - Total nonoperating revenues (expenses) 128,379 - - Income (loss) before
contributions and transfers 1,462,681 (2,051) 554,123 Transfers in 933,161 - - Transfers (out) (960,000) - (408,247) Change in net position 1,435,842 (2,051) 145,876 Total net position - beginning 13,526,415 1,039,086 564,617 Total net position - ending 14,962,257$ 1,037,035$ 710,493$

CITY OF SANTA CLARA

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN FUND NET POSITION
For the year ended June 30, 2022

Combining Statement of Revenues, Expenses, and Chang es in Fund Net Position

DRAFT

199

Special Workers'
Information Liability Compensation
Technology Insurance Insurance
Services Claims Claims TOTAL
12,064,739$ 7,070,567$ 5,998,858$ 37,902,499$ - 295,090 346,487 641,577 12,064,739 7,365,657 6,345,345 38,544,076 1,828,897 - - 6,833,930 9,288,491 - - 12,467,388 - 10,640,952 4,194,324 14,835,276 207,930 - - 207,930 1,208 - - 2,699,239 11,326,526 10,640,952 4,194,324 37,043,763 738,213 (3,275,295) 2,151,021 1,500,313 - 37 - 37 - 24,425 - 161,559 (716) - - (716) - - - (8,755) (716) 24,462 - 152,125 737,497 (3,250,833) 2,151,021 1,652,438 - 5,200,000 - 6,133,161 - - - (1,368,247) 737,497 1,949,167 2,151,021 6,417,352 (1,382,599) (2,730,421) (13,706,453) (2,689,355) (645,102)$ (781,254)$ (11,555,432)$ 3,727,997$

CITY OF SANTA CLARA

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN FUND NET POSITION
For the year ended June 30, 2021

DRAFT

200

Technical PW Capital
Automotive Equipment Projects
Services Services Management

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 8,387,964$ 482,242$ 3,962,714$ Payments to suppliers (2,238,084) (373,997) (127,440) Payments to employees for salaries and benefits (2,325,124) - (2,973,325) Internal activity - payments to other funds (222,286) - (245,788) Claims paid - - - Other receipts 137,134 - - Net cash provided (used) by operating activities 3,739,604 108,245 616,161

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
(Increase) in due from other funds (2,105) - - Increase in due to other funds 238,397 102,092 - Transfers in 933,161 - - Transfers (out) (960,000) - (408,247) Cash Flows from Noncapital Financing Activities 209,453 102,092 (408,247)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition and construction of capital assets, net (2,169,296) - - Principal payment on capital debt - - - Interest paid on capital debt - - - Cash Flows from Capital and Related
Financing Activities (2,169,296) - -

CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends - - - Cash Flows from Investing Activities - - - Net increase (decrease) in cash and cash
equivalents 1,779,761 210,337 207,914 Cash and investments at beginning of period 10,242,228 1,568,436 564,617 Cash and investments at end of period 12,021,989$ 1,778,773$ 772,531$ Cash and cash equivalents:

Pooled cash and investments 12,021,989$ 1,778,773$ 772,531$ Total cash and cash equivalents 12,021,989$ 1,778,773$ 772,531$

CITY OF SANTA CLARA

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF CASH FLOWS
For the year ended June 30, 2022

Combining Statement of Cash Flows

DRAFT

201

Special Workers'
Information Liability Compensation
Technology Insurance Insurance
Services Claims Claims TOTAL
12,058,335$ 7,070,567$ 6,708,943$ 38,670,765$ (8,154,412) - - (10,893,933) (1,882,213) - - (7,180,662) (57,199) - - (525,273) - (6,780,230) (4,636,070) (11,416,300) - 25,348 - 162,482 1,964,511 315,685 2,072,873 8,817,079 - - - (2,105) - - - 340,489 - 5,200,000 - 6,133,161 - - - (1,368,247) - 5,200,000 - 5,103,298 - - - (2,169,296) (207,639) - - (207,639) (716) - - (716) (208,355) - - (2,377,651) - 37 - 37 - 37 - 37 1,756,156 5,515,722 2,072,873 11,542,763 - 2,147,308 4,050,633 6,979,709 25,552,931 3,903,464$ 9,566,355$ 9,052,582$ 37,095,694$ 3,903,464$ 9,566,355$ 9,052,582$ 37,095,694$ 3,903,464$ 9,566,355$ 9,052,582$ 37,095,694$ (continued)

CITY OF SANTA CLARA

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF CASH FLOWS
For the year ended June 30, 2022

DRAFT

202

Technical PW Capital
Automotive Equipment Projects
Services Services Management
Reconciliation of operating income (loss) to net cash
provided (used) by operating activities:

Operating income (loss) 1,334,302$ (2,051)$ 554,123$ Adjustments to reconcile operating income (loss) to net cash provided by operating activities:
(Decrease) Increase in lease obligation - - - (Decrease) Increase in due to OPEB system (25,513) - - (Decrease) Increase in due to retirement system (275,716) - - Depreciation 2,587,735 110,296 - Change in assets and liabilities:

Receivables, net 64,585 - - Inventory (58,494) - - Accrued liabilities (32,242) - 62,038 Long-term portion estimated claims - - - Compensated absences 7,813 - - Other receipts 137,134 - - Net cash provided (used) by operating activities 3,739,604$ 108,245$ 616,161$

CITY OF SANTA CLARA

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF CASH FLOWS
For the year ended June 30, 2022

DRAFT

203

Special Workers'
Information Liability Compensation
Technology Insurance Insurance
Services Claims Claims TOTAL
738,213$ (3,275,295)$ 2,151,021$ 1,500,313 207,930 - - 207,930 (11,671) - - (37,184) (126,125) - - (401,841) 1,208 - - 2,699,239 (6,404) 283,565 710,085 1,051,831 - - (25,938) (84,432) 1,076,880 1,180,067 402,705 2,689,448 - 2,102,000 (1,165,000) 937,000 84,480 - - 92,293 - 25,348 - 162,482 1,964,511$ 315,685$ 2,072,873$ 8,817,079$

CITY OF SANTA CLARA

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF CASH FLOWS
For the year ended June 30, 2022

DRAFT

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DRAFT

205

CITY OF SANTA CLARA

COMBINING FIDUCIARY FUNDS

PRIVATE PURPOSE TRUST FUNDS
Private Purpose Trust Funds are used to report trust arrangements, other than pension and investment trusts, under which principal and income benefit individuals, private organizations, or other governments. The Private Purpose Trust Funds are described below:

CHARITABLE TRUST
This fund accounts for the various gifts, donations and bequests received by the City for distribution to various nonprofit organizations as determined by the Mission City Community Fund.

SUCCESSOR AGENCY
California State laws ABx1 26 and AB 1484 provided for the dissolution of California Redevelopment Agencies effective January 31, 2012 and the transfer of all non-housing Agency assets to the Successor Agency Redevelopment Obligation Retirement Fund.

CUSTODIAL FUNDS
Custodial Funds are presented separately from the Government-wide and Fund financial statements.

Custodial Funds account for assets held by the City as an agent for individuals, governmental entities, and non-public organizations. These funds include the following:

EMPLOYEE SUPPLEMENTAL FUND
This fund is used to account for monies collected and disbursed for the employees paid leave program that is administered by respective bargaining units. The City does not make contribution to this fund.

SPECIAL ASSESSMENTS
This fund accounts for monies collected and disbursed from special assessment districts where the City is not obligated for the outstanding debt payments.

CUSTODIAL DEPOSITS
This fund accounts for various miscellaneous deposits for other entities.

DRAFT

206

Total
Charitable Successor Private Purpose
Trust Agency Trust
ASSETS
Current assets
Cash and investments:

Pooled cash and investments 634,618$ 637,942$ 1,272,560$ Receivables (net of allowance for uncollectibles):

Interest and rent 13,956 215,408 229,364 Leases receivable - 736,474 736,474 Total current assets 648,574 1,589,824 2,238,398 Noncurrent assets
Leases receivable- noncurrent - 43,699,299 43,699,299 Investment with fiscal agent-noncurrent 2,859,692 - 2,859,692 Land held for resale - 532,542 532,542 Total noncurrent assets 2,859,692 44,231,841 47,091,533 - Total Assets 3,508,266 45,821,665 49,329,931

LIABILITIES
Unearned revenues - 110,917 110,917 Due to other agencies - 630,000 630,000 Total Liabilities - 740,917 740,917

DEFERRED INFLOWS OF RESOURCES
Leases related - 43,617,753 43,617,753 Total deferred inflows of resources - 43,617,753 43,617,753

NET POSITION
Held in trust for private purpose 3,508,266 - 3,508,266 - 1,462,995 1,462,995 - Total Net Position 3,508,266$ 1,462,995$ 4,971,261$

CITY OF SANTA CLARA

PRIVATE PURPOSE TRUST FUNDS

COMBINING STATEMENT OF NET POSITION
June 30, 2022
Restricted for individuals, organization
and other governments

Private Purpose Trust Funds

Combining Statement of Net Position

DRAFT

207

Total
Charitable Successor Private Purpose
Trust Agency Trust

ADDITIONS
Investment income:

Net change in fair value of investments (326,060)$ -$ (326,060)$ Interest and rents 150,060 2,952,451 3,102,511 Net investment income (176,000) 2,952,451 2,776,451 Other - - - Total additions (176,000) 2,952,451 2,776,451

DEDUCTIONS
General and administrative 79,000 756 79,756 Pass through to the County of Santa Clara - 2,120,000 2,120,000 Total deductions 79,000 2,120,756 2,199,756 (255,000) 831,695 576,695 Net position - beginning 3,763,266 631,300 4,394,566 Net position - ending 3,508,266$ 1,462,995$ 4,971,261$

CITY OF SANTA CLARA

PRIVATE PURPOSE TRUST FUNDS

COMBINING STATEMENT OF CHANGES IN NET POSITION
For the Year Ended June 30, 2022
Net increase (decrease) in fiduciary net position

Combining Statement of Changes in Net Position
DRAFT

208

Total
Employee Special Custodial Custodial
Supplemental Assessments Deposits Funds
ASSETS
Cash and investments:

Pooled cash and investments 422,270 $ 347,377 $ 23,519 $ 793,166$ Total cash 422,270 347,377 23,519 793,166 Total Assets 422,270 347,377 23,519 793,166

NET POSITION
422,270 347,377 23,519 793,166 - Total Net Position 422,270 $ 347,377 $ 23,519 $ 793,166$

CITY OF SANTA CLARA

CUSTODIAL FUNDS

COMBINING STATEMENT OF NET POSITION
June 30, 2022
Restricted for individuals, organization
and other governments

Custodial Funds

Combining Statement of Net Position

DRAFT

209

Total
Employee Special Custodial Custodial
Supplemental Assessments Deposits Funds

ADDITIONS
Contributions:

Employee contributions 138,214$ -$ - $ 138,214$ Other plans - 1,340,818 - 1,340,818 Gifts and bequest - - 675 675 Total contributions 138,214 1,340,818 675 1,479,707 Investment income:

Interest and rents 6,139 - - 6,139 Net investment income 6,139 - - 6,139 Total additions 144,353 1,340,818 675 1,485,846

DEDUCTIONS
General and administrative - 80,000 2,401 82,401 Benefits paid 107,543 - - 107,543 Pass through to the Stadium Authority - 1,085,575 - 1,085,575 Total deductions 107,543 1,165,575 2,401 1,275,519 36,810 175,243 (1,726) 210,327 Net position - beginning 385,460 172,134 25,245 582,839 Net position - ending 422,270$ 347,377$ 23,519 $ 793,166$

CITY OF SANTA CLARA

CUSTODIAL FUNDS

COMBINING STATEMENT OF CHANGES IN NET POSITION
For the Year Ended June 30, 2022
Net increase (decrease) in fiduciary net position

Combining Statement of Changes in Net Position

DRAFT

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DRAFT

Statistical Section (Unaudited)

DRAFT

213

CITY OF SANTA CLARA

STATISTICAL SECTION
This part of the City of Santa Clara’s Annual Comprehensive Report provides detailed information to better understand the data presented within the financial statements, note disclosures, and required supplementary information.

TABLES
FINANCIAL TRENDS 1 - 4
Contains trend information to help the reader understand how the City’s financial performance has changed over time.

REVENUE CAPACITY 5 - 10
Contains information to help the reader assess the City’s most significant local revenue source, the property tax.

DEBT CAPACITY 11 - 15
Presents information to assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future.

DEMOGRAPHIC AND ECONOMIC INFORMATION 16 - 17
Offers information to help the reader understand the environment within which the City’s financial activities take place.

OPERATING INFORMATION 18 - 21
Contains service and infrastructure data to help the reader understand how the City’s financial report relates to the services the City provides and the activities it performs.

City of Santa Clara
DRAFT

214

CITY OF SANTA CLARA

NET P OSITION BY COMP ONENT
Las t Ten Fis cal Years
(Accrual Bas is o f Acc o unting)
(In Tho us ands )
Table 1
2022 2021 2020 2019 2018 2017 2016 2015 (2) 2014 2013 (1) Go ve rnmental Activities :

Net Investment in Capital Assets 625,872$ 626,115$ 613,187$ 585,201$ 553,135$ 532,255$ 507,390$ 524,645$ 528,043$ 522,175$ Restricted 317,290 275,653 260,872 244,775 246,048 242,393 207,996 198,316 189,618 230,545 Unrestricted (283,492) (289,637) (224,176) (169,513) (180,368) (135,818) (125,913) (186,423) 102,421 127,390 659,670$ 612,131$ 649,883$ 660,463$ 618,815$ 638,830$ 589,473$ 536,538$ 820,082$ 880,110$ Bus ines s - Type Activities :

Net Investment in Capital Assets 1,079,607$ 1,042,058$ 974,612$ 953,098$ 917,738$ 882,187$ 844,911$ 760,150$ 496,107$ 406,972$ Restricted 333,069 234,289 249,516 185,267 174,595 142,459 133,718 93,891 96,318 90,437 Unrestricted 112,922 100,116 80,997 31,258 (24,141) (13,132) (61,843) (1,573) 325,633 382,992 1,525,598$ 1,376,463$ 1,305,125$ 1,169,623$ 1,068,192$ 1,011,514$ 916,786$ 852,468$ 918,058$ 880,401$ P rimary Go vernment
Net Investment in Capital Assets 1,705,479$ 1,668,173$ 1,587,799$ 1,538,299$ 1,470,873$ 1,414,442$ 1,352,301$ 1,284,795$ 1,024,150$ 929,147$ Restricted 650,359 509,942 510,388 430,042 420,643 384,852 341,714 292,207 285,936 320,982 Unrestricted (170,570) (189,521) (143,179) (138,255) (204,509) (148,950) (187,756) (187,996) 428,054 510,382 2,185,268$ 1,988,594$ 1,955,008$ 1,830,086$ 1,687,007$ 1,650,344$ 1,506,259$ 1,389,006$ 1,738,140$ 1,760,511$ Note:
(1) Certain amounts in the prior year have been reclassified due to the implementation of GASB Statement No. 65. (2) Certain amounts cannot be compared to fiscal year 2015 due to the implementation of GASB Staetment No. 68.

Source: Finance Office, City of Santa Clara.

To tal Go vernmental
Activities Net
As s ets :

To tal Bus ines s - Type
Activities Net
P o s itio n
To tal P rimary
Go ve rnment Net
P o s itio n

1. Net Position by Component – Last Ten Fiscal Year s
DRAFT

215

2. Changes in Net Position – Last Ten Fiscal Years

Table 2
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Expens es :

Go vernmental Activities :

General Administration 37,676$ 33,671$ 26,436$ 30,328$ 25,467$ 20,636$ 22,692$ 18,310$ 15,208$ 15,799$ City Clerk 1,171 1,414 1,292 1,263 864 1,020 309 389 263 388 City Attorney 2,079 1,890 1,945 1,700 1,000 860 270 194 102 100 Human Resources 2,136 1,616 2,751 2,011 1,886 1,675 748 654 502 367 Finance 10,325 10,188 10,497 7,111 6,253 5,323 1,633 1,357 844 1,270 P ublic Works 38,837 41,951 46,176 45,725 38,276 34,314 30,365 29,713 30,287 29,337 P arks and Recreation 20,520 20,266 27,491 23,285 21,369 18,616 17,106 16,135 15,913 15,858 P ublic Safety:

P olice 71,575 87,563 89,477 72,449 76,742 63,612 58,599 54,252 47,105 45,120 Fire 58,117 71,025 67,767 58,120 55,372 43,384 37,120 35,341 34,099 33,162 P lanning and Inspection 15,487 15,537 16,281 12,879 10,614 9,162 7,855 7,593 6,848 6,383 Library 10,925 10,864 13,773 12,687 12,302 10,553 10,718 8,851 8,161 7,712 Interest on long term debt 408 487 560 630 695 749 803 853 1,125 2,107 To tal Go vernmental Activities Expens es (Net) 269,256 296,472 304,446 268,188 250,840 209,904 188,218 173,642 160,457 157,603 Bus ines s -Type Activities :

Utilities:

Electric 552,552 454,503 453,112 408,812 437,419 402,977 386,239 377,017 362,303 338,786 Water 45,578 45,353 43,196 46,067 41,777 35,649 32,254 29,482 28,181 26,683 Sewer 30,523 30,103 28,614 29,462 25,689 23,047 19,081 17,981 17,237 16,054 Water Recycling 5,700 5,844 6,344 5,909 4,972 4,858 2,672 2,902 2,030 1,979 Solid Waste 32,997 29,769 25,567 25,393 23,363 26,621 20,142 19,717 18,486 19,222 Cemetery 1,350 1,359 1,659 1,257 1,174 820 781 676 901 991 Sports and Open Space Authority 9 8 10 9 10 53 102 97 95 44 Santa Clara Golf and Tennis Club - - 1,675 2,837 2,951 2,772 2,777 2,754 2,827 2,662 Santa Clara Convention Center 11,829 4,667 16,738 12,967 8,423 8,478 9,075 9,006 8,926 8,553 Santa Clara Stadium Authority 65,308 41,181 79,539 103,899 111,210 105,593 147,435 98,363 21,913 27,442 To tal Bus ines s -Type Activities Expens es 745,846 612,787 656,454 636,612 656,988 610,868 620,558 557,995 462,899 442,416 To tal P rimary Expens es 1,015,102$ 909,259$ 960,900$ 904,800$ 907,828$ 820,772$ 808,776$ 731,637$ 623,356$ 600,019$ Source: Finance Office, City of Santa Clara

CITY OF SANTA CLARA

CHANGES IN NET P OSITION
Las t Ten Fis cal Years
(Accrual Bas is o f Acco unting)
(In Tho us ands )

DRAFT

216
Table 2
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
P ro gram Revenues :

Go vernmental Activities :

Charges for Services:

General Administration 9,592$ 3,475 $ 8,837$ 7,904$ 398$ 1,651$ 1,247$ 416$ 355$ 562$ P arks and Recreation 2,049 891 1,495 3,431 3,126 3,169 3,114 4,207 3,157 2,825 P lanning and Inspection 21,274 16,470 15,564 19,048 12,837 13,658 15,065 13,944 9,299 6,872 Other P rograms 15,282 12,604 15,057 17,476 21,303 19,658 23,022 16,281 12,296 9,352 Operating Grants and Contributions 34,060 17,053 9,455 8,457 7,172 4,723 5,809 8,240 6,566 3,922 Capital Gains and Contributions 6,072 11,598 29,619 23,634 20,273 14,280 12,100 5,848 10,347 4,490 To tal Go vernmental Activities P ro gram Revenues 88,329 62,091 80,027 79,950 65,109 57,139 60,357 48,936 42,020 28,023 Bus ines s -Type Activities :

Utilities:

Electric 611,549 526,710 507,494 460,263 475,434 459,849 412,441 381,858 364,280 345,045 Equity in income (losses) of joint ventures
(1) - - - - - - - (4,719) 4,214 6,111 Water 51,606 52,530 51,373 47,017 46,685 39,953 31,955 31,462 30,979 30,177 Sewer 116,443 16,587 71,041 44,763 50,942 43,176 41,659 43,400 34,585 32,090 Equity in income (losses) of joint ventures (1) - - - - - - - (10,036) (3,383) (3,654) Water Recycling 6,072 6,182 6,304 6,299 5,479 4,834 3,841 3,381 3,136 2,774 Solid Waste 34,851 26,603 26,645 25,983 23,544 22,585 21,854 20,404 20,154 19,575 Cemetery 1,024 844 585 634 666 799 693 649 528 632 Sports and Open Space Authority - - - - - 58 72 66 82 420 Santa Clara Golf and Tennis Club - - 674 2,001 1,991 1,780 1,666 2,207 2,857 2,929 Santa Clara Convention Center 8,527 1,221 14,252 12,734 9,061 9,581 7,399 7,112 7,240 6,933 Santa Clara Stadium Authority 59,528 38,682 87,976 112,550 112,039 110,059 146,619 102,908 33,193 - To tal Bus ines s -Type Activities P ro gram Revenues 889,600 669,359 766,344 712,244 725,841 692,674 668,199 578,692 497,865 443,032 To tal P rimary Go vernment P ro gram Revenues 977,929 731,450 846,371 792,194 790,950 749,813 728,556 627,628 539,885 471,055 Net (Expens e) Revenue:

Governmental Activities (180,927) (234,381) (224,419) (188,238) (185,731) (152,765) (127,861) (124,706) (118,437) (129,580) Business-Type Activities 143,754 56,572 109,890 75,632 68,853 81,806 47,641 20,697 34,966 616 To tal P rimary Go vernment Net (Expens e) Revenue (37,173)$ (177,809)$ (114,529)$ (112,606)$ (116,878)$ (70,959)$ (80,220)$ (104,009)$ (83,471)$ (128,964)$ Note:
(1) Equity in income (losses) of joint ventures were included in the Electric and Sewer Business-Type Activities beginning in fiscal year 2016 Source: Finance Office, City of Santa Clara
Las t Ten Fis cal Years
(Accrual Bas is o f Acco unting)

(In Tho us ands )
(co ntinued)

CITY OF SANTA CLARA

CHANGES IN NET P OSITION

DRAFT

217

CHANGES IN NET P OSITION
Las t Ten Fis cal Years
(Accrual Bas is o f Acc o unting)
Table 2
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
General Revenue and o ther changes in Net P o s itio n Go ve rnmental Activities :

Taxes:

Sales 56,902$ 56,178$ 55,270$ 65,036$ 56,320$ 55,751$ 57,797$ 49,648$ 46,736$ 44,159$ Ad Valorem P roperty 74,188 68,358 65,132 58,502 54,965 50,943 45,627 37,574 39,187 31,651 Transient occupancy 10,812 2,949 15,994 23,229 20,580 20,484 20,557 18,186 15,141 13,673 Other 7,317 6,019 5,967 5,955 6,392 5,671 5,510 5,173 5,191 4,333 Internal Governmental, unrestricted:

Motor Vehicle in-lieu - - - - - 55 49 50 - 51 Contribution in-lieu of taxes 27,259 24,548 22,710 21,304 21,986 21,117 19,057 17,493 16,591 15,219 Investment earnings 5,709 6,451 8,700 6,990 4,600 3,466 2,178 1,702 3,380 6,058 Net increase (decrease) in the fair value of investments (13,688) (5,207) 6,531 8,082 (2,452) (3,217) 1,049 496 1,815 (3,567) Equity in income (losses) of joint ventures - - 95 28 25 49 44 (40) (106) (286) Rents and royalties 7,205 9,852 9,032 9,762 10,494 11,410 13,642 11,189 3,781 13,658 Other 58,511 24,590 22,513 30,257 16,243 39,956 8,551 12,154 4,317 4,434 Special item - - - - - - (24,451) (9,224) (80,152) (29,563) To tal Go vernment General Re venue and Special
Item 234,215 193,738 211,944 229,145 189,153 205,685 149,610 144,401 55,881 99,820 Bus ines s -Type Activities : (2)
Investment earnings 11,587 13,569 16,709 16,618 15,755 13,031 16,894 15,602 2,863 3,403 Net increase (decrease) in the fair value of investments (26,594) (6,246) 10,798 9,921 (3,584) (3,672) 1,218 544 2,356 (4,695) Equity in gains of joint venture 14,639 - - - - - - - - - Gain (loss) on retirement of assets - 1,678 - - - - 29,751 64 - (2) To tal Bus ine s s -Type Gene ral Revenue (368) 9,001 27,507 26,539 12,171 9,359 47,863 16,210 5,219 (1,294) To tal P rimary Go vernment Ge neral Revenue 233,847 202,739 239,451 255,684 201,324 215,044 197,473 160,611 61,100 98,526 Change in Net P o s itio n - To tal P rimary Go vernment 196,674 24,930 124,922 143,078 84,446 144,085 117,253 56,602 (22,371) (30,438) Net P o s itio n - Beginning o f Year (2015 Adjus ted) 1,988,594 1,955,007 1,830,085 1,687,007 1,650,344 1,506,259 1,389,006 1,738,140 1,760,511 1,790,949 GASB68 Imple mentatio n - - - - - - - (405,736) - - GASB75 Imple mentatio n - - - - (47,783) - - - - - GASB84 Imple mentatio n - 8,657 - - - - - - - - Net P o s itio n - End o f Year - To tal P rimary Go vernment 2,185,268$ 1,988,594 $ 1,955,007 $ 1,830,085 $ 1,687,007 $ 1,650,344 $ 1,506,259 $ 1,389,006 $ 1,738,140 $ 1,760,511 $

CITY OF SANTA CLARA
(co ntinued)
(In Tho us ands )

DRAFT

218
Table 3
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
General Fund:

Nonspendable 7,244$ 13,767$ 24,260$ 24,421$ 25,002$ 13,837$ 13,517$ 13,247$ 12,850$ 12,785$ Restricted 23,291 25,943 28,507 17,652 13,585 7,083 11,865 9,546 9,641 7,191 Committed 23,985 40,280 36,978 30,902 41,914 58,580 64,111 55,121 78,125 86,949 Assigned 9,844 7,131 5,861 7,879 7,473 4,639 4,875 6,761 4,752 4,927 Unassigned 76,751 90,681 122,969 147,739 107,801 107,404 103,430 58,946 23,910 38,522 To tal General Fund 141,115 177,802 218,575 228,593 195,775 191,543 197,798 143,621 129,278 150,374 All o ther Go vernmental Funds :

Restricted 110,448 88,486 89,256 86,802 91,290 89,818 67,612 76,848 60,489 105,785 Committed 73,821 50,558 44,757 45,345 40,473 44,936 38,953 20,237 25,697 21,351 To tal All Other Go vernmental Funds 184,269 139,044 134,013 132,147 131,763 134,754 106,565 97,085 86,186 127,136 To tal Go vernmental Funds 325,384$ 316,846$ 352,588$ 360,740$ 327,538$ 326,297$ 304,363$ 240,706$ 215,464$ 277,510$

CITY OF SANTA CLARA

FUND BALANCES - GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
(In Thousands)

3. Fund Balances – Governmental Funds – Last Ten Fi scal Years

DRAFT

219
Table 4
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
REVENUES:

Taxes:

Sales 56,902$ 56,178 $ 55,270$ 65,036$ 56,321$ 55,750$ 57,796$ 49,649$ 46,736$ 44,160$ Ad valorem property 74,630 68,773 65,498 58,502 54,965 50,943 45,627 37,574 39,187 31,651 Transient occupancy 10,812 2,949 15,994 23,229 20,580 20,484 20,557 18,186 15,141 13,673 Other 7,317 5,824 5,967 5,955 6,392 5,671 5,510 5,173 5,191 4,333 Licenses, permits, fees and penalties 16,182 12,568 11,476 16,478 8,665 10,536 11,530 9,508 6,860 6,523 Intergovernmental 39,929 22,589 19,905 29,685 13,920 15,269 8,570 13,766 10,611 6,838 Charges for services 47,194 38,171 44,029 49,067 45,237 42,941 46,938 39,012 32,749 26,621 Contribution in-lieu of taxes 27,259 24,548 22,710 21,304 21,986 21,117 19,057 17,493 16,591 15,219 Interest and rents 13,220 16,161 17,673 16,927 15,223 14,636 15,617 10,692 7,672 20,026 Net increase (decrease) in the fair value of investments (13,688) (5,207) 6,531 8,082 (2,452) (3,217) 1,049 496 1,815 (3,567) Other 42,033 17,161 17,955 15,021 11,957 32,209 9,578 13,792 6,740 4,627 TOTAL REVENUES 321,790$ 259,715$ 283,008$ 309,286$ 252,794$ 266,339$ 241,829$ 215,341$ 189,293$ 170,104$ Source: Finance Office, City of Santa Clara.

CITY OF SANTA CLARA
(In Thousands)
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)

CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS

4. Changes in Fund Balances – Governmental Funds – Last Ten Fiscal Years DRAFT

220
Table 4
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013

EXP ENDITURES
Current:

General Administration 42,252$ 37,273$ 28,927$ 36,093$ 28,997$ 24,265$ 23,743$ 18,684$ 17,101$ 17,615$ City Clerk 1,618 1,697 1,429 1,440 1,361 1,594 1,007 1,060 863 970 City Attorney 2,681 2,330 2,154 2,006 1,690 1,658 1,500 1,329 1,335 1,226 Human Resources 3,837 3,201 3,876 3,151 3,175 2,993 2,616 2,322 2,279 2,055 Finance 16,576 15,852 14,924 11,697 10,484 9,725 9,319 8,455 8,231 7,876 P ublic Works 28,158 28,443 28,186 31,595 25,595 24,018 20,088 18,424 17,562 16,765 P arks and Recreation 19,890 17,822 22,551 20,026 18,882 17,364 16,162 14,506 14,428 14,063 P ublic Safety:

P olice 77,590 74,918 74,168 62,799 67,841 62,290 61,015 54,344 45,584 42,991 Fire 62,203 59,799 56,421 50,975 49,043 42,550 39,129 35,144 33,267 32,370 P lanning and Inspection 16,174 14,712 13,534 11,521 9,896 9,156 8,231 7,620 6,938 6,268 Library 10,011 8,879 10,392 10,234 10,426 9,113 9,479 7,611 7,206 6,564 Capital Outlay 19,261 30,514 24,021 30,382 19,933 29,329 13,434 10,730 8,736 15,060 Debt Service:

P rincipal payments 2,009 1,930 1,859 1,786 1,731 1,674 1,620 1,576 8,520 24,302 Interest and fiscal fees 498 572 644 712 767 825 879 925 1,174 2,009 Bond issuance cost - - - - 7 2 1 2 5 411 TOTAL EXP ENDITURES 302,758 297,942 283,086 274,417 249,828 236,556 208,223 182,732 173,229 190,545

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXP ENDITURES 19,032 (38,227) (78) 34,869 2,966 29,783 33,606 32,609 16,064 (20,441) OTHER FINANCING SOURCES (USES):

Lease liabilities issued 18 - - - - - - - - - P roceeds from Bond Issuance - - - - - - - - - 19,572 Transfers in 56,105 49,402 29,003 43,334 21,381 44,983 58,473 14,152 27,961 17,525 Transfers out (66,617) (55,575) (37,076) (45,001) (23,106) (52,832) (27,581) (12,295) (25,918) (14,446) TOTAL OTHER FINANCING SOURCES (USES) (10,494) (6,173) (8,073) (1,667) (1,725) (7,849) 30,892 1,857 2,043 22,651

NET CHANGE IN FUND BALANCES
BEFORE SP ECIAL ITEM 8,538$ (44,400)$ (8,151)$ 33,202$ 1,241$ 21,934$ 64,498$ 34,466$ 18,107$ 2,210$

SP ECIAL ITEM-ASSET TRANSFERRED

TO LIABILITIES ASSUMED BY SUCCESSOR
AGENCY - - - - - - (842) (9,224) (80,152) (29,563)

NET CHANGE IN FUND BALANCES AFTER
SP ECIAL ITEM 8,538$ (44,400)$ (8,151)$ 33,202$ 1,241$ 21,934$ 63,656$ 25,242$ (62,045)$ (27,353)$ DEBT SERVICE AS A P ERCENTAGE OF 2,507 2,502 2,503 2,498 2,505 2,501 2,500 2,503 9,699 26,722 NON-CAP ITAL EXP ENDITURES 1 % 1% 1% 1% 1% 1% 1% 1% 6% 15% Source: Finance Office, City of Santa Clara.
(continued)

CITY OF SANTA CLARA
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
(In Thousands)

CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
DRAFT

221
Table 5
Ratio of Net
Fiscal Year Net Local State Net Net Total Assessed Valuation % Growth Total Direct Ending Secured Assessed Unsecured Assessed Assessed To Total Assessed of Assessed Tax June 30 Roll (1)
Valuation Roll Valuation Valuation Valuation Valuation Rate 2012 / 13 20,475,348$ 4,641$ 4,702,675$ 25,182,664 $ 25,295,792$ 99.55% 6.19% 1.16% 2013 / 14 22,216,962 4,641 4,680,536 26,902,139 27,012,697 99.59% 6.83% 1.14% 2014 / 15 24,294,056 4,183 4,352,204 28,650,443 28,758,679 99.62% 6.50% 1.13% 2015 / 16 27,659,960 4,183 5,157,346 32,821,489 32,927,777 99.68% 14.56% 1.16% 2016 / 17 30,672,596 4,183 5,856,885 36,533,664 36,638,297 99.71% 11.31% 1.15% 2017 / 18 33,449,607 3,896 6,553,560 40,007,063 40,109,539 99.74% 9.51% 1.16% 2018 / 19 36,596,483 354 7,266,592 43,863,429 43,964,914 99.77% 9.64% 1.13% 2019 / 20 38,502,828 870 7,629,244 46,132,942 46,232,453 99.78% 5.17% 1.20% 2020 / 21 42,047,766 870 7,972,493 50,021,129 50,118,954 99.80% 8.43% 1.18% 2021 / 22 44,162,052 870 8,007,077 52,170,000 52,264,729 99.82% 4.30% 1.19% Note:
(1) Net of Home Owner Property Tax Relief.

Source: County of Santa Clara, Department of Finance

CITY OF SANTA CLARA

ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years
(In Thousands)

5. Assessed and Estimated Actual Value of Taxable P roperty – Last Ten Fiscal Years

DRAFT

222

CITY OF SANTA CLARA

PROPERTY TAX RATES
(Per $100 Assessed Valuation)
Direct and Overlapping Governments
Last Ten Fiscal Years
Table 6
Fiscal Santa
Year Ending Clara School Special
June 30 County Districts Districts Total
2012 / 13 1.0388% 0.1108% 0.0069% 1.1565%
2013 / 14 1.0388% 0.0962% 0.0070% 1.1420%
2014 / 15 1.0388% 0.0824% 0.0065% 1.1277%
2015 / 16 1.0388% 0.1174% 0.0057% 1.1619%
2016 / 17 1.0388% 0.1014% 0.0086% 1.1488%
2017 / 18 1.0388% 0.1028% 0.0062% 1.1478%
2018 / 19 1.0388% 0.0905% 0.0042% 1.1335%
2019 / 20 1.0388% 0.1472% 0.0041% 1.1901%
2020 / 21 1.0388% 0.1356% 0.0037% 1.1781%
2021 / 22 1.0388% 0.1318% 0.0051% 1.1757%
Tax rate limit: A state constitutional amendment (Proposition 13) commencing with fiscal 1979 provided that the tax rate was limited to 1% of full cash value, levied only by the County and shared with all other jurisdictions. All jurisdictions may levy a tax rate for voter approved debt.

Due date for current taxes: First installment - November 1; second installment - February 1.

Penalties for delinquency: 10% and 1.5% of tax per month after date taxes become delinquent.

Collected by government unit: County of Santa Clara.

Basis upon which collections are distributed: Taxing jurisdictions assessed valuations and tax rates for voter approved debt to taxing jurisdictions, County rate (1% of full cash value) shared by all jurisdictions.

Compensation paid to collecting government unit for fiscal year 2021-22 is $442,717 Note: Tax rates stated are the rates applicable to the tax rate area 7-000 as typical tax rate area within the City. Rates are based on $100 assessed valuation.

Source: County of Santa Clara, Department of Finance

6. Property Tax Rates Direct and Overlapping Govern ments – Last Ten Fiscal Years DRAFT

223
Table 7
Percentage of Percentage of
Assessed Total Assessed Assessed Total Assessed
Taxpayers Valuation Valuation Valuation Valuation
Intel Corporation 1,813,764$ 3.47% 1,102,266$ 4.36% Nvidia Corporation (formerly Nvidia Land Development LLC) 1,142,361 2.19% 370,958 1.47% Microsoft Corporation 1,127,274 2.16% - - Santa Clara Square Office 2B LLC 1,105,692 2.12% - 0.00% Santa Clara Phase III EFH LLC 867,276 1.66% - - SI LLC 839,601 1.61% 704,703 2.79% Vantage Data Centers LLC 830,420 1.59% - - Forty Niners SC Stadium Company LLC 785,232 1.50% - - Apple Inc 686,798 1.31% - - Coresite Real Estate 549,108 1.05% - - Santa Clara Square Apartment - - - 0.00% Agilent Technologies - - 195,748 0.77% Applied Materials, Inc. - - 186,975 0.74% Oracle America Inc (formerly Sun Microsystems) - - 280,529 1.11% Marvell Technology Inc - - 215,311 0.85% Silicon Valley California LLC - - - 0.00% Yahoo Inc. - - 219,104 0.87% Top Ten Total 9,747,526$ 18.66% 3,275,594$ 12.96% City Total 52,264,132$ 25,295,792$
Sources: Santa Clara County Assessor 2021-22 and 2012-13 Combined Tax Rolls through HdL Coren & Cone. 2021-22 2012-13

CITY OF SANTA CLARA

PRINCIPAL PROPERTY TAX PAYERS
2021-22 AND 2012-13 COMPARISON FOR GENERAL FUND
(In Thousands)

7. Principal Property Tax Payers 2017-18 and 2010- 11 Comparison for General Fund

DRAFT

224

CITY OF SANTA CLARA

PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
(In Thousands)
Table 8
Fiscal Year Percentage of Delinquent Percentage of
Ending Gross Current Tax Current Levy Tax Total Total Levy June 30 Tax Levy Collections Collected Collected Collections Collected 2012 / 13 22,313 $ 22,313 $ 100.00% - 22,313 $ 100.00% 2013 / 14 24,027 24,027 100.00% - 24,027 100.00% 2014 / 15 25,550 25,550 100.00% - 25,550 100.00% 2015 / 16 27,603 27,603 100.00% - 27,603 100.00% 2016 / 17 30,605 30,605 100.00% - 30,605 100.00% 2017 / 18 33,312 33,312 100.00% - 33,312 100.00% 2018 / 19 37,374 37,374 100.00% - 37,374 100.00% 2019 / 20 40,288 40,288 100.00% - 40,288 100.00% 2020 / 21 43,680 43,680 100.00% - 43,680 100.00% 2021 / 22 45,539 45,539 100.00% - 45,539 100.00% Sources: City of Santa Clara and County of Santa Clara, Department of Finance

8. Property Tax Levies and Collections – Last Ten F iscal Years DRAFT

225
Table 9
This list is in alphabetical order and represents sales from July 2021 to June 2022 The Top 25 Sales / Use Tax contributors generate 44.7% of Santa Clara's total sales and use tax revenue AG Electronic Materials Lexus of Stevens Creek
Applied Materials Norman S. Wright Mechanical Equipment Corp Arista Networks NVIDIA Corporation
Bell Electrical Supply One Workplace
Carl Zeiss Sports Optics Pace Supply
Costco Wholesale Pivot Interiors
Frontier Ford Porsche Stevens Creek
Home Depot Stevens Creek Auto Imports
Ingrasys Technology USA Stevens Creek BMW
Intel Corporation Vantage Data Centers Procurement
Keysight Technologies Wiwynn International
Lasertec ZT Systems
Lenovo Global Technology
Sources: From Muni Services Sales Tax Digest Summary.

CITY OF SANTA CLARA

PRINCIPAL SALE/USE TAX CONTRIBUTORS
June 30, 2022

9. Principal Sale/Use Tax Contributors

DRAFT

226

Table 10
Fiscal Year
Ending June
30 Residential Commercial Industrial Other Total
2012 / 13 23,474$ 15,579$ 257,118$ 2,581$ 298,751$ 2013 / 14 25,653 13,770 267,169 2,578 309,169 2014 / 15 27,139 13,783 277,079 14,936 332,938 2015 / 16 27,789 15,409 321,491 7,112 371,801 2016 / 17 28,007 15,855 341,865 4,682 390,410 2017 / 18 29,082 15,774 355,279 3,562 403,698 2018 / 19 29,734 15,378 359,407 2,428 406,947 2019 / 20 31,867 15,472 383,704 2,815 433,858 2020 / 21 35,440 16,489 399,940 1,394 453,264 2021 / 22 33,275 16,395 448,257 4,447 502,373 Notes:

Sources: City of Santa Clara

CITY OF SANTA CLARA
Electric Utility Charge For Services by Source
Last Ten Fiscal Years
(In Thousands)

10. Electric Utility Charge for Services by Source

DRAFT

227
Table 11
Business
Activities
Santa Clara
Stadium
Authority
Total Primary
Government Population
Debt per
Capita
Total Personal
Income ($000)
Debt/ Income
Ratio
Fiscal Year
Ending June
30 Certificates of
Participation
Total Governmental
Activities Revenue Bonds Revenue Bonds
2012 / 13 34,784$ 34,784$ 199,676$ 396,140$ 630,600$ 120,284 5,243 $ 4,530,093$ 13.92% 2013 / 14 26,210 26,210 227,163 653,367 906,740 121,229 7,480 4,739,710 19.13% 2014 / 15 24,579 24,579 226,828 561,556 812,963 120,973 6,720 4,952,711 16.41% 2015 / 16 22,905 22,905 229,719 464,720 717,344 123,752 5,797 5,194,006 13.81% 2016 / 17 21,177 21,177 220,800 429,773 671,750 123,983 5,418 5,454,137 12.32% 2017 / 18 19,392 19,392 208,117 394,827 622,336 129,604 4,802 6,064,143 10.26% 2018 / 19 17,551 17,551 189,158 340,217 546,926 128,717 4,249 6,121,909 8.93% 2019 / 20 15,638 15,638 196,012 325,265 536,915 129,104 4,159 6,180,008 8.69% 2020 / 21 13,654 13,654 184,933 296,796 495,383 130,746 3,789 6,596,037 7.51% 2021 / 22 11,594 11,594 170,413 280,314 462,321 130,127 3,553 7,540,481 6.13% Notes:

Sources: Finance Office, City of Santa Clara and MuniServices LLC.

CITY OF SANTA CLARA

RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
(In Thousands)
Public Facilities Financing Corporation
Governmental Activities

11. Ratios of Outstanding Debt by Type - Last Ten F iscal Years DRAFT

228
Fiscal Year
Ending June 30 Population
Total Assessed
Valuation
2012 / 13 120.3 25,295,792$
2013 / 14 121.2 27,012,697
2014 / 15 121.0 28,758,679
2015 / 16 123.8 32,927,777
2016 / 17 123.9 36,638,297
2017 / 18 129.6 40,109,539
2018 / 19 128.7 43,964,914
2019 / 20 129.1 46,232,453
2020 / 21 130.7 50,118,954
2021 / 22 130.1 52,264,729
Sources: State of California, Department of Finance
County of Santa Clara, Department of Finance

CITY OF SANTA CLARA

POPULATION AND ASSESSED VALUATION
Last Ten Fiscal Years
(In Thousands)
Table 12

12. Population and Assessed Valuation – Last Ten Fis cal Years DRAFT

229
Table 13
% Applicable Debt
Direct Debt:
2010 Lease Financing 100% -$
2013 Refunding Certificates of Participation 100% 11,065,000 Total Gross Direct Debt 11,065,000
Unamortized Premium/Discount 100% 529,395
Total Net Direct Debt 11,594,395
Overlapping Debt:

Santa Clara County General Fund Obligations 109,797,872 Santa Clara County Pension Fund Obligations 30,439,053
Santa Clara Valley Water District Benefit Assessment District 4,366,724 Santa Clara County Board of Education Certificates of Participation 165,056 San Jose-Evergreen Community College District OPEB Obligations 25,623 West Valley-Mission Community College District General Fund Obligations 3,619,320 Foothill-DeAnza Community College District 7,841,910
San Jose-Evergreen Community College District 450,392
West Valley Community College District 220,929,325
Fremont Union High School District 15,542,478
Campbell Union High School District General Fund Obligations 317,750 Campbell Union School District 9,762,450
Campbell Union High School District 7,613,495
Campbell Union School District General Fund Obligations 82,555 El Camino Hospital District 1,760,929
San Jose Unified School District 756,351
Cupertino Union School District 13,226,963
Santa Clara Unified School District 615,172,138
San Jose Unified School District General Fund Obligations 9,675 Santa Clara County 102,556,787
Foothill-DeAnza Community College District Certificates of Participation 254,850 Santa Clara Unified School District Certificates of Participation 8,571,306 Santa Clara County Vector Control District Certificates of Participation 136,488 Total Overlapping Debt 1,153,399,490
Total Gross Direct and Overlapping Bonded Debt (1) 1,164,464,490 Direct Unamortized Premium/Discount -
TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT 1,164,464,490$ 2021 / 22 Assessed Value 52,264,729,168$
Ratios to Assessed Valuation:

Direct Debt 11,594,395$ 0.020%
Total Gross Debt 2.230%
Total Net Debt 2.220%
Note: (1) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds.

Source: California Municipal Statistics, Inc.

CITY OF SANTA CLARA

COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT June 30, 2022
Description

13. Computation of Direct and Overlapping Bonded Deb t\ DRAFT

230
Table 14
Fiscal Year Net
Ending Assessed Debt Limit- 15% of Debt Applicable
June 30 Valuation Assessed Valuation (1)
to Limit Legal Debt Margin
2012 / 13 25,182,664$ 3,777,400$ - 3,777,400$ 2013 / 14 26,902,139 4,035,321 - 4,035,321 2014 / 15 28,650,443 4,297,566 - 4,297,566 2015 / 16 32,821,489 4,923,223 - 4,923,223 2016 / 17 36,533,664 5,480,050 - 5,480,050 2017 / 18 40,007,063 6,001,059 - 6,001,059 2018 / 19 43,863,429 6,579,514 - 6,579,514 2019 / 20 46,132,942 6,919,941 - 6,919,941 2020 / 21 50,021,129 7,503,169 - 7,503,169 2021 / 22 52,170,000 7,825,500 - 7,825,500 Note:

Sources: County of Santa Clara, Department of Finance and City of Santa Clara

CITY OF SANTA CLARA

LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
(In Thousands)
(1) Section 1309 of the City Charter of the City states: "Bonded Debt Limit. The bonded indebtedness of the City may not in the aggregate exceed the sum of fifteen percent (15%) of the total assessed valuation of property within the City, exclusive of revenue bonds or any indebtedness that has been or may hereafter be incurred for the purposes of acquiring, constructing, extending, or maintaining municipally owned utilities for which purposes a further indebtedness may be incurred by the issuance of bonds, subject only to the provisions of the State Constitution and this Charter."

14. Legal Debt Margin Information – Last Ten Fiscal Years DRAFT

231
Table 15
Fiscal Year
Ending June 30
Gross
Revenue
Less
Operating
Expense
Net Revenue
Available For
Debt Service Principal Interest
Letter Of
Credit
Fees Total Coverage (1)
2012 / 13 298,522 $ 266,246 $ 32,276$ 6,560 $ 9,899 $ 813 $ 17,272 $ 1.87 2013 / 14 314,847 288,954 25,893 3,550 7,994 637 12,181 2.13 2014 / 15 332,178 297,846 34,332 6,485 7,990 459 14,934 2.30 2015 / 16 359,084 316,578 42,506 8,958 8,348 358 17,664 2.41 2016 / 17 352,828 317,237 35,591 7,640 8,434 335 16,409 2.17 2017 / 18 383,662 346,825 36,837 11,416 6,594 302 18,312 2.01 2018 / 19 414,975 331,141 83,834 11,897 11,565 607 24,069 3.48 2019 / 20 445,142 368,162 76,980 11,700 6,787 316 18,803 4.09 2020 / 21 467,625 407,627 59,998 9,580 3,862 349 13,791 4.35 2021 / 22 554,170 492,700 61,470 13,005 3,232 8 16,245 3.78 Notes:

Source: City of Santa Clara

CITY OF SANTA CLARA
Last Ten Fiscal Years
(In Thousands)
(1) The required coverage is 1.00.

PLEDGED REVENUE COVERAGE

ELECTRIC REVENUE BOND

15. Pledged Revenue Coverage Electric Revenue Bond – Last Ten Fiscal Years DRAFT

232
Table 16
Per
Capita Public County City
Personal Buying Median School Unemployment Unemployment Year Population Income Income Age Enrollment Rate Rate
($000)
2012 / 13 120,284 4,530,093$ 37,662 $ 34.1 14,705 6.8% 6.2% 2013 / 14 121,229 4,739,710 39,097 35.0 15,169 5.4% 4.9% 2014 / 15 120,973 4,952,711 40,941 34.4 15,169 3.9% 3.6% 2015 / 16 123,752 5,194,006 41,971 34.3 15,388 4.2% 3.7% 2016 / 17 123,983 5,454,137 43,991 34.3 15,409 3.8% 3.4% 2017 / 18 129,604 6,064,143 46,790 34.3 15,509 2.9% 2.7% 2018 / 19 128,717 6,121,909 47,561 33.9 15,387 2.1% 1.9% 2019 / 20 129,104 6,180,008 47,868 34.2 15,306 11.0% 9.0% 2020 / 21 130,746 6,596,037 50,449 33.9 14,808 7.0% 5.9% 2021 / 22 130,127 7,540,481 57,947 34.0 14,028 1.8% 1.6% Sources: MuniServices, LLC \ Avenu Insights & Analytics (1) Population data by the California Department of Finance Projections. (2) The California Department of Finance demographics estimates now incorporate 2010 Census counts as a benchmark. (3) Unemployment and Total Employment Data are provided by the EDD's Bureau of Labor Statistics Department. (4) Student Enrollment reflects the total number of students enrolled in the Santa Clara Unified School District.

Other school districts within the City are not accounted for in this report.

CITY OF SANTA CLARA

DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years

16. Demographic and Economic Statistics – Last Ten C alendar Years DRAFT

233
Table 17
Percentage of Percentage of
Number of Total City Number of Total City
Company Employees Employment Employees Employment
Applied Materials, Inc. 8,500 20.7% 8,500 7.1% Intel Corporation 7,801 19.0% 7,001 5.9% Advanced Micro Devices Inc. 3,000 7.3%
California's Great America 2,500 6.1% 2,500 4.4% Nvidia 2,500 6.1%
Dell 2,088 5.1%
Santa Clara University 2,000 4.9% 1,200 1.0% City of Santa Clara 1,752 4.3% 1,412 1.2% SVB Financial Group 1,250 3.0%
Macy's 1,200 2.9% 1,200 1.0%
Catalyst Semiconductor Inc. - -
EMC Corporation - - 1,338 1.1%
AAA-Affordable Tutoring - - 4,324 3.6% Texas Instruments - -
Kaiser Foundation Hospitals - -
Total Top Ten 32,591 79.4% 30,575 25.3%
All Others 8,491 20.6% 88,642 74.7%
Total Employment 41,082 100% 119,217 100%
Sources: Fiscal year 2021: Reference Solutions database, Infogroup, Inc., Papillion, Nebraska Sources: Fiscal year 2012: www.ReferenceUSA.com

CITY OF SANTA CLARA

PRINCIPAL EMPLOYERS
Current Year and Ten Years Ago
2022 2013

17. Principal Employers – Current Year and Ten Years Ago DRAFT

234
Table 18
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
City Council 9.00 9.00 10.00 10.00 11.00 10.00 9.00 8.50 8.50 8.50 City Clerk 6.00 7.00 5.00 6.00 7.00 7.00 5.00 5.00 5.00 4.00 City Attorney 8.00 8.00 7.00 7.00 6.00 6.00 6.00 6.00 6.00 6.00 City Auditor 3.00 3.00 3.00 - - - - - - - City Manager 19.00 13.00 13.00 13.00 14.00 13.00 16.00 9.00 9.00 8.00 Information Technology 6.00 7.00 7.00 7.00 7.00 7.00 5.00 5.00 4.00 4.00 Human Resources 14.00 15.75 15.75 15.00 15.00 15.00 14.50 14.50 14.50 14.50 Finance 68.75 69.75 61.75 61.00 61.00 61.75 60.25 58.25 58.00 58.00 Parks & Recreation 77.75 82.75 82.75 80.75 80.75 79.00 82.75 82.75 82.00 82.00 Library 42.50 46.75 46.75 46.75 45.50 45.50 47.00 46.50 46.50 42.00 Community Development 72.00 68.75 66.00 65.00 64.00 56.00 42.00 44.00 40.00 40.00 Engineering 39.25 42.25 39.25 39.92 40.92 39.25 38.25 38.00 38.00 38.00 Building Maintenance 13.00 13.00 13.00 13.23 13.23 12.90 10.90 11.40 11.50 11.50 Street 55.50 60.60 60.60 58.60 58.60 59.60 65.35 63.10 62.00 63.00 Automotive Services 14.75 15.65 15.65 15.75 15.75 15.75 15.00 15.00 15.00 16.00 Police 221.00 239.00 239.00 239.00 239.00 231.00 222.00 219.00 222.00 222.00 Fire 154.50 168.25 167.25 167.25 167.50 166.50 179.50 179.50 179.50 179.50 Non-Departmental - 11.00 9.00 4.00 - - - - - - Electric Utility 198.00 198.00 197.00 189.00 186.00 179.00 166.00 156.00 142.00 135.00 Water Utility 50.55 50.80 50.80 50.35 50.85 52.70 50.10 47.10 45.40 45.80 Sewer Utility 22.45 22.20 22.20 22.65 22.15 21.30 19.90 17.90 15.60 14.20 TOTAL 1,095.00 1,151.50 1,131.75 1,111.25 1,105.25 1,078.25 1,054.50 1,026.50 1,004.50 992.00 Source: City of Santa Clara Annual Budget

CITY OF SANTA CLARA

FULL-TIME EQUIVALENT BUDGETED CITY EMPLOYEES BY PROGRAM/FUNCTION Last Ten Fiscal Years
Fiscal Year Ending June 30

18. Full-Time Equivalent Budgeted City Employees by Program/Function – Last Ten Fiscal Years DRAFT

235
Table 19
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Culture and Recreation:

Number of library items circulated 1,268,965 736,301 1,598,171 2,509,201 2,612,102 2,700,315 2,479,126 2,491,553 2,260,844 2,525,555 Fire Protection:

Number of calls answered 10,391 8,853 9,339 9,456 8,849 8,850 8,933 8,403 8,336 8,232 Number of inspections conducted 10,143 4,004 4,303 6,404 8,470 9,696 8,260 8,067 8,784 9,097 Police Protection:

Number of calls for service
(1)
61,421 67,211 63,860 58,912 53,865 50,429 51,853 60,208 59,474 59,158 Electric System:

Maximum annual demand (MW) 649.4 590.6 579.3 587.8 586.6 568.1 526.4 491.1 482.4 471.1 Total annual energy (Mwh) 4,361,658 3,956,474 3,773,864 3,693,251 3,733,800 3,628,200 3,488,004 3,238,372 3,145,100 3,102,166 Sewer System:

Number of service connections 25,682 25,948 25,359 25,481 26,236 26,162 25,744 25,656 25,660 25,530 Peak flow (5-day average, WPCP)
(MG) 110 110 110 110 110 110 110 121 121 121 Maximum daily capacity of
treatment plant (WPCP) (MGD) 167 167 167 167 167 167 167 167 167 167 Peak flow (5-day average, City)
(MGD) 16 16 16 16 16 16 16 16 16 16 Water System:

Number of service accounts 25,371 25,592 24,904 25,293 25,670 25,714 25,716 25,656 25,530 25,530 Daily Average consumption (MG) 13 16 16 16 15 15 15 16.8 18.8 19 Maximum daily capacity of plant:

Audit CommitteeNovember 30, 2022

Audit Committee
November 30, 2022