St. Helena City Council
October 25, 2022

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PROPERTY TAXATION
Property Tax Collection Procedures
In California, property which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The “secured roll” is that part of the assessment roll containing state assessed public utilities’ property and property, the taxes on which are a lien on real property sufficient, in the opinion of the county assessor, to secure payment of the taxes. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property.

Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1.5% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County.

Property taxes are levied for each fiscal year on taxable real and personal property situated in the taxing jurisdiction as of the preceding January 1. A bill enacted in 1983, SB813 (Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Thus, this legislation eliminated delays in the realization of increased property taxes from new assessments. As amended, SB813 provided increased revenue to taxing jurisdictions to the extent that supplemental assessments of new construction or changes of ownership occur subsequent to the January 1 lien date and result in increased assessed value.

Property taxes on the unsecured roll are due on the January 1 lien date and become delinquent, if unpaid on the following August 31. A 10% penalty is also attached to delinquent taxes in respect of property on the unsecured roll, and further, an additional penalty of 1.5% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder’s office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent.

Taxation of State-Assessed Utility Property
The State Constitution provides that most classes of property owned or used by regulated utilities are assessed by the State Board of Equalization (“SBE”) and taxed locally. Property Agenda Item #9.1.

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valued by the SBE as an operating unit in a primary function of the utility taxpayer is known as “unitary property,” a concept designed to permit assessment of the utility as a going concern rather than assessment of each individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and “operating nonunitary” property (which excludes nonunitary property of regulated railways) is allocated to the counties based on the situs of the various components of the unitary property. Except for unitary property of regulated railways and certain other excepted property, all unitary and operating nonunitary property is taxed at special county-wide rates and tax proceeds are distributed to taxing jurisdictions according to statutory formulae generally based on the distribution of taxes in the prior year.

Assessed Valuation
Assessed Valuation History. The following is a table summarizing the historical assessed valuation of the taxable property in the City since Fiscal Year 2013-14.

Table 1
CITY OF ST. HELENA
Assessed Valuations of All Taxable Property
Fiscal Years 2013-14 to 2022-23
Fiscal Year
Local
Secured Utility Unsecured Total
Percent
Change
2013-14 $1,865,420,353 $38,550 $74,771,746 $1,940,230,649 --% 2014-15 1,878,049,203 38,550 81,624,051 1,959,711,804 1.0 2015-16 1,988,547,332 38,550 80,122,724 2,068,708,606 5.6 2016-17 2,156,769,732 38,550 72,092,808 2,228,901,090 7.7 2017-18 2,303,467,769 0 71,614,593 2,375,082,362 6.6
2018-19 2,468,796,413 0 64,818,792 2,533,615,205 6.7
2019-20 2,626,885,209 0 63,331,907 2,690,217,116 6.2
2020-21 2,747,504,154 0 61,719,159 2,809,223,313 4.4
2021-22 2,851,576,113 0 59,563,465 2,911,139,578 3.6
2022-23 3,035,141,810 0 73,757,319 3,108,899,129 6.8
Source: California Municipal Statistics, Inc.

Agenda Item #9.1.

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Assessed Valuation by Land Use. The following table shows the land use of parcels in the City, according to assessed valuation. As shown, the majority of land in the City is used for residential purposes.

Table 2
CITY OF ST. HELENA
Assessed Valuation and Parcels by Land Use
Fiscal Year 2022-23
2022-23 % of No. of % of
Non-Residential: Assessed Valuation(1) Total Parcels Total Agricultural/Vineyards $551,444,586 18.17% 239 9.67%
Commercial/Hotel 230,949,231 7.61 54 2.19
Vacant Commercial 19,507,503 0.64 15 0.61
Industrial/Winery 349,185,291 11.50 18 0.73
Government/Social/Institutional 0 0.00 88 3.56
Subtotal Non-Residential $1,151,086,611 37.93% 414 16.75% Residential:

Single Family Residence $1,584,403,754 52.20% 1,478 59.81% Condominium 91,090,262 3.00 168 6.80
Mobile Home 9,637,028 0.32 157 6.35
Mobile Home Park 2,949,987 0.10 1 0.04
2-4 Residential Units 121,309,324 4.00 115 4.65
5+ Residential Units/Apartments 48,587,692 1.60 35 1.42 Vacant Residential 26,077,152 0.86 103 4.17
Subtotal Residential $1,884,055,199 62.07% 2,057 83.25% Total $3,035,141,810 100.00% 2,471 100.00%
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(1) Local Secured Assessed Valuation; excluding tax-exempt property.

Source: California Municipal Statistics, Inc.

Agenda Item #9.1.

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Assessed Valuation of Single-Family Residential Parcels. The following table shows a breakdown of the assessed valuations of improved single-family residential parcels in the City, according to assessed valuation.

Table 3
CITY OF ST. HELENA
Per Parcel 2022-23 Assessed Valuation
of Single-Family Homes
No. of 2022-23 Average Median
Parcels Assessed Valuation Assessed Valuation Assessed Valuation Single Family Residential 1,478 $1,584,403,754 $1,071,992 $845,791 2022-23 No. of % of Cumulative Total % of Cumulative
Assessed Valuation Parcels (1) Total % of Total Valuation Total % of Total $0 - $99,999 89 6.022% 6.022% $6,394,835 0.404% 0.404%
$100,000 - $199,999 96 6.495 12.517 13,491,650 0.852 1.255 $200,000 - $299,999 89 6.022 18.539 22,806,583 1.439 2.695 $300,000 - $399,999 113 7.645 26.184 39,220,152 2.475 5.170 $400,000 - $499,999 77 5.210 31.394 34,883,888 2.202 7.372 $500,000 - $599,999 83 5.616 37.009 44,987,277 2.839 10.211 $600,000 - $699,999 75 5.074 42.084 48,672,078 3.072 13.283 $700,000 - $799,999 71 4.804 46.888 52,996,086 3.345 16.628 $800,000 - $899,999 104 7.037 53.924 88,574,652 5.590 22.218 $900,000 - $999,999 83 5.616 59.540 78,644,391 4.964 27.182 $1,000,000 - $1,099,999 71 4.804 64.344 74,272,215 4.688 31.870 $1,100,000 - $1,199,999 69 4.668 69.012 79,187,063 4.998 36.868 $1,200,000 - $1,299,999 50 3.383 72.395 62,417,013 3.939 40.807 $1,300,000 - $1,399,999 55 3.721 76.116 74,230,294 4.685 45.492 $1,400,000 - $1,499,999 36 2.436 78.552 52,070,676 3.286 48.779 $1,500,000 - $1,599,999 30 2.030 80.582 46,415,449 2.930 51.708 $1,600,000 - $1,699,999 25 1.691 82.273 40,985,524 2.587 54.295 $1,700,000 - $1,799,999 32 2.165 84.438 56,003,476 3.535 57.830 $1,800,000 - $1,899,999 22 1.488 85.927 40,572,045 2.561 60.390 $1,900,000 - $1,999,999 19 1.286 87.212 37,057,607 2.339 62.729 $2,000,000 and greater 189 12.788 100.000 590,520,800 37.271 100.000 1,478 100.000% $1,584,403,754 100.000%
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(1) Improved single family residential parcels. Excludes condominiums and parcels with multiple family units.

Source: California Municipal Statistics, Inc.

Alternative Method of Tax Apportionment – Teeter Plan
The County operates a Teeter Plan whereby taxing entities, including the City, receive 100% of their secured ad valorem property tax levy assessed by the County. The Teeter Plan will apply with respect to the ad valorem property taxes levied for the Bonds.

The Teeter Plan will remain in effect unless the County orders its discontinuance or unless the County receives a petition for its discontinuance joined in by resolutions adopted by at least two-thirds of the participating revenue districts in the County, in which event the Board of Supervisors of the County shall order discontinuance of the Teeter Plan effective at the commencement of the subsequent fiscal year. Additionally, the County may discontinue the procedures under the Teeter Plan with respect to any political subdivision in the County if the rate of secured property tax delinquency in that political subdivision in any year exceeds 3% of the total of all taxes and assessments levied on the secured rolls for that political subdivision. If the Teeter Plan is discontinued subsequent to its implementation, only those secured property taxes actually collected would be allocated to political subdivisions (including Agenda Item #9.1.

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the City) for which the County acts as the tax-levying or tax-collecting agency. For further information, please see “APPENDIX A – CERTAIN INFORMATION REGARDING THE CITY OF ST. HELENA AND COUNTY OF NAPA – CITY FINANCIAL INFORMATION – Property Taxes” herein.

Under the Teeter Plan, the County funds current year delinquencies from certain moneys in its treasury, including, currently, tax payments from prior years’ delinquencies. There can be no assurance that the County will continue to utilize the Teeter Plan with respect to the tax levy for the Bonds or for the City. Further, the amounts expected to be available to the County may not be sufficient to fund all delinquencies in current tax levies, in which case the City may not receive the full amount required for the payment of debt service on the Bonds on a timely basis.

Property tax delinquencies may be impacted by economic and other factors beyond the City’s control or the control of the County, including the ability or willingness of property owners to pay property taxes during an economic recession or depression. An economic recession or depression could be caused by many factors outside the control of the City, including high interest rates, reduced consumer confidence, reduced real wages or reduced economic activity, including but not limited to as a result of the spread of COVID-19 or other pandemic or natural or manmade disaster.

Pursuant to Revenue and Taxation Code Section 4985.2, the Treasurer-Tax Collector of the respective County may cancel any penalty, costs or other charges resulting from tax delinquency upon a finding that the late payment is due to reasonable cause and circumstances beyond the taxpayer’s control, and occurred notwithstanding the exercise of ordinary care in the absence of willful neglect, provided the property taxes are paid within four fiscal years of such taxes coming due. See “SECURITY FOR THE BONDS – COVID-19 Global Pandemic.” Appeals of Assessed Value
There are two types of appeals of assessed values that could adversely impact property tax revenues within the City.

Appeals may be based on Proposition 8 of November 1978, which requires that for each January 1 lien date, the taxable value of real property must be the least of its base year value, annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution, or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value.

Under California law, property owners may apply for a Proposition 8 reduction of their property tax assessment by filing a written application, in form prescribed by the SBE, with the County board of equalization or assessment appeals board. In most cases, the appeal is filed because the applicant believes that present market conditions (such as prevailing conditions in the residential home market) cause the property to be worth less than its current assessed value.

Proposition 8 reductions may also be unilaterally applied by the County Assessor.

Any reduction in the assessment ultimately granted as a result of such appeal applies to the year for which application is made and during which the written application was filed. These reductions are subject to yearly reappraisals and are adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.

Agenda Item #9.1.

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A second type of assessment appeal involves a challenge to the base year value of an assessed property. Appeals for reduction in the base year value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter.

The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date.

The City cannot predict the changes in assessed values that might result from pending or future appeals by taxpayers. Any reduction in aggregate City assessed valuation due to appeals, as with any reduction in assessed valuation due to other causes, will cause the tax rate levied to repay the Bonds to increase accordingly, so that the fixed debt service on the Bonds (and other outstanding general obligation bonds, if any) may be paid.

Tax Rates
The table below shows historical property tax rates within the City:

Table 4
CITY OF ST. HELENA
Typical Tax Rate Per $100 Assessed Valuation
Fiscal Year 2017-18 through 2021-22
2017-18 2018-19 2019-20 2020-21 2021-22
General Tax Rate 1.0000 1.0000 1.0000 1.0000 1.0000
Napa Valley Community College District .0238 .0238 .0205 .0190 .0180 St. Helena Unified School District .0407 .0396 .0392 .0382 .0387 Total Tax Rate 1.0645 1.0634 1.0597 1.0572 1.0567
Source: California Municipal Statistics, Inc.

Agenda Item #9.1.

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Major Taxpayers
The following table shows the twenty largest property taxpayers in the City as determined by their secured assessed valuations for Fiscal Year 2022-23.

Table 5
CITY OF ST. HELENA
Largest 2022-23 Local Secured Taxpayers
2022-23 % of
Property Owner Primary Land Use Assessed Valuation Total (1)

1. Treasury Wine Estates Americas Company Winery/Vineyards $145,585,395 4.80%

2. Spring Mountain Hotel LLC Hotel 85,583,047 2.82

3. Sutter Home Winery Inc. Winery/Vineyards 69,057,197 2.28

4. Palmer City-Core Main Associates LLC Hotel 42,048,519 1.39

5. C. Mondavi and Sons Inc. Winery/Vineyards 41,576,652 1.37

6. Antonio and Rita Castellucci, Trust Commercial Properties 34,134,590 1.12

7. Joseph P. and Nancy J. Schoendorf, Trust Residential 25,486,998 0.84

8. Realty Income Properties 2 LLC Vineyards 23,539,681 0.78

9. Duckhorn Wine Company Vineyards 17,531,752 0.58

10. ACI Real Estate SPE 125 LLC Supermarket 13,274,428 0.44

11. LMR Destinations LLC Commercial Land 11,934,000 0.39

12. Schramsberg Vineyards Company Winery 11,900,797 0.39

13. Patrick L. Stotesbery, Trust Residential 11,872,426 0.39

14. Wagner Ranch LLC Vineyards 11,483,271 0.38

15. Jorge Hernandez Trust Residential 10,928,379 0.36

16. BRM-TAJ LLC Residential 10,857,611 0.36

17. Rifugio Holdings LLC Winery 10,691,982 0.35

18. Helena Vinedo LLC Residential 10,208,998 0.34

19. Double Vee Properties LLC Winery/Vineyards 9,809,645 0.32

20. Miles C. MacDonnell and Kathy Hall-MacDonnell Residential 9,760,730 0.32 $607,266,098 20.01%
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(1) 2022-23 Local Secured Assessed Valuation: $3,035,141,810.

Source: California Municipal Statistics, Inc.

Agenda Item #9.1.

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Direct and Overlapping Debt
Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. The Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith.

The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency.

The contents of the Debt Report are as follows: (1) the first column indicates the public agencies which have outstanding debt as of the date of the Debt Report and whose territory overlaps the City; (2) the second column shows the percentage that the City’s assessed valuation represents of the total assessed valuation of each public agency identified in the first column; and (3) the third column is an apportionment of the dollar amount of each public agency’s outstanding debt to property in the City, as determined by multiplying the total outstanding debt of each agency by the percentage of the City’s assessed valuation represented in the second column.

Table 6
CITY OF ST. HELENA
Statement of Direct and Overlapping Bonded Debt
As of September 1, 2022
2022-23 Assessed Valuation: $3,108,899,129
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt Napa Joint Community College District 6.314% $4,421,240 St. Helena Unified School District 28.376 12,245,939
City of St. Helena 100.000 0(1)
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $16,667,179 OVERLAPPING GENERAL FUND DEBT:

Napa County Certificates of Participation 6.370% $433,160 Napa County Board of Education Certificates of Participation 6.370 740,513 TOTAL OVERLAPPING GENERAL FUND DEBT $1,173,673
COMBINED TOTAL DEBT $17,840,852(2)
Ratios to 2022-23 Assessed Valuation:

Direct Debt .........................................................................................0.00% Total Direct and Overlapping Tax and Assessment Debt ...................0.54% Combined Total Debt ..........................................................................0.57% (1) Excludes the Bonds to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

Agenda Item #9.1.

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CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUES

AND APPROPRIATIONS
Principal and interest on the Bonds are payable from the proceeds of an ad valorem property tax levied by the County, as directed by the City, for the payment thereof. See “THE BONDS” and “SECURITY FOR THE BONDS.” Articles XIIIA, XIIIB, XIIIC and XIIID of the State Constitution, Propositions 62, 111, 218, 26, 1A and 22, and certain other provisions of law discussed below are included in this section to describe the potential effect of these Constitutional and statutory measures on the ability of the County to levy, and the City to spend, tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laws impose any limitation on the ability of the County to levy taxes for payment of the Bonds. The tax levied by the County, as directed by the City, for payment of the Bonds was approved by the City’s voters in compliance with Article XIIIA and all applicable laws.

Article XIIIA of the State Constitution
On June 6, 1978, California voters approved Proposition 13, which added Article XIIIA to the State Constitution. Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service (i) on indebtedness approved by the voters prior to July 1, 1978, (ii) on bonded indebtedness approved by a two-thirds vote on or after July 1, 1978, for the acquisition or improvement of real property or (iii) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55 percent of the voters voting on the proposition. Article XIIIA defines full cash value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under ‘full cash value,’ or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” This full cash value may be increased at a rate not to exceed two percent per year to account for inflation.

Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster, and in other minor or technical ways.

Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County and distributed according to a formula among taxing agencies.

The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989.

Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the two percent annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years.

Agenda Item #9.1.

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Article XIIIB of the State Constitution
In addition to the limits Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual “appropriations limit” imposed by Article XIIIB which effectively limits the amount of such revenues those entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues, State subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on Bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government.

The State and each local government entity has its own appropriations limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Proposition 111 requires that each agency’s actual appropriations be tested against its limit every two years. If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the aggregate limit, the excess must be returned to the agency’s taxpayers through tax rate or fee reductions over the following two years.

The City has never exceeded its appropriations limit.

Articles XIIIC and XIIID of the State Constitution
General. On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges.

On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article XIIIC define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind imposed by a local government,” with certain exceptions.

Agenda Item #9.1.

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Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City (“general taxes”) require a majority vote; taxes for specific purposes (“special taxes”), even if deposited in the City’s General Fund, require a two-thirds vote.

Property-Related Fees and Charges. Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property-related fees, charges, and assessments for municipal services and programs.

Reduction or Repeal of Taxes, Assessments, Fees and Charges. Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. If such repeal or reduction occurs, the City’s ability to pay debt service on the Bonds could be adversely affected.

Burden of Proof. Article XIIIC provides that local government “bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” Similarly, Article XIIID provides that in “any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance” with Article XIIID.

Judicial Interpretation of Proposition 218. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts, with various decisions already handed down, but none impacting the City’s ability to pay the Bonds.

Proposition 62
Proposition 62 was adopted by the voters at the November 4, 1986, general election and (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the City be approved by a two-thirds vote of the governmental entity’s legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax, (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax, (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985, be ratified by a majority vote of the voters voting in an election on the tax within two years of the adoption of the initiative or be terminated by November 15, 1988.

California appellate court cases have overturned the provisions of Proposition 62 pertaining to the imposition of taxes for general government purposes. However, the California Supreme Court upheld Proposition 62 in its decision on August 28, 1995, in Fresno County Transportation Authority v. Guardino. This decision reaffirmed the constitutionality of Proposition 62. Certain matters regarding Proposition 62 were not addressed in the Supreme Court’s decision, such as what remedies exist for taxpayers subject to a tax not in compliance Agenda Item #9.1.

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with Proposition 62, and whether the decision applies to charter cities. The City has not experienced any substantive adverse financial impact as a result of the passage of this initiative.

Proposition 1A; Proposition 22
Proposition 1A. Proposition 1A, proposed by the Legislature in connection with the State’s Fiscal Year 2004-05 Budget, approved by the voters in November 2004 and generally effective in Fiscal Year 2006-07, provided that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibited the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any Fiscal Year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county had to be approved by two-thirds of both houses of the Legislature.

Proposition 22. Proposition 22, entitled “The Local Taxpayer, Public Safety and Transportation Protection Act,” was approved by the voters of the State in November 2010.

Proposition 22 eliminates or reduces the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.

Proposition 19
On June 7, 2022, voters in the State approved “Proposition 19 – The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act” (“Proposition 19”).

Prior Law. As described in the preceding sections of this Official Statement entitled “– Article XIIIA” and “– Legislation Implementing Article XIIIA,” Article XIIIA defines full cash value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under ‘full cash value,’ or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” Proposition 19 amends Article XIIIA.

Prior to passage of Proposition 19, California law allowed certain “eligible homeowners” to move to a different home without paying higher property taxes. “Eligible homeowners” include those who are over 55 or severely disabled or whose property has been impacted by a natural disaster or contamination. An eligible homeowner can move within the same county and keep the same assessed value if their new home is not more expensive than their existing home. Also, certain counties allow these rules to apply when an eligible homeowner moves to their county from another county. Homeowners who are over 55 or severely disabled generally can use these special rules only once in their lifetime. This limit does apply to properties impacted by a natural disaster or contamination. Special rules also allowed certain “inherited properties” to pass between parents and children without an increase in their assessed value. These rules also apply to grandparents and grandchildren if the grandchildren’s parents are deceased. The rules apply to a parent’s or grandparent’s home and a limited amount of other types of property.

Changes Implemented by Proposition 19. Effective April 1, 2021, Proposition 19 expanded the special rules for eligible homeowners described above. Specifically:

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• Eligible homeowners can keep their lower property tax bill when moving to another home anywhere in the state.
• Eligible homeowners can use the special rules to move to a more expensive home.

Their property tax bill would still go up but not by as much as it would for other homebuyers.
• Homeowners who are over 55 or severely disabled could use the special rules three times in their lifetime.

In addition, effective February 16, 2021, the special rules for inherited properties described above have been narrowed, specifically:
• The special rules now apply only to two kinds of inherited property: (1) properties used as a primary home by the child or grandchild and (2) farms. Properties used for other purposes can no longer use the special rules. • The property tax bill for an inherited home or farm would go up if the price the property could be sold for exceeds the property’s taxable value by more than $1 million (adjusted for inflation every two years). In this case, the tax bill would go up but not as much as it would if the property were sold to someone else.

Impact of Proposition 19. Given its recent enactment, the long-term impact of Proposition 19 is not yet known. However, according to the Legislative Analyst’s Office, property taxes for local governments and schools will probably increase as a result of the adoption of Proposition 19.

Possible Future Initiatives
Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 62, 111, 218, 26, 1A, 22 and 19 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time other initiative measures could be adopted, further affecting revenues of the City or the City’s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the City.

RISK FACTORS
The following information should be considered by prospective investors in evaluating the Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks.

The various legal opinions to be delivered concurrently with the issuance of the Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by State and federal laws, rulings and decisions affecting remedies, and by bankruptcy, reorganization or other laws of general application affecting the enforcement of creditors’ rights, including equitable principles.

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Reduction in Taxable Value
Property tax revenue available to pay principal of and interest on the Bonds are determined by the amount of taxable value in the City and the current rate or rates at which property in the City is taxed. The reduction of taxable values of property in the City caused by economic factors beyond the City’s control, such as the complete or partial destruction of property caused by, among other eventualities, fire, earthquake or other natural disaster, could cause a reduction in the property taxes available to pay debt service on the Bonds and in turn have an adverse effect on the City’s ability to make timely payments on the Bonds.

Seismic. The City, like much of California, is located in a seismically active area. A major earthquake would be expected to cause considerable damage to property and transportation systems. In particular, roads, bridges and highway overpasses are susceptible to damage or failure in the event of a major earthquake. Landslides would be intensified as a result of ground shaking, and could affect portions of the roadway system located in landslide potential areas.

Seismic damage could also occur to treated water and sewage pipelines, gas pipelines, and to cell phone towers and power lines.

Wildfires. Like much of California, land in the City may be vulnerable to property damage or reductions in assessed value as a result of increased frequency and severity of wildfires or other negative impacts resulting from climate change. Parcels within the City could experience changes to local and regional weather patterns; increased risk of vegetation changes and wildfires. These changes could adversely impact property values within the City.

For example, the Glass Fire was a wildfire that started on September 27, 2020 in the vicinity of the City and lasted for 23 days. The fire burned over 67,484 acres and destroyed 1,555 structures, including 308 homes and 343 commercial buildings in Napa County, as well as 334 homes in neighboring Sonoma County. Additionally, the fire destroyed or damaged 31 wineries, restaurants and lodges in the area, including the 41-year-old Chateau Boswell Winery near the City, the White Sulphur Springs Resort and The Restaurant at Meadowood.

In addition, a vegetation fire in the Pope Valley east of the City occurred in May 2022 and forced evacuations for a short time in an eastern portion of the City, however the fire was quickly contained with no structural damage.

Droughts. From time to time, areas of the State have experienced significant drought conditions that resulted in negative impacts to water supplies, which could have an adverse effect on property values in the City. The City cannot predict what effect drought conditions may have on the desirability to live in the City or property values therein.

Hazardous Substances. An additional environmental condition that may result in the reduction in the assessed value of property would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the City. In general, the owners and operators of property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the City be affected by a hazardous substance, could be to reduce the marketability and value of the property by the costs of remedying the condition.

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Economic Instability. The general economy of the City will be subject to all of the risks generally associated with urban real estate markets. Real estate prices may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in home improvement costs and by other similar factors. In addition, if there is a significant decline in the general economy of the City, the owners of property within the City may be less able or less willing to make timely payments of property taxes or may petition for reduced assessed valuation causing a delay or interruption in the receipt of property tax revenues by the City.

In the event that one or more of such above conditions occur, such occurrence could cause damages of varying seriousness to the land and improvements and the value of property in the City could be diminished in the aftermath of such events. A substantial reduction of the value of such properties could affect the ability or willingness of the property owners to pay the property taxes. The above list is not exhaustive.

Bankruptcy and Foreclosure
The payment of property taxes and the ability of the County to foreclose the lien of a delinquent unpaid tax may be limited by bankruptcy, insolvency, or other laws generally affecting creditors’ rights or by the laws of the State relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Cyber Security
The City, like many other public and private entities, rely on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that their efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially adversely impact the operations or finances of any entity, including with respect to the administration of the Bonds. The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County Auditor-Controller for the levy and collection of taxes, State agencies, and the Paying Agent. No assurance can be given that the City and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.

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COVID-19 Pandemic
The COVID-19 coronavirus pandemic, and efforts to contain the spread of the virus, are impacting governments, businesses and people in a manner that is having effects on global, national and local economies. In addition, stock markets in the United States and globally have seen volatility attributed to coronavirus concerns. Future property taxes available to the City for payment of debt service on the Bonds could be negatively impacted. The initial impact could occur because property tax installments due dates could be deferred, or some taxpayers may be unable to make their property tax payments. Such impacts could be offset because the County operates under the Teeter Plan, which shields the City from delinquencies, however there is the possibility that the County could end the Teeter Plan in the future. See “PROPERTY TAXATION – Alternative Method of Tax Apportionment – Teeter Plan” and “APPENDIX A.” Loss of Tax-Exemption
Interest on the Bonds could become includable in gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a result of future acts or omissions of the City in violation of its covenants in the Bond Resolution. In addition, current and future legislative proposals, if enacted into law, may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation by, for example, changing the current exclusion or deduction rules to limit the aggregate amount of interest on state and local government bonds that may be treated as tax exempt by individuals. Should such an event of taxability occur, the Bonds are not subject to special redemption and will remain outstanding until maturity or until redeemed under other provisions set forth in the Bond Resolution.

Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds, or, if a secondary market exists, that the Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances.

TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. For tax years beginning after December 31, 2022, interest on the Bonds may be subject to the corporate alternative minimum tax.

The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Tax Code”) that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has made certain representations and covenants in order to comply with each such requirement.

Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds.

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Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes.

De minimis original issue discount and original issue premium is disregarded.

Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.

Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond’s maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Bonds.

California Tax Status. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes.

Form of Opinion; Contingent Compensation. The proposed form of opinion of Bond Counsel is attached hereto as APPENDIX C. Jones Hall will receive compensation from the City contingent upon the sale and delivery of the Bonds.

Other Considerations. Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above, including any opinion regarding federal tax consequences arising with respect to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.

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In addition, future legislation, if enacted into law, or clarification of the Tax Code may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent owners of the Bonds from realizing the full current benefit of the tax status of such interest.

The introduction or enactment of any such future legislation or clarification of the Tax Code may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation, as to which Bond Counsel expresses no opinion.

CONTINUING DISCLOSURE
The City will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the City by not later than April 1 after the end of each fiscal year of the City (currently June 30), commencing with the report for the 2021-22 fiscal year (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events.

The specific nature of the information to be contained in an Annual Report or the notices of enumerated events is set forth in the form of Continuing Disclosure Certificate attached as APPENDIX D. These covenants will be made to assist the Underwriter (as defined below) in complying with Securities Exchange Commission Rule 15c2-12(b)(5) (the “Rule”).

In the past five years, the City has been in compliance with its prior undertakings under the Rule, other than filing of financial statements in 2021 occurring approximately 3 months late and filing of financial statements in 2022 occurring approximately 1 week late. The City will engage the services of BLX Group LLC as the initial dissemination agent in connection with its continuing disclosure obligations associated with the Bonds. See APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE.”

NO LITIGATION
No litigation is pending or threatened concerning the validity of the Bonds, and a certificate to that effect will be furnished to the Underwriter at the time of the original delivery of the Bonds.

The City is not aware of any litigation pending or threatened questioning the political existence of the City or contesting the City’s ability to receive ad valorem taxes or to collect other revenues or contesting the City’s ability to issue and repay the Bonds.

RATING
S&P Global Ratings, a division of Standard & Poor’s Financial Services LLC (“S&P”), has assigned its municipal bond rating on the Bonds of “___.” There is no assurance that the rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by S&P, if, in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

The City has furnished to S&P information and material which has not been included in this Official Statement. Generally, rating agencies base their ratings on information and material so furnished and on investigations, studies and assumptions made by the rating agencies. The ratings reflect only the view of such organization and an explanation of the significance of such rating may be obtained from S&P.

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The City has covenanted in a Continuing Disclosure Certificate to file on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website (“EMMA”) notices of any ratings changes on the Bonds. See “CONTINUING DISCLOSURE.” Notwithstanding such covenant, information relating to ratings changes on the Bonds may be publicly available from the rating agency prior to such information being provided to the City and prior to the date the City is obligated to file a notice of rating change on EMMA. Purchasers of the Bonds are directed to the ratings agency and its website and official media outlets for the most current ratings changes with respect to the Bonds after the initial issuance of the Bonds.

MUNICIPAL ADVISOR
The City has retained Del Rio Advisors, LLC, as its municipal advisor (the “Municipal Advisor”) in connection with the issuance of the Bonds. A. M. Peché & Associates LLC is serving as sub-consultant to the Municipal Advisor with respect to the Bonds.

Neither the Municipal Advisor nor the sub-consultant to the Municipal Advisor is obligated to undertake, and neither has undertaken to make, an independent verification or assumes any responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The Municipal Advisor has provided the following sentence for inclusion in this Official Statement: The Municipal Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the City and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Municipal Advisor does not guarantee the accuracy or completeness of such information.

The Municipal Advisor and the sub-consultant have assisted the City with the structure, timing and terms for the sale of the Bonds. The Municipal Advisor and the sub-consultant provide municipal advisory services only and do not engage in the underwriting, marketing, or trading of municipal securities or other negotiable instruments.

The compensation of the Municipal Advisor and the sub-consultant to the Municipal Advisor is contingent upon the delivery of the Bonds.

COMPETITIVE SALE OF BONDS
The Bonds were sold following a competitive bidding process conducted on ______, 2022, and were awarded to ______________ (the “Underwriter”), whose proposal represented the conforming bid with the lowest true interest cost for the Bonds as determined in accordance with the Official Notice of Sale. The Underwriter has agreed to purchase the Bonds at a price of $____________, which is equal to the initial principal amount of the Bonds of $____________ plus a net original issue premium of $_______________, less an Underwriter’s discount of $____________. The Underwriter intends to offer the Bonds to the public at the offering prices set forth on the inside cover page of this Official Statement. The Underwriter may offer and sell to certain dealers and others at a price lower than the offering prices stated on the inside cover page hereof. The offering price may be changed from time to time by the Underwriter.

EXECUTION
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The execution of this Official Statement and its delivery have been approved by the City Council.

CITY OF ST. HELENA
By:

City Manager
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APPENDIX A

CERTAIN INFORMATION REGARDING
THE CITY OF ST. HELENA AND COUNTY OF NAPA
The Bonds are secured solely by an ad valorem property tax levied by the County, on behalf of the City, in an amount sufficient to pay principal of and interest on the Bonds each year.

The Bonds are not payable from any other funds or revenues. Information regarding the City and its General Fund finances is provided for informational purposes only; and does not constitute security for the repayment of the Bonds.

Introduction
The City of St. Helena (the “City”) is located in the County of Napa (the “County”) in the State of California (the “State”). The City is in the center of the world famous wine growing Napa Valley, 65 miles north of San Francisco. The City is in the center of the world famous wine growing Napa Valley, 65 miles north of San Francisco. The area was settled in 1834, first incorporated as a City on March 24, 1876 and reincorporated on May 14, 1889. The City serves a population of approximately 5,437 residents.

Population
Population figures for the City, County and State for the last five years are shown in the following table. The City attributes the small declines beginning in 2020 to be an effect of the pandemic.

CITY OF ST. HELENA, COUNTY OF NAPA

AND STATE OF CALIFORNIA
Population Estimates as of January 1
Year
City of
St. Helena
County of
Napa
State of
California
2018 6,119 140,340 39,519,535
2019 6,110 139,608 39,605,361
2020 5,454 138,019 39,538,223
2021 5,521 137,518 39,303,157
2022 5,437 136,179 39,185,605
Source: State Department of Finance estimates (as of January 1).

City Government
The City is a full-service City, providing water, sewer, police and fire services to a community that encompasses an area of 4 square miles. The City is a general law city and operates under the Council-City Manager form of government. The City Council is the governing body of the City, and has the power to make and enforce all laws and set all policy related to municipal affairs.

The City Manager is responsible for carrying out the policies of the City Council and for the proper and efficient management of municipal activities. The City Manager directs and Agenda Item #9.1.

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manages the various departments and municipal services through appointed Department Heads who directly supervise and administer the various City programs, services, and activities.

The current members of the City Council are shown in the following table:

Member Office Term Expires
Geoff Ellsworth Mayor November 2022
Paul Dohring Vice Mayor November 2022
Anna Chouteau Council Member November 2022
Lester Hardy Council Member November 2024
Eric Hall Council Member November 2024

CITY FINANCIAL INFORMATION
Accounting Policies and Financial Reporting
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. City resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

The City’s most recent audited financial statements for the fiscal year ending June 30, 2021, are attached as “APPENDIX B – AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2021” to this Official Statement, which were prepared by the City and audited by Brown Armstrong Accountancy Corporation, Bakersfield, California (the “Auditor”).

The audited financial statements should be read in their entirety. The City has not requested nor did the City obtain permission from the Auditor to include the audited financial statements as an appendix to this Official Statement. Accordingly, the Auditor has not performed any post-audit review of the financial condition or operations of the City or the General Fund. In addition, the Auditor has not reviewed this Official Statement.

Cybersecurity
The City’s information technology infrastructure continuously faces cyber threats, including, but not limited to, hacking, viruses, malware, ransomware, and data breaches. The City takes cybersecurity very seriously and has operational controls and multiple security measures to safeguard City’s data and infrastructure. The City has not experienced known cybersecurity breaches to date that have had a material adverse impact on the City; however, no assurances can be given that the security and operational control measures will be successful in guarding against all cyber threats.

Impact of COVID-19
Overall, the actual financial performance of the General Fund has not been adversely affected by the pandemic. In Fiscal Year 2021 general Fund revenues were more than budget estimates by about $2.33 million. The enhanced revenue performance, compared to budget, was Agenda Item #9.1.

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primarily due to increased revenue collections in Sales Tax and Other Taxes which is $2.56 million above estimated budget. Fiscal Year 2020-21 revenue estimates for Sales Tax were conservative and based on a slow recovery from the impacts from the COVID-19 pandemic and the shelter-inplace orders which took effect in March 2020. However, actual Sales Tax received showed the economic recovery started sooner than anticipated.

Actual expenditures were less than budgeted appropriations by $3.07 million, with significant savings in the general government expenditures of $2.15 million, planning and building of $0.40 million, and public works of $0.54 million. The primary reason for the savings is due to contracts not being expended for projects that continued into Fiscal Year 2021-22.

Overall, the actual financial performance of the General Fund exceeded original budget projections by $5.40 million as a result of exceeding revenue projections by $2.33 million and spending $3.07 million less in expenditures than was budgeted. The City’s sales tax and transient occupancy tax exceeded pre-pandemic levels in Fiscal Year 2022 and for Fiscal Year 2023 are projected to exceed Fiscal Year 2019 levels.

The City received $1.6 million in federal stimulus funds. Funds were utilized to replace loss revenues for Fiscal Year 2021 and Fiscal Year 2022.

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Financial Statements
The tables on the following pages provide a recent history of the City’s General Fund balance sheet, and General Fund revenues, expenditures, transfers, and ending fund balances.

CITY OF ST. HELENA

GENERAL FUND BALANCE SHEET
(Fiscal Year Ending June 30)
Audited Audited Audited Audited Audited
2016-17 2017-18 2018-19 2019-20 2020-21
ASSETS:

Cash and investments $4,108,318 $6,039,757 $7,889,404 $8,648,592 $9,557,161 Receivables:

Accounts 207,338 194,207 351,798 140,518 126,817
Taxes 1,227,377 1,465,260 1,437,230 967,073 2,702,777
Interest 39,864 77,369 105,433 102,274 97,850
Due from Other Governments 393,169 420,248 366,871 695,109 1,495,373 Notes and Loans 455,039 452,577 448,635 596,019 685,914 Due from Other Funds 208,593 316,335 32,603 1,039 --
Advances from Other Funds 48,058 -- -- -- --
Prepaid Expenditures 64,512 149,636 67,248 451 58,426
TOTAL ASSETS 6,752,268 9,115,389 10,699,222 11,151,075 14,724,318 LIABILITIES:

Accounts Payable and Accrued Liabilities 584,185 895,923 844,247 863,473 1,411,053 Deposits Payable 184,589 221,201 226,636 379,967 367,247 TOTAL LIABILITIES 768,774 1,117,124 1,070,883 1,243,440 1,778,300

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - Taxes 416,032 355,978 422,540 768,967 1,570,009 TOTAL DEFERRED INFLOWS OF RESOURCES 416,032 355,978 422,540 768,967 1,570,009

FUND BALANCES (DEFICIT)
Nonspendable 567,609 602,213 515,883 596,470 744,340
Restricted 436,527 436,527 404,573 345,562 167,106
Assigned 219,240 219,240 283,929 277,526 677,018
Unassigned 4,344,086 6,384,307 8,001,414 7,919,110 9,787,545 TOTAL FUND BALANCES (DEFICIT) 5,567,462 7,642,287 9,205,799 9,138,668 11,376,009 TOTAL LIABILITIES AND FUND BALANCES $6,752,268 $9,115,389 $10,699,222 $11,151,075 $14,724,318 Source: City of St. Helena, Annual Financial Statements for Fiscal Years 2016-17 through 2020-21.

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CITY OF ST. HELENA

GENERAL FUND REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE (Fiscal Year Ending June 30)
Audited Audited Audited Audited Audited
2016-17 2017-18 2018-19 2019-20 2020-21
REVENUES:

Property Taxes $4,277,441 $4,718,495 $5,235,189 $5,407,510 $5,978,661 Sales and Other Taxes 5,771,414 7,827,446 8,535,481 7,237,906 6,523,098 Charges for Services 326,345 257,679 205,682 138,765 54,212 Fines and Forfeitures 146,673 190,710 225,572 142,503 34,035 Licenses and Permits 1,040,863 963,653 884,147 876,734 926,000 Development Fees 20,800 20,325 25,600 19,360 20,800
Intergovernmental 230,529 392,460 632,458 199,394 2,322,213 Interest and Rents 146,300 179,410 418,120 305,202 (17,439) Other Revenues 205,336 194,887 194,506 90,801 169,372
TOTAL REVENUES 12,165,701 14,745,065 16,356,755 14,418,175 16,010,952 EXPENDITURES:

Current:

General Government 2,616,718 2,386,535 3,029,631 3,275,582 4,305,816 Planning and Building 898,802 1,117,438 1,160,983 911,671 1,121,499 Public Safety 3,676,832 4,206,490 4,526,949 4,635,211 5,171,896 Public Works 1,530,338 1,774,192 2,291,251 2,352,883 2,063,249 Library 823,975 843,002 998,494 994,165 948,578
Parks and Recreation 546,246 614,458 696,808 798,100 621,288 Debt service-principal 218,030 223,722 135,320 138,466 127,168 Debt service-interest 18,245 12,553 6,984 3,918 7,180
TOTAL EXPENDITURES 10,329,186 11,178,390 12,857,180 13,109,996 14,366,674 Excess Revenues Over (Under) Expenditures 1,836,515 3,566,675 3,499,575 1,308,179 1,644,278

OTHER FINANCING SOURCES (USES)
Proceeds from sale of assets -- -- -- -- 160,000
Transfers in -- 44 4,526 -- 667,123
Transfers out (721,561) (1,491,894) (1,940,589) (1,375,310) (234,060) TOTAL OTHER FINANCING SOURCES (USES) (721,561) (1,491,850) (1,936,063) (1,375,310) 593,063 Net Change in Fund Balance 1,114,954 2,074,825 1,563,512 (67,131) 2,237,341 Fund Balance, July 1 4,452,508 5,567,462 7,642,287 9,205,799 9,138,668 Fund Balance, June 30 $5,567,462 $7,642,287 $9,205,799 $9,138,668 $11,376,009 Source: City of St. Helena, Audited Financial Statements for Fiscal Years 2016-17 through 2020-21.

Agenda Item #9.1.

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General Fund Budgets
General. The City’s annual budget serves as the foundation of the City’s financial planning and control. Upon adoption of the budget by the City Council, the responsibility of implementing each department’s budget lies with each Department Head, with oversight by the Administrative Services Directorand ultimate responsibility resting with the City Manager.

Department Heads are expected to operate their departments within the appropriations established in the budget.

This budget is arranged by department, fund, and function. The level of budgetary control is established at the fund level. Department Heads may authorize the transfer of appropriations within a department, except transfers: (1) that would purport an increase in the number of regular personnel, and (2) that would decrease appropriations for capital outlay. The City Manager may transfer appropriations between departments so long as total appropriations are not increased within a fund. The City Council has the overriding authority to control the use of revenues and the appropriations of funds and therefor may modify this policy at any time. The total appropriations in any fund may not be increase except by the City Council.

The budget is reviewed and presented to City Council on a quarterly basis with a more extensive mid-year budget review. During the quarterly budget review by City Council, consideration is given to necessary adjustments for new programs, projects, and other adjustments to ensure that expenditures and revenues are in line with the budgeted projections.

A carefully designed system of internal accounting and budgetary controls is used to ensure that revenues and expenditures/expenses are tracked and used as intended. These controls are designed to provide reasonable, but not necessarily absolute, assurance with respect to the reliability of financial and budgetary records for use in the preparation of financial statements, as well as accountability for all City assets. At the end of each fiscal year-end, all operating budget appropriations lapse.

Impact of State Budget on City Finances. In general, the State budget does not have a material impact on the City’s annual budgets. Instead, the City relies on local revenue sources, such as property taxes, real property transfer taxes, sales tax, transient occupancy taxes, voter approved parcel taxes, and local business license to fund its operations.

Information about the Fiscal Year 2022-23 adopted State budget and other State budgets is regularly available at various State-maintained websites. An impartial analysis of the budget is posted by the Legislative Analyst Office at www.lao.ca.gov. The information referred to in this paragraph is prepared by the respective State agency maintaining each website and not by the City or the Underwriter, and the City and the Underwriter take no responsibility for the continued accuracy of the Internet addresses or for the accuracy or timeliness of information posted there, and such information is not incorporated in this Official Statement by these references.

Estimated Actuals for Fiscal Year 2021-22 and Budget for Fiscal Year 2022-23. The City is projecting Fiscal Year 2021-22 revenue to exceed (and expenses to be below) the approved budget. In March 2020, just prior to the start of Fiscal Year 2020-21, a shelter in place order was mandated by the County to deter the spread of COVID-19. A strict moratorium was placed on construction activity which resulted in a sharp downturn in building permits and related planning fees, as well as a slowdown in home sales. Faced with the uncertainty caused by the burgeoning pandemic and the risk of an economic recession, revenue was budgeted conservatively. Fortunately, the moratorium was lifted and the real estate and construction Agenda Item #9.1.

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markets recovered quickly. In addition, business related taxes did not decline as expected. There were significant declines in recreation related revenues as rental facilities were forced to remain closed all year and programs were scaled back to conform to County health regulations.

The following table shows estimated actuals for Fiscal Year 2021-22 and budgeted amounts for Fiscal Year 2022-23. As noted above, COVID-19 has not had a material adverse impact on the City’s finances, to date.

Agenda Item #9.1.

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CITY OF ST. HELENA

GENERAL FUND REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES 2021-22 2021-22 2022-23
Budgeted Estimated Budgeted
REVENUES:

Property Taxes 5,476,132 5,966,582 5,911,328
Sales Taxes 4,929,200 4,929,200 6,218,148
Transient Occupancy Taxes 3,140,940 3,576,027 3,437,647 Other Taxes 212,930 218,576 335,468
Charges for Service 52,650 78,557 52,650
Fines and Forfeitures 101,362 56,162 98,500
Licenses and Permits 752,941 743,600 752,300
Development Fees 20,325 20,325 10,000
Intergovernmental 57,896 1,062,838 57,605
Interest and Rents 145,293 156,756 63,760
Miscellaneous 781,535 988,326 176,300
Total Revenues 14,894,155 16,813,106 17,110,121

OPERATING TRANSFERS IN
Tree City Fund Balance 131,666
Recreation 36,050
TID Admin Fees 4,486 4,486 4,999
4,486 4,486 172,715
Total Income 15,675,690 17,801,432 17,286,421
DEPARTMENTAL EXPENDITURES:

Administration 2,279,725 2,421,127 2,760,258
Public Works 2,839,918 3,038,725 3,274,390
Planning & Building 1,324,196 1,473,073 1,090,767
Recreation 682,725 687,691 883,926
Library 969,642 995,842 907,815
Police 3,206,609 3,234,230 3,551,435
Fire 1,609,505 1,974,394 2,011,509
NON-DEPARTMENTAL EXPENDITURES:

Other 2,021,330 2,777,555 3,265,596
Unemployment Insurance 9,730
Workers Compensation 270,299 225,755 273,745
Liability Insurance 298,144 250,857 361,677
PERS Additional Discretionary Pymt 173,357 173,357 269,243 Total Expenditures and Transfers-out 15,161,260 16,748,147 17,678,171 OPERATING NET INCOME 514,430 1,053,285 (391,750)

CAPITAL TRANSFER-OUT
Streets Capital 464,189 464,189 514,189
Equipment Replacement Fund 50,000 50,000 458,000
Total Capital Transfers 514,189 514,189 972,189
Net Income after Capital Transfers 241 539,096 (1,363,939) General Fund Ending Fund Balance 6,160,510 10,415,771 9,051,832 Source: City of St. Helena Finance Department.

City General Fund Revenues
Taxes and other sources of revenue received by the City are listed in the table below, which presents the major revenues of the City’s General Fund for the last five fiscal years for Agenda Item #9.1.

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which audited financial statements are available. Certain taxes currently imposed by the City are affected by Proposition 218. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS –Article XIIIC and Article XIIID of the State Constitution.” As shown in the table, property taxes represent, by far, the largest source of General Fund revenues to the City for each of the past five fiscal years for which audited financial statements are available.

CITY OF ST. HELENA
Major Revenues by Source – General Fund
Audited Audited Audited Audited Audited
REVENUES: 2016-17 2017-18 2018-19 2019-20 2020-21
Property taxes $4,404,001 $4,906,266 $5,345,789 $5,717,265 $6,779,703 Sales and use tax 3,421,091 4,456,658 4,964,784 4,540,321 4,738,185 Franchise tax 227,287 238,480 232,570 238,151 210,659
Transient occupancy taxes 2,336,237 2,863,580 3,681,356 2,723,055 1,705,203 Business licenses tax 149,998 153,307 158,269 155,820 149,688 Motor Vehicle In-lieu 4,391 -- 2,937 -- --
Investment earnings (39,655) 9,270 223,664 328,441 112,022 Miscellaneous 25,965 49,902 307,736 233,262 465,184
Transfers in (out) (144,756) (800,000) (881,956) -- 81,541 TOTAL REVENUES $10,384,559 $11,877,463 $14,035,149 $13,936,315 $14,242,185 Source: City of St. Helena Audited Financial Statements for Fiscal Years 2016-17 through 2020-21.

Property Taxes
General. This section describes property tax levy and collection procedures and certain information regarding historical assessed values and major property taxpayers in the City.

Property taxes typically represent the largest source of tax revenue to the City. The City has projected to receive $5,911,328 in property tax revenue for Fiscal Year 2022-23, slightly higher than the estimates for the prior fiscal year. See “ – Assessed Valuation” below. This amount includes: Property Tax Secured, Property Tax Unsecured, ERAF, Prior Year Property Tax, Real Property Transfer Tax, In Lieu VLF, and Homeowner Property Tax.

Property taxes have historically been the primary revenue source affected by voter initiatives and legislative actions. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” and “BOND OWNERS’ RISKS – Limitations on Taxes and Fees.”
Levy and Collection. Property taxes are levied for each fiscal year on taxable real and personal property as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing Stateassessed public utilities property and real property the taxes on which are a lien sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.”
Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year, and become delinquent on December 10 and April 10, respectively.

A penalty of 10% attaches immediately to all delinquent payments. Property on the secured roll with respect to which taxes are delinquent become tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of a penalty of 1.5% per month to Agenda Item #9.1.

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the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property may be sold at public auction.

Property taxes on the unsecured roll are due as of the January 1 lien dates and become delinquent on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1.5% attaches to them on the first day of each month until paid. The County has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a judgment in the office of the County Clerk specifying certain facts in order to obtain a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s office in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee.

For additional information the levy and collection of property taxes, see the main body of this Official Statement.

Assessed Valuation. All property is assessed using full cash value as defined by Article XIIIA of the State Constitution. State law provides exemptions from ad valorem property taxation for certain classes of property such as churches, colleges, non-profit hospitals, and charitable institutions. Future assessed valuation growth allowed under Article XIIIA of the State Constitution (new construction, certain changes of ownership, 2% inflation) will be allocated on based on “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools will share the growth of “base” revenues from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation in the following year. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”
Assessed Valuation History. Table 1, in the main body of this Official Statement, shows a history of the City’s assessed valuation. Since 1993, there are only 5 instances where property tax declined. Over the past 30 years, the average property tax growth is 7% annually. The City’s Long Range Financial Forecast accounts for minimal growth in property tax over the next 10 years.

Major Property Taxpayers. Table 5, in the main body of this Official Statement, shows the principal property taxpayers in the City as determined by their secured assessed valuations in Fiscal Year 2022-23.

Business and Sales Taxes
Because the City is primarily residential, business and sales taxes are combined for budgeting purposes. Business taxes consist of business license charges. Business licenses have been relatively stable over the past several years while sales taxes have been increasing an average of 6% per year. This category is being budgeted for Fiscal Year 2022-23 at $6,218,148, an increase of $293,815 or 5%, from the prior fiscal year adjusted budget for this category.

This section describes the current system for levying, collecting and distributing sales and use tax revenues in the State of California.

Sales Tax Rates. The City receives a percentage of taxable sales in the City (minus certain administrative costs imposed by the Department of Tax and Fee Administration) pursuant Agenda Item #9.1.

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to the Bradley-Burns Uniform Local Sales and Use Tax (the “Sales Tax Law”), as shown below.

Currently, taxable transactions in the City are subject to the following sales and use tax, of which the City’s share is only a portion. The State collects and administers the tax, and makes distributions on taxes collected within the City, as follows:

CITY OF ST. HELENA
Sales Tax Rates
As of September 1, 2022
Component Rate
State-Wide Tax Rate 7.25%
Napa Valley Transportation Authority (NVTA) 0.50
City of St. Helena Transactions and Use Tax (SHGT) (1) 0.50 Total City of St. Helena Tax Rate 8.25%
(1) In 2017 voters passed Measure D – a half cent sales tax (no sunset date). It is anticipated the City will receive $2.3 million in Fiscal Year 2023 from this sales tax measure.

Sales and use taxes are complementary taxes; when one applies, the other does not. In general, the statewide sales tax applies to gross receipts of retailers from the sale of tangible personal property in the State of California. The use tax is imposed on the purchase, for storage, use or other consumption in the State of tangible personal property from any retailer. The use tax generally applies to purchases of personal property from a retailer outside the State of California where the use will occur within the State of California.

Certain transactions are exempt from the State sales tax, including sales of the following products:
• food products for home consumption;
• prescription medicine;
• newspapers and periodicals;
• edible livestock and their feed;
• seed and fertilizer used in raising food for human consumption; and • gas, electricity and water when delivered to consumers through mains, lines and pipes.

This is not an exhaustive list of exempt transactions. A comprehensive list can be found on the Department of Tax and Fee Administration’s website at http://www.boe.ca.gov/. The reference to this Internet website is provided for reference and convenience only. The information contained within the website may not be current, has not been reviewed by the City and is not incorporated in this Official Statement by reference.

Sales Tax Collection Procedures. Collection of the sales and use tax is administered by the California Department of Tax and Fee Administration (CDTFA). Under the Sales and Use Tax Law, all sales and use taxes collected by the Department of Tax and Fee Administration under a contract with any city, city and county, redevelopment agency, or county are required to be transmitted by the CDTFA to such city, city and county, redevelopment agency, or county periodically as promptly as feasible. These transmittals are required to be made at least twice in each calendar quarter.

Agenda Item #9.1.

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Under its procedures, the Department of Tax and Fee Administration projects receipts of the sales and use tax on a quarterly basis and remits an advance of the receipts of the sales and use tax to the City on a monthly basis. The amount of each monthly advance is based upon the Department of Tax and Fee Administration’s quarterly projection. During the last month of each quarter, the Department of Tax and Fee Administration adjusts the amount remitted to reflect the actual receipts of the sales and use tax for the previous quarter.

According to the CDTFA, it distributes quarterly tax revenues to cities, counties and special districts using the following method:

Using the prior year’s like quarterly tax allocation as a starting point, the Department of Tax and Fee Administration first eliminates nonrecurring transactions such as fund transfers, audit payments and refunds, and then adjusts for growth, in order to establish the estimated base amount. The Department of Tax and Fee Administration disburses 90% to each local jurisdiction in three monthly installments (advances) prior to the final computation of the quarter’s actual receipts. Ten percent is withheld as a reserve against unexpected occurrences that can affect tax collections (such as earthquakes, fire or other natural disaster) or distributions of revenue such as unusually large refunds or negative fund transfers. The first and second advances each represent 30% of the 90% distribution, while the third advance represents 40%. One advance payment is made each month, and the quarterly reconciliation payment (clean-up) is distributed in conjunction with the first advance for the subsequent quarter. Statements showing total collections, administrative costs, prior advances and the current advance are provided with each quarterly clean-up payment.

The CDTFA receives an administrative fee based on the cost of services provided by the Board to the City in administering the City’s sales tax, which is deducted from revenue generated by the sales and use tax before it is distributed to the City.

Historical Composition of Sales Tax Revenue. A historical summary of sales tax composition by category is shown in the following table. Total taxable sales in the City during the first quarter of 2022 were reported to be $68,441,678, a 25.16% increase over the total taxable sales of $54,681,491 reported during the first quarter of 2021.

CITY OF ST. HELENA

TAXABLE TRANSACTIONS
(Figures in Thousands)
2017 2018 2019 2020 2021
Auto Dealers, Auto Supplies $16,350 $15,689 $17,642 $9,953 $9,948 Home Furnishings and Appliances 7,055 7,568 7,748 9,352 9,352 Bldg. Materials, Farm Implements --(1) --(1) --(1) --(1) --(1) Food Stores 20,259 20,879 20,873 22,365 22,392
Gas/Service Stations --(1) 9,562 8,894 --(1) --(1)
Apparel Stores 9,912 9,350 9,427 13,644 13,646
Gen. Merchandise Stores --(1) --(1) --(1) --(1) --(1)
Eating and Drinking Places 49,996 54,604 57,102 58,705 58,801 Other Retail Stores 59,489 62,350 43,991 63,056 63,114
Total Retail and Food Services 163,062 180,000 165,678 177,075 177,254 All Other Outlets 95,815 90,612 97,170 89,708 89,902
TOTAL ALL OUTLETS $258,877 $270,613 $262,848 $266,783 $267,155 (1) Sales omitted because their publication would result in the disclosure of confidential information.

Source: State Department of Tax and Fee Administration.

Agenda Item #9.1.

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Transient Occupancy Taxes
The City has a tax rate of 13% on all overnight stays when occupying a room, rooms, or other living space in a hotel, inn, tourist home or house, motel, or other lodging if the stay is for a period of 31 days or less. The tax is paid by the guests staying at these accommodations. One percent of the tax is dedicated to affordable housing. Due to impacts from the COVID-19 pandemic health orders that caused rapidly diminishing occupancy beginning in March 2020, Transient Occupancy Tax remains the most volatile of the City’s primary General Fund revenue sources.

Fiscal Year 2022 TOT revenues experienced a 184% increase from Fiscal Year 2021.

While the increase was above projections, the City is maintaining a conservative budgeting stance in FY 23 with the estimated revenues at 4% above Fiscal Year 2019 (pre-pandemic). With the return of international travel, the City (as well as the County) are being cautious in projections.

April 2017 marked the opening of Las Alcobas – a luxury, high-end hotel. During 2020, the hotel was sold to Marriott and reopened as Alila, a luxury resort which is continuing the trend of high TOT revenues.

The City has approved a development agreement for the “Farmstead” project, planned for 65 Rooms. This project is anticipated to be generating TOT revenues in 2027 and additional property tax in Fiscal Year 2028.

Other Revenue
Business License Tax. This revenue is generated by a license tax paid by all businesses operating within the City. With revenues remaining steady during the current fiscal year, no increase is projected for Fiscal Year 2021- 22.

Building & Planning Revenue. This category includes revenues for Building Permits, Building Inspection and Administrative Fees, Planning Application and Permit Fees, and ShortTerm Rental Permit Fees.

Employee Relations
There are approximately 92 FTE employees of the City, represented by formal labor organizations and not represented groups, as shown in the table below. The City has never experienced a work stoppage and believes its relationship with its employees is good.

CITY OF ST. HELENA
Employees and Contract Expiration Dates
Labor Group
Number of
Employees
Contract
Expiration Date
St. Helena Police Officers Association (represented) 18.75 June 30, 2025 St. Helena Firefighters (non-represented) 8 June 30, 2022 St. Helena Employee Association (represented) 37 June 30, 2025 Mid Managers and Department Heads (non-represented) 18 June 30, 2025 Part-time (non-represented) 10.25
Total 92
Source: City of St. Helena.

Agenda Item #9.1.

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Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the City carries insurance. The City is a member of the California Intergovernmental Risk Authority (CIRA), a joint powers authority, which provides joint protection programs for public entities covering automobile, general liability, errors and omission losses, property, and workers’ compensation claims. Under the program, the City has a $10,000 general liability retention limit similar to a deductible with the Fund being responsible for losses above that amount up to $500,000. The Fund carries excess liability coverage to a total of $39.5 million in excess of its $500,000 retention limit per occurrence through the California Joint Powers Risk Management Authority and its excess insurers.

The Fund covers workers’ compensation claims up to its self-insurance limit of $1 million.

A purchased excess policy insures the Fund for an additional $1 million to provide aggregate coverage of up to $2 million per claim. The City pays an annual premium to the Fund; the City may share in any surplus revenues or may be required to pay additional assessments based upon the Fund’s operating results. The Fund also provides property coverage up to $300 million per occurrence for its members.

The City paid no material uninsured losses during the 2020-21 fiscal year. Financial statements of the Fund may be obtained from its administrative offices located at 414 W. Napa Street Sonoma, California 95476.

See Note 3 in the City’s Fiscal Year 2020-21 audited financial statements, which are attached to this Official Statement as APPENDIX B, for additional information about the City’s risk management practices.

Employee Retirement System
This caption contains certain information relating to California Public Employees’ Retirement System (“CalPERS”). The information is primarily derived from information produced by CalPERS, its independent accountants and actuaries. The City has not independently verified the information provided by CalPERS and makes no representations and expresses no opinion as to the accuracy of the information provided by CalPERS.

The audited financial statements of CalPERS are available on its Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference in this Official Statement. Neither the City nor the Underwriter can guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or may be changed in the future. Actuarial assessments will change with the future experience of the pension plans.

Plan Description. All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (the “Plan”) administered by CalPERS. The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool. Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety Agenda Item #9.1.

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risk pools. The City sponsors eight rate plans (three miscellaneous and five safety). Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the Plan regarding benefit provisions, assumptions, and membership information that can be found on the CalPERS website.

Benefits Provided. The Plan is a cost-sharing multiple-employer defined benefit pension plan administered by CalPERS. A full description of the Plan benefit provisions, assumptions for funding purposes but not accounting purposes, and membership information is listed in the June 30, 2019 Annual Actuarial Valuation Report.

A summary of the City’s benefit formulas as of June 30, 2021 is provided below:

Miscellaneous
Hire Date Prior to Dec. 18, 2012 On or After Dec. 18, 2012 On or after Jan. 1, 2013 Benefit formula 2.0% @ 55 2.0% @ 60 2.0% @ 62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Monthly for life Retirement age 55 60 62
Monthly benefits, as a % of eligible
compensation
(1) (1) (1)
Required employee contribution rates 7.000% 7.000% 6.750% Required employer contribution rates* 10.221% + $646,074 8.081% + $3,758 6.985% + $11,627 Safety (Police)
Hire Date Prior to Jan. 16, 2012 On or after Jan. 16, 2012 On or after Jan. 1, 2013 Benefit formula 3.0% @ 50 3.0% @ 55 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Monthly for life Retirement age 50 55 57
Monthly benefits, as a % of eligible
compensation
(1) (1) (1)
Required employee contribution rates 9.000% 9.000% 12.000% Required employer contribution rates* 21.927% + $272,257 20.073% + $2,243 13.034% + $1,402 Safety (Fire)
Hire Date Prior to Jan. 1, 2013 On or after Jan. 1, 2013 Benefit formula 1/2% @ 55 2.0% @ 57
Benefit vesting schedule 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life
Retirement age 55 57
Monthly benefits, as a % of eligible
compensation
(1) (1)
Required employee contribution rates 10.1% 10.0%
Required employer contribution rates* 10.363% + $1,208 10.216% + $1,634 (1) Depending on years of service.

Agenda Item #9.1.

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Contributions. Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be 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 the Plan 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 fiscal 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.

Beginning in fiscal year 2016, 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 accrued liability. The dollar amounts are billed on a monthly basis. The City’s required contribution for the unfunded accrued liability was $1,572,311 in fiscal year 2021. The City’s contributions to the Plan for the fiscal year ended June 30, 2021, were $1,572,311.See “– Recent Actions Taken by CalPERS” below.

Actions Taken by CalPERS Related to Discount Rate and Other Assumptions. In 2013, the CalPERS’ Board of Administration (the “Board of Administration”) approved a recommendation to change the CalPERS amortization and smoothing policies. In 2018, the Board of Administration voted to shorten the period over which CalPERS will amortize actuarial gains and losses from 30 years to 20 years for new pension liabilities. In 2014, the Board of Administration approved new demographic actuarial assumptions based on a 2013 study of recent experience. The largest impact, applying to all benefit groups, is a new 20-year mortality projection reflecting longer life expectancies and that longevity will continue to increase. Because retirement benefits will be paid out for more years, the cost of those benefits will increase as a result. In 2015, the Board of Administration adopted a funding risk mitigation policy intended to incrementally lower its discount rate – its assumed rate of investment return – in years of good investment returns, help pay down the pension fund’s unfunded liability, and provide greater predictability and less volatility in contribution rates for employers. In 2016, the Board of Administration voted to lower its discount rate for local agencies per the following schedule:

Fiscal Year
Discount
Rate
2018-19 7.375%
2019-20 7.250
2020-21 7.000
On July 12, 2021, CalPERS announced it had achieved a preliminary investment return of 21.3% for the 12-month period ending June 30, 2021. Under the Funding Risk Mitigation Policy approved by the CalPERS Board of Administration in 2015, the double-digit return triggered a November 2021 reduction in the discount rate from 7.00% to 6.80%.

Lowering the discount rate means employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities.

Active members hired after January 1, 2013, under PEPRA will also see their contribution rates rise. PEPRA included certain other provisions to try to minimize pension costs for covered employees. The three-year reduction of the discount rate will result in average employer rate increases of about 1 percent to 3 percent of normal cost as a percent of payroll for most miscellaneous retirement plans, and a 2 percent to 5 percent increase for most safety plans.

Additionally, many CalPERS employers will see a 30 to 40 percent increase in their current Agenda Item #9.1.

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unfunded accrued liability payments. These payments are made to amortize unfunded liabilities over 20 years to bring the pension fund to a fully funded status over the long-term.

Fiscal Year 2020-21 investment returns and changes to the discount rate and other assumptions, including demographic changes, will be reported on the June 30, 2021 CalPERS actuarial reports. These changes, including the newly determined discount rate, will be reflected in contribution levels for cities, counties, and special districts in Fiscal Year 2023-24.

Net Pension Liability. As of June 30, 2021, the City reported a liability of $12,719,254 for its proportionate share of the net pension liability. The City’s net pension liability for the Plan is measured as of June 30, 2020, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019, rolled forward to June 30, 2020, using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the Plan relative to the projected contributions of all participating employers, actuarially determined. For additional details see Note 2 in APPENDIX B.

Pension Expense. For the fiscal year ended June 30, 2021, the City recognized pension expense of $2,121,565.

No Other Post-Employment Benefits (OPEB)
The City does not offer OPEB.

Long-Term Obligations
The following is a summary of long-term liability activity for the fiscal year ended June 30, 2021.

Governmental Activities
Beginning
Balance Additions Deletions
Ending
Balance
Due Within
One Year
Compensated Absences $758,234 $163,072 $125,570 $795,736 $54,375 Claims 140,917 23,305 53,543 110,679 55,937
Net Pension Liability 8,999,898 470,947 -- 9,470,845 -- Direct Borrowings:

Capital Leases 336,118 -- 127,168 208,950 58,222
Reimbursement Agreement 30,740 -- -- 30,740 --
Total $10,265,907 $657,324 $306,281 $10,616,950 $168,534 Investment Policies and Procedures
The City invests its funds in accordance with the City’s Investment Policy (the “Investment Policy”), which is subject to annual review and approval by the City Council. The purpose of the Investment Policy is to establish the investment goals of safety, liquidity, and yield (in that order).

The Investment Policy complies with the provisions of the California Government Code, Sections 53600 through 53659 (the authority governing investments for municipal governments in the State). The Investment Policy limits the City to investments authorized by State law (Sections 53601 et sec). In addition, the Investment Policy establishes further guidelines.

It is the policy of the City to invest public funds in a prudent manner which will provide the highest yield consistent with the maximum security and preservation of invested principal, while Agenda Item #9.1.

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meeting the daily cash flow demands of the City, and conforming to all applicable federal, state and local statutes governing the investment of public funds.

Construction Activity
Provided below are the building permits and valuations for the City of St. Helena for calendar years 2017 through 2021.

CITY OF ST. HELENA
Total Building Permit Valuations
(Valuations in Thousands)
2017 2018 2019 2020 2021
Permit Valuation
New Single-family $6,721.5 $6,888.3 $10,970.1 $6,397.0 $4,825.7 New Multi-family 1,387.0 1,600.0 0.0 0.0 0.0
Res. Alterations/Additions 8,658.0 5,848.1 6,425.7 2,927.3 12,545.8 Total Residential 16,766.5 14,336.4 17,395.8 9,324.3 17,371.5 New Commercial 4,026.7 4,747.5 3,277.8 3,794.5 949.6
New Industrial 0.0 0.0 0.0 0.0 0.0
New Other 1,250.6 7,861.8 815.2 694.4 1,663.2
Com. Alterations/Additions 1,938.0 4,822.0 1,899.7 1,876.0 3,802.0 Total Nonresidential 7,215.3 17,431.3 5,992.7 6,364.9 6,414.8 New Dwelling Units
Single Family 13 11 20 9 14
Multiple Family 8 8 0 0 0
TOTAL 21 19 20 9 14
Source: Construction Industry Research Board, Building
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Employment
The City is included in the Napa Metropolitan Statistical Area (“MSA”). The unemployment rate in the Napa County was 2.6 percent in July 2022, down from a revised 2.7 percent in June 2022, and below the year-ago estimate of 5.9 percent. This compares with an unadjusted unemployment rate of 3.9 percent for California and 3.8 percent for the nation during the same period.

The table below list employment by industry group for Napa Metropolitan Statistical Area MSA for the years 2017 to 2021.

NAPA METROPOLITAN STATISTICAL AREA MSA
(Napa County)
Annual Averages Civilian Labor Force, Employment and Unemployment, Employment by Industry
(March 2021 Benchmark)
2017 2018 2019 2020 2021
Civilian Labor Force (1) 73,200 73,800 73,300 68,800 68,400 Employment 70,500 71,600 71,200 62,600 64,300
Unemployment 2,700 2,200 2,100 6,200 4,100
Unemployment Rate 3.7% 3.0% 2.9% 9.0% 6.0%
Wage and Salary Employment: (2)
Agriculture 5,000 5,100 5,200 5,000 5,300
Mining, Logging and Construction 4,200 4,700 4,700 4,100 4,500 Manufacturing 12,700 13,200 13,700 12,800 13,200
Wholesale Trade 1,700 1,800 1,800 1,600 1,500
Retail Trade 6,400 6,300 6,400 6,200 6,200
Transportation, Warehousing, Utilities 2,000 2,100 2,100 1,800 2,000 Information 400 400 300 200 300
Financial Activities 2,300 2,200 2,300 2,100 2,100
Professional and Business Services 6,800 7,200 7,200 6,700 6,600 Educational and Health Services 10,100 10,100 10,300 9,900 9,900 Leisure and Hospitality 13,100 13,500 13,700 9,100 10,200 Other Services 2,200 2,100 2,100 1,700 1,800
Federal Government 200 200 200 200 200
State Government 3,500 3,600 3,600 3,600 3,600
Local Government 6,800 6,700 6,400 5,900 5,600
Total, All Industries (3) 77,300 79,300 79,900 70,800 72,900 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Totals may not add due to rounding.

Source: State of California Employment Development Department.

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Major Employers (County)
As a largely residential community, there are no significant employers located within the City. The table below lists the major employers in the County, listed alphabetically.

NAPA COUNTY
Major Employers
(August 2022)
Employer Name Location Industry
Adventist Health St Helena St Helena Hospitals
Allied Universal Napa Security Guard & Patrol Service
California Odd Fellows Napa Retirement Communities & Homes Domaine Chandon Yountville Wineries (mfrs)
Duckhorn Portfolio Inc St Helena Wineries (mfrs)
Health & Human Svc Napa Health & Welfare Agencies
Mccarthy Library St Helena Libraries-Public
Meadows of Napa Valley Retire Napa Non-Profit Organizations Meritage Resort & Spa Napa Resorts
Napa County & Community School Napa Schools
Napa County Public Works Napa Government Offices-County Napa State Hospital Napa Hospitals
Napa Valley College Napa Junior-Community College-Tech Institutes Pavilion-Vintage Estate Yountville Wedding Chapels
Restaurant At Auberge Du Sll Rutherford Resorts
Robert Mondavi Winery Oakville Vineyards
Silverado Resort-Spa Dolce Napa Hotels & Motels
Solage Calistoga Resorts
Sutter Home Winery St Helena Exporters (whls)
Syar Industries Napa Sand & Gravel (whls)
Trinchero Family Estates St Helena Wineries (mfrs)
Veteran's Home of California Yountville Government-Specialty Hosp Ex Psychiatric Veterans Home Yountville Veterans' & Military Organizations Walmart Supercenter Napa Department Stores
Westin Verasa Napa Napa Hotels & Motels
Source: State of California Employment Development Department, extracted from the America’s Labor Market Information System (ALMIS) Employer Database, 2022 2nd Edition.

Agenda Item #9.1.

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Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance).

Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.” The following table summarizes the total effective buying income for the City of St. Helena, the County of Napa, the State and the United States for the period 2018 through 2022.

CITY OF ST. HELENA, COUNTY OF NAPA,

STATE OF CALIFORNIA AND UNITED STATES
Effective Buying Income
2018 through 2022
Year Area
Total Effective
Buying Income
(000’s Omitted)
Median Household
Effective Buying
Income
2018 City of St. Helena $266,619 $77,602
Napa County 4,874,841 69,144
California 1,113,648,181 59,646
United States 8,640,770,229 50,735
2019 City of St. Helena $263,077 $74,921
Napa County 4,881,780 70,710
California 1,183,264,399 62,637
United States 9,017,967,563 52,841
2020 City of St. Helena $266,657 $79,019
Napa County 2,701,513 73,719
California 1,243,564,816 65,870
United States 9,487,165,436 55,303
2021 City of St. Helena $259,604 $72,840
Napa County 4,934,709 75,241
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 City of St. Helena $322,823 $88,542
Napa County 5,853,719 87,550
California 1,452,426,153 77,058
United States 11,208,582,541 64,448
Source: The Nielsen Company (US), Inc for 2018; Claritas, LLC for 2019 through 2022.

Agenda Item #9.1.

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APPENDIX B

AUDITED FINANCIAL STATEMENTS
FOR FISCAL YEAR ENDED JUNE 30, 2021
Agenda Item #9.1.

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APPENDIX C

FORM OF OPINION OF BOND COUNSEL
________, 2022
City Council
City of St. Helena
1572 Railroad Avenue
St. Helena, CA 94574
OPINION: $______ City of St. Helena (Napa County, California) 2022 General Obligation Bonds
Members of the City Council:

We have acted as bond counsel to the City of St. Helena (the “City”) in connection with the issuance by the City of the above-captioned general obligation bonds (the “Bonds”). In such capacity, we have examined such law and such certified proceedings, certifications and other documents as we deem necessary to render this opinion.

The Bonds are being issued under the provisions of Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California, commencing with Section 53506 (the “Bond Law”), and a resolution adopted by the City Council of the City on _______, 2022 (the “Resolution”). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

Regarding questions of fact material to our opinion, we have relied upon certified proceedings and other certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation.

Based on the foregoing, we are of the opinion that, under existing law:

1. The City is a duly created and validly existing general law city and municipal corporation with the power to adopt the Resolution, perform the agreements on its part contained therein, and issue the Bonds.

2. The Resolution has been duly adopted by the City Council and constitutes a valid and binding obligation of City, enforceable against the City in accordance with its terms.

3. The Bonds have been duly authorized and executed by City, and are valid and binding general obligations of City.

4. The City is obligated and authorized under the laws of the State of California to levy ad valorem taxes, without limit as to rate or amount (except with respect to certain personal Agenda Item #9.1.

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property that is taxable at limited rates), upon the taxable property in the City for the payment when due of the principal of and interest on the Bonds.

5. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax.

It should be noted however that for tax years beginning after December 31, 2022, interest on the Bonds may be subject to the corporate alternative minimum tax. The opinions set forth in the preceding sentences are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended, relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The City has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds.

6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California.

The rights of the owners of the Bonds and the enforceability of the Bonds are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally, and by equitable principles, whether considered at law or in equity.

This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Our engagement with respect to this matter has terminated as of the date hereof.

Respectfully submitted,
A Professional Law Corporation
Agenda Item #9.1.

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APPENDIX D

FORM OF CONTINUING DISCLOSURE AGREEMENT
$_______
CITY OF ST. HELENA
(County of Napa, California)
2022 General Obligation Bonds

CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and delivered by the City of St. Helena (the “City”) in connection with the issuance of the abovecaptioned bonds (the “Bonds”). The Bonds are being issued under the provisions of Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California, commencing with Section 53506 (the “Bond Law”), and a resolution adopted by the City Council of the City on _______, 2022 (the “Bond Resolution”).

The City hereby covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and to assist the Participating Underwriter in complying with the Rule.

Section 2. Definitions. In addition to the definitions set forth above, in the Bond Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4.
“Annual Report Date” means the date not later than April 1 after the end of each fiscal year of the City (currently June 30th).
“Dissemination Agent” means BLX Group LLC, or any other Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
“Listed Events” means any of the events listed in Section 5(a). “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule.
“Official Statement” means the final official statement executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” means the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.

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“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2023 with the report for the 2021-22 fiscal year, provide to the MSRB in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall, in a timely manner, provide (or cause the Dissemination Agent to provide) a notice of late filing to the MSRB, in an electronic format, as prescribed by the MSRB.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

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(b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, financial information and operating data with respect to the City for the preceding fiscal year, substantially similar to that provided in the Official Statement:
(i) Assessed value of taxable property within the City; (ii) Top ten property tax assessees for current fiscal year, and their respective secured property assessed values, but only if the City’s general obligation bond collections are not included on the County’s Teeter Plan; (iii) property tax levies, collections and delinquencies, but only if the City’s general obligation bond collections are not included on the County’s Teeter Plan; and
(iv) Amount of all general obligation debt of the City outstanding, and total scheduled debt service on such general obligation debt. (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in light of the circumstances under which they are made, not misleading.
(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or
determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers.
(9) Defeasances.

Agenda Item #9.1.

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(10) Release, substitution, or sale of property securing repayment of the securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City. (13) The consummation of a merger, consolidation, or acquisition involving the City, or the sale of all or substantially all of the assets of the City (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material.
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties.
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of a Listed Event described in subsection (a)(8) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Bond Resolution.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14), and (a)(15) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds.

The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal securities law.
(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. (e) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.

Agenda Item #9.1.

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Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).

Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if the City has received an opinion of counsel knowledgeable in federal securities laws to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule.

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Bond Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information Agenda Item #9.1.

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provided to it by the City hereunder, and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.

Date: ______________, 2021 CITY OF ST. HELENA
By:

City Manager
Agenda Item #9.1.

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APPENDIX E

DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

Neither the City nor the Paying Agent take any responsibility for the information contained in this Section.

No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or redemption premium, if any, with respect to the Bonds, (b) Bonds representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (in this Appendix, the “Bonds”). The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond will be issued for each maturity of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any maturity exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates.

Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned Agenda Item #9.1.

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subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information contained on this Internet site is not incorporated herein by reference.

3. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Bonds representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

4. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them.

6. Redemption notices will be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to Agenda Item #9.1.

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those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from City or Paying Agent on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, Paying Agent, or City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of City or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to City or Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered.

10. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC.

11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that City believes to be reliable, but City takes no responsibility for the accuracy thereof.

Agenda Item #9.1.

Good Faith Estimates
California Government Code Section 5852.1 requires that the Council shall obtain and disclose in a meeting open to the public specified information obtained as good faith estimates from an underwriter or municipal advisor prior to authorization of the issuance of the City of St. Helena, 2022 General Obligation Bonds (the “2022 Bonds”). The Council receives such information from the Municipal Advisor as set forth below:

Name of Municipal Advisor: Del Rio Advisors, LLC
City Council Meeting Date: October 25, 2022
Name of Issue: City of St. Helena, 2022 General Obligation Bonds The Municipal Advisor has provided to the City the following required good faith estimates relating to the 2022 Bonds:
(1) The true interest cost of the 2022 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the new issue of bonds: 4.49301%. (2) The finance charges for the 2022 Bonds, which means the sum of all fees and charges paid to third parties: $185,000 of estimated fixed costs plus $52,550 as an estimated underwriter’s discount for a total of: $237,550. (3) The amount of proceeds received by the public body for sale of the 2022 Bonds less the finance charge of the 2022 Bonds described in subparagraph (2) and less any reserves or capitalized interest paid or funded with proceeds of the 2022 Bonds: $5,255,000.00.
(4) The total payment amount, which means the sum total of all payments the public body will make to pay debt service on the 2022 Bonds plus the finance charge of the 2022 Bonds described in subparagraph (2) not paid with the proceeds of the 2022 Bonds (which total payment amount is calculated to the final maturity of the Bond): $10,390,529.03.

The foregoing estimates constitute good faith estimates only. The actual principal amount of the 2022 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to a variety of factors. The actual interest rates borne by the 2022 Bonds and the actual amortization of the 2022 Bonds will depend on market interest rates at the time of sale thereof.

Market interest rates are affected by economic and other factors beyond the control of the City.

Agenda Item #9.1.

City of St. Helena
2022 General Obligation Bonds
City Council October 25, 2022
Agenda Item #9.1.

Legislative Process
• January 24 and January 31, 2022:
• Public meetings held discussing a potential general
obligation bond measure for critical infrastructure
• February 8, 2022: City Council adopted Resolution No. 2022-11 • Determining the necessity to incur bonded indebtedness to finance municipal improvement projects of the City
• February 22, 2022: City Council adopted Ordinance No. 2022-3 • Ordering the submission to the voters of the City a
proposition authorizing bonded indebtedness
• June 7, 2022: Election which included Measure H
• Measure H passed by more than two-thirds vote
2 Agenda Item #9.1.

2022 General Obligation Bonds
• Currently anticipated to be sold via public offering in a competitive sale pursuant to the Official Notice of Sale
• Sale date: November 15, 2022
• Closing date: November 30, 2022
• Bond rating: AA+
• The bonds will be sold at a premium which will be used to pay for the costs of issuance, underwriter’s discount and the first year of debt service (until the bonds can be placed on the tax roll in July / August 2023) 3 Item Amount
Estimated Principal Amount $5,255,000
Estimated Project Fund $5,255,000
Estimated Costs of Issuance $185,000
Estimated Underwriter’s Discount $52,550
Estimated Total Interest $5,135,529.03
Estimated Total Debt Service $10,390,529.03
“All-In” True Interest Cost 4.77581%
Estimated Average Tax Rate $5.17
Estimated Maximum Tax Rate $11.10
Agenda Item #9.1.

Estimated Costs of Issuance
Role Party Amount
Bond Counsel Jones Hall 60,000.00
Bond Counsel Expenses (NTE) Jones Hall 1,500.00
Disclosure Counsel Jones Hall 40,000.00
Municipal Advisor Del Rio Advisors, LLC 42,500.00
Municipal Advisor (Competitive Sale) Del Rio Advisors, LLC 5,000.00 Municipal Advisor Expenses (NTE) Del Rio Advisors, LLC 750.00 Rating Fee Standard & Poor's Corporation 16,250.00
Paying Agent (Acceptance Fee) U.S. Bank 500.00
Paying Agent (Annual Fee) U.S. Bank 750.00
Paying Agent (Costs of Issuance) U.S. Bank 600.00
Printing of Official Statement TBD 7,500.00
Continuing Disclosure Review DAC 1,500.00
Notice of Intent Publication Bond Buyer 1,500.00
CUSIP Service Bureau Del Rio Advisors, LLC 1,500.00
Rounding Adjustment / Miscellaneous Misc. 5,150.00
Total Estimated Costs $185,000.00
4 In addition, the underwriter that purchases the 2022 Bonds in the competitive sale will propose an underwriter’s discount as their compensation for underwriting (purchasing) the 2022 Bonds. This amount will not exceed 1.00% of the principal amount of the 2022 Bonds or $52,550. Agenda Item #9.1.

Financing Team
• City Staff
• Bond / Disclosure Counsel: Jones Hall
• Municipal Advisor: Del Rio Advisors, LLC
• Escrow Agent: U.S. Bank Trust Company, N.A.
5 Agenda Item #9.1.

Documents for Review and Approval
•Resolution of Issuance
•Official Notice of Sale
•Official Statement
6 Agenda Item #9.1.

Recommendation
7 Approve a resolution authorizing the issuance and sale of general obligation bonds (the “2022 Bonds”) in an
estimated principal amount of $5,255,000 and a not-toexceed amount of $6,000,000, and authorizing the execution of documents and the taking of other actions
related thereto
Questions / Discussion
Agenda Item #9.1.